Thursday, December 11, 2008

Does Google's AdSense Make Sense?

Call me cynical, but the latest word from media darling Google failed to wow me. Maybe I've been in this business too long, but the idea struck me as so... 1999. Like many of the concepts concocted in the heady days of Internet advertising, AdSense seems deeply flawed. Advertisers should approach with caution.

The idea: Allow small-time publishers to monetize their page views by displaying text links from Google's AdWords program. Advertisers pay only when someone clicks on the ads, which are targeted based on Google's crawl of the pages ads are displayed on.

If things work as Google predicts, the program will help keep smaller publishers afloat by helping them make money from inventory that would otherwise have been wasted.

Here's how Sergey Brin, cofounder and president of technology at Google, described AdSense: "By providing Web site publishers with an effective way to monetize content pages on their sites, Google AdSense strengthens the long-term business viability of content creation on the Web."

A noble aim, and one I wholeheartedly support. Vive la Internet diversity! There's a lot of excellent content out there people produce for free. Blogs are a notable example. I'm not sure, however, AdSense will really work for advertisers. (One clue advertisers aren't top of mind with Google is the press release announcing the move made not one mention of benefits to advertisers.)

The strategy takes me way back to the days of Flycast, which served ads on small to medium-sized Web sites based on behavioral profiles and offered a product in the cost-per-click space. Flycast, as you may know, was eventually purchased by then-high-flying CMGI in a deal valued at $690 million. It later merged into Engage, which this week filed for Chapter 11 bankruptcy.

What Google's proposing is basically an ad network for text links, a model the most successful companies in the space (read: DoubleClick) abandoned as unworkable.

Consistent with the thinking process prevalent in the Flycast era, the benefit of Google's proposition appears to be volume. "Gain more ad exposure on even more Web sites," read Google's pitch in the newsletter it sent to AdWords advertisers. The company does claim to hold participating sites to "rigorous standards," but it has already been willing to display AdWords ads on fairly untargeted blogs on its recently acquired BlogSpot site. How much can advertisers (and, by extension, publishers, who get paid a percentage of each click fee) expect to gain from this type of volume?

Don't get me wrong. I know there's a shortage of inventory in the red-hot search space. This is obviously Google's attempt to do something about the problem. (We'll likely see Overture's approach in a couple of weeks.) But is contextual advertising really related to search? After all, Internet users coming across those ads likely aren't in "search mode," meaning ads would have to be spectacularly relevant to push them into product-seeking behavior -- much less into buying behavior.

No doubt Google would pooh-pooh my concerns with reassurances about its incredible technology. It can parse page content and deliver targeted ads. It will ensure "ads will continue to appear only in relevant places that make sense to Web users." It can slice, dice, and leap tall buildings in a single bound. Google search is a wonderful thing, folks. But Google isn't infallible.

The reassuring thing is it's possible to opt out of the AdWords contextual program. So far, in my own super-small-scale keyword-buying experiments, my ads generated only 13 impressions (and zero clicks) on content pages. Surely that will change as publishers begin to sign up for the AdSense program. For now, I'm just waiting and watching. People in the search space I've spoken with seem to agree with that approach. CEO and fellow ClickZ columnist Kevin Lee says, "Advertisers need to be more and more vigilant in measurement of campaign effectiveness." He suggests more will opt out of contextual as it becomes a bigger part of total inventory.

Frederick Marckini, founder and CEO of iProspect, says the jury's still out. "When you remove the key-critical behavior of search, you have moved from pull to push marketing, and everyone knows which of these is most powerful: pull," he observes. "We are testing, measuring, and tracking through to conversion."

Thankfully, technology does come to the rescue in a critical way: It enables advertisers to determine effectiveness and to react accordingly.

I'd love to see smaller publishers get paid for the great work they do. But the only way the plan will work is if it really performs for advertisers. We've learned a lot since 1999. There's a lot less venture capital to burn through. I'm optimistic we'll soon find out if AdSense really does make sense.

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