Google CEO extols $800 billion advertising opportunity

Google CEO Eric Schhmidt extols $800 billion global advertising market.
Written by Donna Bogatin, Contributor

 UPDATE: YouTube: What Google CEO Eric Schmidt really thinks


Google CEO Eric Schmidt reinforced his profound belief in a “new,” Google-centric paradigm, ‘cloud computing and advertising go hand-in-hand’, speaking at the Morgan Stanley Technology Conference in San Francisco this afternoon. 

Schmidt’s high-level Google vision expressed today mirrored his commentary at the Search Engine Strategies conference last August, where I personally heard him extol that “the two, cloud computing and advertising, go hand-in-hand.”: 

There is a new business model that’s funding all of the software innovation to allow people to have platform choice, client choice, data architectures that are interesting, solutions that are new – and that’s being driven by advertising.

Schmidt views Google as spearheading universal business model transitioning to the “new paradigm.” 

I heard Schmidt tell the audience of analysts today that “cloud computing,” “targeted advertising” and “search” represent new monetization trends that serve as “metaphors for investing opportunities.”

Schmidt on cloud computing: Why would a rational person put personal information anywhere else but the (Google) cloud, given risks of losing and/or damaging a mobile device or PC? 

Schmidt on targeted advertising: Very targeted ads are very valuable. With highly targetable devices and highly targeted ads, fewer ads may be necessary to make even more money. Out of the current $600-$800 billion global advertising market, close to 95% is untargeted. Even a small improvement in targeting could have a very large impact on revenues. 

Schmidt on search: The rate of production of new media is compounding and search answers all the consumer problems in information, health and entertainment. 

What does the “new paradigm” mean on a tactical level for Google and prospective Google partners? 

Schmidt used YouTube as an example of how Google is helping others “business model transition” to benefit from the “new paradigm” that he extolled and Google enables.

Just as search answers consumers’ problems, YouTube and Google Video answers fan’s needs, according to Schmidt. 

Google’s stance to video content owners: “We will work with you to help you get to the new model.” Schmidt indicated that “after the initial conversation,” content owners are generally on board with the new, “iconic” Google model. 

What is the model that is being transitioned to exactly? Schmidt said that the new Internet video content model is monetized on a “per view” basis. What is the method of monetization? Schmidt said that is still “unclear.” 

For Schmidt, the YouTube and Google Video priority is to first get “as much licensed content as possible” and then to develop monetization and advertising formulas around it. 

Google’s notion of video content licensing, as conveyed by Schmidt, apparently does not necessarily involve licensing fees, monetization commitments and/or guarantees. 

Schmidt underscored the Google position that the YouTuber fan base is “very valuable” to content owners from promotional perspectives. 

Nevertheless, Schmidt put forth “monetization” of video content is a “big project” for us this year.

UPDATE: YouTube: What Google CEO Eric Schmidt really thinks

ALSO: Google warns of Microsoft, Yahoo competition and Google Search: Is PageRank reliable?

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