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Yesterday I noted that Google has stepped on a few toes while walking down Madison Avenue.
Google's threat to ad agencies, in particular, has been discussed frequently and while the company claims that it has no intention to disintermediate agencies, its actions have won it more enemies and frenemies on Madison Avenue than friends.
Those actions may be coming back to haunt Google.
The Association of National Advertisers (ANA) has sent a letter to United States government regulators urging opposition to Google's planned search advertising deal with Yahoo.
The ANA, whose members include major advertisers such as American Express, Anheuser-Busch, Bank of America, BMW, Coca-Cola, Disney, Ford Motor Company, Johnson & Johnson, Pepsi, Proctor & Gamble and Wal-Mart, sent a letter to the US Department of Justice Assistant Attorney General Thomas O. Barnett noting that...
"...a Google-Yahoo partnership will control 90 percent of search advertising inventory."
The ANA believes that the Google-Yahoo tie-up...
"...will likely diminish competition, increase concentration of market power, limit choices currently available and potentially raise prices to advertisers for high quality, affordable search advertising."
These, of course, are precisely the opposite of the outcomes Google and Yahoo claim will result from its partnership.
Both Google and Yahoo were quick to respond to the ANA's letter and disputed its arguments.
While it's unclear what impact, if any, the ANA's opposition to the Google-Yahoo deal will have on regulators, the deal has already come under more scrutiny than the companies anticipated (including outside of the United States).
This certainly hints that the Google and Yahoo may have a more difficult time formalizing their friendship than their management teams (and shareholders) were banking on.
Yet the outcome of the Department of Justice's review of the Google-Yahoo partnership is less interesting to me than the fact that the ANA letter leaves little doubt that large advertisers, ad agencies and ad industry trade organizations have serious concerns about Google's dominance of the online advertising market, and are willing to seize the opportunity to strike at it whenever and wherever possible.
Coincidentally or not-so-coincidentally, Google has been stepping up efforts to woo (or buy?) friends on Madison Avenue.
The New York Times recently published an article detailing how "Google has built a 40-person group that is charged with courting agencies, trying to persuade them that their clients should buy ads on Google sites and use the search engine’s tools."
Its Campus@ initiative even brings a Google team to agency offices - "our products, our food, our tchotchkes" in tow.
What led to this more friendly approach?
MindShare North America managing partner Jeff Ratner notes that while Google is a shoe-in when it comes to search advertising, it isn't a shoe-in anywhere else:
"As they start moving more into ad networks and other mediums, they need the agency to help make it a reality."
This underscores the fact that Google probably never anticipated that it would grow into a company owning media properties (like YouTube) that need ad agencies more than the ad agencies need those properties.
But has Google already done harm beyond immediate repair? Many agencies are looking beyond the quirky and friendly Googlers that have invaded their offices with gelato, coffee bars and iPods and see a less benevolent agenda.
Deutsch's chief media officer Peter Gardiner told the New York Times:
"I think they’re great at pushing and pulling together what suits their agenda. I would not necessarily put them on the same level as other media companies in terms of their partnering attitude."
Of course, Google finds such mistrust misplaced. It claims that it is physically unable to service clients in the same way that ad agencies can. Yet its growing advertising sales force leaves some agencies with little comfort.
So what does the future hold for Google?
While I have no doubt that its cash and youthful eccentricity will help it seduce some on Madison Avenue, the fact that there already appears to be lots of hardened skepticism about Google's intentions is not a positive sign.
The ANA's strong opposition to Google's partnership with Yahoo hints that, at the very least, Google will need to bring more than gelato, coffee bars and iPods to Madison Avenue if it's serious about mending the wounds caused by its childhood arrogance.
If there's one lesson Google is hopefully learning it is this - don't burn bridges. You just might have to cross them someday.