Google ramps up ad spending in renewed battle
While the internet giant may be dominant in search, it has work to do promoting its newer businesses.
As internet search giant Google Inc. (GOOG) expands its product line outside of search, the company is spending large amounts of money to promote itself.
In order to push new services such as Google+ and Chrome web browser, Google spent about $213 million on advertising in the U.S. last year, almost four times the amount it spent in 2010, according to estimates from Kantar Media.
Google's ad spending in 2011 represented about 1.2% of its U.S. revenue of $17.6 billion, which places it among other big tech spenders like Apple Inc. (AAPL), Microsoft (MSFT) and Yahoo Inc. (YHOO). Google still spends the majority of its advertising through Web-based ads, but paid about $70 million for TV ads in 2011, compared to only $6 million a year earlier. The company also promoted its Chrome web browser, but Microsoft's Internet Explorer is still the most popular browser in the world. "This is a sign of a good old-fashioned competition. While Google has a dominant footprint in search, they have work to do in other areas to gain market share," David Cohen, chief media officer at Universal McCann, told the Wall Street Journal.
In a move that many are calling an invasion of privacy, Google recently received a patent to take advertising to a whole new level. Last week, Google was awarded a patent for "advertising based on environmental conditions." Meaning, the company will use environmental factors obtained through a device's sensors to target ads at users.
The patent reads, "A web browser or search engine located at the user's site may obtain information on the environment (e.g., temperature, humidity, light, sound, air composition) from sensors. Advertisers may specify that the ads are shown to users whose environmental conditions meet certain criteria." In theory, if you make a phone call and Google hears you are watching a particular television show in the background, it may send you mobile ads for the DVD.
Google notes "it is important to respect the privacy of the users," and claims users will have the option of "enabling or disabling some or all of the sensors." However, it is still a bit creepy that Google might introduce more technology to constantly monitor the environment around its users. Executive director of Privacy International, Greg Hosein, told the BBC, "Patents like this may never come to fruition, but they force us to ask ourselves, how many aspects of our lives will advertisers try to exploit and where will it end?"
Eric McWhinnie is an editor at Wall St. Cheat Sheet. As of this writing, he did not own a position in any of the aforementioned stocks.
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