Thoughts on the Google Sponsored Links Change
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Written By Reprise Media | August 18, 2005 | Share This
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Although Google has been experimenting with three sponsored links instead of the usual two for a while now it wasn’t until recently that the news became more widespread, with stories like this one by David Utter of WebProNews.
What impact will seeing three sponsored links on top of search results have, if any, on users? What about advertisers? There’s a lot of speculation going around and a lot of folks (including investors) are wondering what this will do to the market.
Here are a few points to consider:
Not All Searches are Created Equal
Certain queries are more commercial in nature than others - “vegas hotel” vs. “vegas” for example. When a user is explicitly in the market for a specific product, and advertisers are trying to use search to sell the same product, the interests of both parties are entirely aligned. In many instances, the natural search results for these types of queries may be less useful than the paid search results. Since advertisers are economically incentized to be relevant (because they need strong conversion rates), in this type of situation having more paid ads makes sense because it may actually help create a more relevant user experience.
It’s Not Just About the Investors
Sure Google has gone public and they’ve got investors to worry about, but that’s not the only factor driving this decision. Google’s mantra is that they’re all about users and making information accessible. More ads on the page means broader choice, and if formatted and placed properly, the addition of another ad shouldn’t get in the way of search results.
Masters of their Own Domain
Because Google is so often opaque with their business practices and ‘magic formulas’, we often get calls from analysts who are frustrated with their inability to accurately predict financial results quarter over quarter. What these “quants” generally don’t understand is that any small change or tweak to the Google way of doing things shifts user click habits, potentially meaning millions of dollars difference in revenue. Remember, Google is not a CPG company where they stock the shelves and say “if we make x number of widgets, we’ll get y in revenue.” For web publishers, particularly search engines, seemingly small tweaks like this - or stuff like playing around with font sizes - can completely change the revenue picture…and, as a result, throw analyst estimates totally out of whack.
Joshua Stylman is Managing Partner at Reprise Media.
Topics: Google |