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January 03, 2005

50% ROI increase in contextual advertising with Google

At Search Engine Strategies Chicago in December, Emily White spoke briefly about contextual advertising... from the advertisers point of view, and complete with a fancy power point to illustrate it.

Smart pricing was launched on April 7, 2004, amid cheers from the advertisers and jeers from a large percentage of publishers. But interestingly, since the launch of smart pricing, advertiser ROI in content has increased 50%.

In a nutshell, smart pricing estimates what the ROI would be on any given publisher's webpage for the ads running on there, and discount the cost of that ad to the advertiser, and thus the earnings the publisher would make on that click.

This means that if a page has a higher liklihood of conversion, the advertiser may pay higher than the same ad running on a page where the liklihood of a conversion is much lower. This discounting is done automatically and "on the fly".

With such a dramatic increase of ROI to advertisers, it should encourage advertisers who may have initially turned off content targeting in their Adwords account to perhaps give it another try. Advertisers will likely discover a lower cost associated with running their ads on the content network, as well as seeing a lower cost and higher ROI when compared to their ads run on content last year.

Posted by Jenstar at January 3, 2005 10:08 AM

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No question that my firm has seen some improvement in performance in recent months, but the 50% figure Emily threw out at SES could be fairly misleading. If average conversion was at .2% a year ago and at .3% today, for instance, it wouldn't be terribly impressive.

Posted by: PJH at January 9, 2005 05:31 PM

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