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Google: biting the hand that feeds it?
Everybody loves Google, right? Not so fast.
May 4, 2005: 2:12 PM EDT
Krysten Crawford, CNN/Money staff writer

NEW YORK (CNN/Money) - In honor of National Teacher Day, Google featured on its home page Tuesday a graphic of a chalkboard with an apple at its base. Quirky tributes like this are meant to engender goodwill among the Google masses.

Not everyone, however, is feeling warm and fuzzy toward Google.

A new study of national advertisers and interviews with a handful of marketing agencies indicate that the Internet giant could have a customer service problem.

"Google has always been bad -- worse than bad even," said Dana Todd, the president of the Search Engine Marketing Professional Organization (SEMPO), a 300-member trade group founded in 2002.

Independent media analyst Jack Myers, in his fourth annual "customer satisfaction" survey of online sales groups, also found that advertisers aren't entirely happy with Google's service.

Google's core issue appears to be one of customer interaction. Google developed the world's most popular Internet search engine. But it makes most of its money selling what's known as paid-search advertising, or ads that are based on search results or the content that appears on another site that has partnered with Google.

Paid-search advertising is going gangbusters. eMarketer, a technology research firm, estimates that search advertising will grow 40 percent, to $5.4 billion, in 2005. Overall, online advertising revenues are expected to reach $12.9 billion this year, making the Internet the fastest-growing form of advertising.

Google has been the major beneficiary of the online ad boom -- revenues for the quarter that ended in March nearly doubled, to $1.26 billion, and its stock price is up 164 percent since its initial public offering . The bonanza is also drawing fierce competitors, including Yahoo!, Microsoft's MSN.com and America Online's Advertising.com.

Time Warner is the parent of AOL and CNN/Money, and Yahoo provides CNN/Money's Web search.

Room for improvement

But as Google looks to broaden its services beyond paid search, Myers suggests the company first has some work to do with advertisers.

In his survey, Myers asked close to 200 national advertising executives who spend the majority of their time handling online sales to rank 60 Web sites based on several categories.

Google finished a solid No. 5 overall, better than its seventh-place finish in 2004. Yahoo! was No. 2. Of the nine categories measured, Google's sales team edged out Yahoo!'s crew in one category: product knowledge. Google finished third. Yahoo! ranked fourth.

What caught Myers's attention was Google's ranking in one of the most important categories: "responsiveness and accessibility." Google was No. 18, down from 11th place the year before.

"Google is performing well against the industry," noted Myers. But when it comes to customer interaction, Myers said Google "has dropped considerably" in recent years.

Myers attributed Google's falloff to the Mountain View, Ca.-based company's rapid growth and its dominance, which means advertiser expectations are high. At the same time, Myers says Google's rivals are more accessible and more effective at dealing with advertisers.

But interviews with ad agency reps suggest that Google's reputation among advertisers is worse than Myers's study indicates.

A matter of identity

Todd, the SEMPO president, attributes Google's poor image to the fact that the company has viewed itself as and acted like a technology company. Google has tried to automate as many processes as possible and that, according to Todd, doesn't work in the advertising world.

Another advertising taboo that Todd says Google has broken: the company has gone around the agencies it deals with and tried to sign deals directly with Fortune 1000 advertisers. That's alienated media buyers and, at the same time, fueled the perception that Google is giving deep-pocketed advertisers special treatment, to the detriment of smaller advertisers.

"They haven't perceived themselves, until recently, as a media company," said Todd, who is also co-founder and vice president of SiteLab International, a La Jolla, Ca.-based agency specializing in online advertising.

Google isn't the only one that's apparently breached ad industry etiquette. Todd says Yahoo! once tried a similar end-run around agencies, but has since stopped the practice.

Google and Yahoo! are founding members of SEMPO.

Todd said Google officials have told her they're aware of advertiser concerns and plan to address them.

Tim Armstrong, the vice president of sales at Google, said the company is committed to building a top-notch customer service operation and that the response from agencies and advertisers has been very positive.

"In general I think we're very focused on all of our customers," said Armstrong. Asked whether Google is bypassing agencies to sell directly to advertisers, Armstrong said: "I want to be very, very clear on this point. That is not the culture that we have at Google. We work very closely with agencies and clients in exactly the manner they want us to."

Does Google really need to worry? After all, there are no signs that Google is about to cede its lead as the dominant Internet advertising site anytime soon. And given the rosy projections on future ad spending, Google might not need to win any popularity contests in the advertising world.

And yet, history might offer a lesson in hubris.

The last time Internet advertising flourished -- in the late 1990s -- AOL was king and acted like it. Time Warner officials today openly acknowledge that AOL alienated advertisers with its arrogance and paid a steep price when the dot.com bubble burst, giving advertisers the upper-hand.

It's taken years for AOL to rebuild those relationships. And while AOL's rankings in the Myers survey have improved over time, it lags both Google and Yahoo!.

Jessie Stricchiola, president of search-engine marketing firm Alchemist Media, says the AOL lesson shows that advertisers and their agencies can't be ignored.

"It's still a pretty small industry in terms of the people involved," she said.  Top of page

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