Google… the OS for Advertising

Traditional media companies are in a persistent state of confusion when it comes to Google. The question that keeps these media executives up at night is… is Google a friend or a foe? If recent conversations I’ve had with such executives are any indication, Google’s recent deals and initiatives (e.g. acquiring YouTube, selling newspaper and radio ads, etc.) have only served to heighten their frustrations to an all-time high.

From where I sit, the answer to this vexing question lies in one’s ability to foresee what Google is planning from a product development perspective. If you read through all the announcements and analyses about their recent deals and initiatives, it becomes clear that a common vision unites them all. Simply put, Google is building what is essentially an operating system (“OS”) for advertising… one that will work across all media.

Just like Microsoft’s Windows (or any other OS) manages all the hardware and software resources of a computer, Google’s Ad/OS will similarly manage all the critical components of an ad campaign, regardless of media type. But instead of controlling and allocating memory, Google’s Ad/OS will allocate ad budgets… instead of prioritizing system requests, controlling input & output devices, Google’s Ad/OS will enable ad inventory buying & placement… instead of facilitating networks and managing files, Google’s Ad/OS will optimize media buying across the spectrum & manage creative placement.

Google’s Ad/OS will be used to manage and buy ads at many of the top new media publishers like MySpace, YouTube, AOL, Ask, and Google itself, of course, along with hundreds of thousands of blogs. It will also be used to buy ads in the NY Times, the Boston Globe, the Washington Post, and all sorts of local papers owned by Tribune, Gannett and McClatchy… not to mention radio stations all over the country that are owned by Clear Channel and other radio conglomerates. And if Google executes on its plan, soon all the major broadcast TV and cable networks will join in to make their ad inventory available via Google’s Ad/OS.

So sit back and imagine that for a minute… the development of an operating system for advertising where anyone (from mom-n-pop stores to Fortune 1000 brands) can sit at their computers and slice, dice, & puree all their ad buys across web sites, newspapers & magazines, radio, and TV. Over $500 billion is spent every year advertising on these traditional media markets and Google is using its superior technological advantage to become a media-agnostic advertising platform.

Now, taking it from the top… if you were an executive at a traditional media company, would you consider Google a friend or a foe? As one media executive said to me the other day… “as long as they don’t develop their own content, we think we’re safe”. Hmmm, interesting. But it would behoove him and his colleagues to remember that Google’s core competency is to use technology in a manner that devalues and deflates traditional industries by extracting inefficiencies in existing processes. And the long-term strategic implications of this “Google effect” is much more disruptive than simple market realignment… rather, it’s an issue of rendering old core (human) competencies obsolete and replacing them with new ones reliant on automated, scalable technologies (much like what Wal-Mart did to retailing and what Craigslist is in the process of doing to classifieds). For instance, the only way for traditional media companies to leverage the core competencies they have today in order to compete with Google’s Ad/OS, in the long run, is to start breeding ad salespeople who will have the expertise and capability to sell across all media platforms. Sure, that’s feasible… when pigs can fly.