Google One-Ups Yahoo Once Again - This Time With 'Gadget Ads'

Includes: GOOG, YHOO
by: Trade Radar Operator

Google's (NASDAQ:GOOG) press release describing the expansion of a beta program for what are being called Gadget Ads has again shown that Google is unparalleled at melding technology and advertising to benefit its bottom line. Gadget Ads are mini-web pages or "widgets" that can be embedded within publisher pages.

I have written in the past on Yahoo's (YHOO) Smart Ads and how, by more precisely targeting site users and adjusting ad content accordingly, they provide a much desired evolution of the banner or display ad format.

Though Smart Ads and Gadget Ads are not really the same, I think it is fair to say that Google has seen the challenge of Smart Ads and has chosen to leapfrog Yahoo by rolling out its own update to the display ad format.

The evolution of the Gadget Ad

One of the trends on the Internet over the last year or so involves software developers creating "widgets" which can be hosted within web pages and blogs. Widgets can be pretty much anything that can be encapsulated within a modest amount of real estate on the page. They are typically "active" in some way, displaying RSS feeds, countdown clocks, animations, media players, games, social network badges, etc. I myself have experimented with widgets related to the stock market (you can see them at or

Google, not a company to ignore a trend, created their version of the widget, called the Google Gadget. It provides widget developers a platform for creating Gadgets that can be embedded in a user's personalized iGoogle page or on other web pages or blogs. There are tons of Gadgets available at the Google site encompassing a wide spectrum of functionality.

Harnessing the power of Gadgets to create interactive ads and publishing them through Google's huge ad network is a very shrewd move.

Why the potential of the Gadget Ad is so powerful

If you look at the top three Digital Marketing awards for 2006 from Canada's Marketing Magazine, you will see that all three are interactive: two are games and one allows users to create and save a plant of their own design. Likewise, the 2007 Webby Awards for Business-to-Consumer Promotions and Ads features various interactive ads that allow users to, among other things, play with a car and access different kinds of humorous entertainment (Swedish meatballs singing your name, anyone? Really, it's funnier than you might think). The point I am trying to make is, it is the interactive ads that get the attention of the industry and of consumers. They have ability to engage the user in ways a simple banner or text ad never could. This is what advertisers most desire when trying to enhance brand awareness, make an emotional connection and secure customer loyalty.

Google Gadget Ads make this kind of engaging ad functionality much more easily available to many more advertisers. The Gadget envelope and environment is already created and tested by Google. An ad creative can be developed offline and re-purposed as a Gadget with minimal effort. The ads can be hosted by Google, reducing the advertiser or agency's responsibility for deployment. There are functions within the Gadget API that allow sending an interaction hit to a tracking server to report user interactions inside Gadget Ads. This will give agencies and advertisers the ability to measure the effectiveness of their rich media advertising and assess how consumers are using or navigating through the ad content.

Currently, Gadget Ads can be targeted to certain types of consumers based on site, geography and demographic characteristics. Because AdSense ads are context sensitive and are targeted to users most interested in whatever the publisher or host site is offering, Google will be working on implementing the same model for Gadget Ads. As the Gadget Ads make their way out of the beta stage and into wide distribution on the AdSense network and in search advertising, their reach will increase dramatically.

A different kind of ad

In a complete departure from what we think of as an online ad, the Google Gadget Ads can be implemented in iGoogle, web pages or blogs by users themselves. If the Gadget Ad provides a fun or useful experience, news on a fan's favorite band or a daily joke or image, for example, the user may choose to keep that Gadget as a permanent part of their personal pages. The ability for users to use and share Gadget Ads increases the potential for the ads to benefit from buzz and go viral while providing an opportunity for creative advertisers to enter into a mutually beneficial relationship with consumers.

The technology behind Gadgets allows them to request fresh content each time a page is loaded or repeatedly after the page has already been loaded. A user can interact with the gadget and, through the use of Flash and/or Web 2.0 technologies, new content can be displayed, video or music can be streamed, etc.

Google sets the standard again

All in all, Gadget Ads are another solid step forward for Google as they utilize their powehouse technology to provide the strongest and most flexible ad serving platform on the Internet. Is Google a buy at $546 per share? We might look back in twelve months and think that was cheap.

Disclosure: Author owns none of the stocks mentioned in this article (yet).

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