Contextual Ads: Vital to a Search Marketing Campaign?

Are you bidding on keywords through Overture’s Precision Match, Google’s AdWords or another pay-for-placement program? If so, you’re eligible to participate in contextual advertising.

A special report from the Search Engine Strategies conference, August 2-5, 2004, San Jose, CA.

In contextual advertising, search engines will display your search ads on the web pages of content sites that have signed up as publishing partners, and are deemed relevant for your ads. That extra visibility sounds great, right? Not so fast. The speakers on the contextual advertising panel point out problems, as well as perks, to this fairly new form of online advertising.

Joshua Stylman, managing partner of Reprise Media, opened the session by stating contextual advertising is not a new business model. In the late 1990s, agencies such as DoubleClick, 24/7 Media and Flycast pooled seemingly like-minded sites together and ran client banner ads across vertical networks. However, search engines are expanding into this arena with a new twist. They’re using the same information extraction techniques they use within search to define what a particular web page (not web site) is about and then map the most contextually-relevant ad within their database to that page. Stylman believes this is a more intuitive and scaleable model, which benefits advertisers.

Oh what different a year makes. When Brad Byrd, director of business development for NewGate, presented on this panel last year, he showed case studies of clients that experienced dismal results with contextual advertising compared to their search campaigns. This year, although Byrd noted conversion rates and cost-per-acquisition numbers vary by advertiser, he highlighted examples where contextual advertising produced a positive return on investment for non-retail clients (Byrd defined non-retail companies as those interested in generating leads but not specifically interested in selling a product to consumers).

“At this stage in the game, contextual advertising has less traffic potential than search for most advertisers,” said Byrd. “However, it does provide the opportunity of delivering some additional qualified traffic.”

Andrew Goodman, principal of Page Zero Media Inc., also showed a few successful case studies. However, Goodman warned, “Someone else’s conversion rates don’t help you.” He then offered a few workaround tips for Google AdWords, which doesn’t allow differential bidding between contextual and search programs as Overture does. Goodman noted that the two companies in his presentation achieved a good return on investment by bidding lower for their contextual ads than for search.

Goodman recommended that new advertisers disable contextual advertising in their campaign settings while they figure out what works on search. Within the same account, create a new campaign this time disabling search to set lower bids for contextual ads. Goodman also echoed Byrd’s disappointment with contextual advertising not delivering enough traffic.

“Overall,” said Goodman. “It’s [contextual advertising” over-priced, but it does perform if you can get your price.”

Stylman suggested that if broad match works for advertisers, so might contextual advertising. In broad-matching, search engines may include additional keywords with the phrase originally bid on. This opens advertisers to a broader base of searches. So does contextual advertising, which displays ads on sites more broadly related to advertisers’ keywords. As such, Stylman recommended that advertisers ask for low commitments from consumers. Give away free content, downloads or trials; don’t push the sale of a product. Contextual ad viewers are likely not in the same point of the sales cycle. So don’t hit them up for money right away. Byrd agreed with the approach of using contextual advertising for branding and lead generation rather than direct sales.

Interesting to note that none of the speakers issued the obvious warning about the problem new search advertisers all face: Google and Overture search advertisers are automatically enrolled in contextual advertising. Advertisers must proactively disable this program. Because all speakers spoke in favor of managing search and contextual ad programs separately, disabling the latter is a seemingly vital step for marketers not ready to optimize it.

Paul Volen, vice president of partner and development strategy at Overture, and Patrick Keane, head of sales strategy at Google, fielded more comments than questions from the audience. As at past conferences, marketers asked for more control over their campaigns. However, price wasn’t the top question time year as Overture advertisers can now bid separately on search and contextual ads, and Google advertisers can use the campaign workarounds Goodman spoke about.

Marketers want the publishing partners revealed. Why not? They want to know where their ads are being displayed. Of course, they’d also like to know where their search ads are being displayed too. Is this unveiling likely to happen? No. It would require resource investment from the search engines without generating any additional revenue for them. Plus, you know the next demand micro-managing marketers would make: we’d want to track each partner site individually and cut the ones that don’t perform. Ah well, it can’t hurt to ask.

If you want an incremental lift to your paid listing campaign, dive into contextual advertising and optimize it as a separate campaign from search. As search engines grow their publishing partner base, that incremental lift may become a significant boost.

Catherine Seda, owner of the Internet marketing & training company Seda Communication, is author of Search Engine Advertising.

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