Appendix V: Selling OnlineSelling Online Ads · 1 Appendix V: Selling OnlineSelling Online Ads Google AdSense Program “If I do a search for the New York Times and see an ad offering

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Appendix V:Selling OnlineSelling Online

Ads

Google AdSense Program

“If I do a search for the New York Times and see an ad offering a subscription discount, that's

f l t ”useful to me.-- Susan Wojcicki, Google's director of product management.

Jefferson Graham, Google's AdSense a bonanza for some Web sites, USA TODAYhttp://www.usatoday.com/money/advertising/2005-03-10-google-ads-usat x.htm

Internet advertising

• Before Google started AdSense in March 2003, bloggers and other small Webbloggers and other small Web publishers had fewer options to make money.


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Internet advertising• The only possibilities were

reduced to banner ads on their sites for a host of non-relatedsites for a host of non-related products or commission programs from Amazon and eBay.



• Google and Yahoo dominate the booming online search advertising businessadvertising business, expected to grow to $5.6 billion in 2008, from $2.7 billion in 2004.


Internet advertising• Advertisers buy “keywords” for

anywhere from a penny to $100 a word.word.

• And those are the terms people type into query boxes when they're searching.



• For almost every word searched, Google pops up a number of “sponsored links”number of “sponsored links” (paid advertisements) next to/above the search results.

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Google AdSense

• Trough Google AdSense, the search engine relates specific ads to what users are lookingads to what users are looking for.


• They have converted search queries into “highly targeted advertising” opportunities foradvertising” opportunities for the “long tail” of products that appeal to a wide range of tastes.

http://www.totalcontentandmedia.com/View.aspx?ID=2165&t=5

Internet advertising• Targeting allows advertisers to

suggest the sections of their text/HTML content that they’d lik llike Google to emphasize/downplay when matching ads to their site’s content.

Barry Schwartz, Section Targeting by Google AdSense, 2005http://www.searchenginejournal.com/index.php?p=2110

Internet advertising• Business model similar to the

Telecom Yellow Pages directories.

• Google delivers language and location-specific content and advertising based on users’ location.


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Google AdSense• Lets web site publishers to provide

Google search to their site users and to earn money by displaying Google d th h ltads on the search results pages.

• Pay-per-click and pay-per-impression (on your content pages) advertising.

Google AdSense• The tricky part comes as

businesses fight for the top position on the first page of p p gGoogle's results (an ad at the top of the page receives for sure double the clicks of others).

Ellen Lee, How Google determines ranks and rates of its sponsored links, San Francisco Chronicle, 2006

Google AdSense

• The place where an advertisement appears depends on how much a business ison how much a business is willing to pay and how much the ad has to do with the specific search.


Google AdSense• Also, one company could pay

less than another and wind up in a premium location since Googlea premium location, since Google may believes its ad is the most relevant to the user's concrete search.


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Google AdSense• They can also specify whether

they want their ad to appear only on Google or on one of Google's

i bl lpartner sites, blogs or personal sites.

• Google's partner sites reach 74 percent of all U.S. Internet users.

Google AdSense• Sharing these ads with its partners is

a big business for Google, generating $2.7 billion last year (40% of the total revenues).total revenues).

• Web sites host Google's ads and then split the revenue with Google if someone clicks on the sponsored link.

Google AdSense• Prices fluctuate, since the auction

takes place each time a user searches for information.– For instance, in the days leading up to Mother's Day, prices for keywords such as "Mother's Day" and "flowers" are likely to increase.

Google AdSense

• Frees content creators from having to deal with actual d tiadvertisers.

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Google AdSense

• To participate, advertisers have to sign up at Google, which will review the sitewhich will review the site.


Google AdSense

• Getting started is simple.• Once Google approves your

li i lapplication, you place some HTML code on your Web pages to activate the ads.

Kim Komando, Here's how to make blogging pay, USAToday, 2005 http://www.usatoday.com/tech/columnist/kimkomando/2005-09-18-make-blogging-pay x.htm

Google AdSense• Google's algorithm targets ads to

your readers based on the page's content.

