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AdWords is Google's flagship advertising product and main source of revenue. Google's total advertising revenues were USD$23 billion in 2009 . AdWords offers pay-per-click (PPC) advertising, and site-targeted advertising for text, banner, and rich-media ads. The AdWords program includes local, national, and international distribution (Dell XPS M1210 Batteryhttp://www.hdd-shop.co.uk.

Google's text advertisements are short, consisting of one headline and two additional text lines. Image ads can be one of several different Interactive Advertising Bureau (IAB) standard sizes     (Dell Studio XPS 1340 Battery)    .

Sales and Support for Google's AdWords division is based in Mountain View, California, with major secondary offices in Ann Arbor, Michigan , the company's third-largest US facility behind its Mountain View, California, headquarters and New York City office.Engineering for AdWords is based inMountain View, California    (Dell Studio XPS 1640 Battery)  .

Pay-Per-Click advertisements (PPC)

Advertisers select the words that should trigger their ads and the maximum amount they will pay per click. When a user searches on Google, ads (also known as creatives by Google) for relevant words are shown as "sponsored links" on the right side of the screen, and sometimes above the main search results  (Dell Vostro 1710 Battery)   .

Clickthrough rates (CTR) for the ads are about 8% for the first ad, 5% for the second one, and 2.5% for the third one. Search results can return from 0 to 12 ads.

The ordering of the paid-for listings depends on other advertisers' bids (PPC) and the "quality score" of all ads shown for a given search       (Dell KM958 battery)  .

The quality score is calculated by historical click-through rates, relevance of an advertiser's ad text and keywords, an advertiser's account history, and other relevance factors as determined by Google. The quality score is also used by Google to set the minimum bids for an advertiser's keywords     (Sony VGP-BPS13 battery)   .

The minimum bid takes into consideration the quality of the landing page as well, which includes the relevancy and originality of content, navigability, and transparency into the nature of the business. Though Google has released a list of full guidelines for sites, the precise formula and meaning of relevance and its definition is in part secret to Google and the parameters used can change dynamically      (Sony VGP-BPS13/B battery)   .

The auction mechanism that determines the order of the ads is a generalized second-price auction. This is claimed to have the property that the participants do not necessarily fare best when they truthfully reveal any private information asked for by the auction mechanism (in this case, the value of the keyword to them, in the form of a "truthful" bid)  (Sony VGP-BPS13/S battery) .

AdWords Features

IP Address Exclusion

In addition to controlling ad placements through methods such as location and language targeting, ad targeting can be refined with Internet Protocol (IP) address exclusion. This feature enables advertisers to specify IP address ranges where they don't want their ads to appear        (Sony VGP-BPS13A/B battery)     .

Up to 20 IP addresses, or ranges of addresses, can be excluded per campaign. All ads in the campaign are prevented from showing for users with the IP addresses specified.

Location-based exclusion is also offered as a method of narrowing targeted users      (Sony VGP-BPS13B/B battery)   .

Frequency Capping

Frequency capping limits the number of times ads appear to the same unique user on the Google Content Network. It doesn't apply to the Search Network. If frequency capping is enabled for a campaign, a limit must be specified as to the number of impressions allowed per day, week, or month for an individual user    (Sony VGP-BPL9 battery)    .

The cap can be configured to apply to each ad, ad group, or campaign.

Placement targeted advertisements (formerly Site-Targeted Advertisements)

In 2003 Google introduced site-targeted advertising     (Sony VGP-BPS13B/B battery)   .

Using the AdWords control panel, advertisers can enter keywords, domain names, topics, and demographic targeting preferences, and Google places the ads on what they see as relevant sites within their content network. If domain names are targeted, Google also provides a list of related sites for placement    (Sony VGP-BPL11 battery)  .

Advertisers may bid on a cost per impression (CPM) or cost per click (CPC) basis for site targeting.

With placement targeting, it is possible for an ad to take up the entire ad block rather than have the ad block split into 2 to 4 ads, resulting in higher visibility for the advertiser      (Sony VGP-BPL15 battery)     .

The minimum cost-per-thousand impressions bid for placement targeted campaigns is 25 cents. There is no minimum CPC bid, however.

AdWords distribution

All AdWords ads are eligible to be shown on www.google.com. Advertisers also have the option of enabling their ads to show on Google's partner networks     (Dell Inspiron E1505 battery)     .

