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The_Case_for_Overture_to_Enter_the_Mass_Contextual_Advertising_Market
| The Case for Overture to Enter the Mass Contextual Advertising Market
Contextual Advertising is, by definition, text-based
advertising. As opposed to search engine results which show up
when a user types in a specific request, contextual ads appear
alongside text on all websites that opt to show them.
The market leader in contextual advertising is Google. Through
its AdWords™ program, advertisers can choose to syndicate their
ads on relevant websites. On the other side of the equation,
website owners can join Google’s AdSense™ program to serve these
ads.
Google is not the only company that allows website owners to
serve contextual ads. There are a host of others such as
Searchfeed.com and Revenue Pilot that also do this. The problem
with using these other firms is that the price-per-click you
receive will most likely be less than the price that Google pays
you. This is because advertisers generally bid/pay on an auction
basis. Since Google has so many bidders, the price that the
advertiser pays is greater than they pay on lesser search
engines (classic supply/demand economics).
There is one search engine, Overture, which also serves large
volumes of advertisers, and as such, has keyword bid prices that
are as high as, and often higher than Google’s. While Overture
does offer contextual advertising, it has strict limitations
which prevent the vast majority of websites from enrolling.
Specifically, Overture limits its contextual advertising program
to websites generating more than 1 million web searches a month.
Overture clearly is missing out on a huge revenue source by
limiting program participants. The rational behind its
selectivity is most likely the fact that its contextual
advertising program relies heavily on Overture's editorial team
to avoid poor matches that a technology-dependant approach
inevitably produces. As an example, according to statements
released at the time of the program’s launch by Bill Demas,
Overture's Senior Vice President, without editorial intervention
a story about a person stabbed to death could easily carry knife
advertisements.
While Overture is missing out on significant revenues, web
publishers are also missing out by Overture’s non-participation.
This is because, if more web publishers were able to choose
between AdSense and Overture’s programs, Google would be forced
to become more aggressive with the percentage split that it
gives AdSense publishers. While it has been reported that big
Google partners such as AOL.com receive 80% of the revenue per
click generated by Google ads, AdSense publishers report figures
in the 10% to 50% range.
So, web publishers should really begin pushing Overture to open
up its contextual advertising program as web publishers, and
potentially Overture/Yahoo!’s shareholders, could reap
significant financial benefits.
About the author:
As President of Growthink, Dave Lavinsky has helped the company
become one of the premier business plan development firms.
Growthink clients have collectively raised over $750 million in
financing, launched numerous new product and service lines and
gained competitive advantage and market share. For more
information please visit http://www.growthink.com
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