How Google is changing the media universe

Jerry Cobb Reporter • Profile

LOS ANGELES - That giant sucking noise you hear is the sound of advertising dollars moving from traditional media and into new media like the Internet. It's changing the landscape of the advertising business, and no company is more responsible for the shift than Google.

Like a giant magnet, Google is pulling more and more advertising dollars on to the Internet and away from traditional media like print, radio and television.

It's not just because the search giant attracts 80 million unique visitors a month. It's also because Google's technology allows advertisers to target those visitors in ways traditional media can't.

"When somebody clicks on a phrase in Google, or an ad in Google, we can track right away what's happening; if they went to our site, our client's site, or they bought something, or they asked for information. We're able to track that and really understand what's going on with the consumer," explained David smith, CEO of Mediasmith and a veteran of the advertising business.

Five years ago, the average Internet user performed four searches a month. Today, that number is 26.

And the amount of money companies will spend this year just on online ads linked to specific search terms is expected to equal the total revenue of ABC, CBS and NBC combined.

At the same time, major advertisers like Procter & Gamble, Unilever, Ford and General Motors plan to spend 15 percent or more of their marketing dollars on the Internet

"The Internet is the only medium that's growing,” said Stewart Barry, a research analyst at ThinkEquity Partners. “TV's in decline, news print circulation is in decline and the Internet is expected to grow in usage in the U.S. by at least double digits over the next three years."

Consumers currently spend about 15 percent of their media time on the Internet. But advertisers are only devoting 4 percent of their media budgets to the Web.

But that percentage is bound to increase, especially as more households access the Internet with a high-speed broadband connection capable of carrying full motion video, like a 30-second commercial — the lifeblood of the television business.

"The Web is achieving critical mass from a consumer standpoint," noted Mediasmith’s David Smith. "And the advertisers are following the eyeballs."

The traditional 30-second television commercial is not dead, but it certainly is threatened by the growth of online advertising and the growth of online video. In fact, more people watch music videos on AOL than on MTV these days — a statistic that says a great deal about the shape of things to come.

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