The "search network" includes AOL search,Ask.com, and Netscape. Like www.google.com, these search engines show AdWords ads in response to user searches, but do not affect quality score.

The "Google Display Network" (formerly referred to as the "content network") shows AdWords ads on sites that are not search engines (Dell Latitude E6400 battery)    .

These content network sites are those that use AdSense andDoubleClick, the other side of the Google advertising model. AdSense is used by website owners who wish to make money by displaying ads on their websites. Click through rates on the display network are typically much lower than those on the search network and are therefore ignored when calculating an advertiser's quality score  (HP Pavilion dv6000 Battery)    .

It has been reported that using both AdSense and AdWords may cause a website to pay Google a commission when the website advertises itself.

Google automatically determines the subject of pages and displays relevant ads based on the advertisers' keyword lists (SONY VAIO VGN-FZ Battery)   .

AdSense publishers may select channels to help direct Google's ad placements on their pages, to increase performance of their ad units. There are many different types of ads that can run across Google's network, including text ads, image ads (banner ads), mobile text ads, and in-page video ads (SONY VAIO VGN-FZ18 Battery)  .

Google AdWords' main competitors are Yahoo! Search Marketing and Microsoft adCenter.

AdWords account management

To help clients with the complexity of building and managing AdWords accounts search engine marketing agencies and consultants offer account management as a business service     (SONY VAIO VGN-FZ180E Battery)    .

This has allowed organizations without advertising expertise to reach a global, online audience. Google has started the Google Advertising Professionals program to certify agencies and consultants who have met specific qualifications and passed an exam.Google also provides account management software, called AdWords Editor   (SONY VAIO VGN-FZ220E Battery)  .

Another useful feature is the My Client Centre available to Google Professionals (even if not yet passed the exam or budget parameters) whereby a Google professional has access and a dashboard summary of several accounts and can move between those accounts without logging in to each account (SONY VAIO VGN-FZ340E Battery)    .

The Google Adwords Keyword Tool provides a list of related keywords for a specific website or keyword.

Recently, numerous complaints have been filed with the San Jose Better Business Bureau (BBB) regarding treatment small businesses have received from Google Adwords customer service   (SONY VAIO VGN-FZ430E Battery)     .

As a result, the company now has a A- rating with the San Jose BBB.

Click-to-Call

Google Click-to-Call was a service provided by Google which allows users to call advertisers from Google search results pages. Users enter their phone number, Google calls them back and connects to the advertiser    (SONY VAIO VGN-FZ460E Battery)   .

Calling charges are paid by Google. It was discontinued in 2007. For some time similar click-to-call functionality was available for results in Google Maps. In the Froyo release of Google's operating system, in certain advertisements, there is a very similar functionality, where a user can easily call an advertiser  (SONY VAIO VGN-FZ480E Battery)       .

History

The original idea was invented by Bill Gross from Idealab who, in turn borrowed the idea from Yellow Pages. Google wanted to buy the idea but a deal could not be reached. Not wanting to give up on this form of advertisement, the company launched its own solution, AdWords in 2000    (SONY VAIO VGN-FZ4000 Battery)    .

AdWords followed a model that was significantly similar to Bill Gross' creation which led to legal action between the two parties. Eventually the dispute was settled out of court.

At first AdWords advertisers would pay a monthly amount, and Google would then set up and manage their campaign  (SONY VAIO VGN-FZ31E Battery)     .

To accommodate small businesses and those who wanted to manage their own campaigns, Google soon introduced the AdWords self-service portal. Starting in 2005 Google provided a campaign management service called Jumpstart to assist advertisers in setting up their campaigns     (SONY VAIO VGN-FZ31B Battery)     .

However, this service is no longer available, so companies needing assistance must hire a third-party service provider.

In 2005, Google launched the Google Advertising Professional (GAP) Program to certify individuals and companies who completed AdWords training and passed an exam     (SONY VAIO VGN-FZ31J Battery)    .

Due to the complexity of AdWords and the amount of money at stake, some advertisers hire a consultant to manage their campaigns.

In 2008, Google launched the Google Online Marketing Challenge (http://www.google.com/onlinechallenge/), an in-class academic exercise for tertiary students   (SONY VAIO VGN-FZ31M Battery)      .

Over 8,000 students from 47 countries participated in the 2008 Challenge and over 10,000 students from 58 countries took part in 2009. The Challenge runs annually, roughly from January to June. Registration is at the instructor rather than student level.

