Google to target local, business-to-business advertising in Canadian expansion

Experts expect Google Inc. to make local search central to a Canadian expansion plan focused on business-to-business online advertising. The search giant and online advertising broker has announced an expansion into Canada to garner a bigger share of the business-to-business market. The shift includes moving its headquarters of 70 staff from Waterloo, Ont., to neighbouring Kitchener. The company is planning to hire more staff in engineering, sales, marketing and policy, news reports say. Google did not meet an interview request, but observers say the firm’s new business-to-business focus could target local businesses for online advertising across Canada. “If they’re looking at local business, that really is the long tail,” said Paula Gignac, president of the Interactive Advertising Bureau of Canada (IAB). “Reaching those businesses, providing services to them, educating them, that’s really the challenge, because there are so many of them. Getting the right product mix is going to be really key.” James Burchill, a Toronto-based integrated marketing consultant specializing in search engine optimization (SEO), said he expects Google to leverage its capacity to go local. “They figure that if they can get more geo-specific localization they’re able … increase their market,” he said. “I think this is probably part of their strategy to provide the necessary on-site or in-country support for business-to-business advertising.” Canada appears to be fertile ground for search and online advertising competition. Google competitor Yahoo! Inc. is also planning an expansion in the country. “When you look at the market data, it tells you that the online advertising business in Canada is growing at a pretty nice clip,” Matt Idema, vice-president and country manager for Canada at Yahoo. “Google, I’d expect them to be expanding. We’ve expanded. The online properties of media providers in Canada I would guess are growing as well.” Idema said Yahoo is implementing a new sales strategy—but said he did not want to discuss it for competitive reasons. But in May Yahoo acquired Associated Content Inc., a website where individuals publish articles based on their interests. Although Yahoo is pouring resources into integrating Associated Content into its U.S. operations, the firm is also looking to expand the site’s presence in Canada. “What we’re focused on doing with it in markets outside of the U.S. is really building awareness of what it means to contribute, write content, submit video, and as a result you’ll see yourself becoming part of the Yahoo experience,” Idema said. Rogers Communications Inc. has also been expanding its opportunities as an online advertising broker. The company recently announced a new partnership with Warner Music Canada to sell advertising space on Warner’s digital music video content in Canada, and this month said it had closed a $25-million deal to purchase the online publishing properties of BV! Media Inc. Burchill said Google’s latest portal, Google Health, also indicates where the company may be headed in Canada. Launched in 2008, the site gives people the ability to organize their health records online and securely share information with doctors and healthcare providers. Burchill said the tool could give Google information about health trends across the country, which healthcare providers may be willing to pay for. Google appears to be seeking fortunes beyond the search-engine market because search is under siege from social networking, Burchill said. “People are now creating networks and clustering together. If you think of Google as a library where you can get facts, think of social networking as your local favourite coffee shop where people are talking,” he said. “Google realizes that if it stays in good old-fashioned search, it’s going to start losing ground to social networking,” Burchill said. He added that the company has to find new ways to compete and protect its brand. But if history is any guide, Google’s prospects as a social networking engine may not be so good. “They can’t necessarily compete with the Facebooks of the world,” Burchill said. “They tried that with two projects recently and they burned out quite nicely.” Burchill was referring to Google Buzz, a Gmail social networking service that critics say may not take off, and Google Wave, an online collaboration service that did not become as popular as Google hoped. The company recently said it will phase out Google Wave and use its technology in other initiatives. Idema said Yahoo is in the process of transitioning its underlying search technology to Microsoft Corp.’s Bing search engine—which is “widely misunderstood.” Idema said the move is not a wholesale switch from Yahoo search capabilities to Microsoft—it is a partnership that uses Microsoft’s crawl technology to inform Yahoo’s search results. Yahoo will provide search results that combine the Bing and Yahoo searches—resulting in a different results list than those of Bing, he said. John Hinds, CEO of the Canadian Newspaper Association (CNA) and the Canadian Community Newspaper Association (CCNA), said the online push into local advertising is an issue for newspapers. But Google is also a partner for newspapers, helping direct web users to newspapers’ sites for local news, Hinds said. He added that newspapers are adapting to new ad competitors, such as Google and free-classified websites like Kijiji and Craigslist. “On the online side, a lot of newspapers have created online ad sites replacing their in-print or complementing their print classifieds," Hinds said. "On the content, one of the things people look to a newspaper story for is still the curatorial aspect of a newspaper. Information is not in short supply online, but the idea that someone has edited it and put it into a package is the key to the newspaper.” Sleek smart phone and tablet applications--with their more curated feel--are also expected to challenge the web for eyeballs and advertising dollars. Wired Magazine recently ran a feature article titled “The web is dead. Long live the Internet.” “Two decades after its birth, the World Wide Web is in decline, as simpler, sleeker services—think apps—are less about the searching and more about the getting,” the article says. The Interactive Advertising Bureau of Canada says advertising revenue increased in 2009 while other major media ad revenues slipped. Canadian online ad revenues grew 14 per cent to $1.82 billion, representing 13 per cent of total ad revenues across all media. Last year, companies spent $741 million on search advertising, $578 million on display advertising, and $426 million on classifieds. The IAB says it expects online ad revenues to hit $2.1 billion in 2010, growing 15 per cent over 2009.

Google to target local, business-to-business advertising in Canadian expansion

News | 09/03/2010 4:58 pm EDT

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