The New York Times has a profile on Google, focusing on AdSense and where it is going [hint; the television]
Hidden behind its simple white pages, Google has already created what it says is one of the most sophisticated artificial intelligence systems ever built. In a fraction of a second, it can evaluate millions of variables about its users and advertisers, correlate them with its potential database of billions of ads and deliver the message to which each user is most likely to respond.
Because of this technology, users click ads 50 percent to 100 percent more often on Google than they do on Yahoo, Mr. Noto estimates, and that is a powerful driver of Google’s growth and profits. “Because the ads are more relevant,” he said, “they create a better return for advertisers, which causes them to spend more money, which gives Google better margins.” (Yahoo is working on its own technology to narrow that gap.)
Google already sells its text ads for many other sites on the Internet (including nytimes.com), and is also moving tentatively to sell the picture-based interactive advertising preferred by marketers who want to promote brands rather than immediately sell products.
Now it is preparing to extend its technology to nearly every other medium, most significantly television. It is looking toward a world of digital cable boxes and Internet-delivered television that will allow it to show commercials tailored for each viewer, as it does now for each Web page it displays.
This proposition, he continued, is applicable to other media. “If we can figure out a way to improve the quality of ads on television with ads that have real value for end-users, we should do it,” he said. While he is watching television, for example, “Why do I see women’s clothing ads?” he said. “Why don’t I see just men’s clothing ads?”
Mr. Schmidt acknowledges that as Google explores moving into television, it may well face a conflict between its core belief that advertising must be useful and the typical television commercial that is “based on feeling and emotion.”
“Our model is likely to affect television last,” he said, while expressing optimism that a formula for useful, targeted commercials could be found. For now, he quickly added, the market for various forms of direct marketing is three times larger than that for television ads. “I was shocked by this,” he said. “All of us are so conditioned to television as the height of advertising.
“We are in the really boring part of the business,” Mr. Schmidt concluded, “the boring big business.”
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