Last week, Google unveiled a new method of distributing its paid listings, placing them on web pages, as opposed to the traditional means of inserting them into search results. The new product, Google Content-Targeted Advertising, will likely accelerate the already rapid growth of contextual advertising. It also sees Google offering its second non-search product within a month, following on the company's acquisition of blog-firm Pyra Labs.
Contextual advertising isn't new, yet in preparing to write this article, I also failed to find any good definitions for it. Do a Google search for "contextual advertising," and you might come away feeling that it may be unethical and has something to do with "scumware." Doesn't sound very attractive, does it?
Don't become a doubter yet. First let me try and define what contextual ads are. Then we'll look more closely at why some forms have come under fire, while other forms including Google's are likely to be far more acceptable to users who see these ads.
What Is Contextual Advertising?
For me, contextual advertising is when ads are delivered based on the content of a web page that's being viewed, usually in an automated or semi-automated manner. In other words, the ad system sees that you are viewing a page about travel, which it knows by having examined the words on the page or other factors. The system then delivers up in some fashion an ad that's related to travel. That's the "contextual" part of all this. The ad about travel fits the "context" or subject of the page.
Automation is a key component in understanding what is and is not a contextual ad. For instance, let's say you visit a web site about consumer electronics. Next to the article you are reading about DVD players is a giant skyscraper-style ad hawking the online store of a popular electronics retailer. Contextually, the ad makes sense. You're reading about a consumer electronics product, so there is some degree of targeting in showing you an ad about a retailer of those products. So, isn't this contextual advertising?
Not really. The publisher knows it has pages about a particular topic, so it accept ads generally targeting that topic. But the process of categorizing the pages is mostly done with a human touch and remains very broad. In contrast, contextual ads are far more targeted and don't require as much human involvement.
For example, let's look at how Google works with Howstuffworks.com, one of several places it has announced where contextual ads are currently showing. There's a page within the site about how DVD players work. On the left-hand side of the page, in the "Sponsored By" box, are six ads from the Google AdWords program, all about renting or buying DVDs.
These ads are fairly well targeted to the page's context, and as we'll see, they've been delivered dynamically to that page. In contrast, a banner at the bottom of the page that I saw for a Nokia cell phone was only generally related to the page and no doubt delivered through a fairly static traditional ad campaign.
Contextual Advertising & Controversy
I said, contextual advertising isn't new. What are other examples of contextual ads? Let's start off with eZula, which came to attention back in 2001 after releasing its TopText product.
If you have TopText installed on your system, the program will turn some words on a web page you are viewing into links. Which words? In some cases, those that have been purchased by advertisers.
For instance, Nolo maintains a page about dealing with traffic tickets. When you view the page with Top Text, the word "tickets" in the large headline "Avoiding Traffic Tickets" is turned into a link. Clicking on that link brings back Sponsored Listings from LookSmart. (Interestingly, LookSmart said last month it no longer has a relationship with eZula).
TopText drew controversy when it launched and still attracts it because some publishers understandably dislike a third-party earning money off their content, while they receive nothing. Similarly, another long-time contextual ad company, Gator, has also drawn the ire of publishers.
Rather than inserting links, Gator works to deliver pop-up ads, related to the page you are viewing. In an example from its product tour, if it sees you viewing a page about childbirth, it might deliver a third-party ad about baby formula. As with TopText, the owner of the page you are viewing receives nothing for this. Such action caused seven news publishers to band together and fight Gator last year. The case has just been settled, but the details have been kept confidential.
Some contextual advertising providers have also attracted controversy from web surfers, rather than publishers. This is because those providers that depend on delivering ads via software may change the behavior of a user's computer in a way that's disliked. But didn't the user agree to install the software? If the software is bundled with another product, sometimes they may not realize this.
For example, I recently installed the Kazaa desktop as part of a recent review of multimedia searching that I wrote. I was informed that a program called WhenU would be installed, to offer me coupons based on pages I was viewing. You couldn't run Kazaa without also installing WhenU, so I, like many others agreed. But when I uninstalled Kazaa, WhenU remained on my system (even though to my recollection, I was told that it would be removed). Ads kept popping up unwanted, until I took further action to disable the program.
