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November 20, 2005

Separate bidding on content network introduced by AdWords

Yahoo Search Marketing has long supported the model of allowing separate bidding on the content and search networks, which enabled advertisers to decide how much they were willing to pay dependent on whether it showed up on the Yahoo search results or on one of the content partner networks. Now Google AdWords has finally decided to allow separate bidding between the two, something advertisers have been requesting since AdSense launched.

Content bids let AdWords advertisers set one price when their ads run on search sites and a separate price when their ads run on content sites. If you find that you receive better business leads or a higher ROI from ads on content sites than on search sites (or vice versa), you can now bid more for one kind of site and less for the other. Content bids let you set the prices that are best for your own business.

What will the impact of this change be on publishers? It is a situation where it could go either way in how it impacts publisher earnings. And it might not affect all publishers the same.

On one hand, you might see advertisers finally deciding to run their advertising on the content network, since they can bid at different prices. If they decide a search click is more valuable than a content click, they can adjust their bidding accordingly when they start bidding. So this would inject ad inventory and earnings into the content network.

On the flip side, you might have advertisers who were always quite content to bid the same price across both content and search, who might now suddenly bargain basement their bids on the content network while leaving search bids at their current levels. So suddenly there is a loss of potential earnings revenue from that one advertiser, multiplied across the number of advertisers who chose this route.

So overall, ad inventory would increase, since the likelihood of advertisers opting out of content since they can now bid separately would be pretty slim. But it is the revenue aspect of it that people will be watching closely, and that could drop, rise, or remain the same, depending on what advertisers do.

The timing of the change is good. Advertisers might be encouraged to test out the content network during the busy holiday season, especially with the busiest shopping day of the year occurring this week. There is a lot more incentive for advertisers to try out the content network at this time of year than if this feature was launched at the beginning of the year.

I think this is a good decision for the long term integrity of the AdSense program, even though it could potentially lead to a drop in earnings. By allowing the separate bidding option, I am confident that new advertisers will try out the content network, even with bargain basement bids. And they may discover that their content network ROI is good and will then adjust bids higher to take further advantage of it.

Posted by Jenstar at November 20, 2005 09:02 AM

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