• It works best with pages that are specialized. If your content is too general, Google can't effectively place ads on your page.


Google AdSense

• But first Google makes sure that the ad publishers don't subsidize pornography orsubsidize pornography or gambling, or contain material that is racist, violent or related to illegal drugs.

Yuki Noguchi, A New Model For Getting Rich Online, Washington Post, 2006ttp://www.washingtonpost.com/wp-dyn/content/article/2006/07/27/AR2006072701622_pf.html

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How to place an ad• Placing an advertisement on

Google can cost as little as $5 and takes a few minutesand takes a few minutes.

1) Write a three-line advertisement (no more than 100 characters).


How to place an ad2) Enter the keywords that will activate your sponsored link.

3) Bid in an auction for those3) Bid in an auction for those keywords, determining how much you're willing to pay (1 cent/click to $100/click). You can't spend more than $250,000 a day.


How to place an ad

4) Provide Google with your billing information and wait for your ad to appearfor your ad to appear.


Google AdSense

• Google doesn't disclose how much it pays its customers and prohibits members fromand prohibits members from discussing how much they get.


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Google AdSense• The look of Google's ads can be

customized. You can change colors and control theircolors and control their placement. Additionally, filters give you some control over what ads appear.


Google AdSense: click fraud

• According to a study by MarketingExperiments.com, 30% of clicks on Google and30% of clicks on Google and its partner sites could be fake.


Google AdSense: click fraud• So the search engine is vigilant

about fraud. • If an advertiser inflates page p g

views or clicks, either his account may be suspended or he can be sued by the search engine.



• Click fraud occurs when someone clicks on a sponsored link repeatedly tosponsored link repeatedly, to drive their rivals out of business as they force them to waste their money on useless clicks. Ellen Lee, How Google determines ranks and rates of its sponsored links, San Francisco Chronicle, 2006

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Google AdSense: click fraud• The problem is big for Google

because scammers either use software that automatically clicks yon ads or employ cheap workers overseas to click on ads manually or create networks of spam Web sites and blogs.



• Wall Street analysts say that situation could force Google to issue more refunds andto issue more refunds and make potential advertisers wary about getting into paid search.


Google AdSense

• Partner sites through Google's AdSense programs contributed $1 2 billion to thecontributed $1.2 billion to the search engine's coffers during Q4 2006 (50% more than in 2005).

Google Profits Nearly Triple In Fourth Quarter, TECHWEB, January 2007

Google AdSense

• 99% of Google’s revenues comes from advertising sales.

d f h• Around 50% of them comes from Google-run advertising on other companies' Web sites.

Eric Auchard, Google lets Web sites sign up advertisers directly, Reuters http://www.signonsandiego.com/news/business/20051118-1343-media-google-advertising.html

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Google AdSense• While Yahoo and Kanoodle have

made an effort to be more transparent about their ad systems to publishers, Google still keeps key details of how its system runs secret from customers.Eric Auchard, Google lets Web sites sign up advertisers directly, Reuters http://www.signonsandiego.com/news/business/20051118-1343-media-google-advertising.html

Google AdSense

• Targeting: possibility of suggesting sections of your text and HTML content thattext and HTML content that you'd like Google to emphasize when matching ads to your site's content.

Nick Clayton, Business sense: How to turn your clicks to cash, The Guardian, Sep 06

Google AdSense

• Of course, Microsoft and Yahoo have schemes of their ownown.

• Actually, Overture (owned now by Yahoo) pioneered the system.


Google AdSense

• Advertisers know exactly which ad did the customer clicked on, what the ad looked like what thewhat the ad looked like, what the text/content was, where it was displayed, how much it cost and how much the customer spent.


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Google AdSense

• No longer is 90% of advertising costs wasted on people who'll never buy thepeople who'll never buy the product: access to highly-focused audiences.


Google AdSense

• The advertiser only needs to pay when a visitor is sufficiently interested to clicksufficiently interested to click on a link.


Google AdSense

• Not all clicks are created equally: advertisers bid for AdWords involving levels ofAdWords involving levels of competition, product value and placement.


