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. Last Updated: 07/27/2016

Google to Expand Its Advertising Reach

NEW YORK -- Google, which has built a huge business out of small ads related to what people are searching for on the Internet, is now entering the larger and more competitive market of advertising for things people do not know yet that they want to buy.

Google was to start testing changes Monday to its advertising program that give advertisers more control over where their ads are shown, how they pay for them and what they look like.

For Internet users, the most visible change is an expanded use of ads with graphics and animation on many of the web sites for which Google sells advertising, rather than the short text ads that have been Google's hallmark.

For advertisers, the biggest shift is the option to pay Google simply to show an ad on these sites to a certain number of people, rather than paying only when an Internet user clicks on the ad and is sent to the advertiser's web site.

Pay-per-click ads have grown rapidly because they are an economical way for companies to attract traffic, especially to sites where sales can be consummated. But some marketers simply want to build awareness of their products and brands as users surf, and do not need to lure people to their web sites.

For now, Google is not selling these so-called branding ads on or any of its web sites. The new program is for Google's large but somewhat less visible business of selling advertisements that appear on thousands of other sites, ranging from small blogs to sites of major publishers. Sites may choose not to participate, especially the larger companies that are wary of having Google competing with their own sales operations for their own sites.

Indeed, some analysts suggest, now that Google is a publicly traded company, its advertising network will become more important to its business than its search engine.

"This drives the nail into the coffin of the idea that Google is a search business," said John Battelle, the author of a coming book on Google. "It is an advertising business that has nothing particularly to do with search."

The move is another significant challenge by Google to the business of Yahoo, its one-time partner. Yahoo has long offered both sorts of ads -- small text-only ads linked to searches and larger display ads featuring graphics and animation.

Google said it was introducing the changes to give advertisers more flexibility.

"Now our system takes things very literally," said Susan Wojcicki, Google's director for product management. "If you are on a wine site, we show ads for wine. Now we will let you advertise your cheese on wine sites."

 Shares of Google rose as much as 9.7 percent to a record after first-quarter profit beat the most optimistic of analysts' estimates, Bloomberg reported.

Google said Thursday that profit excluding stock compensation costs jumped to $1.46 per share. Sales rose to $1.26 billion as demand for online advertisements surged.