Google Targets Ad Gains

Google (GOOG) has vowed to take a bigger share of the global advertising market. In a logical step toward that goal, it is now giving advertisers demographic data to help them target their messages.

The data, provided free to customers of Google's Adwords advertising network, come from comScore Media Metrix. The information enables customers to find lists of Web sites, using criteria such as age, sex and income, that appeal to specific groups of people.

"It will enable advertisers to be more selective in the types of sites they want their ads appearing on," says Jennifer Slegg, who runs the online advertising blog JenSense.

There is no doubt that Google is benefiting from the siphoning of ad dollars from offline media to the Web. Last year, online ad revenue jumped 30% to $12.5 billion, according to data from the Interactive Advertising Bureau and PricewaterhouseCoopers. Those statistics don't tell the whole story, though.

Companies are far more picky than they used to be about how they spend their money, according to advertising-industry executives. They want their messages to be targeted to as specific a demographic group as possible.

"Now that the advertising dollars are going up, the tools that allow people to use that kind of information are getting that much better," says Erin Hunter, comScore's senior vice president of media and entertainment business, in an interview.

Google's rivals are heeding the demographics message, too. Microsoft (MSFT), which the search-engine giant considers to be its biggest rival, began offering demographic targeting last week. Slegg argues that Google's new service is a reaction to the earlier Microsoft announcement, something that Google Product Manager Gokul Rajaram denies. Yahoo! (YHOO) also provides demographic information, but on a limited basis.

"It's always been part of our product road map," Rajaram says. "We find it's going to be useful for both large advertisers as well as for small advertisers. The notion of reaching your audience is the same."

Nonetheless, investors remain concerned that Google will be hurt by having to refund money to advertisers for fraudulent clicks. The company agreed on Thursday to pay $90 million to settle a click fraud-related lawsuit. For its part, Google has always argued that it can stop most fraudulent clicks before a client is billed.

Google will no doubt add additional services over the coming months to attract advertisers as competition from rivals continues to intensify. For now, the company has managed to convince spenders that the benefits of advertising with it outweigh risks such as click fraud.

One demographic group that Google has had difficulty reaching lately is investors, some of whom have been questioning the company's growth prospects after a series of recent gaffes, including the release of an erroneous revenue forecast.

That's why investors will be keeping a close eye on whether services such as specific demographic data encourage companies to spend more with Google than they would have otherwise.

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