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Google Weighs Changes to Ad Strategy

Google's (GOOG) vision of advertising's future looks very much like advertising's past.

According to media reports, the search giant is set to start testing dramatic changes Monday to its advertising strategy, with plans to give advertisers greater control over graphical images, including logos, and more say on where their ads appear and how they are bought.

The plans would further detach many of the ads Google sells from its search engine, expanding the company's role of broker to advertisers seeking to place ads on third-party Web sites.

In addition to testing a flurry of new functions aimed at improving Internet search, Google is experimenting with ways of embedding more deeply into the Internet the brands of multinational corporations that are already embedded into other media venues.

In so doing, however, Google may emerge as a competitor to many of the same media companies whose sites its ads have recently been running on. But it will also give many small content sites, even blogs, the ability to compete with the largest online publishers in winning Fortune 1000 companies' ads.

Google already works with many Web sites, from large news and content sites to tiny blogs, to place its ubiquitous "sponsored-links" ads on them. Instead of putting the new branded advertisements on its own site, Google will act as an online ad agency and sell ads on other sites.

Rather than a "pay-per-click" model, the branded ads will follow what some reports describe as a "pay per mile" model -- in essence, a payment based on how many times a graphical ad is viewed. The branded ads will apparently not lean on Google's vaunted search algorithms as much as they will the automated auction technology used in selecting and ranking sponsored links.

Google has repeatedly said its goal is better organizing the world's information. But the moves being tested Monday seem more about securing Google's lead in the nascent online advertising market than giving Internet users the information they need most.

Google's investors, of course, probably care little about the company's loftier values. And with Monday's announcement, the financial future is looking brighter. Google's stock was trading up $1.03, or 0.5%, to $216.84.

Google's new venture is also a direct broadside into the expansion plans of Yahoo! (YHOO), which is the premier site for branded advertising on the Web. Yahoo! has cultivated relationships with many big-name advertisers as they've moved onto the Internet, and it has been dabbling with selling those branded ads to other sites. Now it will have to deal with Google as a competitor in what had been its core advertising market.

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