In 2009, Google revised the AdWords interface, introduced Local Business Ads for Google Maps and Video Ads (SONY VAIO VGN-FZ31S Battery)   .

Legal context

AdWords has generated lawsuits in the area of trademark law (see Google, Inc. v. Am. Blind & Wallpaper Factory and Rescuecom Corp. v. Google Inc.), fraud (see Goddard v. Google, Inc.), and click fraud. In 2006, Google settled a click fraud lawsuit for US$90 million (SONY VAIO VGN-FZ31Z Battery)   .

Overture Services, Inc. sued Google for patent infringement in April 2002 in relation to the AdWords service. Following Yahoo!'s acquisition of Overture, the suit was settled in 2004 with Google agreeing to issue 2.7 million shares of common stock to Yahoo! in exchange for a perpetual license under the patent    (SONY VAIO VGN-FZ38M Battery) .

Technology

The AdWords system was initially implemented on top of the MySQL database engine. After the system had been launched, management decided to use a commercial database (Oracle) instead. The system became much slower, so eventually it was returned to MySQL  (SONY VGP-BPS8 Battery)    .

The interface has also been revamped to offer better work flow with additional new features, such as Spreadsheet Editing, Search Query Reports, and better conversion metrics.

Ad Content Restrictions

As of April 2008 Google AdWords no longer allows for the display URL to deviate from that of the destination URL     (Dell Inspiron 1320 Battery)    .

Prior to its introduction, Google paid advertisements could feature different landing page URLs to that of what was being displayed on the search network. Google expounds that the policy change stems from both user and advertiser feedback. The concern prompting the restriction change is believed to be the premise on which users clicked advertisements   (Dell Inspiron 1320n Battery) .

Users were in some cases, being misled and further targeted by AdWords advertisers.

As of December 2010 Google AdWords has decreased its restrictions over sales of Hard Alcohol.It now allows ads that promote the sale of hard alcohol and liquor        (Dell Inspiron 1464 Battery)    .

This is an extension of a policy change that was made in December 2008, which permitted ads that promote the branding of hard alcohol and liquor.

Allowed keywords

Google has also come under fire for allowing AdWords advertisers to bid on trademarked keywords       (Dell Inspiron 1564 Battery) .

In 2004, Google started allowing advertisers to bid on a wide variety of search terms in the US and Canada, including the trademarks of their competitors  and in May 2008 expanded this policy to the UK and Ireland. Advertisers are restricted from using other companies' trademarks in their advertisement text if the trademark has been registered with Advertising Legal Support team  (Dell Inspiron 1764 Battery)     .

Google does, however, require certification to run regulated keywords, such as those related to pharmaceuticals keywords, and some keywords, such as those related to hacking, are not allowed at all. These restrictions may vary by location.  From June 2007, Google banned AdWords adverts for student essay writing services, a move which was welcomed by universities    (Dell Studio 1450 Battery) .

Google has other restrictions, for example the advertising of a book by Aaron Greenspan called Authoritas: One Student's Harvard Admissions and the Founding of the Facebook Era, was restricted from advertising on AdWords because it contained the word Facebook in it   (Dell Studio 1457 Battery)   .

Google's rationale was that it was prohibited from advertising a book which used a trademarked name in its title .

AdSense is an ad serving application run by Google Inc. Website owners can enroll in this program to enable text, image, and videoadvertisements on their websites     (Dell Latitude D610 Battery)   .

These advertisements are administered by Google and generate revenue on either a per-click or per-impressionbasis. Google beta tested a cost-per-action service, but discontinued it in October 2008 in favor of a DoubleClick offering (also owned by Google). In Q1 2010, Google earned US$2.04 billion ($8.16 billion annualized), or 30% of total revenue, through AdSense  (Toshiba NB100 Battery) .

Overview

Google uses its Internet search technology to serve advertisements based on website content, the user's geographical location, and other factors. Those wanting to advertise with Google's targeted advertisement system may enroll through AdWords  (Toshiba Satellite M65 battery)  .

AdSense has become a popular method of placing advertising on a website because the advertisements are less intrusive than most banners, and the content of the advertisements is often relevant to the website.

Many websites use AdSense to monetize their content; it is the most popular advertising network  (Toshiba Satellite M60 battery) .

