Google Targets Ads by Site, Sells by CPM

  |  April 25, 2005   |  Comments

The search giant is testing a feature that appears to be oriented toward branding.

Google Monday is launching a limited beta test that will let advertisers choose on which sites their contextually targeted ads appear, but they will have to pay for those ads on a CPM basis.

The company expects to roll out site targeting to all advertisers within a few weeks. The move, apparently designed to attract more branding-oriented advertisers, is likely to send shockwaves through the industry, as advertisers have long sought such a feature. In the past, media sellers have typically said site targeting would add too much complexity and would be technically difficult to implement.

"At Google, we are always trying to innovate and do the right thing for users, for advertisers and publishers," explained Susan Wojcicki, director of product management at Google. "Even in describing it, it's a little bit complex to explain. Certainly figuring out what the right pricing mechanism is -- those are the types of things that took us a while to figure out. It's something we heard from our constituents. It just took us some time to figure out."

Using the same AdWords interface, advertisers will be able to select sites on which they want their ads to appear. They can either enter in the URLs of specific sites, or they can perform a keyword search to find sites on which to place their ads. Google will return a list of sites similar to the URLs people select, or a list that matches with the particular keywords. Advertisers can then select sites from those lists.

Google will continue to use an auction model to sell the site-targeted ads, but payments will be on a CPM basis. Advertisers will indicate the maximum price they're willing to pay per-thousand ad impressions. Google will then determine where those ads should appear among the CPC ads. Though CPC ads are ranked by both bid price and click-through rate, the CPM ads will only be ranked by bid price.

"It all competes in the same auction," said Wojcicki.

There's one other differentiator for the site-targeted ads. Advertisers will be able to deploy animated .gifs for these placements. The company has tested animated ads in the past, but hasn't yet rolled them out. Now the animated ads will be introduced along with CPM pricing -- both elements to which branding-oriented advertisers are accustomed.

"This will enable them to get more ad impressions and get their ads in front of the right audiences," said Wojcicki. "Perhaps they'll reach people in other parts of the buying cycle. Hopefully the ads will also meet a variety of different marketing objectives that they have."

Industry-watchers believe the new targeting option is likely to be welcomed by advertisers.

"Marketers have been constantly saying they want the ability to pick and choose where their ads appear. Now they've got it," said Danny Sullivan, editor of SearchEngineWatch. "Hopefully, it will allow them the ability to spend more time getting the most out of their campaigns, rather than having to figure out workarounds to get the control they weren't previously allowed."

Interestingly, the new feature also adds complexity to the Google AdWords interface -- something the company has long said it was trying to avoid.

"Certainly every time you have a new feature, sure, there might be some additional complexity, but we've tried to make it as easy as possible," Wojcicki said.

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ABOUT THE AUTHOR

Pamela Parker

Pamela Parker is a former managing editor of ClickZ News, Features, and Experts. She's been covering interactive advertising and marketing since the boom days of 1999, chronicling the dot-com crash and the subsequent rise of the medium. Before working at ClickZ, Parker was associate editor at @NY, a pioneering Web site and e-mail newsletter covering New York new media start-ups. Parker received a master's degree in journalism, with a concentration in new media, from Columbia University's Graduate School of Journalism.

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