You can't talk online advertising without the 'G word'

HALF MOON BAY, Calif.--What if you organized a conference panel about digital advertising and nobody mentioned Google?

Yeah, duh.

Well, Fortune magazine almost accomplished that feat. During a session at its Brainstorm Tech conference devoted to the state of advertising in a softening economy, the three participants--Tom Bedecarre of AKQA, Lynda Clarizio of AOL, and Microsoft's Brian McAndrews--managed to get through three-fourths of their discussion without uttering the "G word."

Thankfully, one of Fortune's own, the ever-excellent David Kirkpatrick, asked from his seat in the audience whether anyone believed Google's current dominance in online advertising will continue or even might get extended to other forms of advertising.

I didn't expect either Clarizio or McAndrews to take the bait and they didn't disappoint.

"At the end of the day, this industry will be a scale game," Clarizio said. "I think the industry will be well served by competition and competition from several players."

Brian McAndrews, Microsoft senior vice president, Advertiser and Publisher Solutions Group

McAndrews acknowledged that Google had "clearly created a great mousetrap with search" but pointed out that digital search, as important as it has become, does not define the entirety of the advertising market. "If you look across all their assets, we're much stronger in the display space," he said, adding that newcomers will face challenges.

The bigger surprise was a comment from Bedecarre to the effect that Google's new challenge is to reach out to marketers. He suggested that the company's most pressing future struggle would be to convince digital advertisers that there's real value clicking past the home page to the increasingly lengthy list of features and products it offers.

"They're having a real struggle trying to engage advertisers with everything after their home page."

Lynda Clarizio, president of AOL's Platform A

Considering the shape of the U.S. economy, that's probably the kind of struggle most companies in the digital advertising business would happily settle for. Especially in these times.

McAndrews offered a tempered view of the digital ad landscape. He said the economic slowdown in this country has had the expected impact on advertising and forced adjustments in expectations. "To pretend that it has had no impact would be wrong," he said.

One topic that's getting a lot of attention here is the potential for digital advertising in social media. That still remains a work in progress, largely because of the reluctance of advertising to jump into a segment they still don't fully understand. Indeed, Clarizio noted the "very large opportunity" presented by social media, but allowed that several advertisers remain uncomfortable about advertising in social media.

Bedecarre echoed that opinion, pointing out that advertisers haven't caught up to the viral popularity of social networks with choice demographic groups. The problem is the uncertainty and potential loss of control associated with putting up an ad on a social network, he said. "They're uneasy...I'm very bullish about where it's going. But the people who spend the really big bucks have to get used to letting go."