Missing with Targeted Advertising

Author: Wayne Eggert
Date: 03/26/05

Advertising opportunities on the internet are a dime a dozen, but every advertiser has one goal in mind - directly targeting their audience and achieving valid clicks. If you're selling hamburgers and your ads are showing up on a vegetarian website, you're missing the mark and costing yourself money. With the advent of targeted ad programs like Google Adwords, Kanoodle, and Overture, this goal becomes much more realisitic, but in many respects these programs are still failing. Part of the problem is greediness of the advertising companies, competitor sabotage, and advertisements that are still not targeting the audience they need to be successful. This article will discuss the current issue with Google Adsense and similar programs, as well as improvements that are necessary before you will see meaningful click through ratios (CTRs) and a return on investment (ROI).

Golden Age of Advertising
In the stone age of Internet advertising (okay, the mid-90s), webmasters only had a few ways to target potential clients/buyers. The smart webmasters carefully chose advertisements for products and services that were similar to the content on their webpage. This often took a great deal of time, but it was the best way to market to an audience that would very likely be interested in clicking on the ads. Some sites would even go sofar as to record user clicks and preferences to attempt to cater to user interests. More often than not, however, webmasters would choose a general category of ads to be displayed globally on their site (ie. Electronics, Shopping, Movies) and not run seperate ad campaigns on each webpage.

Devious webmasters only interested in ad revenue would bombard a user with pop-ups, pop-unders and everything in-between to try to get clicks. This made it extremely tough to close ads without accidentally clicking on them or causing yet more pop-ups to occur. All of these methods, both good and bad, are still used today and will likely continue to be used into the next decade. As computer users become more intelligent and ad blocking programs become more widespread, many of these old methods of drawing traffic are becoming extinct. Enter Content Targeted Advertising.

Content Targeted Advertising
In the past several years, a new breed of ad programs has surfaced. Programs like Overture and Google Adswords aimed to save advertisers' time and money by allowing them greater control over the audience trying to be reached. Search engines began placing ads next to search results, which offered higher visibility to sites who would have never before dreamed of such exposure. Webmasters wanting to earn revenue could now place these content-driven ads on their sites and need-not worry about placing relevant ads next to their content. Advertisers could have ads displayed on relevant sites, webmasters could benefit in having relevant ads next to their content. Everyone wins, right?

Greediness of Advertising Services
Actually, not everyone is winning. It seems advertising programs like Google Adwords, Kanoodle, & Overture are still failing in many respects. One of the problems is greediness of the ad service providers and it's hard to say if things will ever change.

Let me give an example -- in Google Adwords you create an Ad Campaign and then create ads within that campaign. You choose the amount you're willing to spend per click ($0.05 on up) for each ad. You can then set a daily budget-limit on the campaign. The budget is helpful since its purpose is to help protect you from financial loss should you receive a very large number of clicks. The problem is, with Google Adwords you are penalized for setting a low budget. If the recommended daily budget of the campaign is $20.00, for example, if you set it to $10.00 (less than the recommended) your ad will only be served roughly half the time. In order to have your ad displayed 100% of the time, you must set the daily budget to at least the recommended amount. It would seem like Google could easily change this functionality and give the user an option to have their ad displayed 100% of the time until they've reached their budget. Why don't they? By discouraging setting of safe budgets, they're encouraging you to set your ad budgets high and increasing their profits when one of your ad campaigns runs wild.

It's not just Google. Overture has their own methods of profiting from your misfortunes. In order to advertise with Overture you must purchase your ads up-front. So if you run an ad that's expected to receive $30.00 in clicks per month, they will charge you $30.00 to begin displaying your ad. They also mention that once you've hit $30.00 worth of clicks, they will again charge you for another $30.00 until you tell them otherwise. These services are not allowing the user control over when their ads start & stop and are in-turn penalizing users who do not have the financial backing to support a mistake.

Invalid Clicks
Many of these ad services are now allowing webmasters to show blocks of their ads in exchange for ad revenue on a per-click basis. Usually an advertiser has a preference to display their ad on "Search Sites" or "Content Sites", at least I know this is the case with Google's Adwords. The issue here is any site that incorporates Google search results counts as a "Search Site", so ads are still being displayed on many sites with inappropriate audiences.

Invalid clicks are also being received from sites trying to sabotage their competitors' campaigns. If company XYZ wants to run company ABC out of the advertising business, all they need to do is have several dozen IP blocks and some staff to click ads with high cost-per-click (CPC).

These programs also seem to encourage invalid clicks from webmasters or frequent visitors of their favorite site or blog who wish to give the webmaster's revenue a boost. I've read a number of posts on newsgroups and forums with complaints about this type of abuse, but when you're offering ad revenue in this manner, you're bound to have problems like this. Most advertising services do attempt to look for abuse of invalid clicks, but they aren't going to bend over backwards giving your money back either.

Is There Hope?
Actually, there are some alternative advertising methods that we can only hope will be adopted by the big leagues. AdBrite has an interesting method of advertising that might appeal to some individuals. Instead of paying per-click and having their ads displayed on an upredictable number of sites, advertisers can choose the sites they want to advertise on and pay for their ad to appear on that site for a certain time interval. This generally means more exposure on a site that is directly related to your ad, rather than relying on a large ad network to attempt to target sites for you.

The best part is you pay a one-time advertising fee, rather than a cost-per-click fee.. meaning webmasters are going to be more encouraged to placing the ad blocks somewhere visible and presentable on the page and less inclined to click the ads themselves. Even if they do click the ads, it's not costing you anything as you've already paid for your timeslot. Webmasters, in turn, can rely more on the revenue their ad blocks are generating instead of being left in the dark as to how much they're being paid for each click as with Adsense. The ad networks will always have their place, but just know that there are alternatives that are much easier on the budget and might even target your audience more than haphazardly listing your site on a large ad network.

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