Google at CES: Let's make a deal

January 9, 2008: 3:13 PM ET

By Yi-Wyn Yen

LAS VEGAS - The Consumer Electronics Show is increasingly about media and content, so it's no surprise that online advertising companies were setting up parties in the parking lot outside the Las Vegas Convention Center. AOL and Microsoft have white tents and Yahoo has a purple one. But the biggest search giant is missing.

While Google (GOOG) is not attending CES as an official exhibitor this year, don't be fooled. It may not have invested in its own booth (it did two years ago when co-founder Larry Page gave a keynote speech), but the company has brought an army of Googlers to Vegas and booked a number of hotel suites on the Strip to conduct its meetings.

"We send a fair amount of people to CES to represent us because our work touches all things at CES," says Tim Armstrong, Google's president of advertising and commerce. "CES has a wide representation of companies that we deal with. Having them all in one location in January when everyone's planning their year is a big opportunity for us."

For Google, CES is a place to plug advertising on YouTube and mobile search ads. Google, which has 65 percent of the search market, according to research firm Hitwise, spends a good deal of its time laying out partnerships with wireless companies and setting up operational plans for the year with its clients. "We took roughly the first half of last year working on a monetization plan for video ads,"Armstrong says. "This year at CES, we're talking with our partners on how they can migrate search-type programs in a YouTube environment."

For online ad companies, the high-tech gadget show is a sounding board to learn what consumers want. With consumers demanding online access on mobile phones and location-based devices, online ad companies are looking for ways to be better marketing partners.

"You see all these new connected or semi-connected devices like the iPod that haven't become meaningful ad-supported models. From an advertiser's perspective, you really have to get what it is consumers want," says Jeremy Allaire, CEO of Brightcove, an online video ad network. "There's a lot of learning and experimenting. Outside of the traditional media and the Web, it tends to be a crapshoot."

That's why Yahoo (YHOO) executives say they spend a good portion of their time at CES in learning mode. "There are always new ad formats and platforms emerging, like mobile and rich media ads, and our customers are always asking us about how they can better use those technologies," says David Karnstedt, senior VP for Yahoo sales.

Advertisers at CES are getting more savvy and demanding more ways to reach their customers beyond typing keywords into a search box. Yahoo, which wants to be the starting point for Internet users with its My Yahoo homepage, says it's working with partners like major CES exhibitors Samsung, AT&T (T), Hewlett-Packard (HPQ) and Dell on delivering more graphical ads and ads targeted within social communities like Yahoo Answers and Groups.

"We're seeing advertisers getting more sophisticated and more specific in how they want their ads delivered," says Mary Bermel, who heads Yahoo's tech and telco categories. "A lot of our clients in these categories are the early adopters, so if they want to reach 22 different audiences, we need to know how we can better target them."

Microsoft (MSFT), a distant third to Google in search, is taking advantage of its Xbox 360 console to market video gamers through its 10-million member online network, Xbox Live. It promotes everything from Adidas to Quiznos ads on its network. "These are dynamically-generated ads that are constantly changing," says Jeff Bell, vice president of marketing for Microsoft's Interactive Entertainment Business. "The content and advertisement is determined by who you are and where you've come from. Our goal is to provide advertising content like on Facebook."

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