Sunday, August 13, 2006

Does Adsense Make No Sense?

Adsense makes a big deal about disallowing the posting of details: how many clicks equal plus many clickthroughs and how much they make. They don't allow you to keep out some advertisers (e.g. talk about birth control and a scroll of viagra ads could run down your right nav bar). They pick on little Adsense users who generate less than 1000 hits per day-- those who create a lot of work per click-- while big time scam artists who create massive click circles get the red carpet treatment.

Then a piece from ProductWiki came to my attention:

We are in an interesting position at ProductWiki as we generate our revenue from two different sources of pay-per-click (PPC) advertising: Google AdSense and Shopping.com Merchant Listings. These ads show up on all of our product pages (never at the same time) and each type of ad gets approximately a 50% share of our page views across a broad spectrum of products.

I've compiled data contrasting the performance of Shopping.com and Google AdSense on ProductWiki taken from a one week period at the end of last month.


Shopping.comAdSense
Clickthrough rate (%)29%6.5%
Revenue per click ($/click)$0.21$0.19
eCPM ($/1000 impressions)$59$13

Taking a look at the most significant of these figures (eCPM), Shopping.com outperforms AdSense by a factor of 4.6!

Here’s a brief explanation of how the ads work on ProductWiki.

Google AdSense

AdSense is very simple to implement. When a product page is requested by a user, simultaneously a request is made to Google Ad Services to deliver a banner ad containing two links from their ad database. The database is populated by advertisers. Google has already analyzed the product page and attempts to deliver the most relevant ads. We have neither control on how the ads are formatted (with the exception of some minor font and colour tweaking), nor which ads are chosen.






You would expect to see very relevant results since the theme of our site is consumer products, but it’s often not the case. In the above example, we see an ad for “creative products” and for a Zen Vision case, not exactly what we were going for.

Shopping.com Merchant Listings

Wherever possible we display links to online merchants who sell the product in question. This is handled by our software interacting with a Shopping.com XML Web Service that pulls a specific set of ads for each of our products. Unlike AdSense, we are able to control both what ads are displayed and how they look.





Toshiba Gigabeat MEG-F40 with Shopping.com


Why do Shopping.com Ads do so much better?

1. Relevancy, relevancy, relevancy
By far the most significant reason for such a huge gap in performance is relevancy. In our previous AdSense example, the user is presented with two vaguely relevant ads that have only little to do with the Creative Zen Vision:M. Whereas, in our Shopping.com example with the Toshiba Gigabeat, you see links to three reputable merchants who sell the exact mp3 player you’re looking at.

2. Style
Our integration with Shopping.com allows us to style the ads in almost any way we choose, and thus we are able to maintain a consistent theme throughout the page. As far as AdSense is concerned, since we have very little say in how they are displayed, we struggle in creating a consistent theme.

3. The “ignore” factor
AdSense is omnipresent on the Web and, like a boring TV ad, people are getting better at tuning them out. (Take a look at this post by Seth Godin). That portion of our page might as well be invisible.

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Google does have something that Shopping.com does not – breadth. Their database of ads is much more extensive than anything Shopping.com has to offer beyond products; they have ads for blogs, publishers, services, etc.

So how do you get the best of both worlds: the relevancy and style of Shopping.com ads coupled with the breadth of Google AdSense? Simple. Google needs to allow publishers to control what ads are displayed and how they are styled. Another possible improvement is to allow advertisers to classify their ads across broad categories (product, service, blog, etc.) and then publishers could exclusively select ads from those categories.

In the meantime, don’t merely be satisfied with Google Adsense without exploring other alternatives. While our situation is specific to consumer products, I believe there is likely something out there that will be more prosperous for the theme of your website.

Update: Eric Giguere has written an excellent piece on his blog providing detailed suggestions on what we can do to improve our AdSense performance. We plan to implement these changes and examine how much of an effect they have on revenue.
Google is the 400 lb. gorilla. Every one wants to play in the biggest ballpark and knock one out of the part. Take a lesson from Google and hop into the time machine. Whiz back to the year of 1997. Yahoo, Altavista, Webcrawler and Northern Lights were the the big players in the big game on the web: search engines. Then a plucky little player started showing up in my web logs: "googlebot". I checked out the related website. Google. I thought it was a test site for someone's project: there were no ads, no clutter.
Google went into Yahoo's ballpark and won the World Series. Google Adsense is great idea. But I think it's the equivalent of Yahoo. If a company can address these concerns, it will do to Google what Google did to Yahoo:
  • Allow the blockage of advertisers. Open the list and allow the blockage of segments of the advertising community. This way abortion ads don't show up next to a pro-life article.
  • Reveal ad rates: show warts and all. Adsense's mandate of secrecy is hiding what everyone knows: 1% of the people are making 99% of the money.
  • Put ads on videos. This is being done now in a limited way. Youtube could throw ads onto their Flash delivered in a heartbeat. Software can detect scene breaks: at the scene break of a large piece, throw in a contextual ad.
  • Send ads as videos. There are plenty of Flash ads on the web. Whoever gets into the game shouldn't be afraid of using this medium. No? Checkout the ads on TVGuide.com. They knocked me on my ass.
  • Allow site sponsors: Adbrite does this and its a good idea. Many hits or few, there should be a way for someone to sponsor your site. Maybe they don't even need to run ads-- just throw you some cash.
  • Toss bad actors but leave those with bad attention to detail: I have to wonder how much more likely it is that Google Adsense clips an account when it's at $99 vs. $1.
Starting an Adsense competitor isn't hard. Here's what you need:
  • A weberver and a domain. Any memorable name would do-- even if you started with the husk like a dud domain. The webserver would have to handle 1GB/mo. traffic in its first six months; 10GB/mo. in it's second six months; 15GB/mo. + 20% of the prior month's traffic thereafter.
  • A way to create distributeable ads via a script. The application has to be small, smart and robust. In other words: no 500 Errors.
  • Fraud detection. Do a search for "Liposuction" on Google and check out how the top three hits look like. They're awash with Google Adsense ads. Tell me that isn't fraud. Tell me Google isn't complicit in all of this.
  • A way to read pages for their true context. With AJAX you can add your message; or remove contextually beneficial material via the client. Google Adsense cannot sense that so there is a huge way to hoodwink Adsense. The Adsense replacement has to be smarter than that.
  • A way to promote the new creation. A good idea with bad promotion doesn't get as far as a bad idea with good promotion (Vonage, anyone?)
  • A good accounting system. You need to know when to pay people, how to pay them and when fraud is afoot. I have three Adbrite cheques sitting on my bulletin board: $0.07, $0.45, $0.33. Adsense holds back until you hit $100. How about for amounts less than $10, you have to pay $5 handling to get a cheque, but above that, you get more cheques, even if they're smaller.
The person who comes up with this will maybe spend $10,000 on the application development; $10,000 in the first year to run the server; and an unguessed amount on promotion. Done right, this could rob a 400 lb. gorilla of its bananas.

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