AdSense has been particularly important for delivering advertising revenue to small websites that do not have the resources for developing advertising sales programs and sales people. To fill a website with advertisements that are relevant to the topics discussed, webmasters implement a brief script on the websites' pages     (Dell Latitude D830 Battery)   .

Websites that are content-rich have been very successful with this advertising program, as noted in a number of publisher case studies on the AdSense website.

Some webmasters invest significant effort into maximizing their own AdSense income      (Dell Latitude D620 Battery) .

They do this in three ways:

  1. They use a wide range of traffic-generating techniques, including but not limited to online advertising.
  2. They build valuable content on their websites that attracts AdSense advertisements, which pay out the most when they are clicked    (Dell Inspiron Mini 10 Battery)      .
  3. They use text content on their websites that encourages visitors to click on advertisements. Note that Google prohibits webmasters from using phrases like "Click on my AdSense ads" to increase click rates. The phrases accepted are "Sponsored Links" and "Advertisements"   (Sony VGN-FW11S Battery)     .

The source of all AdSense income is the AdWords program, which in turn has a complex pricing model based on a Vickrey second price auction. AdSense commands an advertiser to submit a sealed bid (i.e., a bid not observable by competitors). Additionally, for any given click received, advertisers only pay one bid increment above the second-highest bid (Sony VGN-FW11M Battery) .

Google currently shares 68% of revenues generated by AdSense with content network partners.

History

Oingo, Inc., a privately held company located in Los Angeles, was started in 1998 by Gilad Elbaz and Adam Weissman (Sony VGN-FW139E/H battery)    .

Oingo developed a proprietary search algorithm that was based on word meanings and built upon an underlying lexicon called WordNet, which was developed over the previous 15 years by researchers at Princeton University, led by George Miller (Dell Latitude E5400 Battery)  .

Oingo changed its name to Applied Semantics (company) in 2001, which was later acquired by Google in April 2003 for US$102 million.

In 2009, Google AdSense announced that it would now be offering new features, including the ability to "enable multiple networks to display ads"      (Dell Latitude E4200 Battery)    .

Types

AdSense for Feeds

In May 2005, Google announced a limited-participation beta version of AdSense for Feeds, a version of AdSense that runs on RSS and Atom feeds that have more than 100 active subscribers    (Dell Vostro A840 Battery)   .

According to the Official Google Blog, "advertisers have their ads placed in the most appropriate feed articles; publishers are paid for their original content; readers see relevant advertising—and in the long run, more quality feeds to choose from."

AdSense for Feeds works by inserting images into a feed      (Dell Inspiron 300M Battery) .

When the image is displayed by a RSS reader or Web browser, Google writes the advertising content into the image that it returns. The advertisement content is chosen based on the content of the feed surrounding the image. When the user clicks the image, he or she is redirected to the advertiser's website in the same way as regular AdSense advertisements   (Dell Studio 1737 battery)  .

AdSense for Feeds remained in its beta state until August 15, 2008, when it became available to all AdSense users.

AdSense for search

A companion to the regular AdSense program, AdSense for search, allows website owners to place Google search boxes on their websites     (Dell Inspiron E1505 battery)       .

When a user searches the Internet or the website with the search box, Google shares 51% of the advertising revenue it makes from those searches with the website owner. However the publisher is paid only if the advertisements on the page are clicked; AdSense does not pay publishers for mere searches    (Dell RM791 battery)       .

AdSense for mobile content

AdSense for mobile content allows publishers to generate earnings from their mobile websites using targeted Google advertisements. Just like AdSense for content, Google matches advertisements to the content of a website — in this case, a mobile website  (Dell XPS M1530 battery)      .

AdSense for domains

Adsense for domains allows advertisements to be placed on domain names that have not been developed. This offers domain name owners a way to monetize domain names that are otherwise dormant. Adsense for domains is currently being offered to some users, with plans to make it available to all in stages     (Dell XPS M2010 battery) .

On December 12, 2008, TechCrunch reported that AdSense for Domains is available for all US publishers .

AdSense for video

AdSense for video allows publishers with video content to generate revenue using ad placements from Google's extensive Advertising network including popular Youtube videos     (Dell Vostro 1000 battery)   .

