Ads Next to Picasa Web Albums Search Results

Google started to display text ads above the search results from Picasa Web Albums. In the recent months, Google turned to the services that weren't yet monetized to improve its financial performances: Google Image Search, Google News, Google Finance and now Picasa Web Albums.


"We've been testing different advertising formats for years (some have been more successful than others), and over the next few months, you'll see us continuing to experiment with new ads in new places. (...) Whenever we make changes like these, we carefully evaluate users' reactions to ensure we're holding true to our basic principles: that ads by Google should always be relevant and useful. Of course, these experiments benefit Google because they generate revenue from new sources — but by ensuring that we show the right ads at the right time to the right people, we'll add value for users too," explained Google in November.

Now that the revenues from advertising grow much slower than in the past, Google will probably launch more paid services like the App Engine or Google Apps Premier Edition. Even Google Checkout, a service that has been subsidized by Google for years, will use the same processing fees as PayPal from May.

Behavioral Targeting in Google AdSense

As part of the integration with DoubleClick, Google announced last year that it would use DoubleClick's DART cookies to improve the way ads are displayed on the Google content network. The list of improvements included in-depths reports for advertisers and preventing ads from being displayed too frequently to the same user. "We are enabling this functionality by implementing a DoubleClick ad-serving cookie across the Google content network," mentioned Google at that time.


The integration will soon expand since Google intends to offer behavioral targeting or interest-based advertising, as Google likes to call it. "We think we can make online advertising even more relevant and useful by using additional information about the websites people visit. Today we are launching interest-based advertising as a beta test on our partner sites and on YouTube. These ads will associate categories of interest — say sports, gardening, cars, pets — with your browser, based on the types of sites you visit and the pages you view. We may then use those interest categories to show you more relevant text and display ads," explains a post from the Official Google Blog.

The DoubleClick cookie contains a unique ID that is associated with all your visited pages that include ads served by DoubleClick. If you're visiting a lot of pages related to music, Google will place you in one of the 600 predefined categories (most likely, music enthusiasts) and will use this information to show more ads about music. For now, Google will use interest-based targeting to show better ads when the content of a web page doesn't include enough information to serve contextual ads.

Google also launched a page where you can enter a list of categories that reflect your interests. If you don't likely the new targeting options, the same page offers two ways to opt-out: either by setting a special opt-out DoubleClick cookie or by installing an add-on that protects your cookie. Another option is to block all the cookies sent from doubleclick.net. Google promises to offer an option for AdSense publishers to disable interest-based targeting, but the publishers still need to change the privacy policy to reflect the new features.

While behavioral targeting is not new and many other companies are using it, Google tried to alleviate the worries about profiling users: it won't create sensitive interest categories like race or religion and it won't cross-correlate the data with other information saved in Google accounts.

Google tries to use the enormous reach of the content network (75% globally) to attract more display ads, but the risk could be too high: Google's ads were perceived as non-intrusive, relevant and complementary to the page where they were placed. Focusing more on display ads, using recently visited pages to target ads to users could change that perception and Google will lose its most important asset: user trust.

Text Ads in Google Image Search

After months of experimentation, Google choose to show text ads above image search results. It's not clear if the ads are actually useful for those who visit Google Image Search to find images, but Google mentioned last year that the volume of commercial queries has increased significantly.

"Whenever we make changes like these, we carefully evaluate users' reactions to ensure we're holding true to our basic principles: that ads by Google should always be relevant and useful. Of course, these experiments benefit Google because they generate revenue from new sources — but by ensuring that we show the right ads at the right time to the right people, we'll add value for users too," explained a Google blog post from November.


In 2006, Google estimated that it could earn $80-200 million a year by including text ads in Image Search. Google decided not to monetize Image Search because the experiments showed that people used the service less. I wonder if the experiments from 2008 showed different results.

It's worth mentioning that the only other important image search engine that shows ads is Ask.com Image Search.

More YouTube Ads

Two years after being acquired by Google, YouTube still hasn't figured out how to monetize the site. "We believe the best products are coming out this year. And they're new products. They're not announced. They're not just putting in-line ads in the things that people are trying. But we have a number — and, of course, Google is an innovative place," said Eric Schmidt in August.

One of the new products replicates Google's search ads and adjusts them to a video site. "Sponsored Videos is a self-serve advertising platform that will allow you to promote your video to the audience you are interested in reaching in an easy, effective, democratic, and affordable way. Then, when people use YouTube to search for videos, YouTube will display the most relevant, compelling videos alongside the search results," explains YouTube Blog. Any company or YouTube user from the US can promote his channel or one his videos next to the search results.

Since YouTube controls the search results and hosts the videos, it can provide more measurable results. YouTube can track if the user watched the entire video, if he subscribed to the channel or clicked on the link to the advertiser's homepage.