Google AdSense

• The cost of individual AdWords is never made public (tough many of thepublic (tough many of the most expensive involve US lawyers and financial services).


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Google AdSense

• Tops of the list are $69.16 for “school loan consolidation” and “abdominaland “abdominal mesothelioma”.


The keywords issue

• Web site publishers need to be creative: a house painter advertising his services on aadvertising his services on a homemade site will waste money if he mentions only house painting.

Jefferson Graham, Google's AdSense a bonanza for some Web sites, USA TODAYhttp://www.usatoday.com/money/advertising/2005-03-10-google-ads-usat_x.htm

The keywords issue– “Housepainting” is a 20-cent word.– “Home improvement” is worth $2.

• Keyword tricks hurt the editorial• Keyword tricks hurt the editorial integrity of sites.

Jefferson Graham, Google's AdSense a bonanza for some Web sites, USA TODAYhttp://www.usatoday.com/money/advertising/2005-03-10-google-ads-usat_x.htm

The keywords issue• One of the main problems is

related to the proliferation of computer-generated directories with links to hotels, restaurants and entertainment and no real editorial content, fueled by the availability of “Ads by Google”. Jefferson Graham, Google's AdSense a bonanza for some Web sites, USA TODAYhttp://www usatoday com/money/advertising/2005-03-10-google-ads-usat x htm

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The keyword issue

• At this point, Google makes sure people don't inflate their revenues by clicking on theirrevenues by clicking on their own ads (practice known as “click fraud” that has plagued online marketing).

Yuki Noguchi, A New Model For Getting Rich Online, Washington Post, 2006ttp://www.washingtonpost.com/wp-dyn/content/article/2006/07/27/AR2006072701622 pf.html

The keyword issue• The popularity of making money

this way also has led to creation of "made-for-AdSense", which consists in web pages with very little content and lots of ads.

Yuki Noguchi, A New Model For Getting Rich Online, Washington Post, 2006ttp://www.washingtonpost.com/wp-dyn/content/article/2006/07/27/AR2006072701622 pf.html

The keywords issue

• eBay has an internal team that works full-time on the paid search programme with thesearch programme with the Google account team.

Abhinav Ramnarayan, The Google trailhttp://www.thehindubusinessline.com/bline/catalyst/2006/08/24/stories/2006082400260300.htm

The keywords issue

• The rate of the keywords varies. • For instance, “Nokia” would be

more valuable than a keyword such as “pencil”.


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The keyword issue

–At the end of the day, the rate that eBay pays is a function of the click-through-rate and thethe click through rate and the cost-per-click.


The keyword issue

• The keyword “Nokia phone” is more valuable than “Nokia blue tooth device” and has a better click-through-rate.


The keyword issue

• The advertiser can specify search-targeted keywords for categories such as broadcategories such as broad matches, phrase matches, exact matches or negative matches.


Google AdSense

• Anyway, it takes months before the most useful website tops any searchwebsite tops any search engine’s rankings.


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Google AdSense

• The most successful websites and blogs, in AdSense terms, are specialist and withare specialist and with original/regularly updated content.


Onsite Advertiser Sign-Up

• Onsite Advertiser Sign-up is a tool that helps advertisers to sign up directly on Google’ssign-up directly on Google’s partner sites.

Google lets Web sites sign up advertisers directly, Reutershttp://www.daikynguyen.com/eet/print_archive/united_states/boston/2005/11-Nov/21/A03_business.pdf


• Eases the connection with a wider range of small advertisers when usingadvertisers when using Google’s behind-the scenes ad management system.



• First step is to enroll through Google’s AdWords program and list those sites where theyand list those sites where they wished their ads to be featured.


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Onsite Advertiser Sign-Up• This tool provides Web

publishers with total control over how advertisers select ads on particular sites.

• In turn, site owners and Google each receive a percentage of resulting ad sales.

Google lets Web sites sign up advertisers directly, Reutershttp://www.daikynguyen.com/eet/print archive/united states/boston/2005/11-Nov/21/A03 business.pdf

Onsite Advertiser Sign-Up• Allow websites to sign up smaller

advertisers while leaving Google the management of the production and billing process.

