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Using relevancy and targeting to maximize ad revenues 05/24/2008

Posted by Paul Daigle in Uncategorized.
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googleeyeglassIn my last post I discussed how the key to growing a successful and sustainable online advertising businesses is to give users relevance through a healthy attention economy. Google, the Internet’s most profitable company, delivers ad relevancy both within their domain and across the web.

Google developed a slightly better method for ranking websites at a time when Alta Vista, the former leader, watered down its search mission to compete with full service portals like Yahoo. By enhancing search relevancy, Google won the search market.

In 2003 Google introduced AdSense, a tool that serves cost-per-click ads by analyzing and targeting page content on publisher sites. AdSense gives web site owners an easy way to bring contextually relevant ads to their pages. By monetizing web pages with existing CPC advertisers AdSense enabled Google to spread its cost-per-click business across the open web.

Google has clearly demonstrated that the key to online advertising success is relevance. As the owner of operator of an ad driven business your mission must becomes centered on helping your users find relevant ads. This may sound strange, as we all are conditioned to view advertising as a distraction, but if you work with advertisers that have something to offer your users, it’s important that your users and your advertisers are able to connect are the right time.  How can you accomplish this? There are 2 basic methods. One is by targeting user consumption, and the second is by targeting user profiles.

Google’s business targets consumption. A user searches for a specific word or term which demonstrates an interest in a product or content, allowing Google to tailor advertising and web site results that are aligned with the consumer’s immediate needs or interests. Similarly, Google’s AdSense looks at the content being consumed and serves ads that are topically aligned with that content. Both of these methods bring users relevant options that they wouldn’t have had access to otherwise, which is why Google’s response rates are so high and their ad products are so profitable.

In order to provide users with relevancy based on content consumption, your site must be easy to navigate based on need. Clear and thoughtful menus, channels, grouped content, keyword search tools and other drill down methods allow you to create user value and carve out effective advertising opportunities. Yahoo’s Auto, Finance, Real Estate, and Jobs channels each work to build user and advertiser communities around specific needs. The focus of these environments commands much higher ad rates by allowing timely introductions and fueling competition for premium placement. Unfocused pages on the Internet generate .01-.35 cents for every thousand pages viewed. Synergistic environments can often achieve effective CPMs (Cost-per-thousand) of $10-$20. AdSense generates effective CPMs of $1.00- $15, often times doing so on content that wouldn’t sell in a traditional ad-media marketplace.

Whereas consumption targeting is time-based (targeting real time needs and consumption), other methods for targeting are user-based. By identifying and publishing your demographic, psychographic and behavioral data in your media kit, you are building the basic targeting tools that media planners use to consider whether your audience is right for their message.

There are other technology-driven targeting methods that utilize user cookies and/or personal registration data. These methods allow companies to serve relevant ads that are not contextually tied to current consumption. If your company assigns user-cookies that track which users spend time on your food and recipe pages and search on food and recipe related words- you can use that data to serve those users food and recipe related ads even when they are involved in activities that have nothing to do with food. This type of data allows you to create more opportunities to reach specific user segments. If you have an online registration process that records user demographic information like age, gender, industry, interests, income or other personal attributes, you can leverage this data to help advertisers filter out the users who are not in their target market. These capabilities command much higher ad rates because they allow advertisers to concentrate their impressions to ideal users, which eliminates waste.

Both of these methods utilized stored user PII (Personal Identifiable Information).

The key privacy principles which govern the collection and use of PII are “notice” and “choice”. Any ad targeting based on PII needs to be transparent to end-users and to respect their privacy preferences.”  Peter Fleischer, Google’s Global Privacy Counsel,

In other words your privacy policy should clearly state how you collect and use PII, and allow users the means to opt-out of any or all PII targeting. When properly managed, most users will understand that you’re using their data responsibly to bring them relevancy, and will feel that their privacy and security is in good hands. When best practices are ignored you risk the kind of public relations problems epitomized in the past by DoubleClick and Facebook Beacon . Using your PII data to develop ad inventory that you can sell as targeting or filters ensures that you’ll keep your users and their personal activities private and safe.

Advertising is about relevance, efficiency and measurability. Selling online advertising opportunities that maximized these important aspects are crucial to your long term success.

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Comments»

1. warungkopi - 09/01/2009

good info . I always wait for new article of you 😀

Paul Daigle - 09/02/2009

Thanks. I’ve been migrating some of my older post from my old Blogger account, as they’re ingrained in the things I’m working on and thinking about. Will have new stuff to post later this week. Thanks for reading.


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