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contextual ads debate at SES conference
the ROI debate heats up...
seoboy

10+ Year Member



 
Msg#: 441 posted 7:47 am on Aug 22, 2003 (gmt 0)

heard that things got pretty heated at the SES this week on the contextual ads panel. evidently the engines were singing their praises, but the panelists from marketing companies seemed to have a different perspective -- saying that they've been seeing lower ROI.

[siliconvalley.internet.com ]

anyone sit in on this panel?
what were your thoughts?

seoboy

 

NeverHome

10+ Year Member



 
Msg#: 441 posted 8:05 am on Aug 22, 2003 (gmt 0)

I am undecided whether I am cannon fodder, or a frontline soldier in a brave new world. But I think if these contextual advertising media heavyweights would add a dollar a click from their hefty war chest so that I might continue to be a willing participant in this great experiment, I might just go along with it, come hell or high water! :)

jonknee

10+ Year Member



 
Msg#: 441 posted 3:31 pm on Aug 22, 2003 (gmt 0)

I can't see how targeted advertising could be any worse than typical "punch the monkey" campaigns. Maybe untargeted is just so much cheaper it makes up for it.

cornwall

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 441 posted 3:52 pm on Aug 22, 2003 (gmt 0)

>>evidently the engines were singing their praises, but the panelists from marketing companies seemed to have a different perspective -- saying that they've been seeing lower ROI.

You have to consider 2 sorts (at least) of advertiser

1. You have the "traditional" AdWords advertiser who is interested in making a cut on the turn. In other words they pay so much per click to attract punters, then they sell to a percentage of those punters and can calculate a ROI on the exercise.
AdSense may, or may not, be good news

2. You have direct sellers, to who AdSense is good news. If you, for example run a hotel in St Louis or manufacture and sell cosmetics, then you can cut out the middle man, and advertise direct to the end user.

Depends to which of these two advertisers you are talking to, as to whether they "like" AdSense or not

From a personal point of view, I continue to see improving income on my AdSense account. So overall there is no fall off in advertisers using AdSense

europeforvisitors



 
Msg#: 441 posted 6:44 pm on Aug 22, 2003 (gmt 0)

I think Cornwall hit the nail on the head: Traditional PPC advertisers (such as affiliate sites) that "make money on the turn" may not see the kind of ROI from content ads that they do with search ads, but those advertisers aren't representative of the larger market for AdSense. For advertisers that historically have used direct-response venues like mail-order catalogs or ads in the back of magazines, targeted content ads on the Web are likely to offer much higher ROI than what they've been using.

IMHO, a lot of the responsibility for poor ROI lies with the advertiser. When an advertiser knows that an ad will run on general-interest content sites where readers may not know much about the product or service, the advertiser needs to be very careful in writing its ad copy. Let's take one example: luxury cruising. If a travel agency is trying to sell high-end cruises with an average cost of $800 per person per day, its ad can't just say "20% off Platinum Cruises"--it needs to include a phrase such as "ultra-luxury cruises" in the body text to discourage clickthrough by readers who have beer tastes and near-beer budgets.

seoboy

10+ Year Member



 
Msg#: 441 posted 8:01 pm on Aug 22, 2003 (gmt 0)

i'm not sure about the difference between "middlemen" and direct advertisers... the only reason i can see why it would be "worse" for middlemen would be that adsense -- and perhaps contextual ads in general -- performed worse than search ads, overall.

isnt that the logic behind why there would be "less money on the turn" -- because the ROI was fundamentally "less"?

i guess the way i see it these contextual ads aren't much different than banners. and the problem i always had with banners is that they never seemed as good at catching someone IN THE ACT of purchasing. i think the purchases you get from banners are more like impulse buys than calculated, intentional buys...

there's no debating that this can be another good model, but i'm not sure the debate is over whether or not it "can" work. i think its over whether or not it works "as well as search" -- and the engines seems to be saying that the results are comparable.

the point about paying a higher per-click price with adsense versus adwords is interesting also. i've seen that pretty frequently. has anyone else seen the same?

seoboy

loanuniverse

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 441 posted 8:37 pm on Aug 22, 2003 (gmt 0)

the point about paying a higher per-click price with adsense versus adwords is interesting also. i've seen that pretty frequently. has anyone else seen the same?

One study of limited data, does not an irrefutable argument makes. I would like to know how can they separate adsense from searchs. is the referrer URl different in the logs?

