Search Giant Google Makes Its Case for Display Advertising

NEW YORK ( –  Search advertisers: Google would like you to sell you some display advertising. The internet giant is releasing a bit of research today that’s counterintuitive, if not somewhat peculiar, for a company so dependent on the search-advertising category for revenue. Specifically: Google is making the claim that display, video and text ads on its “content” network are just as effective as search.

In a study Google conducted last year, ads in its content network, which reaches about 80% of internet users in the U.S., was more cost-effective for advertisers than search. Among advertisers that use both, the cost of reaching a consumer who ultimately clicks on an ad cost 2.6% less on Google’s content network than in Google’s search results.

Google came up with the data by following 25,000 advertisers representing 1 billion clicks and 70 million click-through conversions for 12 months ending in November 2008. In total, 51.6% of Google advertisers got better returns from the content network than search. Search still drove the majority of total clicks, but nearly 20% of all clicks came from ads on the content network among advertisers included in Google’s study, proving that it too can be an important driver of leads and sales for marketers. (Of course, a click is just a click and doesn’t necessarily mean a consumer took the action an advertiser wanted, be it to fill out a survey or buy a product.)

As one might imagine, the research is dense and includes some caveats. Google is posting the entire white paper detailing its findings on the AdWords blog at some point today.

Break down stereotypes

But Google is hoping to break down some stereotypes about search and ad networks at a time when online ad dollars are flowing into search, as marketers look for the fastest, cheapest return at the expense of longer-term branding campaigns.
“The perception has been that ad networks in particular don’t perform as well as search campaigns,” said Lexi Reese, director of Google’s content network. “But this shows people looking for performance right now benefited when they extend their search campaign into the ad-network space.”

Search has weathered the ad recession better than any other ad medium; meanwhile, network advertising was a weak spot for Google in the first quarter, down 3% from a year ago. In general, online display ads are expected to go negative by a percentage point or two in 2009, while search advertising will be up 8%, according to a March forecast from Barclays Capital.
Kevin Lee, CEO of search-marketing firm Didit, saw some flaws in Google’s methodology. Namely, the advertisers included are already both AdSense and content network clients, and many wouldn’t be running ads on the network if they weren’t working.
Lead generation.

That said, he went on to say that with the right advertisers and targeting, DidIt clients have achieved results on Google’s content network as good as results on search, particularly for lead-generation. Retail advertisers have had less success, in part because they are catching people earlier, when they start looking to shop, which often begins with search.

The parity between search and the content network was in part due to improvements in targeting, such as the ability of advertisers to screen out sites that don’t perform, as well as target ads by the type of content on sites.

“For retail, you have to give it some TLC; you have to change your ad copy, run the ads in narrower geographies, or use the site-targeting feature,” he said. “A combination of these things tends to work a lot better than just turning it on.”

Bill Lan, VP-account development at search ad agency Efficient Frontier, still sees search as the most efficient ad category and Google’s content network as an easy next step. “If you’re already doing search, the content network is a way to move to the next level into another effective channel.”

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