There's lots of room to disagree when it comes to contextual advertising -- and that's what make the decision on whether or not to participate in programs such as Google AdSense so challenging for publishers right now. What I'm seeing in the market are the first steps towards refining and improving the whole concept, and that, as with all things Internet, will mean even more confusion before we get to anything approaching clarity.
One company that's getting some buzz right now is Quigo. By mixing technology with a new model that combines contextual ad placement with categories such as travel, it claims it is creating an even higher level of relevancy. The underlying logic seems good. For example, if you are a cruise ship operator, do you want your ad on a recipe site where there is mention of a recipe found during someone's travels to Spain , or a travel site talking about all the wonderful things one can do if one travels to Spain? Neither site is a bad place to advertise, but from a clickthrough perspective, the cruise ship company is likely to do better on the travel site.
Some theorists are going further, suggesting that advertisers could place their ads at a central location, and publishers would select what ads to place on their sites. Presumably, they would select the ads most relevant to their audiences in order to maximize clickthroughs, and thus their own revenue. A nice side benefit is that publishers would have complete control over what appears on their sites.
That's an interesting peek into the future, but what about today? My contention is that publishers can't come out winners in the current game of contextual advertising. Here's my reasoning, excerpted from my June speech at the Canadian Business Press annual conference:
Some of us are already engaged in a form of self-abuse by allowing contextual advertising on our sites. The rationale for a publisher to accept advertising from a search engine is simple and seductive: some money from advertisers you'd never sell anyway is better than no money. Some publishers are already reporting nice monthly checks rolling in -- with no work at all. What's not to like? After all, aren't you the clever one for turning the search engines into ad sales reps for you?
Yet what would you say if an independent sales rep came to you and made this proposition:
I want you to give me space in your publication, and by the way, I'm looking for good positions, maybe even your home page
I'll sell ads into that space, and keep the lion's share of the revenue
I won't specifically chase your advertisers, but if they should come to me, tough on you
I'll sell using a whole different pricing approach than you use, which may turn out to be a cheaper rate than you offer your advertisers
I'll essentially be the judge of who advertises what on your site, without regard to your brand or your market position
I'll be building a huge syndicate, so you'll always need me more than I need you
I will be telling the advertising community, day in and day out, that my approach to advertising is far superior to yours
How long would that rep be in your office? Probably just long enough for you to stop laughing. Yet when Google talks, we listen.
Contextual advertising may in fact be clever and beneficial if most of your revenue doesn't come from advertising. But if you generate the bulk of your revenue from advertising, you need to be afraid -- very afraid -- of contextual advertising. Let's go back to that rationale I mentioned earlier: you're getting some money from advertisers you'd never sell anyway. Actually, that was the rationale for going with some of the old syndicated advertising services like DoubleClick. They sold massive traffic in broad categories to marketers of broad-appeal consumer products. That is indeed free money for any specialized publication. But if you publish a magazine for, say, the machine tool industry, and a contextual ad appears on your site based on the keywords "NC simulation," that's your advertiser -- or it should be -- meaning the search engine supplying that ad is competing with you and you're helping them do it. Let me say it another way: by definition and design, contextual advertising is competitive with your own advertising sales efforts.
The future of contextual advertising might be a lot friendlier to publishers, but for now, fear and loathing appear to be the correct response.