Does your log analyzing and customer tracking when in site good enough to be reliable. I think that Google should move towards independent reporting of both programs.

europeforvisitors



 
Msg#: 441 posted 8:49 pm on Aug 22, 2003 (gmt 0)

there's no debating that this can be another good model, but i'm not sure the debate is over whether or not it "can" work. i think its over whether or not it works "as well as search" -- and the engines seems to be saying that the results are comparable.

It doesn't matter if it works "as well as search" or not.
The important thing is that it reaches prospects who aren't responding to search ads or who may not even see search ads.

Some of these possible buyers may not actively looking for a product or service, but some will be. The latter are the kind of people who read magazine reviews, travel guidebooks, etc. before they buy. They aren't likely to click on an AdWord in Google, but they may well click on an AdSense ad on a content site after they've read the information they've been looking for.

It's up to the advertiser to decide whether to (a) compete for the same pool of search-page users that everybody is competing for, by using AdWords alone; or (b) expand the pool of prospective buyers by choosing the content-ad option.

GrantNZ

10+ Year Member



 
Msg#: 441 posted 2:27 am on Aug 23, 2003 (gmt 0)

I see contextual ads are a heavier branding tool, ads that are close but not as close as an actual search by someone who maybe already knew the products name. Now, instead of bugging sites we like for a link or exchange, I'm quite happy to see my ads there and building our profile, brand and yes, sales do happen, a little slower with contextual but the final close of sale is bigger.

chiyo

WebmasterWorld Senior Member chiyo us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 441 posted 2:41 am on Aug 23, 2003 (gmt 0)

It would be interesting to see the actual evidence for lower ROI from the marketing types. Apart from that any heat in the discussion was highly predictable. The on line ad market is highly profitable, and adsense is the first major initiative for a while that is shaking it up and putting noses out of joint. It is far more revolutionary than deciding to make banner ads BIGGER (with noisesa nd more more animation!) when banner ad click-through rates plummeted a few years back. That was the last try at a new "thing" by the industry and lets say it failed badly.

Adsense may well do to online advertising industry what google did to the the search engine industry. Im not surprised that the debate is getting heated.

DavidP

10+ Year Member



 
Msg#: 441 posted 5:35 am on Aug 23, 2003 (gmt 0)

Well speaking as an adwords advertiser, having my ads syndicated through adsense has been nothing but good news for my sites, vastly increasing their ad reach - in one case by a factor of 20.

In some cases the adsense ads are obviously appearing on the sort of sites where the users aren't in a frame of mind to buy things. This is hardly a problem though as with no minimum CTR this just gives us free brand building.

In other cases the adsense ads are BETTER targetted than the Google search ads.

Our ROI calculations are a little more complicated than the traditional CPC x conversion rate x purchase price formula (actually an accurate ROI calculation should be more complicated than this for anyone, but I digress) but in simple terms a clickthrough from Google search to our largest site is worth about $1.25 to us. A clickthrough from Adsense is worth about $7.60. Adsense CPC is a bit over a twentieth of a cent more than google search.

My conclusion? Adsense is good.

Ron_James

10+ Year Member



 
Msg#: 441 posted 7:43 am on Aug 23, 2003 (gmt 0)

>> In other cases the adsense ads are BETTER targetted than the Google search ads.

That's good news DavidP. Thanks for sharing some of your ROI numbers. I've had positive experience running ads in Adsense too! (good, but not nearly as dramatic as yours)

justageek

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 441 posted 9:27 am on Aug 23, 2003 (gmt 0)

I'd be interested to know where exactly the two complaining company advertisements where ranked in the traditional search. Since an advertiser can only show up on on adsense if they are in the top two or four position (depending on what the content site asks for from Google) but they can show up dead last which may be on page whatever of a search result, and the click through remains the same, then of course they will see a lower roi.

They really are two different critters and should never be equally compared. Contextual advertising has its place and it is a good thing. Is it 100 percent perfect? Nope. Will there ever be a one hundred percent perfect advertising campaign? Nope. Will everyone be happy with everything presented to them? Nope.

The bright side of this being brought to light is that if all the folks who don't like it bail out then the field of play is less crowded and the advertisers who are left playing will see their roi increase :-)

justageek

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 441 posted 10:27 am on Aug 23, 2003 (gmt 0)

One more thing. For those who don't like what they see at Google now have greater options of going elsewhere because in a way adsense has leveled the playing field. We all know Google has a good reputation for finding exactly what people want so they get the so called better traffic. But, adsense removes this advantage that Google has had over other ppc engines because now, as far as quality of traffic goes, because it really doesn't matter anymore.

