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More On Mixing Contextual & Search Spending

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Niki Scevak saw my Google's Revenue Is Not All Search-Derived post yesterday decrying the mixture of contextual and search revenues and points out that Jupiter Research's own paid search estimates appropriately don't mix the two: The Myths of Contextual Advertising.

He goes on to discuss how AdSense doesn't just mean contextual at Google any more. Instead, it's an umbrella term they now use to represent both "AdSense for search" and AdSense for content."

This came up on our forums earlier this month: AdSense for search? As I explained there, Google shifted to using the umbrella term internally a few months ago. You really saw it make its public debut in the Google IPO filing, when AdSense was used throughout those documents to represent any type of ads placed outside of Google.

Advertisers, of course, tend to think of two different things: AdWords (meaning ads that show up in response to keyword searches) and AdSense (meaning to advertisers the ads that show up contextually placed and which are considered by many of them as an option they can choose for their AdWords campaigns).

From Google's point of view, AdWords is simply the program that lets advertisers place ads into the AdSense program -- which means both AdSense for search and AdSense for content.

Niki goes on to outline that contextual ads are in his view a dismal earner for Google but one it can afford because they represent incremental income for the service, rather than its bread-and-butter. Don't forget, the deals also have the impact of denying Google competitors from gaining partnerships, denying them cash). He also notes Google is stepping back from some "vanity" deals which may have even cost it money.

Meanwhile, Kevin Ryan takes another look at those IAB search projection figures I blogged about earlier, the ones where contextual doesn't appear to be broken out. In his Why Search is Slowing, Ryan gathers a few comments about the fears of a slowdown in search, despite still incredible rises. In short, some leveling off was in order.

He also notes that keyword search emerged as an ad format in 2002. To be correct, the ad format was there well before this. It was just that no one bothered to track it.

Spending on paid search ads began with Overture back in 1998. It happened even earlier than that, if you want to count keyword-linked banners. Google started carrying paid ads at the end of 1999.

All this spending could have been tracked back then. It wasn't. It took the rosy public financials of Overture to wake up Wall Street, research firms and even advertising organizations to something advertisers were already doing: spending on search in droves. My Search Engine Marketing Finally Getting Respect article from 2001 looks at this more.

Meanwhile, tracking of spending on "free" or "organic" or "natural" search seems non-existent. That's something that research by SEMPO may help correct. It's long overdue. Not having these figures is like trying to predict the state of any type of marketing solely on ad buys but not public relations efforts.

Postscript: The IAB figures do apparently track spending on search engine optimization as well as advertising.


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