Google Inc (NASDAQ:GOOG) is “the template” for Internet advertising companies, according to Citi analysts. They issued a report to investors this week taking a closer look at the online advertising industry and its evolution. They refer to the next phase of the Internet ad industry as “Edge Marketing.”
Google is the master at “Edge Marketing”
Citi analysts Mark May, Kevin Allen and Nathaniel Brogadir explained what they mean by the term “Edge Marketing.” It shows how companies leverage both data and multi-channel capabilities in their efforts to edge out competitors. It also shows how control within the industry is being pushed toward the edges, which they say include direct advertisers or agencies rather than intermediaries like opaque networks. The result of this evolution is a major disruption in the industry, leaving old players struggling to adapt.
Under their description of “Edge Marketing,” they see Google Inc (NASDAQ:GOOG) as the clear leader.
Google’s suite of solutions
The analysts said it seems clear that Google has recognized the trend in online advertising and worked toward it. They note that the search giant has used both acquisitions and internal developments to develop “the most comprehensive suite of end-to-end edge marketing solutions.
The analysts name four key acquisitions Google Inc (NASDAQ:GOOG) has made which gives it a competitive edge over other online advertisers. They name DoubleClickDFP DoubleClick AdEx, AdMeld and Invite Media.
Expectations for the online ad industry
The analysts are expecting to see a 15 percent growth in the Internet advertising industry in the U.S. this year. They said the main driver of the industry’s growth has been volume-based rather than pricing. As a result, they note that this growth has been negative impacted as social networks have growth. They refer to this as an “excess supply of less expensive inventory.”
The expect that as the market evolves and is enhanced by data-based targeting and multi-channel campaign management, prices within the industry will improve and we could start to see above-average growth in some areas, including brand, video and mobile advertising.