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Web Marketing Breaking News
Paid Search Engine Ads Get More Popular
Posted on December 29, 2003
For years Internet advertising
was written off as ineffective. The most typical ad format - the rectangular
banner at the top of the Web page - was simply too small to be creative,
informative or otherwise persuasive.
So, it is no small surprise that the hottest form of
online advertising is now paid listings on search engines - a mere two
sentences that make a banner ad look epic in comparison.
Forrester Research, a technology consulting firm, expects search-based
advertising spending in the United States to grow 47 percent to $2.8 billion
next year from $1.9 billion in 2003, which is faster than any other form
of online marketing.
The question facing the industry is how big can these
small ads really be. The main purveyors now - Google and Yahoo's Overture
Services - are rapidly trying to place these ads on other Web pages like
news articles. And lots of other sites, like the Bizrate shopping engine
and the Citysearch local information service, are refashioning their business
models to focus on variations of paid-search advertising.
The main reason that search advertising has been successful
is that it presents advertising that consumers might actually want to
see. Someone searching for information on arthritis may well be as interested
in ads by drug companies and chiropractors as the reports by medical foundations
and information sites found by the search engines.
A less obvious driver of search ads, but perhaps as
important in the long run, is that they sell themselves. Rather than negotiating
with an ad salesman, the advertiser buys search ads on a Web site by entering
a search term and price it is willing to pay. The highest-bidding ads
are displayed, and the advertisers only pay when a user clicks on the
ad to visit their Web page.
Now Overture and Google have hundreds of thousands
of advertisers willing to pay for more clicks than even those highly used
search engines can deliver. So they are both placing search ads on other
Web pages. But advertisers are concerned that such advertisements are
less effective if they are not on a search site, and may not be willing
to pay as much for them. There are also some bugs to work out with the
automated systems that pick which ads to go on what pages, the president
of Overture, Ted Meisel, said.
One embarrassing example was the placement of
ads by luggage stores on a Web page for a news article about a murderer
who carried away his victims in a suitcase. "It's harder to do content
targeting than we thought," Mr. Meisel said.