|The Future of Google AdSense|
what do you think?
| 8:55 am on Jul 28, 2003 (gmt 0)|
During the late 1990's, ad networks provided good revenue to publishers, only to slowly and steadily decrease them with time rather than increase.
What do you think about Adsense. Will it improve with time in terms of revenue production for publishers, or will it follow suit?
| 9:04 am on Jul 28, 2003 (gmt 0)|
We are in a perfect supply & demand market place.
1. Will competition among advertisers increase decrease, in other words will bid prices move up or down
2. Will there be too many or too few publishers. Will that force prices up or down
3. What sort of cut will Google take as brokerage fee, will that move up or down
4. Will other organisations offer targeted ads and how much will they pay publishers. That will keep Googles cut "honest" in the long term.
I have no doubt that Google will want to maximise their profit - but don't we all
In the end the market will decide what happens
| 9:05 am on Jul 28, 2003 (gmt 0)|
No, it will die in about a year as most ad networks do, hopefully G will try and keep a head of the game, but I can't think of one network which hasn't been superseded by it's competitor.
[edited by: DaveN at 9:57 am (utc) on July 28, 2003]
| 9:13 am on Jul 28, 2003 (gmt 0)|
To survive, it will have to revolotionize the current economics and structure of online advertising. Its a big ask, but google has done it before in another area. ;)
A lot also depends on the competition. Again google has proven before it understands and knows how to best work with, rather than against, the unique fundamentals of the Web. If the others still use old mass media, broadly targeted models, perhaps only concentrating on a few high page view sites, Google will have a competitive advantage.
The other unknown is how Google can prevent undermining of the brand by a proliferation of low quality opportunitistic Adsense-revenue-directed sites, just like the affiliate farms. If they can get this right, its another thing in their favour.
Im a great believer in that history can predict the future.. up to the stage where a real revolution of substance occurs that changes the rules.
| 12:33 pm on Jul 28, 2003 (gmt 0)|
Do you think adsense could start including more factors into which ads it shows than just page content.
At the moment UK ads are shown to UK visitors but this could be extended to IP addresses. Ads could match with what previous searches have been done on google. They could even take into account what sites have been browsed with if the user has the Googlebar installed. A deal could be done with microsoft to get the browser to watch the users activity for google.
For example if someone searches for football boots in google. The football boots site could pay to advertise on the next 20 ads the user sees. Perhaps even with different ads to try and catch the user 'are you sure you don't want to buy our boots?', 'did you know our boots have both blue AND red laces?', etc.
| 12:43 pm on Jul 28, 2003 (gmt 0)|
>>Do you think adsense could start including more factors into which ads it shows than just page content.<<
Excellent question. There is a mass of data that google is collecting from both Adsense sites and the people who click on Adsense ads, and much of it can be cross referenced. Ive got no doubt that some of this data cild be highly useful for delivering the "best" ads for each page. At the simple level they already know things like CPC, CTR for EVERY page, how many ads one IP/server is clicking on, at the more advanced and cross referenced level they also have very tasty data on similar sites and pages, "theme" of site, "visited before" history, most visited sites of clickers. Its actually a quantitative market researcher's dream - with all that data - and with some intellugence could result in delivering even more relevant or targeted ads.
| 12:48 pm on Jul 28, 2003 (gmt 0)|
That is one thing I'm sure everybody is noticing... if Adsense is really taking off, google will have its thumb seriously on the browsing habbits of MANY folks across a LARGE section of the web (capitalisation intentional).
Some will shrug it off, but the same has been an issue before, and will be again, in a serious way.
[edited by: killroy at 2:46 pm (utc) on July 28, 2003]
| 2:38 pm on Jul 28, 2003 (gmt 0)|
I don't think the failed promise of earlier ad networks is a bad omen for Google's AdSense network. Consider:
1) In the giddy heyday of banner ads, a significant percentage of the Web's ads were for dot-coms that advertised on each other's sites (often via barter arrangements rather than cash).
