This particular move, though, is a not-so-subtle signal to the marketplace that Google intends to become the dominant player in global ecommerce – which in the U.S. alone is already a $186 billion goldmine. Yes, for Google this is not just about going deeper into the ads business. The ever-expanding behemoth’s intention is to take a bite out of retailers margins too, starting first with those generated by ecommerce websites.

The first stop for shoppers

The Channel Intelligence purchase adds to the buzz that Google created back in October when it shifted its Google Shopping property to a fully paid ad marketplace, which by many accounts generated some $1 billion in the fourth quarter. And a Conductor study says that Google already influences over a quarter of all e-commerce transactions through its little search engine. These recent moves indicate that it seeks not only to go toe-to-toe with Amazon, but also to sneak up on other retail giants that sell both online and in stores.

Channel Intelligence (now part of Google) has a robust set of leading retail advertisers, which provides Google access to detailed retailer pricing and inventory data. Even more importantly, Google will get more valuable data on how those retailers convert browsers into customers. The ability to use its vast data resources to better understand retailer margins ultimately gives Google more pricing power for its ads.

Being able to offer retailers an easier way to deliver product inventory into its search engine will make Google a more formidable player in online shopping. Judging from the growing volume of retail-driven search on both Google and Amazon, it is clear that users are choosing to go to one of those spots to get the most up-to-date pricing and product availability. This is a two-way battle to be the consumer’s first stop. The winner of this battle will become the gatekeeper of the consumer through which all retailers will have to go to sell products.

Evolution to a digital store shelf

With the advent of today’s on-demand culture, Google is betting that it no longer matters who actually sells the product. Consumers are squarely in control and Google will increasingly help them find that product they are looking for, and do so at the right location for the right price. This was traditionally the role of ecommerce players like Amazon and massive offline retailers like Wal-Mart and Target.

However, with the growth of Google Shopping and the integration of those results into its core search engine, Google is quickly becoming the “digital store shelf” that it had always promised. For example, Google web search results today for retail queries tend to have at least 10 to 15 product images in addition to the traditional blue links. As Google starts to aggregate retailers’ local inventory – a probable next step on its roadmap with Channel Intelligence – it will be able to compete more aggressively in the mobile commerce space as well, directing consumers to physical stores in exchange for more ad dollars.

Not just ecommerce but all commerce

Make no mistake about it, Google is making a play for all retail with its recent moves and every retailer should be worried about the implications. (Rumors are swirling this week that the company has plans for its own branded retail outlets.) However, while Google is dominant in search, it is not the global ecommerce leader yet. It does not own significant pieces of the customer relationship (e.g. shipping, customer support, and retention marketing) and retailers can remain competitive by investing in areas that will stave off commoditization. Because as we all know, once you are a commodity, you will be traded like pork bellies and sold to the highest bidder. And that’s no place for a great retail brand to be.

The promise of e-commerce is having informed consumers finding the products they need from the brands that they love. Here are a few things marketers should employ to fend off Google’s advances:

• Focus on your brand’s value proposition and how it will be perceived in a Google search and other ad channels. Highlight what makes you unique so that you don’t become just another slot in a price list.
• Stay away from Google’s tools that track revenues/profits. Otherwise you’re simply handing over your business’s most valuable data.
• Develop mobile sites and apps that are a first stop for shoppers on the go, offering a better alternative to a Google search for prices.
• Devote resources to customer experience and personalization as a way of differentiating and bettering a basic search that’s more challenging for consumers.

Jason Lehmbeck is CEO and co-founder of DataPop, an online advertisement optimization company that works with retail, travel and automotive brands.

Photo courtesy of Anneka/Shutterstock.com.

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Google’s Chief Business Officer Nikesh Arora, however, indicated at the Dive into Media conference in southern California that the company has no intention of changing course. Arora brushed off a question I posed about whether Google would reinstate the more granular ad options, and emphasized that the new AdWords system meant advertisers would no longer have to run hundreds of different ad campaigns to target all demographics and devices.

