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Friday, December 26, 2003

Google AdSense Ads to Appear in E-Mail Soon?

Kevin Lee of did-it.com publishes a monthly search engine marketing newsletter under the auspices of a site called BriefMe.com. A recent issue of the HTML-format ezine contained Google AdSense ads. Not only that, but in the margin, there was a headline link titled "Google Launches AdSense Beta for Newsletters." One was hoping to click on this and find out more about the program from Kevin.

Unfortunately the link is mislabeled and if the item ever appeared on the website, it's been pulled. I can't find any info by searching the web or any of the news services such as Google News or MSN Newsbot. This is unsurprising since Google doesn't like to comment on or release information on new features until they've been formally announced.

This won't be big news to many when it does come out, in any case, since sufficient readers will have seen Lee's newsletter to conclude that Google is testing AdSense-in-Email with some habitual beta testers such as did-it.

In addition, although I have seen no formal announcement, some larger advertisers and agencies have already discovered that Overture is running sponsored links in email. According to one agency source, some are expressing dismay that this is being done with limited consultation, and worry that the traffic quality will be poor if more is not done to monitor the quality of the publishers and to provide better channel control for advertisers (in contrast with Overture's habitual "all or nothing, take it or leave it" philosophy).

Pay-per-click keyword ad providers will need to be careful about how they move into the email space, but if it's done correctly and carefully, this can be another important channel for many online advertisers, especially smaller ones -- a channel which they've often found too confusing or risky to embrace in the past. Committing a small budget to the email channel through an interface that one is already using, such as Google AdWords, FindWhat, or Overture, would be a convenient and highly quantifiable method of dipping a toe into the email waters. And the process of weeding out the hucksters who publish low quality information or who pump up their impression numbers would be accelerated by the usual quasi-Darwinian feedback mechanisms inherent to so many online campaigns today. Tangible rewards would then accrue to quality, targeted publications as advertisers outbid one another for targeted slots. A far cry from online advertising circa 1999.

This depends, however, on the willingness of companies like Google and Overture to come up with ways of allowing their advertisers to highlight or block certain publications in their choices of where to show or not show their ads. If it's just a mysterious matching technology working in tandem with a small editorial quality control staff, the process of weeding out the free-riding publishers becomes much slower. It could be a couple of years before the IT departments of some larger companies have the appropriate meetings with their marketing departments to determine that an AdSense ad showing up in a certain publisher's emails doesn't convert well to sales. And if the leaders continue to thwart advertisers' wishes for enhanced control over ad placement, this leaves an opening for their competition.

It's not just the usual suspects (second-tier PPC's and existing online ad brokers) who may be vying for this business. Many months ago I talked to a freshly-funded software company which was planning an "AdSense-like" program (prior to Google's AdSense rollout) for larger publishers who wanted to run their own PPC auction. The company doesn't seem to have succeeded thus far; part of the problem was a business model that charged a hefty licensing fee for the software as opposed to working on a revenue sharing plan. One upside, however, was the fact that the publisher -- not the middleman -- would "own" their own advertiser list. (No doubt similar thinking is what led Yahoo to acquire Overture.) The concept could easily be expanded to email. The savings realized in larger companies by cutting back on the staff whose job it is to buy and sell ads each month would likely pay for the software.

The point is, there remain plenty of openings in the targeted online advertising space. There will be room for innovators to enter and gain market share.

With their growing clout and hefty marketing budgets, the top five or six PPC ad brokers -- and maybe some upstarts you've never heard of -- stand to take more business from email marketing firms in '04. This will likely mean continued ferment in the online advertising game, with merger & acquisition activity and hard choices to be made for some firms which have made their living, or part of it, brokering email ads.

Posted by Andrew Goodman




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