Software-Free Contextual Advertising
Despite some of the concerns with contextual ads raised above, there are others who've long run contextual ads without controversy. In particular, these are those companies who work directly with publishers to insert contextual ads, rather than relying on software to insert such ads without publisher cooperation.
IndustryBrains is an example of this. Over the past year, the company has cut deals with a variety of publishers to insert paid listings into their pages, such as MacWorld and Ziff Davis Media web sites, such as eWeek.
Scroll to the bottom of eWeek's page on computer storage, and you'll see IndustryBrains' contextual links in the Marketplace section, near the bottom of the page. Placing these links required no change to a user's computer, while eWeek and IndustryBrains both share the money earned by clicks on them.
PRIMEDIA-owned About.com has long been a pioneer with contextual links, inserting listings from its Sprinks service into content within its own network. For example, Sprinks ads related to job searching appear in the Sponsored Links area of the About Job Searching Guide (and unfortunately also appear in an annoying, giant pop-up).
Yesterday, About.com formally announced a relaunched Sprinks service. The new ContentSprinks program (which has run unannounced since October) places paid links on non-PRIMEDIA sites such as iVillage and Forbes.com and even Yahoo, though a short term test bias..
Another contender in the contextual advertising space is Applied Semantics (formerly Oingo). The company is one of Overture's 10 largest affiliates, according to Overture's financial filings.
Until recently, Applied Semantics earned its position as a top Overture partner by creating links for web sites with good domain names but which had no content of their own, through its DomainPark program.
For example, the IRS.org site probably receives lots of what I call "accidental" traffic by those who guess that http://www.irs.org is the address for the US Internal Revenue Service. (It's not. The correct address is http://www.irs.gov).
Thus, the owner of the domain has a great name. But how to make money off of it? Enter Applied Semantics. The company's DomainPark program automatically assembles a search solution that's aimed at those coming to the site who are probably interested in tax information. You can browse directory-like categories, such as "Income Tax" that automatically pull back paid listings from providers such as Overture.
Applied Semantics recently branched into contextual ads. Last October, the company launched its AdSense program. This places paid listings into web pages, by analyzing the content of those pages and then selecting ads that seem most appropriate. A test deal signed last month has placed these ads on USA Today. Ads also appear through pilot programs on Excite and iWon. The company also says it expects to announce another 10 major pilot customers this month. This recent BBC article looks at the company's system in more detail.
Google's Giant Potential
As you can see, there are a variety of players already in the contextual advertising space. Google's new among them, but the giant stature it currently has in web search may turn it into a giant with contextual ads, as well.
Google's strength is that it already knows about the vast majority of important pages on the web. The company has indexed well over 2 billion pages (the 3 billion claimed on the home page includes some pages it has never visited but knows about only via link analysis). This means that, according to Google, that it can easily deliver targeted ads to any page participating in its program.
Indeed, by just inserting a small amount of code, Google says that publishers that eventually enter its program can get the company's targeted ads. In short, the potential exists for the entire web to be Google's ad canvas. Everything could become Google's indirect content.
Of course, Google is not without competition. Aside from existing players, Overture recently announced that it expects to release its own contextual advertising product soon, a statement no doubt spurred on because the company suspected Google's product would go live soon (it's been in beta testing for several months, according to Google). Overture will certainly make the same strong play for partners in the contextual space that it currently does in search.
Interestingly, Google itself is applying the most limitations. It is not following an Amazon-style distribution model, where anyone who wants to can become an affiliate and share the wealth.
Instead, the company has a staff of its own media buyers who are looking for unsold inventory, such as run-of-site banner ads and skyscraper space, that it can get for low CPM (cost per impression) prices. Google is then filling these spaces with its own contextual ads and hoping to make a profit off the difference between what it pays and earns. It puts the risk fully on Google, but given that the company is moving forward with the model, there's every reason to believe its earning well off of it.
Certainly Google is accepting applications for those with content, so we'll see its distribution network grow. For now, in addition to Howstuffworks.com, the company also publicly distributes on Weather Underground and in its own Google Groups and Google Directory areas.
Another major distribution site is Blogger.com, a site Google now owns through last month's acquisition of Pyra Labs. Exactly as I predicted when Google announced the acquisition, Bloggers who use the free service are now having Google ads on their site. For example, the Is That Legal site has a banner-like ad at the top of its page which contains Google contextual links.