2) Expectations for traditional ad networks (and for banner advertising in general) were unrealistically high. Advertisers were led to expect response (clickthrough) rates that were comparable to those of direct-response campaigns, but the ad networks and media buyers failed to deliver the targeted audiences that were needed to generate high clickthrough rates.
3) As Chiyo points out, Web advertising was (and is) often based on traditional media models: e.g., massive flights of run-of-network ads on general-interest sites. That may be a valid approach if you're trying to generate brand awareness for Coca-Cola, Tide, or Wal-Mart, but it isn't likely to result in immediate clickthroughs and sales.
Google's AdSense has very little in common with traditional ad networks that deliver banners, skyscrapers, popups, popunders, interstitials, and other display ads. It's a targeted direct-response ad network that allows both small and large advertisers to reach prospects who are likely to be interested in what they're selling.
Just as the readers of special-interest magazines welcome ads on topics of interest to them, the readers of special-interest Web sites are happy to see ads for sewing machines, ham-radio equipment, computer accessories, cameras, kennel supplies, artisan cheeses, adventure tours, model trains, fireproofing materials for nuclear power plants, water-purification systems, dental and surgical tools, or whatever they might need for their craft, hobby, avocation, or business.
This ability to target readers makes AdSense completely different from traditional ad networks, where "targeted advertising" might mean running travel banners for Florida or South Dakota on a site about European travel. AdSense actually lives up to the promise of "targeted advertising"--at least when it works right, as it already does much of the time.
I do think AdSense has a few problems that will need to be addressed, e.g.:
1) Standards for enrollment and retention need to be raised, to prevent fast-buck, SEO-driven AdSense sites from flooding Google's SERPS the way affiliate sites have done--and, just as important, to keep users from becoming as skeptical of AdSense ads as they are of e-mail spam. Google may also want to rethink its current policy of allowing AdSense partners to run ads on multiple sites (such as e-commerce and affiliate sites) without specific approval by Google.
2) Targeting needs to be improved. (An article on Paris apartment rentals shouldn't display ads for Miami apartment rentals. Such screw-ups could be prevented by allowing the use of special "default topic" keywords or inclusion/exclusion filters).
3) Advertisers need to be protected with aggressive antifraud procedures and--just as important--with the ability to control where their ads appear. Without advertiser confidence, the AdSense network will fail.
| 2:59 pm on Jul 28, 2003 (gmt 0)|
Excellent post, EFV!
| 5:09 pm on Jul 28, 2003 (gmt 0)|
|Google may also want to rethink its current policy of allowing AdSense partners to run ads on multiple sites... without specific approval by Google. |
I have noticed this more and more, that AdSense ads are appearing on sites that would never have been approved if it was the initial site to be submitted. It is a pretty big loophole that they are allowing. And Google probably wouldn't realize there was a content issue (whether it be a personal site, etc) unless some other flag was raised, such as high CTR, or other fraudulent clickthroughs.
I think this will need to be changed at some point, but perhaps they decided not to enforce this in the beginning so they weren't so overwhelmed with site reviews, and assuming if the publisher got one site right, he or she wouldn't break the rules for the subsequent sites. Except the problem is people are definitely bending this rule to get sites that are clearing against the terms/FAQ/policies showing AdSense ads.
| 7:45 pm on Jul 28, 2003 (gmt 0)|
|It is a pretty big loophole that they are allowing |
Good point, Jenstar
| 9:24 pm on Jul 28, 2003 (gmt 0)|
Or maybe they released adsense as a ruse to catch on all the PR networks. Finding out all the sites that one entity owns by associating all pages where the adsense was added together. Jus kidding.
| 10:17 pm on Jul 28, 2003 (gmt 0)|
|Or maybe they released adsense as a ruse to catch on all the PR networks. Finding out all the sites that one entity owns by associating all pages where the adsense was added together. Jus kidding. |
That may not have been the motivating factor in launching AdSense, but it might be a helpful side effect. :-)
Of course, those PR network types are probably smart enough to apply for AdSense accounts under multiple business names. (Which is all the more reason for AdSense to require a tax identification number and valid credit-card number up front for ID purposes.)
| 12:48 am on Jul 29, 2003 (gmt 0)|
Overall I think that Google will have to do something very special for webmasters because when OV introduces their service the CPC will be higher. We advertise with both G and OV and it cost us less for the same position in G than OV. If webmasters can make more with OV why would they stay with G?
