Bloomberg News

Google Extends Local Ads on Smartphones to Desktops

August 28, 2014

Google Inc. (GOOG:US) is extending a mobile-advertising feature to the desktop, its most significant ad service to debut on smartphones before moving to computers, as the search provider rolls out technology for different platforms.

The ads show what products are available nearby when users search for items, combining the key digital trends of local, mobile and commerce, said Sridhar Ramaswamy, Google’s senior vice president of ads and commerce, who was put in charge of those businesses earlier this year.

While Google once developed products first for personal computers and later moved them to wireless gadgets, more marketing tools initially designed for smartphones will now shift to desktops, said Ramaswamy, who joined Google more than a decade ago as an engineer. The local shopping feature is Google’s biggest initiative to date to expand the company’s ad and commerce technology into all parts of its business.

“Increasingly, we expect a lot from our mobile phones,” Ramaswamy said in an interview. “Mobile -- very, very unsurprisingly -- is the top theme for the entire ads and commerce” team, he said.

The local ads -- part of Google Shopping, an effort to attract more retailers to Google’s marketing services -- shows shoppers what’s available before they visit stores. That could include everything from bicycles to perfumes, helping drive foot traffic for those choosing to advertise on Google.

The ad feature is also expanding beyond the U.S., adding countries including Australia, France, Germany, Japan and the U.K., Google said.

What’s Around

“Mobile can have a big impact on local because we’re all walking around with these phones,” Ramaswamy said. “They all know your location. And so this why we created local inventory ads -- to show you what’s around you.”

Wireless devices are becoming a key advertising platform for Web companies, pressuring the search provider, which has its roots in PC-based searches. While Mountain View, California-based Google is on track to make up half of the global market for mobile ads this year, its share is sinking amid gains by Facebook Inc. (FB:US), which will see its portion rise to 22 percent from 18 percent in 2013, according to EMarketer Inc.

Ad prices on smartphones were 57 percent lower than those on desktop computers during the second quarter, according to Covario Inc., whose services let marketers place digital ads on search engines and other websites. At Google, the price of ads fell 6 percent during the second quarter, even as the number of clicks on the promotions shot up 25 percent.

Ramaswamy said his team is focused on crafting ad services that will deliver long-term results -- and that prices should follow. Smartphones enable new types of promotions that aren’t as applicable to desktop computers. For example, Google offers options for calling advertisers easily from a marketing spot.

Name Recognition

“I look at what are opportunities that mobile unlocks that desktop cannot even hope to match,” Ramaswamy said.

Nikesh Arora, Google’s former chief business officer who departed to lead SoftBank Corp. (9984)’s global growth strategy, said before leaving earlier this year that he expects Google’s business from wireless gadgets to eventually outpace its traditional revenue.

Ramaswamy previously shared leadership of his group with Susan Wojcicki, who now runs YouTube, Google’s online-video unit. YouTube’s ad products are run by Ramaswamy. He said YouTube ads require greater focus on brand advertising, which is geared toward building up name recognition, instead of direct, immediate action by Web users.

“Having the YouTube team really be part of the same ads team has helped me really focus on brand advertising,” Ramaswamy said.

Google shares fell less than 1 percent to $569.20 at the close in New York.

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Reed Stevenson, Jillian Ward


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