Google Jumps The Shark

In writing our review of the current state and future potential of Facebook’s self-service advertising platform, we found ourselves incredibly bullish on its potential, not the least of which stems from all of the various levers they have yet to explore. Naturally, thinking about Facebook’s self-service platform and its potential future evolution leads us back to the company that, while they certainly didn’t invent the self-service ad platform, they did manage to do it better than anyone else, i.e. Google. Facebook may not have used it as an inspiration for their ad platform, but they might want to use Google as an inspiration on how to extract more money out of their advertising. Google’s years of tweaks have yielded them consistently higher revenues by driving up both the amount of clicks they generate and the average cost per click, a truly winning monetization strategy. Google calls these tweaks "innovations." From a consumer facing product perspective we might agree. Think back to map sites pre-Google Maps (Mapquest) and post-Google Maps. From a monetization standpoint, Google acts no different than a direct marketing company. They have an obsession with metrics and finding new ways to achieve the aforementioned higher RPM (eCPMs), be it through the old "innovations" such as using CTR in calculating bid price to newer "innovations" like quality score or minimum first page bid. Look at these monetization innovations, and one thing outside of the sheer quantity and duration of them stands out. Google has done two related things remarkably well – 1) continue to come up with newer tweaks that drive up revenue and 2) couch the explanation in terms of adding value to the user. Naturally, the question has long been, how many more tweaks do they have before a) they run out and/or b) advertisers react and we see a wide spread lowering of bids due to quality. The answer could be now.

For active users of Google products, especially those who follow the online ad space, fourth quarter 2008 has brought about some unexpected changes on Google properties. It may have taken Google several years before Google.com had any ads (lord knows every media buyer at every network has written Google pre-2002 about them putting a banner up on their site, myself included), but it has taken little time for them to litter with ads a bunch of their sites that once were ad free. At first, it might have seemed one off, but taken together the changes raise some really interesting questions. Haven’t followed the changes? Here’s a summary.

Ads on Google Finance

I’ve used Google Finance for years, so when they first did this, I did what non-ad people seem to do well, ignore it. As an ad person, though, it bothers me to see such good ad inventory wasted. It was bad enough when they modified the format of the page to show more news stories and not have the same default chart they used to, but this is worse. Contextual ads should be contextual. Arguably the best algorithm, and they cannot show anything but penny stock ads? Talk about poor user experience on top of wasted ad inventory. For a company that wants to rule the display space and brands, here is their chance. Take a cue from sites like Yahoo Finance to The Wall Street Journal. Put a nice display ad for Scottrade there.

Ads on Google Maps

Unlike Google Finance, noticing this one, especially if you have a larger monitor, requires a little extra attention. No, there is no ads on the image above, but click on one of the flags on the map, and you might see an ad like the one we did.

Again, from a user experience standpoint, this is a questionable use of real estate. The query in this scenario is incredibly local. The vast majority of ads that show will be less relevant and take the user to a more general page, as was the case here.

AdSense for Domains

Little known to those outside of the domain world and select journalists / bloggers is Google’s domain name monetization system. Google accidentally entered the domain space when it acquired Applied Semantics more than four years ago, the company whose technology became the core to extending AdWords to content sites. Besides having a great semantic algorithm for understanding content, Applied Semantics had a healthy parked domain monetization business which Google continued. Given the largely misunderstood nature of domain parking, which for Google has led to bad press and frivolous lawsuits, the product has historically been a B2B play – used to power other domain parking companies and registrars, e.g. Go Daddy. Extremely large domain portfolio owners could work directly with Google, but you almost had to know the secret handshake to make that happen. No longer.

Ads on Google Shopping

Something about this one just seems redundant

Display Ads on Search Ads Listings

Google’s AdSense extended paid search to content sites. The product has a variety of ad units, one of which is almost anachronistic – keywords – that when clicked lead to search result listings of paid search advertisers. A golf site, for example, might have some links that look like navigation links but are "Ads by Google." One of which might say "Golf Apparel." Click on that, and you will see a page like the one below… now with banner ads and not just those uploaded through AdWords.

Ads on Google Images

Google has played around with various ads on images (including banners), but the current format seems both consistent with their core offering of just text ads and the current winner in format. We especially like the response sent to Search Engine Land by Google when they reported on banners appearing. All too fitting. "As part of our ongoing commitment to innovation and to help users find new and better ways of getting the information they’re looking for, we are currently conducting a test to show ads on the results pages for Google Image Search. The experiment is restricted to U.S. advertisers who are using formats including text ads and static image ads."

So, has Google jumped the shark? They will succeed in getting more clicks, but at what cost? For just about all of the above, it’s hard not to believe that Google should have waited until they could hold true to their mission – user experience and relevance – before releasing these tests to the broader market. They are incredibly complex scenarios for serving ads. Simply tweaking the contextual engine and spitting out an AdWords advertiser won’t work.