Google Gadget Ads: next small thing or next big hype for advertisers?

In the midst of the buzz around Google's Gadget Ads, a new McKinsey & Co. report draws some unexpected conclusions: Advertisers are still reluctant to shift dollars online because of the "absence of meaningful metrics and adequate capabilities."

With widgets hailed as the "next small thing" for advertising, and newspapers going "widget-happy", it was about time Google expanded the beta release of its new Google Gadget Ads to advertisers worldwide. Google Gadget Ads are interactive ads that contain rich media capabilities. They can contain data feeds, images and videos, plus they can be developed in Flash and HTML. The Gadget Ads will run on Google's content network, and the pricing model will be both cost-per-click and cost-per-impression.

John Battelle, author of the seminal book on "search," welcomes Google's embracing of rich media and is "particularly pleased with the use of 'conversations' in the release, as well as a step toward what I've termed 'sell-side advertising'--the idea of putting your ads out there and letting the publishers/people drive them."

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However, in the midst of the buzz around the new ad format, a new McKinsey & Co. report (via Publishing 2.0) draws some unexpected conclusions about "How Companies Are Marketing Online:" Advertisers are still reluctant to shift dollars online--despite the massive shift of consumer attention online--because of the "absence of meaningful metrics and adequate capabilities." McKinsey polled 410 marketing executives in five sectors, and among those already advertising online, 52 percent said "insufficient metrics to measure impact" was the biggest barrier, followed by insufficient in-house capabilities (41 percent), the difficulty of convincing management (33 percent), limited reach of digital tools (24 percent), and insufficient capabilities at agency (18 percent).

I find this astonishing: no one can seriously claim that the metrics for the good old TV commercial, billboard or print ad are more accountable than cost-per-click or cost-per-impression, and I would agree with Publishing 2.0's verdict that traditional advertising models are simply more "comfortable, more familiar" for advertisers who obviously struggle with adapting to a more dynamic ad model.

Steve Rubel has his own take, arguing that "some Web 2.0 sites will never attract big ad dollars." He believes that "many online communities, bloggers, social networks will never attract a critical mass of advertisers because they are not set up properly to attract visitors who have a commercial intent to buy products and services." (...) "Today, most advertisers size up community sites, blogs and social networks using traditional media buying models--namely, reach and frequency. Unfortunately, the reality is that many Web 2.0 sites, can't deliver marketers the numbers they want because of the effect of Long Tail. It's simple supply and demand economics at work."

Small thing, big ad dollars; long tail, short reach--what do you think?