The changes to AdWords are important since Google has such an out-sized footprint in online advertising and because everyone is watching how the company is responding to internet users’ large-scale migration to mobile devices. So far, ads on smaller screens have proved much less lucrative than desktop ads — frustrating publishers and worrying Google investors.

Google announced its response last week in the form of a blog post describing the new “Enhanced Campaigns.” The new system means mobile ad purchases will be a default option when people sign up to buy Google AdWords (though they can turn the mobile part off). Another major change is Google’s decision to treat tablets and desktops as the same device for ad purposes. This goes against the philosophy of advertisers and publishers who consider the experience tablet a distinct, more immersive experience (though the distinction may be less when, as here, it concerns internet searching).

Ad industry blogs like 360i and AdExchanger have noted that Google is moving away from more granular forms of marketing while advertisers have complained about a loss of control.

On the flip side, some Google watchers have praised Enhanced Campaigns as a much-needed way to consolidate ad campaigns, and to make it easier for small ad buyers to join the mobile ad-buying landscape. At the All Things D event, Arora described how Google is also making it easier for advertisers to take advantage of distinct, new ad options associated with mobile — such as overlaying time and geographic location onto search queries.

In this context, the simplified options make sense, especially as advertisers right now confront the prospect of having to run hundreds of separate AdWords campaigns to account for all demographics and devices. And the Enhanced Campaigns will no doubt juice Google’s ad prices as more people join the mobile auction market, creating more competition for local searches such as “pizza Brooklyn Park Slope.” 

But overall, the new system still seems to shortchange publishers and advertisers. Tablets provide a unique user experience and could be a fount of advertising innovation; Google’s decision eliminates some of this potential. A better option would have been to unveil the Enhanced Campaign system but to also make the older, more granular options available to those who ask for it.

(Note: We’re going to be talking about alternative monetization strategies at our paidContent Live conference in New York on April 17).

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That’s the idea behind its new Adwords Enhanced Campaigns, according to a Google blog post. The unstated rationale is that click rates for mobile ads aren’t exactly setting the world on fire. Google, like Facebook, has a mobile problem. It needs people to click on the ads on their phones and tablets and it needs to find a way to wring more dough out of each click.

Here’s the example Google uses:

“A breakfast cafe wants to reach people nearby searching for “coffee” or “breakfast” on a smartphone. Using bid adjustments, with three simple entries, they can bid 25% higher for people searching a half-mile away, 20% lower for searches after 11am, and 50% higher for searches on smartphones. These bid adjustments can apply to all ads and all keywords in one single campaign.”

According to the Google blog:

“With enhanced campaigns, instead of having to cobble together and compare several separate campaigns, reports and ad extensions to do this, the pizza restaurant can easily manage all of this in one single place. Enhanced campaigns help you reach people with the right ads, based on their context like location, time of day and device type, across all devices without having to set up and manage several separate campaigns.”

Folks had been expecting Google to change its Adwords strategy. Richard Zwicky, CEO of Blueglass, a digital marketing agency and software provider predicted the change and is not a fan.

In his blog, Zwicky wrote that “less complicated campaign management means less campaigns to manage, which is simpler, but also will likely result in lower ROI for advertisers whose campaign managers now need to restructure every campaign they run to adjust for the new reality.”

In his view these changes don’t make things less complicated, just different and “less transparent.” Bottom line, this isn’t good for anyone but Google, according to ZDNet’s Larry Dignam. More on the news from SearchEngineLand.

In other news, Yahoo said it signed a deal with Google to display ads on Yahoo properties using Google’s AdSense for Content and Google’s AdMob services. “By adding Google to our list of world-class contextual ads partners, we’ll be able to expand our network, which means we can serve users with ads that are even more meaningful,” according to a Yahoo statement.

While this is a nonexclusive agreement, Yahoo watchers expect there could be more collaboration with Google since former Google exec Marissa Mayer took the reins as Yahoo CEO. Yahoo is reportedly not happy with the results of its partnership with Microsoft  which made Bing the search engine for Yahoo.com. Gee, I wonder what other search engine they could use?

