Search Engine Marketing Thoughts - Blogation

In the next issue of Search Marketing Standard (the print edition), I have an article discussing the dramatic rebirth of AdSense (the Google Content Network). Once avoided like the plague by search engine marketers, AdSense has quickly become as effective a marketing channel as the regular search results. In fact, for many advertisers I'd go so far to say that AdSense is actually much better than search. If you had told me three years ago that this statement would appear on this blog, I'd have either declared you crazy or a very gung-ho member of the Google PR department.

But now that the printing presses are churning out my positive review of AdSense, I've recently had a change of heart. Though I still recommend using the AdSense network, I'm starting to wonder whether my declaration of AdSense's rebirth was premature. Why? It's not due to low quality (as was the case years ago), but rather due to the increasing convergence of display and contextual advertising.

You see, AdSense was once text ads only. Today, more and more AdSense placements are banner ads or even video ads. The click-through-rate is higher, the conversion rate is better, and publishers get paid a higher eCPM (earnings per thousand impressions). Now that AdSense publishers are getting a taste for banner ads (display), it's doubtful that many of them will want to go back to the text-only days.

That in itself is not bad for Google. What is bad, however, is that there are plenty of competitive advertising networks out there that do a very good job of monetizing display advertising. Think Right Media (now owned by Yahoo), Advertising.com, or ValueClick as examples. Suddenly Google's competition for contextual advertising went from a few small networks (Quigo AdSonar, IndustryBrains, Yahoo Content), to many very large display networks.

The other twist in all of this is that Google did just acquire DoubleClick, which happens to have an ad network and the top ad server (DART). You can be sure that Google will soon be pushing AdSense to publishers using DART, and pushing DART to publishers using AdSense. No doubt DoubleClick's expertise in display advertising will help AdSense considerably in the fight for contextual/display dominance.

At the end of the day, however, publishers go for the highest eCPMs, and advertisers go for the best ROI. In a world where switching from one network to the next is increasingly easy, and where contracts are "at will" (such as on the AdSense network), the fact that someone is a DoubleClick customer today isn't necessarily a guarantee that they will be one one year from now.

Indeed, competitors like Yahoo have also started to gobble up behavioral targeting networks, such as Blue Lithium, which in theory should provide better eCPM and ROI for everyone involved.

Combine increased competition, commoditization, and advanced targeting and Google has a lot of work ahead of it to maintain the strength of AdSense. In some respects, by turning AdSense into a display network, Google may very well have won the battle but lost the war. Of course, the folks at Google are known to be (somewhat) smart, so I'm sure they've thought all of this through. So I'm not predicting the imminent demise of AdSense (yet). But when you read my glowing review next month, add just a pinch of salt to it!