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Why web advertising is tricky and other dirty secrets - UPDATE

At an early point in January 2002 we published the original Why web advertising is tricky and other dirty secrets article - but a lot of people perceived it as a little too critical, especially with Google (which we have to say that is actually a very good search engine - the article was only claiming that it wasn't very effective as an advertising engine :)

Only a month has passed and we could actually prove that we have been 100% right - Google moved from the "hype-oriented" era to the "real world" with their new Google AdWords Select !!!

So what happened? Google took their old "Google AdWords" program (which we can now safely say that was failing miserably) and added a "pay-per-click" approach - and we have to admit that it is a very nice one - still not perfect, but definitely a huge step forward!

The AdWords are still clearly separated from the normal search results (which is not a bad thing but has a certain impact that can not be neglected) but the important innovation is the brilliant mix of bidding and relevancy - the order of the ads is still related to the amount of money that the advertisers are ready to pay for each click (which is a concept pretty much pioneered by Overture) - but when a link is much more relevant to a given search term it will be possible to get the first position paying much less money!

What advertisers will probably like in the new program:
- more potential visitors than with GoTo/Overture;
- nice interface;
- the ads will go "live" very, very fast;
- automatic adjustment of bidding;
- some control over the "target audience" (it doesn't really make sense to show ads for a german-only product to visitors from US or France);
- the relevancy of the link does matter! (we love that!)

What advertisers might not like in the new program:
- the relevancy of the link does matter :) :) :) (we love that but not everybody might like it)
- the reports are still in the first version and as a result more limited than with GoTo/Overture;
- the implementation of "relevancy" is far from perfect;
- sometimes the servers are quite slow;
- the competition against GoTo/Overture is not very real - for instance the minimum bid is 0.05 US$ on both engines
- there is still a certain "minimum payment" involved - whatever you do you can not pay less than 0.05 US$ / click (even if the actual return value for you is less than that), and you also can't pay less than 0.25 US$ / 1000 impressions (even if again the results in certain conditions might not deserve that amount of money - which only proves that Google is still a little too greedy :)
- still some aspects (see below) show a certain lack of experience :)

Still FAR from perfect are two important aspects related to handling of the ads and click-ratios:

a) the ads are "wasted" on all the subsequent pages with results - for instance if somebody will start a search and will not find the wanted result on the first page (including the ads) it will go to the second page of the results, where the same ads will be shown again - AND OBVIOUSLY WILL BE IGNORED AGAIN! That should be avoided (it is ineffective for the advertiser but most important is annoying for the searcher) - or at least an option should be available for each campaign so that every advertiser will be able to set it at his will.

b) the "minimum relevancy limit" is currently set far too low for the "real world" - you have to remember that the AdWords from Google are not displayed as normal results but instead as something quite similar to banner ads - and most people will now automatically neglect all forms of banner ads, even if in the case of Google those might contain very valuable results! The outcome of this combined with the ads wasted on all pages with search results will have the immediate result of much lower click ratios than with GoTo/Overture - our results show that for exactly the same search term and with pretty much exactly the same product description the click ratio with Google is around 2-4 times SMALLER than with GoTo/Overture (and in certain cases up to 10 times smaller). Well, that might not be that bad since you will only pay for clicks, but we think that on the long term will certainly hurt Google's revenue and also the satisfaction of the advertisers (which will be ALL blocked from a LOT of high-volume generic terms where NO link can be relevant enough with the current limits!)

The bottom line is that Google AdWords Select is certainly a major improvement over the old Google AdWords and you should probably try it if you want very precisely-targeted advertising.

Now a few tricks and results from our experiments...

If you already advertise with Overture it will probably be easy to re-use all you search terms - however keep in mind that with Google AdWords Select the interest for your ads is more important - so do not always use the "easy way" (that is kindly provided by Google) and do not place 100 (very) different search terms in a single huge "Add group" - instead you should create a separate Add Group for each small number of search terms that are very close (probably no more than 5-10 in a group) and create 1-3 very specific ads for the group - the ads should be very closely related to your search terms and eventually contain them, you can even go as far as creating one Add Group for each search term!

You should also remember that the "relevancy" calculated by Google for your ad is only marginally related to the relevancy of the link/page itself and actually is mostly related to your "click ratio", so in other words a very smart and appealing ad might be more important than a very good page for a very good product! (sad but true :)

We already said that the click-ratio with Google can be much lower (2-4 times usually) than with Overture, however there are two things that compensate all that and even add a small advantage for Google:
- Google and their affiliates probably have about 5-10 times more visitors than GoTo/Overture and their affiliates;
- since a certain "selection based on the level of interest" was already done on Google (meaning that only the visitors that are really interested in your ad will click on it and the rest will go to the normal results), visitors sent from here will have a slighly higher interest in your site (for instance they will download your evaluation versions more often)!