Contextual Advertising in Context, Part 1

  |  March 19, 2003   |  Comments

Google leaps into contextual advertising. Is search forever changed? Part one of a two-part series.

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 marks Google offering a second nonsearch product within a month, following on the company's acquisition of blog firm Pyra Labs.

Contextual advertising isn't new. Yet in preparing this column, I failed to find a good definition of it. Search Google for "contextual advertising." You'll come away feeling it may be unethical and has something to do with scumware. Doesn't sound too attractive, does it?

Don't be a doubter yet. First, I'll try to define what contextual ads are. We'll examine why some forms have come under fire, while others, including Google's, are likely to be far more acceptable to users.

What Is Contextual Advertising?

To me, contextual advertising is when ads are delivered based on the content of a Web page being viewed, usually in an automated or semiautomated manner. The ad system "sees" you're viewing a page about travel. It knows this by examining words on the page or other factors. The system then delivers a travel-related ad. That's the "contextual" part. The travel ad fits the "context," or subject, of the page.

Let's examine how Google works with HowStuffWorks, one of several places its contextual ads currently appear. One page on the site discusses how DVD players work. On the left-hand side, in a "Sponsored By" box, are six ads from Google's AdWords program, all related to renting or buying DVDs.

The ads are fairly well targeted to the page's context. As we'll see, they're delivered dynamically to that page. In contrast, a banner at the bottom of the page I saw for a Nokia cell phone was only generally related to the page. It was no doubt delivered through a fairly static traditional ad campaign.

Contextual Advertising and Controversy

Contextual advertising is hardly new. Other examples? Let's start with eZula, which drew attention back in 2001 after releasing its TopText product.

If TopText is installed on your system, the program turns some words on a Web page you're viewing into links. Which words? In some cases, those purchased by advertisers.

TopText drew controversy when it launched and continues to do so. Some publishers understandably dislike a third-party earning money from their content while they receive nothing. Another long-time contextual ad company, Gator, has also drawn the ire of publishers.

Rather than inserting links, Gator delivers pop-up ads related to the page you're viewing. In an example from the product tour, if it sees you viewing a page about childbirth, it might deliver a third-party infant formula ad. As with TopText, the page's owner receives nothing.

Seven news publishers banded together to fight Gator last year. The case was recently settled, but details are confidential.

Some contextual ad providers have sparked the ire of Web surfers. Those providers deliver ads via locally installed software, which may change the behavior of a user's computer. Didn't the users agree to install the software? If it was bundled with another product, they may have done so inadvertently.

Software-Free Contextual Advertising

Despite the above concerns about contextual ads, others have long run contextual ads with no controversy. These are companies working directly with publishers to insert contextual ads rather than relying on software to insert such ads without publisher cooperation.

IndustryBrains is an example. Over the past year, the company has cut deals with a variety of publishers, including Macworld and Ziff Davis Media, to insert paid listings into their pages.

PRIMEDIA-owned About.com pioneered contextual links, inserting listings from its Sprinks service into content within its own network. About.com just announced a relaunched Sprinks service. The new ContentSprinks program (which has been running unannounced since last October) places paid links on non-PRIMEDIA sites such as iVillage, Forbes.com, and even on Yahoo, though for a short-term test.

Another contender in the contextual advertising space is Applied Semantics (formerly Oingo). Last October, the company launched its AdSense program which places paid listings into Web pages by analyzing the content, then selecting the ads that seem most appropriate. A test deal runs these ads on USAToday.com. Ads also appear through pilot programs on Excite and iWon. The company says it expects to announce 10 additional major pilot clients this month.

Google's Giant Potential

There are a variety of players in the contextual advertising space. Google's just the new kid on the block. The company's giant stature in Web search may turn it into a major contender in contextual advertising, however.

Google's strength is 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 figure on its home page includes some pages it's never visited but knows about via link analysis). This means, according to Google, it can easily deliver targeted ads to any page participating in its program.

Google says just by inserting a small amount of code publishers who enter the program can get the company's targeted ads. The potential exists for the entire Web to be Google's ad canvas. Everything online could, theoretically, become Google's indirect content.

Natural Limitations

Of course, Google's not without competition. In addition to the existing players, Overture recently announced it expects to release a contextual advertising product soon, a statement no doubt spurred by suspicions Google's product would soon go live (it's been in beta testing for several months, says Google). Overture will make the same strong play for partners in the contextual space as it currently does in search.

Google is applying the most limitations. It's 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 media buyers who look for unsold inventory, such as run-of-site banner and skyscraper ads it can purchase for a low CPM. Google then fills these spaces with its contextual ads, hoping to profit from the price differential. Google fully bears the risk. Given the company is moving forward with the model, there's every reason to believe it's paying off.

Google is accepting applications from publishers and others with online content, so the distribution network will grow. Currently, in addition to HowStuffWorks, the company publicly distributes ads on Weather Underground and on its own Google Groups and Google Directory.

Contextual Ads on Blogger.com

Another major distribution site is Blogger.com, a site Google owns through last month's acquisition of Pyra Labs. Just as I predicted when Google announced the acquisition, Bloggers using the free service now have Google ads on their sites. For example, IsThatLegal has a banner-like ad at the top of its page with Google contextual links.

For Blogger users, little has changed. Those not paying for the service always carried ads and still are. This is now powered by Google's contextual ads program. Bloggers who don't want ads can pay a fee to remove them, as in the past.

Next week in part two: how Google goes beyond search.

Many of you noticed ClickZ newsletters changed recently. Executive Editor Rebecca Lieb gives you a quick rundown.

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ABOUT THE AUTHOR

Danny Sullivan

Danny Sullivan left Search Engine Watch as of Dec. 1, 2006.

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