Taking Surer Aim on Contextual Ads

Between news of a possible click-fraud resolution in Arkansas and a potential perp walk in San Jose, one ad-targeting advancement from the Googleplex got pretty much lost in the kerfuffle. So let’s pause a moment to recognize: Last week, Google quietly rolled out the capacity to give pay-per-click marketers in its contextual program more control over who sees their ads.

“Ad targeting” is actually becoming something of a buzz phrase in search marketing, thanks in large part to Google’s competition up the coast in Redmond WA. MSN adCenter lets users in on the demographic profiles attached to keywords, through a combination of data from Microsoft Web registrations and some third-party information. Advertisers can get a look at some attributes of the users who click on search terms before they make their bids, and can tracks clicks to analyze what demographic groups responded to a paid search ad. In fact, only last week, MSN adCenter moved out of its invitation-only phase and threw open its doors to general enrollment.

In short, Google’s new targeting feature resembles adCenter in its demographic approach, but differs in that so far, it’s not being applied to search ads, only to properties in the network of Google content publishers. That means that the ads are sold on impressions, not clicks, so the metrics are cost per thousand rather than cost per click. (For the moment, the program is also only available for U.S. visitors.)

Users can choose up to three demographic criteria for the readership groups they want to get in front of, including sex, six different age categories from 18 to 65+, seven slices of household income, as well as ethnicity and the presence of children. Regional targeting is also available.

Google explains what happens next in a posting on its AdWords Help Center: “The system will analyze your preferences and create a list of available Google Network sites that are popular with that audience. If you select multiple demographics, the AdWords system will look for sites that match all of your preferences.”

Marketers should realize that this tool is designed to help them pick Web sites on which to run their ads, not to let them decide who those ads will be served to. The Google help center is also careful to point out that while the sites its demographic targeting tool suggests may have a lot of readers that fit the profile criteria, they will probably also attract a variety of readers who don’t.

In other words, what you choose is pretty much—but not always, and not guaranteed to be—what you get in the way of an ad target.

Previously, marketers who wanted to target the AdSense network had some ability to do site targeting—that is, to specify that their ads should appear in groups of Web sites organized around a particular interest or affinity, such as parenting, pickup trucks or gaming. But now marketers who want finer control over their ad placement in Google’s contextual system can overlay demographic cuts on the audiences for those sites.

“This is great, especially for those who’ve done advertising in other media or even in other online channels,” says David Berkowitz, director of strategic planning for search marketing agency 360i. “Now advertisers can target specific demographics with contextual ads and ideally make those ads even more relevant to viewers.”

Adding the demographic filters to the media buys on Google AdSense therefore makes that channel a lot more like buying ad inventory in other online media such as banner ads, Berkowitz says, so in that sense it’s an evolutionary step rather than a great leap. “What was really new for AdSense was adding Google’s bidding model to that medium,” he says. “Adding demographic targeting on top of that just makes it make even more sense. It’s something that I’m sure advertisers were hoping for.”

In the different avenues that Google and MSN have taken to add demographics to their ad offerings, you might be able to read two companies trying to play to their very different strengths, Berkowitz adds. MSN has a very large registered base of users for its various products, from e-mail and instant messaging to social networking and its other Passport services, and it has built most of its profiling capabilities on that large data mound, with some additional input from third parties.

Google doesn’t have that crowd of users who have voluntarily submitted data about their ages, incomes and lifestyles, although Gmail and its other properties are gaining traction. So Google had to go outside its installed base and partner with comScore Networks to get the data for targeting, and then applied that data where MSN ain’t—to its much larger network of publishing partners.

“The interesting thing about this whole development is that this is the first time Google’s had to play catch-up,” says Rob Murray, president of search firm iProspect. “They’re used to being the ones leading innovation, but this time MSN beat them to the punch. At the end of the day, advertisers need three networks competing, so kudos to MSN.”

One possible deficiency may be Google’s reliance on outside data, which “may inherently not be as reliable as the Passport data that MSN owns,” Murray says. “That’s very accurate, real live data. The comScore data is a great product, but it’s a panel-based approach in which comScore tracks the Web surfing behavior of a million or more people.” Extrapolating the behavior of two hundred million searchers from that panel will always be less exact than actual observed data.

Will Yahoo! be forced to respond with its own ad targeting capability, either for search terms a la MSN or for its own publishing network, as Google did? “I’m amazed they haven’t done it yet,” Murray says. “It’s just a matter of time before they come out with something. To me they’re closer to cracking that nut than Google was.”