XHTML compatibility

As of September 2007, the HTML code for the AdSense search box does not validate as XHTML, and does not follow modern principles of website design because of its use of

  • non-standard end tags, such as </img> and </input>   (Acer Aspire One battery)   ,
  • the attribute checked rather than checked="checked",
  • presentational attributes other than id, class, or style — for example, bgcolor and align,
  • a table structure for purely presentational (i.e., non-tabular) purposes,1 and
  • the font tag   (Toshiba Satellite P10 Battery)   .

1: using a table structure for unintended purposes is strongly discouraged by the W3C,but nevertheless does not cause a document to fail validation — there is currently no algorithmic method of determining whether a table is used "correctly" (for displaying tabular data or for displaying elements, that get proportionally wider or narrower when browser window resizes in width without active client side scripting)      (SONY VGN-FZ210CE Battery)    .
2: the font tag is deprecated but does not fail validation in any XHTML standard .

Additionally, the AdSense advertisement units use the JavaScript method document.write(), which does not work correctly when rendered with the application/xhtml+xml MIME type       (Dell Precision M70 Battery)    .

The units also use the iframe HTML tag, which is not validated correctly with the XHTML 1.0 Strict or XHTML 1.0 TransitionalDOCTYPEs.

The terms of the AdSense program forbid its affiliates from modifying the code, thus preventing these participants from having valid XHTML websites    (Toshiba Satellite L305 Battery)    .

However, a workaround has been found by creating a separate HTML webpage containing only the AdSense advertisement units, and then importing this page into an XHTML webpage with an objecttag. This workaround appears to be accepted by Google.

How AdSense works

  • The webmaster inserts the AdSense JavaScript code into a webpage    (Toshiba Satellite T4900 Battery)  .
  • Each time this page is visited, the JavaScript code uses inlined JSON to display content fetched from Google's servers.
  • For contextual advertisements, Google's servers use a cache of the page to determine a set of high-value keywords  (Toshiba PA3399U-2BRS battery)  .
  • If keywords have been cached already, advertisements are served for those keywords based on the AdWords bidding system. (More details are described in the AdSense patent.)
  • For site-targeted advertisements, the advertiser chooses the page(s) on which to display advertisements, and pays based on cost per mille (CPM), or the price advertisers choose to pay for every thousand advertisements displayed (Toshiba Satellite A200 Battery)      .
  • For referrals, Google adds money to the advertiser's account when visitors either download the referred software or subscribe to the referred service. The referral program was retired in August 2008 .
  • Search advertisements are added to the list of results after the visitor performs a search   (Toshiba Satellite 1200 Battery)  .
  • Because the JavaScript is sent to the Web browser when the page is requested, it is possible for other website owners to copy the JavaScript code into their own webpages. To protect against this type of fraud, AdSense customers can specify the pages on which advertisements should be shown. AdSense then ignores clicks from pages other than those specified  (Toshiba Satellite M300 Battery)    .

Abuse

Some webmasters create websites tailored to lure searchers from Google and other engines onto their AdSense website to make money from clicks. These "zombie" websites often contain nothing but a large amount of interconnected, automated content (e.g., a directory with content from the Open Directory Project, or scraper websites relying on RSS feeds for content) WD passport essential (500GB/640GB) .

Possibly the most popular form of such "AdSense farms" are splogs (spam blogs), which are centered around known high-paying keywords. Many of these websites use content from other websites, such as Wikipedia, to attract visitors. These and related approaches are considered to be search engine spam and can be reported to Google  WD passport essential (250GB/320GB) .

A Made for AdSense (MFA) website or webpage has little or no content, but is filled with advertisements so that users have no choice but to click on advertisements. Such pages were tolerated in the past, but due to complaints, Google now disables such accounts WD  passport essential SE (750GB/1TB)   .

There have also been reports of Trojan horses engineered to produce counterfeit Google advertisements that are formatted looking like legitimate ones. The Trojan uploads itself onto an unsuspecting user's computer through a webpage and then replaces the original advertisements with its own set of malicious advertisements   WD  passport elite(250GB/320GB) .

Criticism

Due to alleged concerns about click fraud, Google AdSense has been criticized by some search engine optimization firms as a large source of what Google calls "invalid clicks", in which one company clicks on a rival's search engine advertisements to drive up the other company's costs  WD passport elite(500GB/640GB) .

To help prevent click fraud, AdSense publishers can choose from a number of click-tracking programs. These programs display detailed information about the visitors who click on the AdSense advertisements. Publishers can use this to determine whether or not they have been a victim of click fraud      WD  passport studio for Mac(320GB/500GB) .

