Google's website advertising
program, Adsense, is about to
have some fairly hefty competition.
Yahoo
is testing a "long tail"
ad words scheme.
Markets thrive on competition
and Google's first mover domination
of the adwords market has
been inviting a serious challenge
for some time. A billion dollars
a quarter is enough money
to tempt new entrants.
Google and Yahoo and Microsoft
already compete on search
word advertising; but on the
literally millions of websites
which display "ad strips"
Google has enjoyed an effective
monopoly. Exploiting first
mover advantage, Google has
its Adsense code on everything
from the New York Times
to TCS (over to your right)
and little blogs and websites
which may get all of 20 hits
a day.
Google, with its "do
no evil" corporate philosophy,
has used its virtual monopoly
to invent, perfect and, to
a degree, police, the emerging
market for text based, context
sensitive, advertising. While
Google was the only game in
town publishers and advertisers
have been playing by its rules.
The commercially critical
"no clicking your own
ads" and "no offering
inducements for clicks"
commandments make perfect
sense. However, Google also
imposes content rules on its
publishers by refusing to
accept alcohol, tobacco, pornography,
gambling, illegal drug, legal
drug advertising. As well,
there are rules against displaying
ads on adult sites or sites
which are controversial -
as several bloggers have found
out. Plus publishers have
to obey rules against disclosing
pretty much anything about
the program, including how
much a publisher makes a month,
what clicks on particular
ads are worth, and what the
click through rate for a given
ad or website is.
Break a Google rule and a
publishers' Google account
can be instantly terminated.
Recently Google has started
sending a warning email in
some cases; but there is no
guarantee. In the Googleplex
binary, black and white, logic
seems to apply.
A company like Google has
a perfect right to choose
to do business with whomever
it wants and on whatever terms
it wants. As long as Google
pretty much owned the long
tail of the pay per click
ad business a small publisher
had no choice but to accept
Google's terms. Google was
pretty reasonable about its
rules but without competitive
pressure it was Google's way
or the highway.
The arrival of Yahoo -- and
possibly Microsoft -- in the
adwords market will be good
for publishers and advertisers
simply by expanding the range
of choices and by fostering
innovation through competitive
pressures.
What Yahoo
can do to compete with Google?
-
Offer Paypal and other overnight
funds transfer along with
regular cheques. This is,
after all, the internet
age.
-
Make the publisher shareout
transparent.
-
Recognize that despite the
groovy technology involved
in placing context sensitive
advertising on webpages,
the actual role of an ad
strip provider analogous
to a very well automated
advertising agency. Typically
an advertising agency charges
15-20% of the ad buy. This
compares rather unfavorably
with the current 60-80%
spread it appears Google
is charging.
-
By narrowing the spread
between what advertisers
are paying and what publishers
are getting Yahoo would
attract high quality publishers
who are chafing under Google's
restrictions and relatively
low payout rates.
-
Reward quality publishers.
While there will be an army
of sales people out trying
to get Adsense advertisers
to switch to Yahoo, the
real struggle will likely
be for the tens of thousands
of small to very small publishers
who actually make the Adsense
model work.
-
Offer advertisers at least
one alternative to the pure
"keyword bid"
model. A flat fee for a
set number of clicks might
be more attractive to some
advertisers. As well, while
selling "page views"
or "impressions"
has fallen out of fashion,
these are reasonable metrics
for certain sorts of ad
campaigns.
Choice brings change and there
is no question that the keyword/adsense/adwords
market could use a little
competitive instability
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