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It’s true that the network wants to do away with the voting process that it implemented as a way of improving its governance policies, which required it to get 30 percent of its users to support something before it could make a significant change. But this approach was mostly a failure before it could even get started, since the last vote the company held saw .03 percent of users participate — and as more than one person has pointed out, getting 30 percent of Facebook users to vote would mean 300 million people, which is more than twice as many as voted in the recent federal election in the United States.

Soon, Facebook ads could follow you around the web

In any case, the company has other goals it needs to meet first, and one of those is generating enough revenue to make Wall Street and other investors happy with its $50-billion market capitalization. And that has put a lot of pressure on Facebook to come up with a winning mobile strategy, among other things, since its clickthrough rate for traditional ads is abysmal.

Sponsored stories (which have been criticized in a number of jurisdictions, and could become illegal soon in Norway, according to one recent report) are one way of trying to solve that problem. An external advertising network — one that uses information about users and their activity on Facebook as a way of targeting external ads on other websites — is another way. Chris Dixon, the Hunch founder who just became the newest partner in Silicon Valley venture-capital firm Andreessen Horowitz, has described this as an “embedded option” for Facebook investors, meaning it could stand to significantly enhance the company’s financial prospects if it is handled properly.

“An external ad network is inevitable. Google proved this model with Adsense. With an already huge base of advertisers bidding on CPCs, it is impossible for most other ad networks to compete on publisher payouts. But Facebook’s traffic is so great now that an external ad network might increase their revenues by 2x or so.”

To put this in perspective, if an external ad network did manage to double Facebook’s revenues, that would take them to almost $10 billion a year from their current level of about $5 billion. Theoretically at least, it could push them even higher if Facebook manages to attract enough advertisers with its targeted data.

Your activity on Facebook = ads outside of Facebook

There have been hints that the company was planning to roll out such a network: earlier this year, Facebook experimented with sponsored stories on Zynga’s website that were governed by the data that the social network had about users based on their activity inside Facebook. And the company also provided a preview of the latest changes in May, although most of the attention at that time was focused on the privacy implications. Now it has become even more obvious that an external ad network is the goal — and Facebook’s Chief Privacy Officer said as much in a comment to Forbes magazine about the new rules:

“Everything you do and say on Facebook can be used to serve you ads. Our policy says that we can advertise services to you off of Facebook based on data we have on Facebook.”

As Quartz points out, the first outcome of this new approach could be the introduction of ads into Instagram, which was acquired by Facebook earlier this year for $735 million. But the social network is sure to extend that to other websites and services it could partner with — if only because the kind of data that Facebook has on user behavior (even though it is anonymized) is one of the biggest potential treasure troves of ad-targeting that exists online. Access to information about the browsing and liking habits of a billion people isn’t something that comes along every day.

Google has built a multibillion-dollar advertising business around showing people relevant ads while they search, and so far nothing has been able to match the effectiveness of that approach. But if Facebook is able to target ads on external websites and services based on the data that it has, we could see one of the first major challenges to Google’s ad dominance.

Post and thumbnail images courtesy of Flickr user Balakov

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From their AdWords dashboard, advertisers can now choose to have their display ads appear in mobile apps. They can also now target specific device models, manufacturers or app categories in the Google Play and Apple App Store. The AdWords campaigns on AdMob will only cover cost-per-click campaigns for now but will incorporate CPM campaigns later.

There’s no guarantee that this will solve the mobile monetization problem, but it should make it much easier for certain advertisers to give mobile a try, providing them access to more than 350 million mobile devices in AdMob’s network. And for AdWords advertisers who stick with mobile, they can manage all of their campaigns from one interface. This is big news for mobile developers and publishers, many of whom are still struggling to make big money from mobile.

Many advertisers have been slow to embrace mobile, out of ignorance or inertia, while some are still aren’t convinced of mobile’s efficacy or haven’t set aside a budget for mobile ad spending. And with the explosion in mobile, there’s been a lot more supply of mobile ad inventory than demand.