Another part of YouTube's monetization strategy is expanding the in-video ads to embeddable players. "To date, YouTube has only run ads against partner videos on YouTube itself, and with people viewing millions of embedded YouTube videos every day, this meant that partners were not generating revenue from their views outside YouTube.com. But now, YouTube partners will be able to capitalize on their popularity across the internet and generate revenue from their content no matter where their video lives," informs AdSense Blog. Until now, many YouTube partners disabled the option to embed videos because they couldn't make money from this distribution channel. This change will only affect 4% of the videos uploaded to YouTube, but the percentage of views is much more significant.


The text ads displayed at the bottom of the video can be minimized, but they could cover an important part of a video (for example: annotations, captions) and they're distracting. Most of them link to web pages, but there are some ads that open a new video inside the player.

Google needs to make YouTube profitable and it's nice to see that the ads are often relevant, they don't interrupt videos and they don't make you wait.

Google Launches AdSense for Feeds

I noticed a new option in my AdSense account: AdSense for feeds, a program that displays contextual and placement-targeted ads in FeedBurner feeds. FeedBurner announced in May that AdSense for Feeds will be available to a small number of publishers and now it seems that everyone can use it.

FeedBurner has recently closed FAN, its advertising network. "No new applications for FAN publishers are being accepted and we expect the broad variety of options provided through AdSense (including the new AdSense for Feeds product, powered with FeedBurner feeds) will give publishers valuable new revenue-earning potential," says a FeedBurner/Google employee.

The new AdSense for Feeds option lets you create a new ad unit that has a format automatically selected from 468x60 and 300x250. "Generally, the 300x250 size will display when there's more content and when your feed is being viewed in a device with a larger display," explains Google. You can choose if you want image ads, the ad frequency, the position (top or bottom of the post), the colors and a channel that tracks the ad performance.



For the moment, there's no connection between your AdSense account and the FeedBurner account, so Google automatically adds the FeedBurner service to your AdSense account. Unfortunately, your feeds are still connected to the old FeedBurner account and you need to migrate them first. The migration process is manual: just send an email at adsense-support-aff@google.com and mention your FeedBurner username and the AdSense account email address.


From AdSense, you can easily burn a new feed by entering the address of your blog and selecting some tracking options. The feeds can be managed at the new FeedBurner site, but there's no visible change other than the integration with Google Accounts and the new URLs for feeds: http://feedproxy.google.com/NAME.


Here's an ad from a feed of a FeedBurner/Google employee:


I doubt that these ads are an effective way to monetize feeds, since people use feed readers to get timely updates from a lot of sites and spend less time for each item. Besides, feed readers are mostly used by tech-savvy readers that are less likely to click on ads.

At some point, I may experiment with some infrequent ads in Google Operating System's feed and I'll post my findings.

Resources:
AdSense for Feeds Help Center - you should read the tips
Migrating an existing FeedBurner account
The new FeedBurner homepage

Ads as a Source of Information

At the most recent Google earnings call, Sergey Brin said some interesting things regarding the ads from search results pages. Google tries to reduce the number of ads that are displayed and the number of queries that show ads as it improves the targeting and the ads are more effective.

We try to reduce our coverage at the same time as improving the monetization. But clearly that's not the ideal strategy indefinitely, because we don't want to end up with no ads. And in fact from a quality point of view, we now find our ads are a significant addition quality-wise to our page. They are just a very important source of information. (...) We're all the time running experiments. We run some people without any ads at all, and we know that our ads add value so we know that we're happy about having them.

Jonathan Rosenberg quoted Larry Page, who "often says that we'd be best off if we just showed one ad, the perfect ad". Showing ads that are relevant to the context makes the sponsored links section an alternative to the list of search results, but I wouldn't call some paid links "a very important source of information". Most ads try to convince people to buy a product or a service and to achieve this they may use manipulation or misleading messages.


Last year, one of Google's ad blogs tried to convince healthcare companies to promote their messages using Google ads:

Moore's film [Sicko] portrays the industry as money and marketing driven, and fails to show healthcare's interest in patient well-being and care. Sound familiar? Of course. The healthcare industry is no stranger to negative press. A drug may be a blockbuster one day and tolled as a public health concern the next. (...) Many of our clients face these issues; companies come to us hoping we can help them better manage their reputations through Get the Facts or issue management campaigns. (...) We can place text ads, video ads, and rich media ads in paid search results or in relevant websites within our ever-expanding content network. Whatever the problem, Google can act as a platform for educating the public and promoting your message.

Advertisers have an agenda and they're rarely objective. They provide facts that are difficult to verify and they rarely support their claims.


AdWords has a big list of guidelines that includes supporting competitive claims, third party verification of the claims and an accurate representation of a product, but not all the ads respect these guidelines.