There are a number of commercial tracking scripts available for purchase.

The payment terms for webmasters have also been justly criticized. Google withholds payment until an account reaches US$100, but many micro content providers  require a long time—years in some cases—to build up this much AdSense revenue   WD  passport studio for Mac(500GB/640GB) .

However, Google will pay all earned revenue greater than US$10 when an AdSense account is closed and not disabled.

Many website owners complain that their AdSense accounts have been disabled just before they were supposed to receive their first paycheck from Google      WD  Elements series(250GB/320GB) .

Google claims accounts have been disabled due to click fraud or forbidden content, but have offered no proof of this. An automated email is sent to the publisher's owner which offers no reasoning, or options but a link to file an appeal  WD  Elements SE(500GB/640GB) .

In the email, Google states that "Because we have a responsibility to protect our AdWords advertisers from inflated costs due to invalid activity, we've found it necessary to disable your AdSense account. Your outstanding balance and Google's share of the revenue will both be fully refunded back to the affected advertisers  WD Elements SE(750GB/1TB) ."

The revenue generated - whether legitimate or not - is taken, and all complaints are deferred.

Google came under fire when the official Google AdSense Blog showcased the French video website Imineo.com. This website violated Google's AdSense Program Policies by displaying AdSense alongside sexually explicit material WD  Elements desktop(500GB/640GB).

Typically, websites displaying AdSense have been banned from showing such content. Some sites have been banned for distributing copyrighted material even when they hold the copyright themselves or are authorized by the copyright holder to distribute the material    WD  Elements desktop(750GB/1TB) .

It has been reported that using both AdSense and AdWords may cause a website to pay Google a commission when the website advertises itself.

In some cases, AdSense displays inappropriate or offensive ads  WD  Elements desktop(1.5 TB/2TB) .

For example, in a news story about a terrorist attack in India, an advert was generated for a (presumably non-existent) educational qualification in terrorism.

AdSense sets tracking cookies that are viewed by some  as important threat for the privacy  WD  passport essential SE (750GB/1TB)--USB 3.0) .

Webmasters that use AdSense must place the appropriate warning in the privacy policy page .

Performance-based advertising

With performance-based advertising, the advertiser pays only for measurable results   WD  passport essential (500GB/640GB) .

With other forms of advertising they pay regardless of results. Performance-based advertising is becoming more common with the spread of electronic media, notably the Internet, where it is possible to directly measure user actions that result from the advertisement     WD  passport for Mac(320GB/500GB) .

In fact, over half of all internet advertising is performance-based today.

Pricing Models

There are four common pricing models used in the online performance advertising market.

CPM (Cost-per-Mille, or Cost-per-Thousand) Pricing Models charge advertisers for impressions - i.e. the number of times people view an advertisement      WD  passport for Mac(640GB/1TB) .

Display advertising is commonly sold on a Cost-per-Lead pricing model. The problem with CPM advertising is that advertisers are charged even if the target audience does not click on the advertisement        My book essential 4 generation  (640GB/1TB) .

CPC (Cost-per-Click) advertising overcomes this problem by charging advertisers only when the consumer clicks on the advertisement. However, due to increased competition, search keywords have become very expensive  WD  My book essential 4 generation( 1.5TB/2TB) .

A 2007 Doubleclick Performics Search trends Report shows that there were nearly six times as many keywords with a cost per click (CPC) of more than $1 in January of 2007 than the prior year. The cost per keyword increased by 33% and the cost per click rose by as much as 55%     WD  My book elite( 1TB/1.5TB) .

In recent times, there has been a rapid increase in online lead generation - banner and direct response advertising that works off a CPL pricing model. In a Cost-per-Lead pricing model, advertisers pay only for qualified leads - irrespective of the clicks or impressions that went into generating the lead  WD  My book studio(1TB/2TB) .

CPL advertising is also commonly referred to as online lead generation.

Cost per Lead (CPL) pricing models are the most advertiser friendly. A recent IBM research study found that two-thirds of senior marketers expect 20 percent of ad revenue to move away from impression-based sales, in favor of action-based models within three years   WD  My book essential 4 generation( 1.5TB/2TB) .

CPL models allow advertisers to pay only for qualified leads as opposed to clicks or impressions and are at the pinnacle of the online advertising ROI hierarchy.

