The growing advertising ambitions of technology powerhouses like Google and Microsoft are creating alarm at ad agencies. At an annual gathering...
CANNES, France — The growing advertising ambitions of technology powerhouses like Google and Microsoft are creating alarm at ad agencies.
At an annual gathering here, executives harshly criticized Google’s recent agreement to place ads next to Yahoo search results. The move could strengthen Google’s dominance over the most lucrative portion of the fast-growing online ad field.
The executives worry that Google and Microsoft, which is moving to bolster its capabilities in search and other areas of online advertising, will not stop there. They fear the companies want to extend their reach into traditional advertising — transforming, as they see it, a business built on creativity to one controlled by the sterile algorithms of computer programmers.
Google “clearly wants to replace the advertising industry in its totality,” said Cindy Gallop, a former chief executive of the New York office of the ad agency BBH. She added, however, she thought Google would be “fundamentally undermined” by what she saw as its antipathy toward traditional advertising.
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Despite the alarm, ad agencies are eager to take advantage of the technology companies’ new tools. WPP Group, the second-largest advertising company, spends $900 million a year of clients’ money on Google search ads, CEO Martin Sorrell said.
Microsoft paid for 550 people — its own employees and those of clients — to attend last week’s Cannes conference, roughly 5 percent of the total number of attendees.
Its advertising ambitions, and the tensions raised, were demonstrated when Microsoft said at the festival it had acquired Navic Networks, whose software helps direct cable-TV ads to demographically desirably audiences.
Sorrell said ad agencies were being priced out in the quest to acquire companies like Navic and upgrade their own digital capabilities.
While advertising companies have bought a number of digital ad specialists, the biggest prizes have gone to the new entrants, with Google spending $3.1 billion for DoubleClick and Microsoft paying $6 billion for Seattle-based aQuantive.