Contextual Ad Debate Rouses Critics

  |  August 21, 2003   |  Comments

Google, Overture and Sprinks are putting a lot of money in inventory opportunities beyond search, but analysts say customers need to closely monitor their campaigns. Google Rolls Out New Contextual Ad Units

SAN JOSE, Calif. -- The debate over contextual advertising took a nasty turn Wednesday as researchers picked apart the latest moneymaking strategies by major search engine players Google, Overture and Primedia property Sprinks.

The rivals put their best foot forward hoping to attract a room full of buyers at the Search Engine Strategies 2003 Conference & Expo here. Each one showing that their online advertisements synchronized to published content are the latest and greatest way to generate relevant leads.

For example, with its new contextual advertising tool AdSense, Google uses its algorithmic search capability to scan the pages for their subject matter and serve relevant keyword-targeted paid listings. Overture sponsors a tailor-made program called Content Match that is more of what the company calls a "hybrid approach" using both editors and algorithm for content and relevancy. New York-based Sprinks, which has advertisers buying on topic, is not linked to existing keywords through its ContentSprinks product, also has a newsletter version -- DirectSprinks -- and a regionally-focused product called LocalSprinks.

But the cart got upset when panelist and NewGate Internet researcher Brad Byrd presented an "apples to apples" cost comparison of Google's AdWords and AdSense programs.

The results from the search marketing agency suggest that for a pharmaceutical company looking for leads would pay 30 percent higher for cost-per-click by using AdSense. The data also found click-through rates were 4.2 percent higher for search; cost per registration was 2 times higher for contextual ads and that percent of spend-per-lead was 81 percent higher for search than for links posted next to content.

The numbers were even more earth shattering for an online gift company looking for sale. Byrd found percent of spend was about even, but cost-per-click jumped up to 40 percent higher using Google's contextual ads and click-through rates were 14 times higher using search. In that case alone AdSense came in at an anemic 0.1 percent.

"If I were an advertiser, point-one percent looks like a banner ad campaign not one I would expect for a search ad," Byrd said.

Bottom line says the researcher, marketers and advertisers should treat their search campaigns separate from their contextual ad campaigns and they should certainly keep an eye on how much each one is actually costing in the end.

"I'm not arguing against the channel as a whole but you need to maximize your return on investments," he said.

"Our research found pretty much the same as NewGate, but it agrees more when the search term is longer," CEO Kevin Lee said. "Also, customers are not necessarily in the same frame of mind when they are reading an article as when they are doing a search."

In Google's defense, AdSense creator Susan Wojcicki said the results were only for two cases compared to the numerous studies that the Mountain View, Calif.-based search engine said it had conducted independently.

"I think it's hard to comment on findings when you have only have two data points," Wojcicki told "That is why we work with hundreds of advertisers. It's a new product and there will always be questions. Our conclusion was content converts at a similar rate as search. Once a click happens, there is that the likelihood that the purchase happens. In our view, there are qualified leads everywhere. Just getting them on the search result is an opportunity."

Google has already had some problems with user experiences and AdSense. Three weeks ago Google backtracked on changes it made to its AdSense units. The company said it would add a "related searches" section to units, show white space when it did not have relevant ads, and end the practice of showing public service links on pages where its technology cannot match up the content with an ad. Later the same day, Google retracted the changes after AdSense publishers expressed wide dismay in communications with the company and on industry message boards.

Overture's Paul Volen said the NewGate findings, while compelling, are not going to stop the marriage of contextual advertising and search.

"This is not a fad. It's not going away," Volen said. "We're learning and it will only improve if you give it a chance. Much of it depends on advertisers' buy in. For us, we are tracking conversion rates and we're careful about the partners."

Google also said it was assessing feedback and is prepared to redouble its efforts if necessary.

"How can we prove it to them more? We need to work harder," said "Tools and tracking and key lines are options but ultimately conversions are important," Wojcicki said.

Editor's note: The discussion was moderated by Danny Sullivan, editor of Search Engine Watch. The SearchEngine Strategy show is produced by Jupitermedia, parent company of this Web site.

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Dorian Sweet

Dorian Sweet is the vice president and executive creative director of GSI Interactive who leads strategic development and innovation in online advertising, Web development, e-commerce, and customer relationship management programs. His work has brought award-winning online solutions to such clients as Clorox, Miller Brewing Company, GE, Visa, eBay, British Airways, Wells Fargo, Discovery Networks, Motorola, Kodak, Sears, 20th Century Fox, and others.

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