For those using the Blogger system, little has changed. Those not paying for Blogger always had to carry ads, and they still are -- but these are now powered by Google's contextual ads program. Bloggers who don't want ads can pay a fee to remove them, just as in the past.
Google Goes Beyond Search
I've seen some posts from those discussing Google's move into contextual ads as saying this shows the company is no longer solely about search, which it always said it would be. That's a fair assessment. Google's entry into the contextual ad space has given it an advertising network product that is independent of search. In other words, there's no "search" reason to explain why Google needs to place its ads on web pages.
Businesswise, there's a good reason. Google has to stay competitive. If Google's competitors are expanding their search-oriented paid listings into the contextual space, then Google needs to do it as well, in order to please both advertisers and portal partners.
In short, Google has famously painted itself into corner with its oft-issued statements of "we'll be focused on search." Now, for business reasons, it's being forced to walk across that wet floor.
Of course, with the Blogger acquisition, Google willingly took the walk. There was no search need to purchase Blogger that I can see, as I've previously written. Indeed, as suspected, it appears that Blogger was bought simply because it was probably cheap and because Google guessed it could figure out something to do with it in the future. The deal to buy Blogger was "signed without any real plan" the New York Times reported recently, based on information it says came from those familiar with the acquisition.
As I said previously, the deal was great for Blogger and will probably be great for Google. But it's an odd way for a company that continues to say it is "laser focused on search" to do business. That is unless, of course, we recognize that Google itself doesn't appear to have recognized how it has now changed.
And what does Google think about this assessment?
"Google continues to be focused on search. Search innovation is key to Google, and content-targeted advertising is built based on the sophisticated technology used for keyword targeting on search pages. This new service extends the reach created by the search-based advertising program and is not a replacement for the existing program," the company said, in a statement.
Will Contextual Ads Erode Trust In Google Search?
Ironically, while Google needs to move into contextual ads for business reasons, the entry potentially may hurt the trust many users have that Google will deliver them "unbiased" search results.
Of course, all search results are biased. Crawler-based search engines naturally favor some types of content and dislike others. However, Google's results now may get accused of being slanted in hopes of making the company money.
Google, widely acknowledged to handle more search requests than any other competitor, now has a potential interest in routing people to particular web sites. Ideally, Google wants to earn by paid links on its own site. However, contextual ads give the company a second chance to earn, if the first line of defense of ads on its own site fail. If Google ranks sites that carry its ads higher than those without, Google could increase the odds of earning this secondary income.
In the past, Google has said it does not want to offer a paid inclusion system for fear that selling inclusion into its editorial results might cause consumer distrust of those results. Now contextual ads establish exactly the same connection between money and its editorial results that the company has wanted to avoid.
Even if Google plays fair -- and the company's history is that it will -- it's still guaranteed that you'll begin to see such accusations that it plays favorites made as the contextual ad program enlarges. Concerns that Blogger.com content will be favored over other blogs is already being raised.
Google comments on this fear?
"Our relationship with content sites does not in any way influence Google's search results. As you know, Google's search results are completely separate from content targeting and our advertising programs in general," the company said, in a statement.
Advertiser Concerns Over Contextual Ads
Earlier, I discussed concerns that computer users and publishers may have with contextual ads. Advertisers also have their own concerns, in particular about whether these ads will convert well.
Advertisers have traditionally bought paid listings at search engines with the expectation that these listings will appear before people in "search mode." That is, only those actively searching for information will see these ads, after they perform a specific query. Anecdotally, consumers in search mode have converted extremely well. It makes sense. They wanted something, and the paid listings promised to fulfill exactly what they wanted.
Contextual ads are different creatures. Some consumers seeing them may be in search mode, such as when they read an article about a particular topic, then see a paid listing that seems to offer an answer to that topic. However, others may be in "browse mode," where they check out a paid listing more out of curiosity rather than to fulfill a particular desire. Will browsers convert as well as searchers?
Google says yes, research it has done over the past few months finds that browsers are converting as well as searchers. However, if you doubt this, the answer is simple. Test it yourself, and opt-out of Google's contextual ad program, if you find ad conversation drops.
Sadly, not everyone offers an opt-out program. For example, Gator recently began testing a new product that leaves behind paid listings from Overture when people searching on other search engines, such as Google. Overture advertisers can't choose to opt-out of this service.
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