With the recent 'Florida' update on google & its impact on the SERPs, typically on the commercial search phrases, it has become imperative that we now examine paid advertising scenario at google. For scores of merchants, now paid advertising will be the only way to help them salvage their holiday sales, as also future revenues. This will be a two parts article, with the first part focusing on the google paid advertising space & the second part on the best practices thereof. However, before we start on googles adwords & adsense programs a word or two on online advertising industry performance in 2003.

Online Advertising Industry:

According to the Interactive Advertising Bureau (IAB), the online advertising industry sales have been robust this year with three consecutive quarters of growth witnessed for the first time in last two years. Lets first look at the yearly sales figures for last three years. Online advertising climaxed in 2000 with $8 billion in revenue (dot com boom) before declining to $7.1 billion in 2001, and $6 billion in 2002. This year in the first three quarters, the sales have been estimated at a healthy 5.07 billion (up 13% from the same period last year). The break up of the quarterly sales figure is as under:

The first quarter sales have been at 1.63BUSD

Second quarter is pegged to have clocked 1.69 billion (up 14% from same quarter last year)

Third quarter is estimated to have done 1.75billion.( 20% growth from this quarter last year)

From figures the emerging pattern is towards keyword based text ads gaining popularity.

According to IAB, out of the 6bUSD figure of 2002, 15.4% (or roughly 1 billion) can be attributed to Search term related sales. This is up 200% from the figures of 2001.

The contribution of search term related ads has been estimated to 31% of the second quarter figures. No break up for third quarter figures is however available. Financial firm Salomon Smith Barney expects the estimated $1.4 billion market in 2003, to grow 30 percent to 35 percent per year, reaching $5 billion by 2008.

This Advertising space is dominated by two major players (obviously): Google & Overture.

Google Adwords

Google has two services for its paid advertisers. Adwords & Adsense. Lets start with Adwords.

This is a program run by Google in which it lets the advertisers bid for a chunk of the real estate on the search engine results page related to specific queries. The ads appear as "sponsored listings/premium listings" next to the organic search results. Along with getting exposure at the googles own site, these ads are also syndicated at Google's partner sites like: America Online, Inc.,Ask Jeeves ,AT&T Worldnet ,CompuServe ,EarthLink, Inc. ,Netscape ,Sympatico Inc. etc.

Currently, Google is supposed to have approx 150,000 monthly advertisers for its paid placement services.

Adwords Account Statistics:

Following are the statistics for every adword account google has; One can set up 25 campaigns in every account. Each campaign can have up to 100 adgroups in it; with each adgroup capable of having up to 750 Keywords in it. The overall limit on any account is 2000 keywords.

Adwords offers four kinds of Keyphrse matching namely: Broad, Phrase,Exact & Negative. Recently, Google has introduced expanded matching for its broad matches. More on this later.

It lets you target your ads to specifically 14 languages, 250 countries or 200 states /regions in US. Google claims 99% accuracy for its IP tracking system to deliver the ad effectively to the target audience.

Recent Features on Adwords:

Google has added three new features to its adwords campaign in October. Those are:

Conversion Tracking

Expanded Matching

Increased Click Through Threshold

Conversion Tracking:

Google has introduced a conversion tracking feature for its advertisers, wherein they can now track the conversions resulting from their advertisement traffic. This conversion tracking helps the advertisers by quantifying the ROI they are achieving with their campaigns.

This feature works by introducing a cookie on the user computer whenever someone clicks on an advertisement. This cookie is connected to the conversion page if the user reaches there. If it is matched, google records a successful conversion.

Expanded Matching:

As a part of its broad matching of keywords, Google has introduced a 'smart' feature called expanded matching. With expanded matching, AdWords system automatically runs ads on highly relevant keywords, including synonyms, related phrases, misspellings and plurals, even if they aren't in the original list of keywords that you submitted with google.

For example if you keyword is 'software development', google system will try & guess alternate searches to display your ads on. Some examples are 'software solutions' or 'software services' or 'technical solutions'. Over time, it will monitor the click through rates (CTR) for these searches & 'learn' the relevance of these searches for you. This will help it make expanded searches more specific. Also, based on its mining the search queries, it will be able to develop fresh combination of search terms which will be relevant to the business.

In an effort to let you know what are the keywords it will look to broaden your exposure to, google has for the first time put out a Adwords keyword suggestion tool:

https://adwords.google.com/select/main?cmd=KeywordSandbox

This tool highlights the googles view of what other terms, it 'understands' to be relating to your business. (Tip :This tool works well for broad searches.)

This theme based adwords tuning, is in sync with googles trend of trying to understand 'available content' & 'user queries' & make 'intelligent matching' of the two.

Increased Click Through Threshold

The increased click-through threshold is designed to help ads that may have struggled for traffic due to poor search relevance. These include those related to contextual ads as well.

Now for evaluating the Account performance evaluates each account after every 1,000 ad impressions. If the CTR for the account falls below a minimum required CTR (which varies by ad position, geography etc but is 0.5% for the top spot and slightly reduced for each subsequent position) the ads will only be displayed occasionally for under performing keywords.

Google Adsense:

Google AdSense is an offshoot of the Google Content-Targeted Advertising program that was launched in early March 2003.

This early program let large websites integrate Google AdWords into their websites. Each deal was independently negotiated with Google, and sites with less than 20 million page views couldn't participate.

The Google AdSense program democratizes the content based text ad display process. Even small merchants,bloggers with only a few thousand page views per month, can now apply to the AdSense program.

The AdSense program allows Web publishers to apply for the program online. After Google vets a site for popularity and quality -- a process the company estimates will take two to three days -- accepted applicants download a string of HTML code to insert on Web pages on which they wish to carry text-link ads.

Google draws the listings from its base of 150,000 advertisers, using its algorithmic search technology to scan the content page and match it up with relevant links that are displayed as either skyscraper ads on the right side of the page or banners at the top.

Some of the large Googles partner networks are :HowStuffWorks ,Mac Publishing (includes Macworld.com, MacCentral, JavaWorld, LinuxWorld ,New York Post Online Edition ,Reed Business Information (includes Variety.com and Manufacturing.net) ,U.S.News & World Report online.