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December 15, 2005

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.

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