But advertisers are realizing that users are spending more and more time on mobile devices, which are even more personal than computers and can provide more context for targeting such as location. Consumers spend about 10 percent of their time with mobile devices, but only 1 percent of U.S. ad spend currently goes to mobile, Meeker said. That suggests there’s a big upside to mobile advertising once advertisers start catching up to where their audiences are.

The news comes shortly after the two-year anniversary of Google’s formal $750 million acquisition of AdMob and shows how it is incorporating the mobile ad network into its existing businesses. Google in the past year has brought AdMob’s mobile app inventory to the Doubleclick Ad Exchange and also shifted AdMob’s CPC campaigns to an AdWords-style auction. Advertisers can now also serve ads from Doubleclick for Advertisers into AdMob’s network. The latest step has been a long time in the making but it shows why Google was interested in paying so much for AdMob. It now has a better way to take its success in online advertising and convert that into more mobile ad revenue.

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In a ruling on Thursday, U.S. District Judge Edward Davila said he would not allow the class action to go forward because it was more appropriate for companies who had bought the ads to show any alleged harm on an individual basis.

The case, which was filed in 2008, said Google’s ad-selling practices were unfair and deceptive under California law. The ads in question were those which appeared on “parked domains” which are registered but undeveloped websites, and on placeholder pages that appeared instead of error messages.

The plaintiffs claimed that these sites left a negative impression and that Google (NSDQ: GOOG) had failed to inform them their ads would appear there. The search giant replied that a clicked-through ad on these sites was equally valuable and that its policies disclosed where the ads would appear.

Part of Google’s ad business is a large network on which it helps other web sites host ads.

The company has been dinged by major advertising-related class actions in the past. In 2006, it agreed to a $60 million settlement to compensate ad buyers who had been harmed when malicious third parties clicked on their ad in bad faith, a practice known as click-fraud. And in 2009, Google paid $20 million to settle a suit that alleged it over-charged for ads. The company denied it was at fault but it said it was easier to pay and move forward.

The company is also enmeshed in a series of lawsuits over whether it is legal for one company to buy another firm’s trademark for advertising purposes. So far, courts have sided with Google.

A Google spokeswoman said the company was pleased with this week’s ruling

A lawyer for the plaintiffs declined to comment.

Google Parked Domain Class Action
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These technologies will have a considerable impact on mobile advertising business models, which depend on consumers eyes being focused on their screens to work, said Vlad Sejnoha, CTO of Nuance, the voice recognition and artificial intelligence (AI) company behind Siri. Apple’s new voice assistant hasn’t exactly eliminated the need for visual interaction with a smartphone, Sejnoha said, but its effects are already being felt on search portals, which traditionally act like as the middleman between consumers and the information they seek.

The most oft-cited example is “Siri, call me a cab.” Rather than perform the usual local search, displaying a list of taxi companies and word ads on a screen, Siri does all of the dirty work in the background, automatically placing a call to what its AI feels is the most relevant dispatcher. That bypass of the search portal is changing the way that cab companies present themselves on the Web, spawning a new type of SEO: ‘Siri’ engine optimization. Being in the top three listings of a local Google search or depending on AdWords to push your website to the top of sponsored results is no longer good enough, if Siri is doing the searching instead of the consumer.

Nuance’s own Dragon Go iOS app makes a similar end run around search portal. Dragon Go ingests a spoken search term such as “new Mexican restaurants” or “show times for Sherlock Holmes” and spits out websites displayed in a carousel, which the user can then thumb through. The websites themselves are still served up and thus are the ad impressions. But the portal middleman is eliminated, at least from the consumer’s perspective – Google’s engine may be used to power that search, but its customer-facing website or app never comes into the equation.

“Speech and natural-language search adds a new element to the UI,” Sejnoha said. “It can skip over steps you’d usually take to get information. It’s a shortcut between a user’s intent and a positive outcome. That’s a powerful concept.”

