Paid Search and Contextual Ads

Search is abooming business these days on the Internet. WSJ discusses how the big content publishers are looking to place ads relevant to the stories we are reading. “Here’s how the system works. Advertisers enter bids for keywords or categories on ad networks such as Google and Overture. They agree to pay a certain amount — usually between 10 cents and 50 cents — for each time a reader on affiliated publishers’ sites clicks on their text ad. Publishers then give control of some of the space on their pages to the ad networks, who show the ads alongside related articles. The higher the per-click bid for a keyword or category, the better the chance that ad will be seen. Publishers and the ad networks share in the revenue from clicks.”

Another WSJ story is about how ads are being targeted based on weather. “Online weather sites are experimenting with ads that are triggered by the local weather. They let marketers show ads only in certain zip codes, and only when the current weather or forecast meets certain conditions. For instance, an advertiser could sell air conditioners on a hot day in Miami — or snow tires during a blizzard in Milwaukee…Advertisers have long adjusted their campaigns to fit the weather — like buying radio time for hot-soup ads on cold, rainy days, or television time for allergy medications during seasons with high pollen count — but the Web allows for automatic, instantaneous tweaking of campaigns’ timing as current conditions and forecasts change. They can also charge more for these targeted ads.”

All this is not coming cheap. Wired writes about how the cost of paid search is going up. “As more merchants look to snap up the same keywords, search-engine experts say they also appear to be pushing up prices. Based on bidding activity at the two most popular paid services — Overture (soon to be acquired by Yahoo) and Google’s AdWords program — the cost of delivering ads tied to certain search queries has skyrocketed in recent months.”


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Rajesh Jain

An Entrepreneur based in Mumbai, India.