Banners and Search Merge in Contextual Markets

If you’ve been involved in Internet marketing for more than 10 years, a keyword banner was probably the first search engine media you purchased. I recall buying keyword banners on Lycos, AltaVista, and Yahoo in the early ’90s. Search engines still sell keyword-targeted banners, but pay-per-click (PPC) text links get the most sponsor real estate at the biggest search engines.

Now, the banner is making a comeback. It’s doing so even at search engines, but not in the way you might imagine. Something’s happening to search engine marketing (SEM), or, more correctly, much of what defines SEM is happening in other media. Call it convergence, contextual targeting, or simply auction-based media; recent announcements from Google and Yahoo place the search engines directly into the banner network or ad-network business.

Google: Bid Using CPM

Google has offered graphical banner options to AdSense publishers and marketers for just over a year. Until recently, graphical banners ran head-to-head against textual ad units. Only banners with a high CTR (define), and therefore a high AdRank (effective CPM (define)), made it into significant rotation. After all, Google manages contextual inventory to maximize yield.

Brand marketers who tried their existing banners were often disappointed, unless they’d generated extremely compelling banners that could hold up against two, three, or four text ads crammed into the same space. To get graphical ads to run in rotation, marketers had to establish campaigns with high bids. Often, the text ads provided a higher yield, even at those higher prices. So Google didn’t run graphical ads all that often.

Google’s new move breaks ground in two ways. First, it provides marketers with the ability to bid on a CPM basis. Brand marketers often prefer CPM advertising because some messages and ad creative communicate without necessitating a click. Agencies and marketers may now consider Google an option when spending their image ad budgets.

Second is marketers’ ability to target specific sites. The new interface, still in beta, allows marketers to seek sites in Google’s network and target them specifically for graphical ad rotation.

The targeting feature also helps direct response marketers. A direct response marketer can tune a campaign for better return on investment (ROI) by eliminating all the sites except those that convert well.

How does a direct marketer know which sites have the best conversion profile? When Google AdSense runs across the network, clicks from specific sites can usually be identified by the HTTP referrer. It’s captured by your log file or third-party system for most inbound clicks. Analysis can show which specific traffic sources are converting.

To truly understand the relative quality of success metrics of one site over another, you require a large enough sample of clicks from each site. That will take significant time for all but the most active sites (those running a large AdSense inventory).

Yahoo and MSN Play Catch Up

Not to be outdone, Yahoo announced it, too, would provide a banner-creative option for marketers seeking to leverage its own contextual network. Details on Yahoo network options were scarce at press time; it’s been reported the execution will merge graphical banners and text-sponsored links.

MSN has always had a strong banner offering mix, but hasn’t yet consolidated ad reporting, banner traffic management, and search into a single interface. Clearly, the future will bring consolidated media management interfaces at all the major search engines as they extend their offerings beyond search.

Media Will Be Auctioned

Another contextual offering that may gain significant momentum over the coming year is RSS (define) feed advertising. The explosion of blogs and other RSS feeds will fuel innovation in this area. Google and Yahoo have announced RSS advertising will be available, but neither have provided dates.

One thing is clear: regardless of ad format, the media will be auctioned. Auction pits one marketer against another, resulting in the highest yield for publisher and network. If you think managing search campaigns with bids on thousands of keywords is complex now, you may be in for a real rollercoaster ride very soon.

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Screenshot shows a Google search for outdoor grills, the shopping ads shows images with “in store” showing the product is available nearby.