Google revises ad pricing for content sites

By Reuters
San Francisco, 02 Apr 2004

Web search provider Google said yesterday that it is adjusting prices for some advertisements that Google places on its partners` Web pages, a move that could lower costs for some advertisers.

Google also said it plans to place ads for its customers in e-mail programs, including its own test e-mail service, Gmail, and in e-mail newsletters from companies such as iVillage. Google said that portion of the business will be small for some time.

Mountain View, California-based Google gets the lion`s share of its revenue from its automated advertising services.

One Google program generates ads based on the words Internet users type into its search engine and the other serves up ads based on the words that appear within text on Web sites that participate in Google`s content advertising program.

Susan Wojcicki, director of product management for Google, said the move is a response to advertisers who want to price search-based and content-based advertising campaigns differently. She said some content advertisers will immediately see some of their costs fall due to the new pricing.

Advertisers pay Google each time an Internet user clicks on one of their ads. They have called for Google and other providers of key-word advertising services to offer different pricing on clicks from search and content ads.

Because people are usually looking for something when they are searching, many advertisers say that clicks on ads during searches result in more business than clicks from on ads in content sites, where people are more likely to be browsing.

Ads in content sites also tend to be less specifically targeted than search-based ads. For example, Google showed an ad promoting gay and lesbian vacations in Australia near a news story in the online edition of the New York Post about a spat between New York mob boss Peter Gotti and his wife.

Despite continued scepticism about the effectiveness of content ads, Wojcicki said there are a large number of content sites where ads perform better or the same as search ads.

She also noted that not all content ads are equal.

"A click from the review may be more valuable than a click from a general page," she said. "Our goal is to ensure positive [return on investment] on all of our clicks regardless of where they come from."