February 27, 2003 1:37 PM PST

Google's search for new ad revenue

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Aiming to expand its advertising network, Google is moving beyond selling sponsored links that appear alongside search results to selling similar links on partner sites, including on the pages of newly acquired Blogger.

Through its AdWords program, Google lets advertisers bid for placement in search results related to specific keywords; the ads appear as "sponsored listings" alongside those results. It syndicates the sponsored listings, along with the nonpaid, algorithmic search results with which they appear, to partners including AOL and EarthLink.

Its new Content-Targeted Advertising program takes the idea a step further. According to a promotional page for the program, advertisers can now also have their AdWords ads placed on relevant pages of Google partner sites, including HowStuffWorks, Weather Underground and Blogger, whose parent company, Pyra Networks, was acquired by Google last week. The pages on which the ads appear are tied to the keywords associated with the sponsored links. The promo page says Google plans to sign up other sites to display the Content-Targeted Advertising.

Google could not immediately be reached for comment.

The move casts Mountain View, Calif.-based Google in a more prominent role as an advertising network, much like 24/7 Media, Avenue A or former ad-selling giant DoubleClick. These companies, flush with cash during the dot-com boom, have handled the ad sales efforts of thousands of Web operators for years, selling banners, buttons and links on sites relevant to an advertiser's products. As opposed to these companies, though, Google draws advertisers to its own site first and then sells links on partner sites.

Many ad networks saw their fortunes fall with the dot-com bust, but as search-related advertising has emerged as a winner in recent years, it's helped to fuel a revival in the business. The focus Google and others have placed on selling sponsored text links has proved effective for advertisers, partners and Web surfers alike.

Google's chief rival, Overture, also plans to extend its sponsored listing business beyond Web search. The company recently said that this year it would invest up to $12 million in expanding its advertising network onto Web pages relevant to advertisers. It has already syndicated its sponsored links onto the news pages of many Net publishers, but much of its ad business is still related to search.

Web portal Yahoo similarly has its eye on hosting ad links on relevant Web pages. It recently partnered with Sprinks, a bid-for-placement ad service, to place sponsored links on Yahoo real estate pages, despite Yahoo's exclusive contract with Overture to place such links atop Yahoo search results.

Yahoo turned to Sprinks because Sprinks has a slightly different model of bid-for-placement advertising. The company lets advertisers bid for ad listings on Web pages in particular categories, such as real estate or sports. In contrast, Overture and Google auction listings related to keywords, but both companies are quickly entering the market that Sprinks is tapping.

"We see the inherent value of providing consumers (with) results, whether it be (through) search or through a contextual page on Yahoo," said Yahoo spokeswoman Diana Lee.

Other smaller players want to cash in on the popularity of sponsored text links. Philip Kaplan, creator of the widely read F***edCompany.com site for news and rumors, recently launched MarketBanker, a site that lets people purchase and post their own text links on participating Web sites.

Internet media executives say Google's and Overture's steps are a natural extension of their business, but said sponsored text links have been around forever.

"The reality is, different people react to different communications, whether its links or graphics. This is getting headlines because that's all they sell," said Dave Smith, president of Mediasmith, an interactive media planning agency in San Francisco.

To help jump-start the Content-Targeted Advertising program, Google is offering its AdWords advertisers free clicks on links that are placed on partner pages. AdWords advertisers don't pay Google for placement, instead they pay a set price each time a Web surfer clicks a sponsored link. The free offer is good until March 12.

"Since this is a different service than we've offered before, you should have the chance to see if it's right for your business," according to Google's site.

 

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