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How do you think this will all play out?
Crystal ball time
universetoday




msg:1444411
 9:03 pm on Aug 21, 2003 (gmt 0)

I know it's insane to try and predict what's going to happen on the Internet, but I thought it would be fun for us to try and figure out how Adsense will play out over the coming months, years, decades.

In my opinion, Google has cracked the code and created the first stable sponsorship model for content on the Internet. If you're a content producer, I don't think there's anything out there that gives publishers a better payout while respecting both the websurfer and advertiser. (Obviously, if you feel that premise is incorrect, then it's just a matter of time before the whole thing implodes. If that's your opinion, let's hear it.)

How do you think this will all play out over time as it settles into a long term sustainable model? Think of the variables:

- will Google banner blindness set in? or will CTRs actually improve as people come out of their shells and realize that the advertising is a pretty close match?

- will new publishers flood onto the scene trying to grab some of that Adsense revenue? What will that do to established publishers and big media companies who currently have the lion's share of ad revenue?

- whereever there's money, the competitors will show up. Do Overture or Microsoft stand a chance of competing in this space? Will publishers benefit from the competition? Or will Google enjoy a monopoly as this whole thing grows? What's going to happen to old school banner networks like Doubleclick and Tribal Fusion?

- how fast will new advertisers come on? Will they be open to advertising on the Adsense network as well as Adwords? Is pay-per-click here to stay?

So, what are your predictions. Let's see some back-of-the-envelope calculations. We'll take a look back at this thread in a year and see if any of the trends we're predicting are starting to happen, or have been completely overturned.

 

Ron_James




msg:1444412
 10:11 pm on Aug 21, 2003 (gmt 0)

My hope is that things will stay exactly like they are now!

My predictions we'll experience a slight revenue decrease because

- Number of publishers increases, more high traffic sites get the majority of the high CPC ads, leaving the scraps for everyone else.

- The first week of every month will be excellent before advertisers' monthly budgets are drained.

[edited by: Ron_James at 11:02 pm (utc) on Aug. 21, 2003]

Denis at eVR




msg:1444413
 10:27 pm on Aug 21, 2003 (gmt 0)

I keep seeing comments about the 'low ROI from AdSense ads', but what is the evidence, or even the logic, behind this?

If I do a search for something I'm looking for and see a list of ads down the side of the page (Adwords), why would I think they are any more relevant to my needs than AdSense ads placed on one of the top content pages that I have found in my search?

I think this assumption shouldn't be aired so blatantly unless there is some evidence for it. Adwords advertisers are likely to pick up on these negative vibes and start to believe it themselves, and that's when the deterioration will set in.

Incidentally, advertisers aren't 'paying $1 a click for their ad to show up on Joe Blow's Really K00l Homepage' - they are paying for clickthroughs onto their own site, which is presumably where they want these customers to be.

loanuniverse




msg:1444414
 10:48 pm on Aug 21, 2003 (gmt 0)

Too many factors to take into account. I have to comment on the low ROI comment, and say that there is no evidence to support this. You would be surprised how targetted an audience a niche site can provide.

seeber01




msg:1444415
 10:52 pm on Aug 21, 2003 (gmt 0)

I see Google providing stats so Advertisers can track Adsense and Adwords independently. I will go so far as to say that the time will come that Advertisers will be able to preview the sites they want their ads on. Content will be king, because if you don't match the Advertiser, you will be dead.

I know we will see better stats for publishers ... my hope is that it will include stats by referral page so we can see what's cooking and what isn't. I think the option of stats by referrer page is something Advertisers will see too. If you aren't converting they could opt out of your site, or lower their bid.

Maybe we will see a class system for publishers? Where publisher A gets the best $ per click, B next, and C publishers are on the line and better get their butt in gear.

Ok, this is just my 2 cents ... call me
Karnac Debs
(now if that doesn't age me, what does? LOL)

Ron_James




msg:1444416
 10:58 pm on Aug 21, 2003 (gmt 0)

>> Incidentally, advertisers aren't 'paying $1 a click for their ad to show up on Joe Blow's Really K00l Homepage' - they are paying for clickthroughs onto their own site, which is presumably where they want these customers to be.

As an Adwords advertiser, I agree with this. I have left all of my ads to run in Adsense because I still see a good ROI on those ads.

I won't go into the reasons why ROI could be lower on an Adsense site. Maybe somethings should not be discussed.

loanuniverse




msg:1444417
 12:36 am on Aug 22, 2003 (gmt 0)

I won't go into the reasons why ROI could be lower on an Adsense site. Maybe somethings should not be discussed.
Well Ron this is a webmaster forum made specifically for discussion :) I can see how ROI can be affected by incentiviced clicking and fraud. This could degenerate into advertisers opting out of adsense, which would push the pricing downwards. On the other hand, more advertisers coming in and competitors to the program will push pricing higher.

Of course as a publisher, I am hoping that upward pressures prevail. Then again, I am also hoping to increase my traffic 100 fold too :D

However, I have trouble differentiating the kind of traffic that a content site can provide where the mediasense bot has a whole page to come up with targetting from a Google search where you have at most three words to come up with an ad.

chiyo




msg:1444418
 1:21 am on Aug 22, 2003 (gmt 0)

Remember that a lot of people are being threatened by Adsense. Other ad network servers, to a lesser extent - affiliate networks. Lets just say we are talking about highly profitable business there. I have got no doubt that these companies will be doing all they can to make sure the model does not work.

