AdSense Leads Google's Drive for Dominance

  |  October 19, 2006   |  Comments

Industry sources expect Google to command one out of every four dollars spent on interactive ads. The company's contextual ad network is a critical piece of the pie.

If Google's earnings are on track this week, eMarketer estimates the company could take in about one quarter of U.S. Internet ad revenues for 2006.

A big part of what's driving that growth is the expansion of AdSense, Google's mammoth contextual ad network. While second quarter earnings pegged revenues on Google's own sites higher than on AdSense sites ($1.43 billion versus $997 million), AdSense has the larger reach, according to Kim Malone, director of AdSense online sales and operations.

"If you want to go to one place to reach audience, AdSense is the place to do it," she said during an interview in ClickZ's offices earlier this week.

Yet marketers tend to think of the AdSense network as a sea of text links sprinkled uniformly across the Web's long tail, heavy on remnant inventory and light on branded ad offerings. Google's now in the midst of a push to change that perception with strategies like embedding account reps in the offices of blue chip advertisers and trotting out impressive case studies on rich campaign deployments across the AdSense network.

Google views partnering as the easiest way for it to build traffic, as evidenced by the company's recent distribution deals with MTV and News Corp.'s MySpace, and its AOL deal earlier this year.

"It's almost like Mark Twain and Tom Sawyer getting kids to paint the fence for them and getting ads on the site, but not having to build traffic," said David Hallerman, senior analyst at eMarketer. "It's a very powerful means of revenue without, relatively speaking, doing much work."

For Google, the message to marketers is that AdSense is a great place to get both reach and customization. While the majority of campaigns on the network are run through Google's AdWords dashboard, customization and even on-one support are a growing part of the offering.

The AdSense team will work with larger advertisers to find niche sites that fit with the product or campaign messaging. But to what extent will blue chip marketers want those sites? "CMOs are really beginning to understand the importance of the long tail," said Malone.

But, she acknowledges, the company is striving to score ad distribution with blockbuster sites and content as well. "We're also really excited to work with MTV. It's going to be interesting to watch the interaction of blockbuster content and the long tail."

Malone describes a long-tail network buy in which an auto manufacturer with a sponsorship of a Texas county fair advertised specifically on sites related to the fair. Another advertiser, Saturn, used a combination of AdSense sites, Google Maps and video content to create rich, local experiences for regional car buyers.
In a third instance, the AdSense team broadened the scope of a campaign for a car insurance provider by targeting sites related to life-changing moments like parenting, graduation, wedding, and even divorce. In both instances, neither advertiser would have been able to reach the targeted sites without the targeting AdSense provides.

Despite all the talk about razor sharp targeting, behavioral targeting is definitively not in the cards. "Behavioral targeting is not something that Google [AdSense] will do," affirmed Malone.

Google's positive message about AdSense is somewhat undercut by the company's unwillingness to share particulars of general ad performance across the network. Malone declined to comment either on the average click-through rate across the network or on the percentage of AdWords marketers who will only advertise on search results – thus shunning the network.

Earlier this year AdSense added video to the mix. Malone hypothesized that with regard to TV ads, AdSense could eventually serve as a testing ground for creative, so advertisers and agencies can determine which execution to use in more expensive TV buys.

"It's good for users and advertisers," she said. "Advertisers can go beyond the :30 spot and ask questions."

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Enid Burns

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