• But again, the way Google manages its ad system remains something of a mystery to its customers.


Onsite Advertiser Sign-Up• Advertisers willing to advertise

directly through the syndicated Google advertising program can click on an “Advertise on This Site”click on an Advertise on This Site link that drives them to a Google page where they can create an AdWords ad for the specific website.Google lets Web sites sign up advertisers directly, Reuters

http://www.daikynguyen.com/eet/print_archive/united_states/boston/2005/11-Nov/21/A03_business.pdf

Google AdSense and TV

• AdSense becomes a great opportunity for companies that wouldn’t have consideredthat wouldn’t have considered TV advertising as an option before IPTV.


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• In a few years, Google can control which ads the cable television viewers will watchtelevision viewers will watch and tailor them ads according to the tastes of the consumers.

Raju Shanbhag, Google tests targeted TV ads, TMCnet, March 2007http://ipcommunications.tmcnet.com/news/2007/03/13/269109.htm


• Google has been doing this successfully in online advertising arena by way ofadvertising arena by way of AdSense, AdWords and many other targeted advertising programs.



• The eight-year old company has raked in more than $10 billion as revenues from itsbillion as revenues from its online advertising ventures.


Google AdSense and TV• The U.S. market for TV

Advertising is worth $54 billion and if Google is able to take advantage of this potential market, it can change the way TV advertisements are created and marketed.


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• Most of the internet companies are watching these first steps with enthusiasm asfirst steps with enthusiasm as they too are planning an incursion into the profitable cable advertising world.


Biggest Google AdSense Money Makers publishers

• Markus Frind (PlentyOfFish.com, biggest ( y , ggfree dating site) -$300,000/month; 2 employees.

Bill Ives, Google AdSense Success Stories, Newstex Web Blogs, Portals and KM, Feb 07


• Kevin Rose (Digg.com, news site with 400.000 members and around 200 million page views/month) – more than $250,000/month.



• Jeremy Shoemaker (marketer using hundreds of sites and domains) - $140,000/month.


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• Jason Calacanis (Weblogs, Inc., s) - $120,000/month (before AOL)AOL).

• David Miles Jr. & Kato Leonard (providing designs to be used on MySpace) -$100,000/month.Bill Ives, Google AdSense Success Stories, Newstex Web Blogs, Portals and KM, Feb 07


• Tim Carter (AskTheBuilder.com) -$30 000/month$30,000/month.

• Joel Comm (guru and author of the best selling e-book: What Google never told you about making money with AdSense) -$24 000 / thBill Ives, Google AdSense Success Stories, Newstex Web Blogs, Portals and KM, Feb 07


• Shawn Hogan (DigitalPoint.com) -( g )$10,000/month.


Google AdSense: future

• But it is against Google’s program policies to manipulate the ad targeting tomanipulate the ad targeting to result in ads that are not relevant to the content of your pages.

David Kaplan, Google’s Local Media Ad Program Raises Revenue For Print, Radio -Can TV Be Far Behind?, Mar 2007http://www.paidcontent.org/entry/419-googles-local-media-ad-program-raises-revenue-for-print-radio-can-tv-be/

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Advertising over InternetInternet

Online Marketing• Banner Ads• E-mail (opt-in) (opt-out)• Keyword Ads• Interstitials (Pop-Up Ads)• Rich-Media Ads• Sponsored Links• Sponsorships

• Each time a web page containing the banner is loaded, an “impression” is delivered

Banner Ads

• When a viewer clicks in the banner, he is sent to the advertiser’s website. This is known as a “click through”

http://getit.rutgers.edu/tutorials/banner/media/banner.pdf#search='what%20is%20a%20web%20banner'

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• Differs from traditional advertising in that it gives real-time results about effectiveness

• Most advertisers pay sites based on a click-through payback system.

http://www.marketingterms.com/dictionary/banner_ad/

• Click-through rates measure percentage of people who immediately respond to the ad

• Does not include people who didn’t click, but went to site later as a result of seeing the ad

http://www.marketingterms.com/dictionary/clickthrough_rate/

• As value of CTR’s diminishing, more value being placed on “conversion rates”.