And yes we do see people in discussion boards speculating on ROI. When I see these I ask people to provide any evidence on it. So far they can't. Its a "guess", but their statement was made unequivically as if it's a "well-known fact".

gmiller




msg:1444419
 4:14 am on Aug 22, 2003 (gmt 0)

I suppose the next big step is for banner ad networks to start licensing contextual targetting technology. I noticed a press release a few days back about one of the news sites (msnbc.com, as I recall) licensing a contextual targetting system for banner ads on its own site. Burst!, Fastclick, etc. would probably be foolish not to jump on this ASAP.

Heck, I guess they're likely in negotiations right now.

justageek




msg:1444420
 1:16 pm on Aug 22, 2003 (gmt 0)

I work for a marketing company and had been involved in testing this type of advertising for another company who built a system to do this for quite some time now. I can say that there are right ways to do this and there are wrong ways to do this.

We noticed that clicks were about in the 6-10 percent range on a contextually relevant advertisement. The interesting thing is that we also noticed that if the click was directed to a search results page instead of going directly to an advertiser, the traffic bailed out about 90 percent of the time.

What that told us was that this type of advertising will eventually have to change from what Google and the others are doing to include another step such as the results page to be optimal to the advertiser. This essentially will double opt in the click to make it much more valid.

But, I wouldn't hold my breath waiting for that to hapen for a while since it does decrease revenue for the site and folks like Google.

I don't think the company that developed this has released anything yet so we're kinda stuck with Google and Overture for now.

Eric

gmoney




msg:1444421
 9:41 am on Aug 23, 2003 (gmt 0)

I see Google providing stats so Advertisers can track Adsense and Adwords independently.

I agree. To elaborate further, I believe that there will be more separation between the two because they really are very different forms of advertising. Actually, I believe that eventually Google will give the option to completely separate them. Thus for each ad an advertiser builds they can select whether they want their ads displayed on Adwords, Adsense or both thereby giving the option to have different ad text, targeted keywords, and bid amounts for Adsense focused or Adwords focused advertising. My guess is that Google will develop some advanced click through rate metric purely for Adsense to give advertisers incentive to generate a high Adsense click through rates. Note: Contrary to opinions I have heard expressed elsewhere, I believe a low click through rate on Adsense can be desirable for advertisers (i.e. I would rather my advertisement get 10,000 impressions and pay for 1 click than get only 10 impressions and pay for 1 click. I can’t understand how any advertisers criticize Adsense for low click through rates.) It is the publishers who should be yearning for a high click through rate (i.e. As a publisher, I don’t want to fill up 1 of my 4 ad slots with a dog). Basically I believe developing an Adsense click through rate metric is very important (if Google were to completely separate Adsense and Adwords). I also believe it will be challenging to do it in an effective manner.

Maybe we will see a class system for publishers? Where publisher A gets the best $ per click, B next, and C publishers are on the line and better get their butt in gear.

I do not see a class system in this form taking shape because I think it is in Google’s interest to give the best $ per click to all publishers (i.e. Google wants to make top dollar on every click even from the poor performing publisher clicks. Note: What exactly is a poor publisher anyway? I think a poor publisher is one whose clicks do not convert for an advertiser and therefore only a particular advertiser can be the judge). However, I can see some type of a class system (or multiple types) used to categorize publishers for the discretion of advertisers to choose from. As a simple example, maybe advertisers would have the option to select any or all of the following classifications of the pages they want to advertise on: horizontal ad before most of the pages content, horizontal ad after most of the content, horizontal ad in the middle of content, vertical ad before content, or vertical ad after content. There could be other, similar classifications to allow advertisers some level of control as to how they are fed (or force fed) clicks.

I will go so far as to say that the time will come that Advertisers will be able to preview the sites they want their ads on.

Good point. In time, I think that more will be more revealed to publishers and advertisers about each other. Google has to move slowly with the amount they reveal or some advertisers would be up in arms and demand to ban certain publishers before Google has a system in place to do so. I would not go as far as to say that the publisher will ever be revealed but maybe they will be given a unique ID# in the advertisers log files. That way the advertiser can determine if they want to put an APB (Adsense Penalty Box) out on that particular ID#.

Humorous Note: If Adsense ever does give the referring URL then it would open the possibility for Adsense spam whereby somebody could actually charge you to visit their site (i.e. if a spammer is trying to target web developers to sell software then they would write a page focused on web developers to get web developer Adsense ads listed and then after people click on the ads, the web developers will stop by to check the quality of the referring URL that they just paid for and low and behold they will get the biggest dupe ever of having to pay to check out somebody’s page about how somebody’s web developers software really helps web developers.):)

I know we will see better stats for publishers

It seems likely as it could help advertisers to refine their colors, location and dimensions of their advertisements. However, it would also inspire some publishers to drop underperforming ads which isn't in the best interest of Google (unless they are replaced with better performing ads but does Google really want to encourage advertisers content manipulation to make more money on ads). Where will Google draw the line with stats they provide? Will it be at clicks per page, $ per page, clicks per advertiser, etc. Whatever information Google gives publishers can be used to back out all sorts of information that Google may not want to share. Even with what little information Google currently gives publishers, a lot can be figured out with log files and periodically checking your Adsense stats.

europeforvisitors




msg:1444422
 1:09 pm on Aug 23, 2003 (gmt 0)

I believe that there will be more separation between the two because they really are very different forms of advertising.

Exactly, and that's a point that many of the naysayers seem to miss.

Ads on search pages are like Yellow Pages advertising.

Ads on content pages are like magazine, newspaper, or broadcast advertising.

Some businesses do quite well with Yellow Pages ads. (Taxi companies, for example.) Others do quite well with media ads. And many businesses find that it's most effective to use a combination of both.

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