By Dan Thies

Contextual Advertising Takes A Huge Leap Forward

By Dan Thies

Google recently announced an upcoming change to the Adwords program, which will allow advertisers to target contextual advertising on specific web sites.

Andrew Goodman reported in WebProNews that this means the end of the old PPC keyword bidding model in favor of pricing based on impressions (CPM), but this isn’t quite right. According to Google, the CPM bidding will apply only to the new “site targeted” advertising feature, and CPM advertisers will still have to compete against keyword-targeted PPC bids for placement on sites carrying Adsense.

Google’s ingenious model for selecting ads to display (maximizing revenue per impression) allows them to perform the ‘apples to oranges’ comparison with ease, and allow advertisers to bid on the same inventory in whichever terms they find more comfortable.

For example, let’s say we have an ad with a PPC bid at $1.00 per click, with a 1% click through rate. That translates to 10 clicks per 1000 displays, or a CPM of $10. A CPM bid of $10.01 will outrank that PPC bid. Simple, elegant, and a big improvement for old-school advertisers.

The biggest improvement, though, is that advertisers will be able to run separate site-targeted campaigns. This is important because it will allow advertisers to use different headlines and copy for their contextual ads. Since contextual ads are shown to people who are looking at something, it takes a different type of ad to get the best response. By comparison, search-targeted ads are shown to people who are looking for something.

Who should be worried about this? Oh, maybe every other online ad network. Who else should be happy, besides advertisers? Publishers with quality sites who can expect their Adsense revenue to grow.

For my own business, I expect that we will shift more advertising funds to Google now that we have a better way to target our contextual advertising. Thanks, Google!

  • Thanks for the update, this is an important way to improve search engine advertising. It will certainly grant greater flexibility to those websites more suited to contextual advertising. All in all very interseting…certainly worth a bit more research though :D.

    -Thanks for the ‘heads up’ Dan!

  • Andrew Goodman

    Please don’t twist my words out of context. I’m well aware that the old CPC programs are still intact. In fact, I’m in direct contact with Google on the matter. Because my blogs are being taken out of context so frequently after WebProNews reprints them from my site, I’m seriously wondering whether I should have given permission for the reprints.

    Sometimes you blog partial info because news is breaking and you don’t have time (due to real life client commitments) to put out a lengthy discussion, OK?

    So, how about thanking me for spending the last 18 months lobbying Google for improvements in the content program?



  • Andrew,

    Thanks indeed for the continuous pressure on Google. I figured you knew better, since you are well known as the premier expert on Adwords. (Seriously, folks, he is.)

    I wasn’t trying to beat you up or anything, and I’m sorry if you feel that I took something out of context, but a lot of folks interpreted this statement the same way I did:

    The first major change: pricing is on a CPM (cost-per-thousand-impressions) basis, not cost per click.

    In fact, I initially found the article when one of my students emailed me to ask what to do about losing their contextual PPC campaigns. Unlike my student, I followed the link you provided which had the details direct from Google.

    Having your blog (which is read by a more experienced group) distributed to a newbie-focused publication may lead to the occasional misunderstanding, especially if you’re trying to break the breaking news in the middle of a busy day.

  • Peter

    My question is of course: How do you get your site with adsense on it to be extremely popular so many people want to advertise on it?

  • [QUOTE=Peter]My question is of course: How do you get your site with adsense on it to be extremely popular so many people want to advertise on it?[/QUOTE]
    I’d recommend starting with reasons why people would want to visit and revisit regularly. Maybe content or something.

  • contextweb

    Here an effective contextual advertising software launched!!

    XeoAds helps anyone who is interested in setting up a contextual advertising network And offer their advertisers and publishers a better channel to do online advertising, the contextual nature of the ads served using this system ensures its effectiveness and scalability. XeoAds is functional contextual ads management software, unique and tested. XeoAds also has features that make it a great interface for most advertisers and publishers, thus making any ads network a top notch success. XeoAds is an easy-to-implement solution for online publishers and ad serving companies for their contextually targeted advertising.

    Read more here:

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