Interesting announcement out of Google this week that points to a potential model that service providers might be able to replicate — ie, steal – in the advertising market.

At issue is Google’s Ad Manager, a new service that lets Web sites — mostly small and medium sites — manage their ad serving for free. To manage such ads on the Web, sites typically have to buy an ad server or pay an ad serving service or network. Google’s proposition is to offer ad serving technology for free in order to get sites on its ad serving platform. It then offers users the *option* of filling up unfilled inventory with Google AdSense ads for a split of the revenue. The ad platform even has some tools that will let sites know if they can make more money running Google ads then their own spots — a sly move thatfurther leverages the full platform effect.

The NYTimes story on the service called it a “trojan horse” and we agree. It could become even more of a Trojan horse now that Google’s acquisition of ad network/vendor DoubleClick is official. While Google is currently positioning DoubleClick as a premium (for-fee) service targeted at larger advertisers (with free Ad Manager serving the long tail), it’s not difficult to envision Google offering the same platform deal to these larger advertisers — free ad serving and probably even free customer service in exchange for letting Google get a shot at placing ads on their sites. It’s that type of potential market power that led regulators to look at the Google/DoubleClick deal in the first place.

It’s interesting to note that Google isn’t the first free ad serving tool. Venture backed open source company OpenX also offers free ad serving. A post on the OpenX blog breaks down the elements of Google’s ad server play, noting that Google is now an 1) ad network provider, 2) an ad server/analytics provider and 3) a publisher that itself makes money off from advertising.

While OpenX obviously touts the dangers of this approach, Google’s platform approach works it is able to subsidize elements of its strategy — free Ad Manager; free Google Analytics; revenue sharing AdWords/AdSense — to drive total ad impressions, Google’s real cash cow.

It also could make it a model worth copying.

Service Provider Take:

Carriers are eying the advertising market carefully (see: Advertising Chaos). But where will the revenues come from and are they big enough to really matter? Dan Taylor, Yankee Group analyst, sums it up well:

It continues to perplex me. Telcos talk about getting into the media business, and the two businesses they talk about are neither big nor as significant as their core business. Those two businesses are advertising, which for them is selling local spot ads — which was a $5.7 billion business last year — and selling personal subscriber data, which means they will be competing against 12 or so established companies that do nothing but external data today. Neither of these businesses approaches the volume of what telcos do today.

One approach to making advertising matter may be to copy the Google ad platform play, where making things easier and cheaper for advertisers becomes a trojan horse providing them with access to ever-larger pieces of the advertising pie.

It’s even more important to note that Ad Manager is only one part of Google’s larger platform play; each piece — search, email, advertising, office apps, cloud computing, etc — builds on and complements the other.

On the ad side, telcos have the data and tools — including location, identity and subscriber information and management, billing, fulfillment and CRM systems — to build a Google-killer platform in the advertising space. And while Google rules the Web (and is trying to enter a variety of other ad markets, from radio to print display and more), service providers are going to have the best, first-crack at key new ad markets, notably IPTV and mobile.

An even better play is to see this advertising platform as *just one* part of a larger telco services platform — including payment, fulfillment, customer data, billing, logistics and much more — all backed by the world’s most reliable and secure networks.

With such a world view in place, a surprising thing happens: Google/Doubleclick starts to look not only like a competitor (which it is), but a potential partner and customer for this telco platform as well.

How’s that for a trojan horse move?