You ain’t seen, heard or felt nuthin’ yet

While voice assistants like Siri may seem revolutionary today, they’re actually rather simplistic compared to what UIs will be capable of as artificial intelligence and new multimodal means of interaction develop. Phones are already full of sensors that could be used to input information, Sejnoha said. If you don’t like the answer your phone is giving you, a simple shake of the handset could tell it to find you a better one. Rather than speak or type a search term into a user interface, you could point your phone’s camera at a bus stop sign, a restaurant or even a magazine ad, and within seconds have the relevant bus schedule, menu or product information displayed on your screen or dictated back to you.

The phone’s accelerometers could be used to power gesture-based commands — a flick to the right means you want to make a phone call, while a flick to the left initiates a Web search. Micro-projectors could even displace information you would normally need to consume from the screen. For example, instead of displaying a tiny map through LEDs and glass, the phone can paint an arrow on the ground showing you the direction you need to head.

As natural language interpretation and artificial intelligence technologies improve, the phone begins to comprehend subtleties in meaning and interpret intent, Sejnoha said. Nuance is working with IBM’s Watson program on deep question understanding and natural language processing. The hope for both companies is to create sophisticated network-based artificial intelligence that can power semantic searches.

Say you’re a hungry pedestrian walking the streets of New York and suddenly spot a new restaurant. You then make a gesture with your device to activate its voice assistant, point it at the restaurant and ask: “What rating did the New York Times give this joint?” GPS knows your precise location. The digital compass knows which direction you’re pointing. The UI then pings its AI servers in the cloud, which not only determine that you’re interested in a restaurant, but are specifically requesting the number of stars awarded it by a specific publication. The AI then scrapes that data off of NYT’s website and returns with a simple answer audio answer: “3 stars.”

In that scenario, the UI is already skipping over several websites and applications that a normal search would have used to find that 3-star rating: mapping apps, search engines and the New York Times website.  But what if that phone delivered more than just the basic data point requested? What if it correctly inferred you were looking to nosh and wanted help selecting a restaurant? It could search out other restaurant reviews from sites it knows you trust. It could scour the restaurant’s menu for dietary information. And it could poll your social networks to see if any of your friends had eaten there. The AI then contextualizes all of that info, decides what’s most relevant to you based on preferences and profile information, and spits out this answer:

Three stars, but Yelp gives it three and one half. Bob loves it. He says try the smoked-tea duck. Tell the waiter about your peanut allergy, though. The kitchen stir-fries with groundnut oil.

With that one semantic search, your device captures information from dozens of Websites, but by performing that search with a multimodal interface, at no point do you have to look at the phone’s screen. That also means at no point do you have to look at an ad. “Along the way value is derived from those brief stays on the portals through ad impressions,” Sejnoha said. “If you’re getting from A to B in fewer steps, you’re bypassing those tolls.”

What’s a Google to do?

These new interfaces put a lot of power into the hands of the UI creator, making them the new gatekeepers for information on the Web. That’s a huge benefit for big web brands that can strike up partnerships with the interface developer. For instance, Nuance works with Milo to deliver online-shopping results and Fandango for movie show times on its Dragon Go app. But since the focus of such interfaces is to deliver a single result rather than a variety of results, Internet companies without the desire or resources to partner with Apple or Nuance may find themselves marginalized.

Less choice may be exactly what consumers want, especially in the mobile world where people are using their phones to grab snippets of timely information rather conduct extensive research. According to Technology Business Research senior Analyst Ezra Gottheil, implementations of Siri are fixing what many consider a critical flaw in the user interface: the huge number of options a user is faced with on the average smartphone. By simplifying the UI with voice commands that yield immediate access to results, consumers are likely to use searches and applications more frequently, Gottheil said in a TBR research note.

