Google Tale

Chris Anderson, editor of Wired Magazine, and discoverer of the Long Tail effect, posted on what he calls a “loophole” in the Google model which, in effect allows him or others to run free ads on Google.  I agree with Chris that this is a loophole but think that it benefits rather than hurts Google; the “victims” include sites, like Fractals of Change, which sell advertising space to Google.

Chris was doing an experiment and ran an ad designed NOT to get any clicks.  Google’s charges to advertisers are based on the number of times an ad is clicked, NOT the number of times it is seen. If your ad gets seen but not clicked, you don’t pay Google anything. 

But there may be value to you in getting your ad seen even if it is not clicked; it may promote your brand; it may get across a point of view.  When Pepsi runs an ad during the Super Bowl, they don’t think you’re going to leave the game and go out and buy a case of soda.  They just hope you’ll be more likely to buy Pepsi next time.

Often Google AdWords ads appear in the right sidebar of this blog for organizations like www.impeachw.com or www.downwithpinkos.com (fictional examples).  These ads are unlikely to get clicked on. But they use real estate on my blog to get their message out.  Because they don’t get clicked on, they don’t have to pay Google.  Much more important, Google doesn’t have to pay me.

OK.  In that example, Google doesn’t get any advantage from this loophole.  But, in the much more usual case, Google and its advertisers benefit and the blog owner loses.  There are lots of movies and books that end up in Google AdWords ads on my blog (remember, a Google bot picks the ads that display here or, in a new program, the advertiser chooses to run here).  These ads don’t get many clicks.  But they get lots of exposures.

The advertisers benefit by repeat display of the name of their products.  Google benefits because it does gets paid for the occasional click.  The cost is my inventory of space, not Google’s.  So every click is gravy to Google and every exposure is value to the advertiser.  In effect, Google is GIVING AWAY exposures on my blog so that they can sell a few clicks which they will dutifully pay me for.

I don’t run ads or blog for the pitiful revenue I get from it – good thing – but running the ads lets me learn stuff like this.  If you want to earn income blogging or from a website, my experience is that you don’t do well with Google ads.  I think the loophole Chris discovered has a lot to do with why.

By contrast, my ads for books on Amazon do much better even though Amazon pays not on clicks but only on actual purchase.  I pick which books to recommend to my readers.  I’m adding value by doing this.  No one gets to float a book title on my blog just for exposure.

On my site and many others, there’s a good click rate on WordOfBlog ads.  These are used primarily but not exclusively for charity.  There’s no commercial model for them yet. But the ad is picked by the site that runs it, not the other way around.  Fred Wilson calls this sell-side advertising.

FeedBurner Ad Network pays and charges per impression like traditional advertising.  This is for ads which appear in increasingly popular RSS feeds.  For reasons I won’t go into here, FeedBurner can give reasonable assurance to advertisers that the exposures they pay for are the exposures they get.  From a publisher’s point of view, this is a good model.  I don’t care whether people click on the ads that run with the feed of my blog or not.  If the advertiser just wants brand exposure, fine.  If the advertiser wants clicks, then she has to design a good ad to get them.  I get to veto ad campaigns which I think would be irrelevant or offensive to my readers.

John Battelle’s Federated Media Publishing has yet another model which I haven’t experimented with yet but which promises to be more responsive to the needs of publishers including the need to NOT deliver irrelevant messages to your readers on your blog site.

Bottom line:  Chris DID expose a loophole.  In the short term, the loophole actually benefits Google.  In the longer term, the loophole means that there is plenty of room for Google rivals – big or small – who can serve publishers and their readers better.

Comments

[Wesley Tanaka]

Google does need to pay for electricity and hardware to serve ads

[Kathleen]

As with the other comments, I think you don't really know how Google Adsense works. Although, yes, you do get some freebies at first (exposure but no clicks), ultimately you "Pay for it"- whether it is NOT getting your ad shown at all, OR having to pay a very high ad price if it does get clicked. (Adsense charges different prices for different words- the more clicks your ad gets, the lower your cost per click).

At any rate, every business DOES WANT the click ultimately. I think you very rarely get free visitors based on someone remembering your URL. There's just too much clutter.

http://www.entrepreneur.com.sg

[tim]

One thing to remember is that impressions of an advertisers ads on context sites can still be worth while for an advertiser.

Why?

Because the cost can be set very low e.g. 1c.

In addition people are unlikely to click because they know that the site will earn revenue. However if the display URL is set correctly, there is always the chance that people will remember the URL and visit the site, which of course costs nothing.

On the other side - as a publisher - affiliate products like Amazon will earn very little, because thousands of impressions will be required for a single sale. The whole idea of affiliate programs is for the merchant and not the affiliate. Many sites will not achieve any sales in months and months.

However if you have lots of blogs, and earn a small amount of revenue from each, via PPC then the total can be a substantial sum

Turning to the Long Tail Effect

There is nothing particularly new about the long tail effect.

It has been well known for years, that multiple pages targeting different keywords is far more likely increase traffic and sales, than popular keywords for which the competition has long since reached saturation point

[aj]

Don't think this is really a loophole. It costs Google to display ads through adsense (capital + operational) and its in their business interest to maximize the number of clicks per impression. They can always choose to not display an ad with poor click through rate or display it less often compared to the ones with better click through rate.
If they don't do a good job maximizing the money they make per display of ad and consequently money you make per display of your blog. You have the freedom to choose another service that can earn you more money then they do.
The question is whether the other service with a different model can earn more money for you or not. Part of that equation is if the other service can attract advertisers to their service better than google can. You can answer that question for yourself if you believe an advertiser is getting a better bang for their buck if they with google's model or somebody else's.

[Teddie]

Dude, you're years late on this, this is what all the good contextual advertisers do anyway.

Guess you better start reading up on how they are cutting off the long tail, that's the real news in search right now for frontline advertisers.

http://www.e-consultancy.com/news-blog/newsletter/2715/search-marketing-and-the-long--tail.html#27985

[Tom Evslin]

elge:

the loophole exists because no ads which run on adsense are considered contextual. Bloggers get paid only on clicks - never on exposures. But some of the ads really are contextual and the advertiser benefits from the exposures even though the owner of the real estate where the ad is displayed doesn't.

[elge_p]

I'd have to disagree that the loophole even exists in the first place because Google charges contextual advertisers for the number of impressions as well as the number of clicks.

[charlie crystle]

I don't click on your Google ads. I might click on other blog links or book links, but never the ads.

We have an "awareness" campaign where we don't expect clicks on our ads. We run them in content areas, and the name of the product (GiftWorks 2006) is all over the ad. They get some clicks, but not as much as the benefits/features ads.

Part of Google's system is that ads that don't get click don't get shown. So they monitor it, and the "loophole" closes over time. They've killed some of our keywords, for instance, simply because nobody searching for those terms ever click on our ads. So we try to adjust. Ultimately, we WANT relevant clicks.

What concerns me most is click fraud by our competitors--when competitors click on our ads and we get charged for it. That sucks.

[Tom Evslin]

Much more likely it disappeared because of trouble TypePad (the hosting service that Chris and I both use) has been having all day. I had to rebuild this site to recover the last week's posts and Chris probably just hasn't done that yet. I bet it'll be back.

[will]

looks like Chris took down the post. . . hmm. . . did the Google secret police make him do it? :)