For some time, Google’s most sophisticated customers have accessed their Google accounts through an Application Programming Interface (API) as opposed to the Ad Words user interface. Most frequently, APIs funnel data to reporting/Business Intelligence databases or bid management tools. Though essential for scale, API usage historically comes with clunky fees attached to it. Google’s recently announced preferred pricing program seems to have solved this complication. The program offers agencies, advertisers, and 3^rd party tool providers the opportunity to go through a certification process in order to earn free API calls based on ad spend. On the surface, this is a welcome change. We of course wanted to dig deeper.

API charges have been troublesome for agencies and advertisers for some time. The variable per-call costs are difficult to plan for. They are particularly bothersome to agencies that drive millions in revenue to Google each month, leaving them feeling nickel-and-dimed. Google’s stated concern is that the charges slowed adoption of new features like Live Ads, which allow advertisers to update ad creative frequently based on variables such as inventory or price point. The more frequent the updating, the greater the potential for API charges each month. This is enough to spook some marketers. Google is betting that adoption of new features will generate more revenue than status-quo API fees.

The certification program and preferred API pricing aren’t the only things Google has been up to with the API in recent months. With much less fanfare, Google also announced they’ll be sunsetting the current API (v13) in favor of a more robust version (2009) effective April 22. Within weeks of that announcement came another. Third-party SEM management tools such as Kenshoo and Marin were required to ensure they were using their developer token (the identifier used to isolate who is accessing the Google API) as opposed to that of the actual agency or advertiser the account belongs to. Google never seemed to pay much attention to this before. Clearly Google wants more visibility to who is accessing their API and if they are indeed an advertiser or an SEM management platform. This leads us to wonder if all of these seemingly related facts add up to a larger story. The carrot is the free API credits. What’s the rub?

It turns out that third-party software providers will have a different process for becoming certified and qualifying for free API usage. Maintaining “tool provider” certification will require compliance with specific terms and conditions. A major tenet of those T&Cs bond the tool provider to incorporate all functionality Google releases through the API into their platforms within an agreed upon timeframe. For example, when Google releases Polygon Targeting into the API (which should happen soon), the Marins and Kenshoos of the world will have a limited time to add the same functionality to their interfaces as well. If bid management software is going to disintermediate Google and it’s advertisers, Google is taking steps to make sure it is on their terms.  This solves another advertiser problem: the gap between Google’s available features and those included in the various SEM management tool interfaces. Google is making sure tool providers are accessing API’s with their own tokens so it can keep tabs on the interfaces of the tool providers and reward their compliance with free API credits.

There doesn’t seem to be any evil here: Google does it again. Just like merging relevancy and profitability with quality score, they’ve merged customer service (lowering API costs) with deepening advertisers engagement with ad words and ultimately increasing profitability. Agencies and advertisers will surely appreciate the decreased gap between third-party management tools and engine features. We’ll see if this pays out for Google in share of spend.

Excited by the Facebook-Marin integration and Chris Copeland’s “Life After Google” speech at SIS Captiva, we scoured the Web for money quotes on Facebook’s monetization strategy.

We learned Facebook wants to position as a demand-generation channel, against Google, in the 90% of the funnel above the point of purchase. Expect Facebook to join Microsoft’s Atlas in speaking out against the last-click attribution model and bringing innovative multi-attribution solutions to the table in the coming months.

Here’s how ex-Googler Sandberg laid it out for Vogue:

“Google makes money because it commands 50 percent of online advertising dollars spent on that final stage, the one that gets people to make a purchase. But that stage represents only 10 percent of all ‘ad spend’— here she writes “$690 billion,” then draws an arrow to her ‘online ad spend’ column. Facebook can dominate the other 90 percent devoted to ‘demand generation’ ($621 billion a year!). It’s not unreasonable, she thinks, that Facebook could wind up getting a substantial part of that, every year.”

Mashable’s article on Vogue’s profile is here:

http://www.buzzbox.com/top/default/preview/vogue-features-facebook-coo-sheryl-sandberg-in-may-issue/?id=1066949&topic=facebook%3Asheryl-sandberg