As for the search portals, if Google or Bing don’t want to get cut out of the value chain, the easy answer is to implement multimodal search interfaces of their own. Both engines make powerful use artificial intelligence to refine their searches, while Google and Microsoft already accepts voice-prompted search terms. It wouldn’t be hard for them to project an ‘optimal’ search result beyond the confines of the screen – a voice activated and delivered version of Google’s “I’m feeling lucky” button.

But if Google and Bing are delivering direct results, rather than a list of links, what of their keyword advertising based business models? And what of the websites themselves that find their information hijacked by a multimodal UI without even an ad impression in compensation? Sejnoha thinks they just need to be more creative with their business models.

The screen is never going away, Sejnoha said. There are certain types of information that people will always need to absorb visually. It’s much easier to look at pie chart than have it described to you. And unless you’re driving, it’s easier to read a restaurant review rather than have your phone dictate it to you. But in the cases where information is more handily delivered off screen, companies need to find ways to draw their customers’ attention back to their devices, Sejnoha said.

Imagine in the restaurant example above that after your phone delivered its personalized and contextualized information about the restaurant in question, it added the following addendum: “By the way, I have some coupons for other restaurants in the neighborhood, if you’d care to look at my screen…”

Image courtesy Flickr user Lazurite

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The “Google is in bed with the pirates” theory is hardly new and is often aired by publishers and copyright lawyers. It has bubbled up again in the last two weeks as a debate rages in Washington over the controversial Stop Online Piracy Act (SOPA).

SOPA’s sponsor, Rep. Lamar Smith (R-Tx) on Monday explained Google’s motives for opposing the law by saying, “That’s because they’ve made large profits by promoting rogue sites to U.S. consumers.”

And last Monday a senior copyright lawyer unleashed a screed against Google on Huffington Post, concluding that investors are losing faith that the search giant can support a legal revenue model.

This last bit, at least, is complete nonsense. Google’s share price is through the roof after the company’s October earnings report showed staggering quarterly revenues of nearly $10 billion and a profit of $2.3 billion. To claim that these numbers were driven by selling ads on fake Tiffany sites is stupid even by the standards of some financial analysts.

But that still leaves the question of how much money Google is making from the hundreds of “rogue” websites worldwide that flog everything from fake NFL jerseys to pirated versions of Hollywood blockbusters.

For those unfamiliar with Google’s business model, the company makes nearly all of its money in one of two ways. The first is by using auctions to sell keywords like “flowers” or “personal injury lawyer” to companies whose ads appear when a user searches those terms. The other way the company makes money is through its AdSense program which helps website owners place ads on their site. In return, Google gets a cut of the ad revenue.

This means Google could (in theory) make money by selling keywords like “football” to companies that want to advertise counterfeit Cowboys jerseys for sale. In fact, earlier this year, the company paid a huge fine for letting Canadian pharmacies buy keywords to advertise drugs without a prescription.

But the pharmacy episode appears to be a one-off blunder. There’s no evidence that Google has a habit of selling keywords to shady partners. A Google spokesperson said by email that the company has strict policies to ban inappropriate ads and companies that try to buy them.

“These policies and guidelines are enforced by both sophisticated automated systems and manual reviews,” wrote the spokesperson.

Still, it’s inevitable that Google makes at least some money from rogue websites that sign up for its AdSense program. Google says it doesn’t let these type of sites use AdSense but that unscrupulous companies try to get around the company’s ban.

The spokesperson didn’t provide numbers about how much revenue Google receives from rogue sites. But she did say that Google provides a refund to any advertiser whose ad inadvertently appears on one of these sites and that the company also keeps a blacklist of thousands of webpages that are prohibited from using the ad services.

If all this is true, it’s hard to see how Google is different from any other major company that provides a service that some people abuse. If we want to blame Google for rogue websites, then we should also blame UPS when someone ships drugs and blame Visa whenever one of its clients use the payment service to perpetuate rip-offs.

The ultimate question is whether Google is actually colluding with the bad guys that use its ad services. So far there is little evidence it does.

