Google Instant Search and Display Advertising

On early September 2010 Google launched an impressive new search enhancement that shows results as you type. This will change how users search and of course, that will change how we do business in Google. SEM and SEO practices will be impacted by this new creative feature and all internet professionals will try to understand how to react in the next months.

SEO related companies all have vested interests in predicting how Google Instant modifies the SEO arena and its best practices. But I believe that the most important thing about Google Instant's arrival is that it creates a perfect boomerang from Google for its online display advertising battle.

Google wants to control the online display advertising market and is going to great lengths to control this piece of the pie. They have made massive investments in technology through acquisitions and inside developments, and have patiently tried to understand how to build real client relationships with traditional branding firms. This demonstrates that its ambition to have a billion dollar business in display adverting is a serious bet for Google.

To win the online display advertising battle, Google needs to improve its margins. Now, its display ads appear in the Google Adsense Content Network and have to share around 60% of revenues with third party affiliates, which has a significative impact on gross margin. To reverse this situation, and reduce its traffic acquisition cost of sales, Google needs online propietary display ad impressions.

Until last week, officialy, its business model has always been to push users to leave Google as fast as possible as a consequence of delivering relevant results really fast. But with Google Instant this approach changes by brilliantly maximizing the original essence of Google Search: Google will dramatically increase the number of its own page views, thus the number of propietary ad impressions.

If a Google Instant search gives two to five times more ad impressions than Google's original search, and those revenues do not have to be shared with third party affiliates, Google will finally have a huge propietary ad display inventory to monetize. Revenues and margins will soar and Google will have won the battle for supremacy in the online display advertising arena.

For years, other market players have been trying to improve their display advertising algorithms to maximize online campaign results. They may be thinking that it won't be easy for Google to keep high CPMs in the current market, because they have a long way to go until Google delivers the same ROI in display advertising as they do in Adwords text link platfom.

But Google has an enormous advantge over all the others players that will change all the metrics and results of the online display advertising market: every ad impression will directly correlate to a keyword search. Google will play the online display advertising game at home, not on third parties' turf, and will control all the technical factors to push to advertisers to pay higher CPMs based on better advertising campaign results.

Google will continue, step by step, on the long road to dominance of the worldwide display advertising market, and with Google Instant, they have taken an impressive step to reaching their final goal.

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