Google and Rivals Focusing on the Ad Game

Google has proven its utility for users. Now it's time to show advertisers.

The goal of making search-engine advertising easier and more efficient for advertisers will lead to some major innovations for Google and other search-engine companies over the next year, says Tim Armstrong, Google's vice president of advertising sales.

"Tools are the next frontier," says Armstrong. "All the systems will be getting more automated and easy to use."

That outlook, along with factors such as a rise in reported revenue for search-engine companies, spotlights the likely continued dynamism of the paid-search business, populated by publicly traded companies such as Overture Services OVER, FindWhat.com FWHT and LookSmart LOOK.

Big Numbers

The privately held Google's status as operator of the most popular search-engine destination for U.S. users makes it a key player in the development of the search-engine business. With Google declining to disclose its financials, the biggest search-revenue generator is likely Overture, which expects full-year revenue to rise from $667.7 million in 2003 to $1 billion in 2003.

As advertisers indicated in a recent panel discussion at a U.S. Bancorp Piper Jaffray search conference, however, advertising on search engines isn't as easy as they'd like it to be, especially when they're trying to coordinate advertising that involves tens of thousands of different keywords. Advertisers also are seeking better tools for adjusting their ad campaigns -- factors such as the words they bid on and the prices they bid -- in response to variable performance of different parts of their ad campaigns.

Google is on the case, insists Armstrong, though he declines to give specifics, such as what percentage of the company's staff is devoted to advertising tools, as opposed to improving users' search experience.

"We'd like to get well-known as a great company for advertiser experience and ease of use," he says.