How ya like them apples?
| 1:19 am on Jul 29, 2003 (gmt 0)|
| 2:09 am on Jul 29, 2003 (gmt 0)|
RobbieD, i was under the impression that OV's Content Match will have quite diff publisher requirements, enought to probably disqualify 95% of those here due to minimum page view requirements. I may be wrong, but if so, they will only be competing in a slice of that market.
| 2:14 am on Jul 29, 2003 (gmt 0)|
But what if they do the same. Allow many small-med publishers the ability to run their ads? The bidding war on OV is crazy. Most CPC to be in the top 3 is crazy!
Just saying the at present G is cheaper than OV and if Ov wanted to try to hurt google they could offer bigger amounts of $$ to publishers...
Just my thoughts...
| 2:40 am on Jul 29, 2003 (gmt 0)|
Even if Overture were to extend its network to small- and medium-sized sites, it might be a while before it could offer the degree of targeting that Google's AdSense does.
Let's hope that Overture plays catch-up, just so Google will have some real competition. :-)
| 3:15 am on Jul 29, 2003 (gmt 0)|
|Even if Overture were to extend its network to small- and medium-sized sites, it might be a while before it could offer the degree of targeting that Google's AdSense does. |
Yes, but it will happen and what do you think publishers will do when the targeting is the same for both. They can bring great quality ads to their users and make money. I love Google but let's say that OV offers me the same amount of targeting but twice the revenue? I think I will switch considering it takes a few hours to put new code in
What do you all think?
| 3:22 am on Jul 29, 2003 (gmt 0)|
I don't know for others but for me, the targetting would be pretty easy to do. No need to get overfancy. Sure, a page on red widgets w/ google brings me red widget sites, purple widgets has purple widget sites. If OV offers just the same kind of widgets, or only red widgets and generic widgets, I'll be happy. I can do w/o the ads for purple widgets if I get a more evenhanded "relationship" (no "warnings" w/o proof) and of course a higher revenue. When you have a business with an ad network bringing in a few bucks it isn't that hard to target.
| 4:33 am on Jul 29, 2003 (gmt 0)|
Let's not forget that one of OV's first public reaction to Adsense was from one of its senior staff who noted "Why would anybody want their ad on a blog?".
If i was a betting gal iid say that OV has no intention at present to target the broad market of niche sites, but to target high page view properties only. This is a different model, which allows for some savings in having a much smaller number of "partners" to work with, all of who represent a significant slice of revenue. They can therefore afford to allocate more resources to say dynamically create ad blocks for each site's pages as they are called up, rather than using previous parses like google's more economical but less capable (but far more cost efefctive when you are looking at thousands of tiny to larger sites) model.
Remember Google knows far more about each site already, even the tiny ones, through tool bar data, cacheing, etc that Y!/OV knows. (they have a large index and a large majority of SE query market share for several years now) even with the acquisition of Ink, ATW, and AV and current OV clients. I tend to agree with Europe, that even if OV wanted to (which i doubt), they would not be able to catch up fast to googles information base.
Which is a pity, because if content-served ads are to become significant to the total online ad industry, like Europe, it will need more than one significant player who understands that the best places for an advertiser to get exposure hides in some of the 95% of the net that the key publishing oligarchies like MSN,Y!,NYT,Ebay/Amazon/AOL-TimeW/ do not cover.
| 6:40 am on Jul 29, 2003 (gmt 0)|
|Sure, a page on red widgets w/ google brings me red widget sites, purple widgets has purple widget sites. If OV offers just the same kind of widgets, or only red widgets and generic widgets, I'll be happy. |
That's great if your site is about widgets, but if I have one article on French barge cruises and another on Garmisch-Partenkirchen, I don't want generic "travel" ads on those pages--I want ads for barge cruises in the barge-cruises article and for something like Garmisch-Partenkirchen hotels or vacation rentals in the Garmisch piece. Google is capable of delivering that degree of "granularity," while Overture can't (at least, not yet).