• Conversion rate refers to the percentage of people who viewpercentage of people who view a banner, go to the site, and ultimately complete the advertiser’s desired action.

http://www.marketingterms.com/dictionary/clickthrough_rate/

E-mail Opt-In• Opt-in e-mail is a form of online

advertising in which a recipient chooses to be included in a web c ooses to be c uded a webpage’s database/e-mail list

• Viewer supplies contact info for web pages to send information to the viewer wants to receive

http://www.marketingterms.com/dictionary/opt_in_email/

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• Effective because sites are providing information to those who have consciously chosen to join the mailing list.

E-mail Opt-Out

• Opt-out e-mailing is exact opposite of opt-in e-mailing

• Visitor is unaware that they are becoming part of a database


• Many times as a result of opting-in to one site, which in turn sells that info to another web page who subsequently

h il h i liputs that e-mail onto their list• Commonly referred to as

“spam”


• Generally not effective because there is a sense of mistrust between recipient and sending because recipient did ’ h i ildidn’t choose to receive e-mail

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• In 2002, Yahoo!’s abrupt chance of account preference to permit opt-out e-mailing triggered a backlash.

• Contact info was collected from Yahoo! merchants, and user profiles were updated to include that info.

Delio, Michelle. “Yahoo’s ‘Opt-Out Angers Users’ .” 2, Apr. 2002. <http://www.wired.com/news/privacy/0,1848,51461,00.html>

• Many claimed that this was a violation of their privacy as they did not believe that information provided to one

ld b l dsource would be later merged with another.

Delio, Michelle. “Yahoo’s ‘Opt-Out Angers Users’ .” 2, Apr. 2002. <http://www.wired.com/news/privacy/0,1848,51461,00.html>

Keyword Ads

• Small text ads that appear on search engine result pages

• Advertisers pay search engines each time the text is clicked

Glasner, Joanna. “Flashy, Targeted Ads Fuel Boom.” 28, Apr. 2004.<http://www.wired.com/news/privacy/0,1848,51461,00.html>

• Even if particular advertising is effective, hard to gauge which part of the advert was effective

• Record effectiveness based on which keywords are clicked most often.

Glasner, Joanna. “Flashy, Targeted Ads Fuel Boom.” 28, Apr. 2004.<http://www.wired.com/news/privacy/0,1848,51461,00.html>

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Disadvantages of Keyword Ads

• More expensive than other forms of online advertising

• Advertisers are subject to click fraud

Mann, Charles C. “How Click Fraud Could Swallow The Internet.” Wired Magazine. Iss. 14.01 January 2006

<http://www.wired.com/wired/archive/14.01/fraud.html>

• Because they pay a search engine each time an ad is clicked, rival companies can drive up ad costs, while simultaneously misleading thesimultaneously misleading the company into believing the keyword ad is more effective than it truly is

Mann, Charles C. “How Click Fraud Could Swallow The Internet.” Wired Magazine. Iss. 14.01 January 2006<http://www.wired.com/wired/archive/14.01/fraud.html>

Interstitials (Pop-Up Ads)

• Online ad that pops up in separate browser when

i iti t i itvisiting a certain site• Strong resentment towards

pop-up ads. • Surfing “spam”

Rich Media Ads

• Flashy video or animated promotions that appear on th f ithe screens of viewers

• Can be in the form of a banner or pop-up ad

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Sponsored Links

• Companies pay to have links to their websites displayed on another usually related webanother, usually related web page

http://www.iab.net/news/pr_2006_05_30.asp

Woot, Inc.

• Woot, an internet retailer, has a devoted following of consumers who anxiouslyconsumers who anxiously await the daily website update.

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• Has a unique business model; the site sells one product per day at a substantially discounted rate.

d f db k f• Woot’s product feedback forum became so popular that it created an entire community

Fuscaldo, Donna. “How Woot.com Won Fans in E-Commerce.” Dow Jones Newswires. 23 Apr. 2005

<http://www.startupjournal.com/ecommerce/ecommerce/20050428-fuscaldo.html?refresh=on>

Effects of Broadband on

Advertising Agencies

Alternatives to Ad Agencies

Several new companies allow national advertisers to hundreds of permutations of their own adspermutations of their own ads through a website, effectively eliminating the role of an ad agency.