In CPA advertising, advertisers pay for a specific action such as a credit card transaction (also called CPO, Cost-Per-Order)  WD  My book elite(640GB/2TB) .

Advertisers need to be careful when choosing between CPL and CPA pricing models.

In CPL campaigns, advertisers pay for an interested lead - i.e. the contact information of a person interested in the advertiser's product or service    Seagate  expansion portable (320GB/500GB) .

CPL campaigns are suitable for brand marketers and direct response marketers looking to engage consumers at multiple touchpoints - by building a newsletter list, community site, reward program or member acquisition program.

In CPA campaigns, the advertiser typically pays for a completed sale involving a credit card transaction    Seagate  expansion (1.5TB/2TB) .

CPA is all about 'now' -- it focuses on driving consumers to buy at that exact moment. If a visitor to the website doesn't buy anything, there's no easy way to remarket to them.

There are other important differentiators    Seagate  Freeagent Desktop (500GB/1TB) :

1. CPL campaigns are advertiser-centric. The advertiser remains in control of their brand, selecting trusted and contextually relevant publishers to run their offers.On the other hand, CPA and affiliate marketing campaigns are publisher-centric. Advertisers cede control over where their brand will appear, as publishers browse offers and pick which to run on their websites  Seagate  Freeagent Go(250GB/320GB) .

Advertisers generally do not know where their offer is running.

2. CPL campaigns are usually high volume and light-weight.In CPL campaigns, consumers submit only basic contact information. The transaction can be as simple as an email address      Seagate  Freeagent Go(500GB/640GB) .

On the other hand, CPA campaigns are usually low volume and complex. Typically, consumer has to submit credit card and other detailed information      Seagate  Freeagent Go(750GB/1TB) .

CPL advertising is more appropriate for advertisers looking to deploy acquisition campaigns by re-marketing to end consumers through e-newsletters, community sites, reward programs, loyalty programs and other engagement vehicles     Seagate  Freeagent Goflex(250GB/320GB) .

Economic Benefits

Many advertisers have limited budgets and may not understand the most effective method of advertising. With performance-based advertising plans, they avoid the risk of paying large amounts for advertisements that are ineffective. They pay only for results  Seagate Freeagent Goflex(500GB/640GB) .

The advertising agency, distributor or publisher assumes the risk, and is therefore motivated to ensure that the advertisement is well-targeted, making best use of the available inventory of advertising space     Seagate  Freeagent Goflex(750GB/1TB) .

Electronic media publishers may choose advertisements based on location, time of day, day of week, demographics and performance history, ensuring that they maximize revenue earned from each advertising slot.

The close attention to targeting is intended to minimize the number of irrelevant advertisements presented to consumers  Seagate  Freeagent Goflex Pro(500GB/750GB) .

They see advertisements for products and services that are likely interest them. Although consumers often state that advertisements are irritating, in many situations they find the advertisement useful if they are relevant.

Metrics

Various types of measurable action may be used in charging for performance-based advertising    Seagate  Freeagent Goflex desktop(1TB/2TB) :

  • Many Internet sites charge for advertising on a "CPM" (Cost per Thousand) or Cost per impression basis. That is, the advertiser pays only when a consumer sees their advertisement. Some would argue that this is not performance-based advertising since there is no measurement of the user response     Seagate  Freeagent go for Mac(320GB/640GB) .
  • Internet sites often also offer advertising on a "PPC" (pay per click) basis. Google's AdWords product and equivalent products from Yahoo!, Microsoft and others support PPC advertising plans    Samsung  G2 protable (250gb/320GB) .
  • A small but growing number of sites are starting to offer plans on a "Pay per call" basis. The user can click a button to place a VoIP call, or to request a call from the advertiser. If the user requests a call, presumably they are highly likely to make a purchase    Samsung  G2 protable (500GB/640GB) .
  • Finally, there is considerable research into methods of linking the user's actions to the eventual purchase: the ideal form of performance measurement.

Some Internet sites are markets, bringing together buyers and sellers     Samsung  S2 protable (320GB/500GB) .

eBay is a prominent example of a market operating on an auction basis. Other market sites let the vendors set their price. In either model, the market mediates sales and takes a commission - a defined percentage of the sale value. The market is motivated to give a more prominent position to vendors who achieve high sales value      Samsung S1 Mini (120GB/160GB) .

Markets may be seen as a form of performance-based advertising.