In an interview from 2004, Sergey Brin said that Google's ads "aren't distracting; they're helpful. (...) We know that when people are looking for commercial things, they use the ads. They know they're ads and they know they're just commercial, yet they use them."

Did you use Google's ads as a source of information? You could check your ad history to see if the ads that attracted your attention supported their claims and offered useful information.

Google-Yahoo Search Ads Deal

In June 2000, Google became the default search engine provider for Yahoo. The agreement lasted until 2004, when Yahoo launched its own search engine. Yahoo realized that you can actually make money from search, so it acquired Overture, a company specialized in pay-per-click advertising that also owned two search engines: AltaVista and AlltheWeb. Unfortunately for Yahoo, it moved too slowly and Google became the leader in both search and PPC advertising.

Yahoo's decision to temporarily outsource some of its search ads to Google was predictable, especially after the two-week test from April. Instead of being acquired by Microsoft, Yahoo chose to partner with a company that has a better search ads system.

"Under the terms of the agreement, Yahoo! will select the search term queries for which - and the pages on which - Yahoo! may offer Google paid search results. (...) Yahoo! believes that this agreement will enable the Company to better monetize Yahoo!'s search inventory in the United States and Canada. At current monetization rates, this is an approximately $800 million annual revenue opportunity. In the first 12 months following implementation, Yahoo! expects the agreement to generate an estimated $250 million to $450 million in incremental operating cash flow. The agreement will enhance Yahoo!'s ability to achieve its goal to grow operating cash flow significantly, while at the same time providing flexibility to continue to invest in ongoing initiatives such as algorithmic search innovation and search and display advertising platforms. It gives Yahoo! complete flexibility to continue to use its Panama paid search results."

Yahoo gets a lot of value from this deal and is no longer pressured by investors to significantly improve the search ads. Even if the agreement has a term of up to ten years, I think this is a short-term deal and Yahoo is more motivated than ever to succeed on its own.

Google Blog is quick to announce that this isn't an anti-competitive move. "Yahoo! will remain in the business of search and content advertising, which gives the company a continued incentive to keep improving and innovating. Even during this agreement, Yahoo! can use our technology as much or as little as it chooses." Since the agreement is non-exclusive and Yahoo won't drop the search ads services, it's unlikely that the U.S. Department of Justice will block the deal.

In other related news, Google Talk users have a reason to rejoice. "Yahoo! and Google agreed to enable interoperability between their respective instant messaging services, bringing easier and broader communication to users." Hopefully, this will actually happen, since the previous agreements with AOL and eBay didn't produce any visible effect and there's still no interoperability with AIM and Skype.

Related:
Search, ads, Yahoo and Microsoft
Could Google save Yahoo from Microsoft?
Yahoo tests Google's search ads

Update: Google Watch has some interesting quotes from the conference call. "We began by saying 'Is there a partnership that would make sense? Is there one that is strategic to both companies and in particular a partnership that would allow Yahoo to remain independent," said Eric Schmidt. "Then Schmidt turned cloak-and-dagger like, noting that the executives met in an empty building that Google owned in an unknown and unfindable location for most of us. Apparently, Yang, Schmidt, Yahoo's Sue Decker and others showed up, sometimes on bicycles."

Yahoo Tests Google's Search Ads

{ Image licensed as Creative Commons by Patrick Woodward. }

In what may be the beginning of a new partnership, Yahoo announced that it will display Google ads next to its search results in a limited experiment. "The test will apply only to traffic from yahoo.com in the U.S. and will not include Yahoo!'s extended network of affiliate or premium publisher partners. The test is expected to last up to two weeks and will be limited to no more than 3% of Yahoo! search queries."

Yahoo explores new ways to defend itself against Microsoft's assault. "While there has been some limited interaction between management of our two companies, there has been no meaningful negotiation to conclude an agreement. We understand that you have been meeting to consider and assess your alternatives, including alternative transactions with others in the industry, but we've seen no indication that you have authorized Yahoo! management to negotiate with Microsoft." - an extract from a letter sent by Microsoft to Yahoo's Board last week.

While switching to Google's search ads means admitting the defeat, Yahoo could use this strategy temporarily. Yahoo has a lot of interesting projects in the mobile space, in search and communication, so the future looks better without Microsoft, a company with a different culture.

"If this test — potentially within the three-week window Microsoft set up to launch a proxy fight — pans out and Yahoo also manages to come through with a first-quarter report on Apr. 22 that looks stronger than the current low expectations of analysts, suddenly Yahoo will have some leverage it didn't have before. If the quarter tanks, though, advantage goes back to Microsoft," anticipates Business Week.

Update: Some interesting new developments. WSJ reports that "Yahoo Inc. and Time Warner Inc.'s AOL are closing in on a deal to combine their Internet operations". Google already provides search ads for AOL, so Yahoo's test with Google ads is just "a way for Google to test how well Yahoo monetizes", to quote Danny Sullivan.