Story, Louise. “Ads Made, No Agency Required.” The New York Times, February 8, 2007

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Alternatives to Ad Agencies

Ads produced by these companies can be customized by the advertiser be updatedadvertiser, be updated automatically, and even translated to target certain demographics.


Non-Agency Ad Companies

Visible WorldPick-n-ClickInvide TechnologiesSpot RunnerStory, Louise. “Ads Made, No Agency

Required.” The New York Times, February 8, 2007

Usage of Non-Agency Ad Companies

Companies such as Subaru, 1-800-Flowers, Comcast and Ford M t h l d t kMotors have already taken advantage of these automated services.


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• Possible to use both one-to-one marketing and electronic recording of consumer preferences to elicit information about individual customers.

• Allows ISPs to become highly focused advertising l b h S k h h

Pointcasting

portals because the ISP knows where you are at the moment you access the Web.

• Performance can thus be measured against customer needs.

Thompson, Donald N. AOL Time Warner, Terrra Lycos, Vivendi, and theTransformation of Marketing. Journal of Business Research. 56. 2003.

• Mass customization permits an AOL to pointcast, not broadcast, to build an ever-increasing data base about each customer, to send information on a product or service only to customers who want and when they

Mass Customization

only to customers who want and when they want it.

• Mass customization: a firm can focus its information collection on what customers want, rather than what the company can produce. Thompson, Donald N. AOL Time Warner, Terrra Lycos, Vivendi, and the

Transformation of Marketing. Journal of Business Research. 56. 2003.

• Broadband enables new advertising streams for advertising agenciesadvertising agencies.

• Some content is only available online, that was previously only available on TV: increased ad revenue

• Broadband advertising gains a huge revenue: more than $9 million in advertising has been sold for the broadband service called “March Madness oncalled “March Madness on Demand”, a video streaming of tournament games owned by CBS.

Los Angeles Times, March 2007 @ http://proquest.umi.com/pqdweb?index=0&did=1232168221&SrchMode=1&sid=2&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1173987666&clientId=15403,

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• As the cost of bandwidth space decreases, and connection speeds increase, services like IPTV will gain more viewersgain more viewers.

• As this happens, the capacity for advertising, particularly local advertising, increases.

hi k h id j• This makes such video projects even more profitable and increases the size of (and revenue from) broadband advertising.

Consequences of broadband advertising success

• Largest cable operators such as Time Warner Cable and ComcastTime Warner Cable and Comcast want to team up with Google and others to do some form of TV advertising.

• Because advertisers are more willing to pay higher rates for targeted ads than untargeted ones, Google will have a competitive advantage over TVcompetitive advantage over TV.

Wall Street Journal @ http://proquest.umi.com/pqdweb?index=3&did=1230128251&SrchMode=1&sid=2&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1173987666&clientId=15403, March 2007

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Blogs• Technorati Inc., a blog search

engine, estimates 1 million bloggers generate income indirectly through marketingindirectly through marketing.

• The firm estimates about 10,000 bloggers generate income from advertisers.

Product Reviews And Links Turn Pages Into Profit. Sara Kehaulani Goo. The Washington Post. Washington, D.C.: Jan 11, 2007.

Blogs• With an estimated 65 million

blogs, and a 175,000 added everyday, the advertising potential is enormous.

Product Reviews And Links Turn Pages Into Profit. Sara Kehaulani Goo. The Washington Post. Washington, D.C.: Jan 11, 2007.

Growing Uses of Blogs

• Blogs have also become tools for marketing products and services

• For example, in India, for the release of a film, Rediff blogs wererelease of a film, Rediff blogs were used by the cast and crew to write their experiences of working on set to entice audiences

“Blog spots and All” March 7, 2006. Business Line (Lexis-Nexis)

Documents

Appendix V: Selling OnlineSelling Online Ads · 1 Appendix V: Selling OnlineSelling Online Ads Google AdSense Program “If I do a search for the New York Times and see an ad offering