The effectiveness of Google’s AdSense online content ads came into question recently when marketing services firm NewGate Internet said three of its clients, including two retailers and one manufacturer, showed poor results. “Google has been pushing pretty hard with these contextual ads, but they really don’t work,” contends Tom Dugan, president of NewGate. “For the contextual ads we tried for our clients, the results were abysmal. They showed very poor conversion rates.”
NewGate presented some of the results of its AdSense study at Jupitermedia’s recent Search Engine Strategies conference in San Jose, CA, where it found other retailers expressing similar concerns about the effectiveness of the AdSense program, Dugan says. NewGate notes that Google’s more established AdWords Internet search advertising program is far more effective than the AdSense program, which was launched earlier this year.
The AdSense program’s content ads, also known as contextual ads, use a mathematical formula to cause clients’ ads to appear on editorial pages that have content related to the ads. The program is intended as a way for content publishers to share advertising revenue with Google, Google says. For example, someone reading an online article about cars might see on the same web page an AdSense ad from General Motors.
Google contends that NewGate’s study looks at only a tiny sample of the 100,000 advertisers that use the AdSense program, and insists that many of its customers are showing strong conversion rates. “We know our customers get qualified leads in search ads, but we’ve found that search and content ads have similar conversion rates,” says Susan Wojicki, Google director of product management who appeared on the same Search Engine Strategies panel with NewGate. She adds that, in some cases, AdSense ads have led to higher average purchases compared to AdWords search ads.
Wojicki agrees that some retailers at the conference expressed concerns about AdSense, but she notes that many people have questions about how it works because it is so new.
Dugan contends that the results of the NewGate study point to an inherent weakness in contextual ads – that they catch consumers at a time when they are not likely to be in a buying mood. In contrast, he says, ads placed in Internet search results reach customers who are more likely to be closer to making a purchase and interested in clicking on a related ad. “There’s a big difference between someone using a search engine, because that’s when people go out and look for specific products,” he says. “But contextual ads are more like banner ads popping up on their screens, and people tend to ignore them.”
Brad Byrd, NewGate's director of business development, who conducted the study, says NewGate focused on Google's AdSense program because it was the only one available to review in comparison with an Internet search advertising program. Other content ad programs are now available from Overture Services Inc. and Primedia Inc. "We chose Google not to pick on them, but because they offered the only
opportunity at the time for a good apples-to-apples comparison of the two channels," Byrd says. "Our goal is to raise the level of discussion about contextuals beyond 'wow, these are the next big thing,' and
educate others in the industry about the differences between the two channels."
NewGate says the results from its study suggest an advertiser could pay 30% higher for cost-per-click ads by using AdSense as compared to using Google’s Internet search ads. It says the study also indicates that click-through rates were 4.2% higher for Google’s Internet search ads, while the percent of spend-per-lead was 81% higher for search than for links posted next to content.
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