David and Google – Underdog Ads

Louise Story wrote an article yesterday in the New York Times that you might all find interesting. According to the story Google and Yahoo! have a new competitor in the contextual ad department. Quigo Technologies is a tiny effective and growing company that bills itself as an alternative to the giants.

In the last year a few large media sites like FoxNews.com and ESPN.com have stopped using Google and Yahoo in favor of Quigo. In fact 17 other large entities have switched, prompting a closer look at the tiny company by others. Quigo offers more control when and where ads are placed than either Google or Yahoo is willing or able to offer.

Quigo gives its advertisers a list of specific sites where their ads have appeared and even the capability to purchase specific Web sites or pages on those sites. Here goes a lesson for startups. Quigo also allows media company sites like ESPN.com the chance to manage their own relationships with advertisers. Quigo has only about 10 percent of the contextual ad market, but its success has prompted Google to alter course with its contextual ads.

The stakes are high in the contextual ad business as $2 billion in revenue was generated last year, and this represented about 13 percent of all online ad spending. 60 percent of that ad money went to Google according to David Halleerman at eMarketer.

"We are gaining a lot of share," said Michael Yavonditte, the chief executive of Quigo. "This has become a multibillion-dollar industry with no clear second-place company. There's a lot of opportunity for other companies to put their own stamp on it."

Yahoo and Google downplay Quigo's serious entry into the market. Emily Fox of Yahoo! said her company was not aware of losing any contextual ad clients to Quigo other than ESPN. Kim Laone of Google AdSense said Google did not worry about Quigo. Isn't that like saying: "We are not concerned with losing a few customers?"

"The David-and-Goliath story is always a great account," Ms. Malone said, "but I think in this case, it's just not accurate. We have a number of large publishers who have tried out other solutions, and they always come back."

Perhaps company executives should study Bible History for $230 million if my math is correct. Obviously Quigo has chosen the daily double in the game of ad jeopardy. In response to further questions about Quigo, Google said they are prepared to make changes to their AdSense services to mimic Quigo. This is unusual given the cavalier statements earlier. Evidently Google AdSense customers would soon be able to bid on contextual ads on particular Web sites rather than simply buying keywords appearing across the entire network.

ESPN switched to Quigo from Yahoo! last fall, in part, because of Quigo's transparency, said Ed Erhardt, the network's president of customer marketing and sales.

Forbes.com and Cox Newspapers are recent converts to Quigo's approach, and Jim Spanfeller, CEO of Forbes.com said: "switching from Google was a dollar-and-cent thing."

Of course Google and Yahoo! will likely be able to outperform smaller companies in the long term, but this is an example of the customer being right when it comes to getting what they want. We should all take note of how these boys and girls play the game! I have been telling our readers all along, "We have a lot more power with Web 2.0 than you imagine."

We have not really acted on anything as the consumer, in the way of telling the big boys what we want really, but have instead immersed ourselves in the gadgets and hardware of traditional merchandising. Take note people, bloggers and Internet users can as easily affect change for the better as this small, innovative ad company. We have to take our sights off of cell phone gadgets long enough to network for better ads, content and Web innovation. So far we collectively support the wheels CD player, navigation gadget, LCD display and heated seats of the vehicle of Web 2.0 without even changing the oil or checking the battery.