Search Advertising with Publishers, Time to Oust Google?


What is it about Google?  Why do so many Publishers look at the contextual search space and throw up their hands and say, “here, you do it.”  Why is that market so entirely dominated by the Goliath?  Okay, so maybe there are about 10, 11 maybe 12 players in the space – networks if you will like Kanoodle or Go.com – who provide contextual advertising for publishers.  But why haven’t the publishers bothered to sell the search advertising on their own?  How much money is thrown over the fence to the networks?  How much money is lining Google’s pockets. 


 


Google has dis-intermediated the space.  They control the advertiser and the publisher.  Unique position.  The publishers are dependent upon them for both the traffic and the ad revenue.  But now Google is developing content and channels which means it will start to compete with its AdSense partners.  Will the publishers be prepared?  Will they step up and start to examine the concept of selling their own search advertising?  Can they even do that?  Technically? 


 


If they have the internal sales staff selling display advertising they have the capability to sell the search advertising, but what about the infrastructure to deliver the contextual search advertising?  What about Advertisers?  Would they be willing to buy from a decentralized market?


 


Let’s look at the display advertising space for a minute.  In 1996 I worked with a small group of people to kick off Zacks.com.  It was one of the first advertising-supported web sites and the fastest growing financial web site on the Web.  We quickly grew our network for co-branded web inventory and sold advertising like mad.  We had a model and scaled it.  But that was just it.  We were leveraging content with other publishers (BIG Publishers like Dow Jones and CNN and AOL) to create co-branded pages that we owned and sold advertising on.  We were creating more and more inventory and continued to sell out.  But our partners were not creating scalable models.  They had content but had not figured out the advertising model yet.  They were turning to networks instead.  Networks – we’re talking the early days like DoubleClick and 24/7 (actually it was Petry and Katz back then and ClickNow! and they were still all separate).  There were some more but who remembers anymore which were the first ones (that will generate some comments!). 


 


Anyway big publishers were throwing their inventory over to these early networks while they got their acts together.  Zacks became the reseller for some of these sites back then as well.  And even today they continue to act as a reseller with their ad network of financial sites.


 


So the progression is clear.  Display advertising was born.  Early adopters began to sell advertising and for those who were slower to get on board, there were the networks.  So what about search?  Now of course, publishers sell their own premium inventory and give the remnant space to the networks.  And of course some networks even get some not-so-remnant space.


 


For search there are only networks.  In fact, for a long time there was just Google.  Now there are more players but Google still has the massive piece of the pie.  And what is their share of the revenue when you participate in AdSense?  More than the other networks –  sometimes a lot more.  But still, they also push more ads through at higher rates so it can net out. 


 


Contextual search revenue has been like free money for publishers.  But there is money being left on the table.  And the amounts may be significant.  Technology exists for these publishers to be selling and managing their own search advertising.  As promised, I try to find technologies that offer compelling opportunities in the space.  LookSmart is one of them.  Their AdCenter is a private-label search advertising manager for publishers.  It is tied to the LookSmart network so you don’t have to completely sell your own inventory, they will backfill what you don’t sell. 


 


AdCenter is a search ad server for publishers.  It enables a web site to sell its own contextual search and retain a much higher margin while still allowing for the use of networks for unsold inventory portions.  Quigo also claims to private label its solution as well but I haven’t verified that.


 


So this might just well be the next generation.  If publishers can direct-sell search to advertisers and retain a greater share of revenue, they can also under-cut the rates of a Google and make it more compelling to advertisers.  Large publishers can really make a go at this while the niche sites could still make a solid run at it.  Let me know your thoughts.


 


Reactionary with Insight.

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