The use of mobile coupons also enables a whole new world of metrics within identifying campaign effect. There are several providers of mobile coupon technology that makes it possible to provide unique coupons or barcodes to each individual person and at the same time identify the person downloading it    Samsung  S1 Mini (250GB/320GB) .

This makes it possible to follow these individuals during the whole process from downloading until when and where the coupons are redeemed.

Media

Although the Internet introduced the concept of performance-based advertising, it is now spreading into other media  Samsung story station (1TB/1.5TB) .

The mobile telephone is increasingly used as a web browsing device, and can support both pay-per-click and pay-per-call plans. Coupons delivered to the mobile handset can be used to link advertising direct to sales    Samsung Story station (1.5TB/2TB) .

As consumers start to use their mobile handset as an electronic payment device, it may become practical to establish direct linkage between advertising and purchases. The linkage may be indirect. A consumer may use their mobile phone to scan a barcode on an outdoor advertisement       Samsung story station Esata(1TB/1.5TB) .

This loads the advertiser's mobile site onto the phone  . When the consumer shortly afterwards goes to the advertiser's store and uses their phone to make a purchase, the linkage can be inferred       Samsung  G3 station (1TB/1.5TB) .

Directory assistance providers are starting to introduce advertising, particularly with "Free DA" services such as the Jingle Networks 1-800-FREE-411, the AT&T 1-800-YELLOWPAGES and the Google1-800-GOOG-411. The advertiser pays when a caller listens to their advertisement, the equivalent of Internet CPM advertising, when they ask for additional information, or when they place a callMaxtor  one touch 4 plus (500GB/750GB) .

IPTV promises to eventually combine features of cable television and the Internet. Viewers may see advertisements in a sidebar that are relevant to the show they are watching. They may click on an advertisement to obtain more details, and this action can be measured and used to charge the advertiser    Maxtor one touch 4 plus (1TB/1.5TB) .

It is even possible to directly measure the performance of print advertising. The publisher prints a special telephone number in the advertisement, used nowhere else. When a consumer places a call to that number, the call event is recorded and the call is routed to the regular number. The call could only have been generated because of the print advertisement  Maxtor cool black(640GB/1TB) .

Pricing

A publisher may charge defined prices for performance-based advertising, so much per click or call, but it is common for prices to be set through some form of "bidding" or auction arrangement    Maxtor Black diamond (320GB/500GB) .

The advertiser states how much they are willing to pay for a user action, and the publisher provides feedback on how much other advertisers have offered. The actual amount paid may be lower than the amount bid, for example 1 cent more than the next highest bidder  Hitachi  simple touch (250GB/320GB) .

A "bidding" plan does not guarantee that the highest bidder will always be presented in the most prominent advertising slot, or will gain the most user actions. The publisher will want to earn the maximum revenue from each advertising slot, and may decide (based on actual results) that a lower bidder is likely to bring more revenue than a higher bidder - they will pay less but be selected more often     Hitachi simple touch (320GB/500GB) .

In a competitive market, with many advertisers and many publications, defined prices and bid-based prices are likely to converge on the generally accepted value of an advertising action. This presumably reflects the expected sale value and the profit that will result from the sale     Hitachi  life studio (320GB/500GB) .

An item like a hotel room or airplane seat that loses all value if not sold may be priced at a higher ratio of sale value than an item like a bag of sand or box of nails that will retain its value over time.

A number of companies provide products or services to help optimize the bidding process, including deciding which keywords the advertiser should bid on and which sites will give best performance     Hitachi life studio (250GB/320GB) .

Issues

There is the potential for fraud in performance-based advertising.

  • The publication may report excessive performance results, although a reputable publication would be unlikely to take the risk of being exposed by audit.
  • A competitor may arrange for automatically-generated clicks on an advertisement  Hitachi  life studio platinum (250GB/320GB)

Since the user's actions are being measured, there may be some concern of loss of privacy.

Performance-based advertising mechanisms induce firms to distort the prices of their goods (usually upwards) relative to prices that would maximize profits in settings where advertising is sold under established pay-per-impression methods      Hitachi life studio platinum (320GB/500GB) .

Upward price distortions reduce both consumer surplus and the joint publisher-advertiser profit, leading to a net reduction in social welfare. Dellarocas (2010) discusses a number of ways in which performance-based advertising mechanisms can be enhanced to restore efficient pricing     Hitachi life studio desk (500GB/1TB) .

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