Alphabet spells good news for ad industry

Ben Wood explains what Google's restructure under a new holding company means for agencies and their clients.

Pichai: Bloomberg last year described Google's new CEO as the 'most powerful man in mobile'
Pichai: Bloomberg last year described Google's new CEO as the 'most powerful man in mobile'

What does Google look like today? Your answer could vary wildly depending on which Google event you might have attended and which part of the multifaceted organisation you have interacted with.

Visit its annual AdWords Performance Summit and Google is a massive advertising ecosystem focused on innovating and expanding digital marketing solutions.

At "Think With Google" events, it is an innovative brand partner combining audience reach and future-focused "moonshots" to transform the way brands embrace the digital world.

At Google I/O, it’s a bleeding-edge tech company where no idea is too outlandish and profitability and ad integration aren’t a consideration.

Last week, Larry Page proved this by providing the tech world’s biggest announcement of the year in a noiseless blog on Page laid out the rationale behind Google’s surprise overhaul of its entire operating structure. The launch of a holding company, Alphabet, will see the core web advertising business separated from newer, more future-focused moonshots such as Fiber, Nest and Calico.

And as Google’s new chief executive, Sundar Pichai will oversee its core internet companies, including Search, Gmail, YouTube, Maps and Android. Those overlooking the fact that, in 2014, Bloom-berg called him the "most powerful man in mobile" may be missing a key nod to Google’s future.

For the majority of consumers and web users, the shift will go mainly unnoticed. Conversely, the financial world was quick to react, with the share price of Alphabet – formerly Google – rising 6 per cent in after-hours trading. 

Many laud the move as being purely to provide investors with incremental transparency of Google’s core business. But what does it mean for our clients and the media and advertising industry?

Well, for agencies and the brands we serve, the restructure can only come as good news. With fewer distractions on future-facing enterprises within the new Google, the shift will put the spotlight firmly on its core business – that of advertising.

And with Google’s stable of solutions – from YouTube (and its efforts to redefine the art of brand engagement) to how its programmatic and search solutions are driving new frontiers in advertising effectiveness – a renewed organisational focus spanning strategy, management and engineering is extremely positive for the industry and a very smart move by Google.

This is especially the case in the context of an increasingly complex and crowded marketplace. Google’s dominance is being gently threatened by Facebook on one flank and by technology players such as Salesforce, Adobe, Oracle and IBM on another, while a new raft of well-funded, data-centric ad-tech startups are also eating their way into different parts of the digital marketing ecosystem.

By dividing its company into core, mature services and exciting but unproven innovations, Alphabet provides Google with the infrastructure to continue to be all of these things, but with a clearer definition and new levels of transparency. New ideas can be tested outside of the core Google business and integrated only when it makes sense.

It will become clearer to us all now if we are dealing with the company that is reinventing advertising for the next decade or the company that is aiming to reshape the entire world over the next 50 years. But staying innovative, staying hungry, defining and redefining the digital advertising industry… this is what Google – sorry, Alphabet – is now shaped to do. 

Ben Wood is the global president of iProspect