One might think smaller contextual ad networks would be cowed by recent news that promises to heat up the competition for advertisers. But neither Yahoo’s rumored expansion into new contextual territory nor MSN’s new pay-per-click program worries the smaller players with which ClickZ spoke.
That’s because they’re giving advertisers the ability to target by vertical or by site — something advertisers seem to want, but that the big boys still won’t give them.
“‘Contextual’ is just a nicer way of saying ‘run-of-network’ buys,” said Chris Copeland, managing director of Outrider. “If the networks look at some kind of verticalization, it would be valuable. If we could run a contextual ad in a specific vertical, there’s a premium price we’d pay.”
In building its network, Kanoodle focuses on vertical categories, while Quigo touts a mixture of contextual targeting and verticals. Industry Brains’ approach is to let advertisers buy site-by-site. All allow the submission of separate bids for each content area, so advertisers can more precisely track and tweak ROI for their campaigns.
“Google and Yahoo are building large networks. We’re building niche, vertical marketplaces, one site at a time,” said Mike Yavonditte, CEO of Quigo. “It’s not an either/or proposition; there are definite benefits to the mass reach of a Google. But savvy marketers are looking for a little more control over where their media buy is going.”
Matt Naeger, VP and general counsel of SEM firm Impaqt, agrees. “The more measurable contextual can be, the more useful it would be for our clients,” he said. “Not having visibility into the networks has limited us in the past.”
“We’ve tested Kanoodle, and it worked in certain areas. For an insurance client, it worked well. For an education client, it was a failure,” said Naeger. He suggests testing not only the sites or categories the ads run on, but also the time of day they run, which he says can mean the difference between success and failure.
The ultimate in advertiser control may be the ability to select individual sites on which their ads appear.
“As our target market is focused on premium content publishers, the increase in ‘network’ competition shouldn’t have a dramatic effect on our business,” said Erik Matlick, CEO of Industry Brains. “Publishers with strong brands and valuable audiences, as well as marketers, have embraced our site-specific philosophy. We are confident that they will continue to do even as ‘network’ options increase.”
Despite pressure from advertisers and the smaller players, neither Google nor Yahoo is likely to begin offering verticalization of their contextual networks any time soon.
“There are always iterations on the product. It’s something we’ve looked at, but we have no current plans in that direction,” Patrick Keane, head of sales strategy at Google, told attendees at the Search Engine Strategies event in New York earlier this month.
Yahoo is working on tools to give users more control, but verticalization is not currently on the table, said Paul Volen, VP of partner development and strategy at Yahoo
“There’s always a battle of control vs. ease of use,” Volen said. “It’s not something we’re politically or religiously against doing, but it is difficult to do it in a scalable way. The issue is how to make it attractive and accessible to more than 100,000 advertisers and potentially thousands of publishers.”
Volen said that putting sites into a user-defined category would likely decrease the relevance of ads, since they are now targeted at a page level, using complex algorithms. “With the kind of granularity we can get with our technology, we’re in a better position to match the advertiser to a particular page a user is looking at. Matching to a category would make it much broader,” he said.
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