My point is that as more companies are able to offer this then the quality of traffic is the same because they can show up on the same content sites. When doing some research on this whole thing I've seen adsense advertisements show up on some pretty strange sites that I know advertisers would not want to be associated with normally. But if the content on a particular page is interesting than the person is more willing to click and buy whether the advertisement comes from Google or Kanoodle or FindWhat or whomever.

I personally do not run a site but I know that if I did I would have an affiliate relationship with as many ppc engines, auction sites etc. as I could and would write some code to hit everyone of them looking for the best, most luractive match I could find :-)

Of course, if every site that accepts advertising uses Google exclusively then my point is useless but most folks are smart enough to realize they should not rely on just one source of revenue hence the success of folks like DoubleClick and ValueClick etc.

loanuniverse

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 441 posted 11:36 am on Aug 23, 2003 (gmt 0)

My point is that as more companies are able to offer this then the quality of traffic is the same because they can show up on the same content sites.

I have to disagree, some of us like to keep ads to a minimum on our sites. {one banner & one skyscraper no popups/popunders} after all the original intent of ads was to cover our hosting expenses or not to be too intrusive to our visitors. With adsense this has changed and frankly who would want to jeopardize this by showing competing contextual advertising.

There would have to be a lot of evidence that the competing program pays as well as Adsense for some of us to replace or risk getting in trouble with Google to put the code in our sites.

justageek

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 441 posted 12:59 pm on Aug 23, 2003 (gmt 0)

Sorry. I wasn't clear enough. I didn't mean have more advertisements showing up. I meant making the best use of the real estate used. Maybe there is only one skyscraper on a page but there are four advertisements. If you could get a better click price on one ad from one ppc engine and maybe a better one from another one then why not do it? Just a thought.

Also it would be hard to get evidence of a better price since Google doesn't actually say how much you will get for a click. I don't think? Do they?

cornwall

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 441 posted 1:24 pm on Aug 23, 2003 (gmt 0)

>>evidently the engines were singing their praises, but the panelists from marketing companies seemed to have a different perspective -- saying that they've been seeing lower ROI.

Another point I would make is that exact measurement of ROI is something that only really applies to the Internet companies that have developed their businesses in making money on the turn

Consider instead the "conventional" advertisers, who spend the biggest slice of the total advertising budget. They have NEVER been able to accurately measure ROI.

It was, I believe, the late Lord Leverhume who said many years ago "half the money you spend on advertising is wasted, the problem is in knowing which half"

Consider say Ford Motor Company, most Insurance Companies, advertisers in the Travel Section of newspapers, etc... Advertising agencies have enough trouble finding out how many people watched a TV advert, or read a magazine advert, let alone knowing how many converted to buy the product.

With AdSense they can pop adverts into spaces where punters may actually be in the mood to buy, and can calculate a return on the investment. A very attractive proposition.

universetoday

10+ Year Member



 
Msg#: 441 posted 3:27 pm on Aug 23, 2003 (gmt 0)

But as bizarre as it sounds, they'd rather advertise in places that it's impossible for them to calculate the ROI (probably appalingly low) then a place like Adsense which forces them to do some optimization work.

Most advertising agencies only exist because their clients don't force them to demonstrate ROI. They don't recommend a lot of online advertising because they don't earn the same kind of commission as they do with offline for such a small amount of work. The agency commission on a $10 million television ad campaign is pretty nice compared to anything they could generate with online spending.

The only way this is going to change is if the online world can generate such a positive ROI that advertisers force their agencies to do a large online component, and demonstrate the ROI.

I believe that some day in the future there's going to be a gigantic price correction in the world of offline advertising when its poor ROI is finally revealed. Either online advertising will get priced higher because people will finally respect its branding component or offline prices will crash.

europeforvisitors



 
Msg#: 441 posted 4:22 pm on Aug 23, 2003 (gmt 0)

Most advertising agencies only exist because their clients don't force them to demonstrate ROI. They don't recommend a lot of online advertising because they don't earn the same kind of commission as they do with offline for such a small amount of work. The agency commission on a $10 million television ad campaign is pretty nice compared to anything they could generate with online spending.

True, but the market share of large traditional advertising agencies (and media) has dropped considerably in recent years as clients have shifted funds into sales promotion, direct-response marketing, and other specialized channels. Large agencies have responded by buying up "integrated marketing" agencies, design shops, etc., but many (most?) large clients aren't buying into the "one-stop shopping solution" concept these days. If the big agencies don't develop expertise in creating and monitoring contextual online ad campaigns, they'll soon lose business to specialized shops that can provide that service...just as many of them have lost business to collateral shops, Web-design firms, direct-response agencies, and other competitors in non-traditional media.

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