Some people claim Google has other, deeper motives for opposing the SOPA law. Scott Cleland, an analyst who has testified before Congress and who consults for Google’s competitors, says the company fears a flood of users will desert it if it removes certain websites from its search listings. For now this claim seems speculative at best (where would all these users go instead? Bing?)

Finally, common sense implies that Google is not in a conspiracy with the rogue sites. If the company is making money hand over fist from legitimate companies, why would it risk the government’s fury by going into the piracy business?

Conspiracy theories make for fun explanations. But in this case the straightforward story makes more sense: Google and the other tech companies are opposing SOPA because they think it’s bad policy (others may disagree) not because they wish to protect pirates.

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In a closely watched case involving Google’s sale of trademarks and brand names as advertising keywords, the European Union’s highest court has ruled in the search company’s favor — although the decision contains a handful of important caveats, which initially led to some confusion over whether Google had won or lost. The bottom line is that the European Court of Justice said the search company can sell trademarked terms through its AdWord service. But it didn’t give Google blanket protection from lawsuits by trademark holders, saying it could be held liable in future cases if it’s found to have encouraged AdWord buyers to engage in trademark infringement.

The confusion over the decision was likely caused by the fact that LVMH — the parent company behind luxury brands such as Louis Vuitton, which launched the case that resulted in the EU court decision — put out a press release claiming victory in the case. In it, the company said that:

Google claimed that advertisers on its service did not commit any illicit use of registered trademarks when purchasing keywords representing such registered trademarks on its website without the consent of the trademark owner. Google further claimed that, in any event, a provider of a paid referencing service was merely hosting the service and therefore could not be held liable. The ECJ strongly rejected both claims.

As both the New York Times and the Financial Times explain, however, that’s only part of the story behind the ruling. LVMH wanted Google to be legally prevented from selling any trademarked terms as AdWord keywords to anyone, something the EU court explicitly did not do. Instead, it said that Google could continue selling trademarks and brand names through the service, provided it took action to remove those terms if a trademark holder complained — a system similar to the “notice and takedown” provisions for copyright infringement that YouTube and other providers are governed by under the U.S. Digital Millennium Copyright Act.

Google has already been hit with a number of such lawsuits from trademark holders, both in the United States and in Europe, and maintains that it does its best to remove infringement when it occurs. The company noted in a blog post about the LVMH ruling that:

[C]ontrary to what some are intimating, this case is not about us arguing for a right to advertise counterfeit goods. We have strict policies that forbid the advertising of counterfeit goods; it’s a bad user experience. We work collaboratively with brand owners to better identify and deal with counterfeiters.

Some of those who have sued the search company have tried to argue, as LVMH did in the latest EU case, that Google is encouraging trademark infringement by simply suggesting trademarked words and phrases when an advertiser is looking for an AdWord placement. Unfortunately for the search company, the EU decision appears to leave that question unanswered, which could open the door to further lawsuits.

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Post and thumbnail photo courtesy of Flickr user bloomsberries.

YouTube has been running ad overlays for close to three years now, calling them “one of the most effective ad formats.” However, generating those ads was previously fairly complex, and even many large advertisers have so far opted for text overlays instead of display ads. The new self-serve ad generator could lead to a huge number of display ads finding their way to YouTube, but also significantly increase monetization for the site, which could make as much as $1 billion in 2011, according to a recent Citigroup estimate.

AdWords customers can use Google’s Display Ad Builder to upload graphics sized 480×70 and then book these banners for regions, categories or even a specific video. Display overlays can be booked either on a cost-per-click or CPM basis.

The move towards self-serve advertising on YouTube doesn’t come as a total surprise: GoRumors uncovered a patent application for such a feature in January. In that application, Google wrote:

“The conventional techniques for development of such multimedia advertisements are complex, requiring resources beyond the means of many small to medium-sized organizations.”

The new ad generator, on the other hand, is squarely targeted at small advertisers. YouTube’s blog post announcing the new self-serve option specifically mentions small businesses as its target audience, musing that this would be a great way for a small beauty products outlet to “create an overlay ad and then run it on popular fashion and beauty videos.”

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