|if content-served ads are to become significant to the total online ad industry, like Europe, it will need more than one significant player who understands that the best places for an advertiser to get exposure hides in some of the 95% of the net that the key publishing oligarchies like MSN,Y!,NYT,Ebay/Amazon/AOL-TimeW/ do not cover. |
Yes, and if Overture confines itself to big general-interest news and entertainment sites, it will limit its revenue and growth potential enormously. There's a huge range of quality special-interest "content sites" that reach targeted audiences of people who buy specific types of goods and services. If I were selling digital cameras, I'd rather have my text ad on Steve's Digicams or DPreview than on MSN or THE NEW YORK TIMES. And if I were trying to put bodies into luxury cruise berths, I'd rather have my ad run in a Silversea, Seabourn, or Crystal article at Cruise Diva than in the winter cruise roundup in THE WASHINGTON POST.
| 7:38 am on Jul 29, 2003 (gmt 0)|
this is the sort of thing which will kill adsense.
$1 a click down to $0.03 and as soon as joe public becomes more familiar with adsense ads on sites I think they will become ad blind.
[edited by: DaveN at 8:13 am (utc) on July 29, 2003]
| 7:40 am on Jul 29, 2003 (gmt 0)|
|$1 a click down to $0.03 and as soon as joe public becomes more similar with adsense ads on sites I think they will become ad blind. |
Surely as Joe Public becomes ad blind then the $$ per click will go up not down - with the well target sites with well targetted ads coming out on top.
| 8:50 am on Jul 29, 2003 (gmt 0)|
>>$1 a click down to $0.03
In the end ROI will dictate price, and the money will be spent (or not spent) by big, conventional, advertisers and not by readers of these forums.
| 8:58 am on Jul 29, 2003 (gmt 0)|
ad blindness may be an issue, but not as bad as banner blindness due to the targeting element and the more info and less spin/hype on a text ad.
What will also cause Adsense to fail is if it fails to evolve. I would guess that google has many tricks up their sleeve to counter adsense blindness!
>>1$ a click to .03<<
This is an extreme surely, we get very few clicks already at either end. As others have suggested, tha advertisers will decide with their pockets, google will decide a split that is just enough for "good" adsense sites (and i stress "good") not to go to the competitor or other revenue streams and enough to give google a nice revenue stream as well.
| 2:12 pm on Jul 29, 2003 (gmt 0)|
|Surely as Joe Public becomes ad blind... |
Internet users aren't any more "ad blind" than magazine readers, newspaper readers, or radio listeners are. Clickthrough rates, even when low, are likely to be higher than the response rates in other advertising media.
A 2002 study at the University of Texas suggested that "message factors" have more impact than "executional factors" in the clickthrough rate of Web-based ads. Because AdSense's messages are far more targeted than other forms of advertising, it stands to reason that their messages will be more likely to result in clickthroughs and ROI for the advertiser.
Where an ad runs will also determine whether readers are likely to read and respond to it. Just the other day, in a WASHINGTON POST article on the Grey Davis recall petition in California, there were two AdWords "content partner" ads: one for electronic signature software, and the other for signature machines. Why? Because the article had the word "signatures" in a number of places. Obviously, most readers of that article tuned out the ads and certainly didn't click on them. But those ads are probably performing just fine in the right niche media, and that's all that counts for the advertiser (who's paying CPC, not CPM).
From a publisher's perspective, AdSense isn't going to work well for everyone. A forum that has a thread on "my summer vacation" might display an ad for luxury cruises because somebody mentioned "Silversea" or "Seabourn" in a message, but the ad isn't likely to generate many clickthroughs and earnings. OTOH, the same ad on a site like Cruise Diva (e.g., a review of a Silversea or Seabourn luxury cruise) might be very productive for both the publisher and the advertiser. (In other words, to be effective, ads must be targeted not only to the keywords on the page, but also to the reader's interests.)