Google's Ad Success Has Lessons For Television

from the ads-are-content dept

Patri Friedman points to a fascinating post by a Yahoo employee (speaking only for himself) speculating on the reasons Google is clobbering Yahoo in the search ad market. In a nutshell, Google was a lot quicker to figure out the benefits of ranking ads by ad quality rather than simply auctioning off the top slot to the highest bidder. Given that online advertisers pay on a per-click basis, more relevant and useful ads can generate more clicks -- and therefore more revenue -- than lower-quality ads. Because ads with higher click-through rates became more highly ranked, advertisers began to compete on relevance as well as price. They began to optimize their ads to generate higher click-through rates. The average quality of ads on Google began to improve. And here's the really important point: as the quality of Google ads got better, users started to discover that Google ads were actually useful and relevant, and they got in the habit of looking at them. This is an example of a principle Techdirt has been emphasizing for years: ads are content, and they're a lot more effective if they contain information people actually want. Google's experience belies the conventional view that ads are a necessary evil users have to put up with as the cost of getting the content they want.

Nowhere is that conventional view of advertising more entrenched than in the television industry, which is constantly wringing its hands (and filing lawsuits) over the detrimental impact of devices like the TiVo and Replay TV that include ad-skipping technology. I think the Google example demonstrates how short-sighted that attitude is. With a little ingenuity, TV networks could be using devices like TiVo the same way Google uses click-through statistics: as a way to gather data on user attitudes toward different ads. If networks priced ad inventory the same way Google does, giving a discount to advertisers whose ads had lower skip rates, advertisers would respond by trying to make more entertaining and relevant ads. And as ads became more entertaining and useful, viewers would be less likely to pick up the remote and push the "30-second skip" button.

Even more radical, the networks could be using TiVo-like devices to distribute shows and ads directly over the Internet. In that case, the device could display a different set of ads to each viewer, with the ads chosen based on the individual viewer's show-watching and ad-skipping history as well as some basic demographic characteristics. For example, users who frequently skip car ads would be shown fewer car ads. Viewers under 40 would never be shown ads for adult diapers, and all-male households would never be shown ads for feminine hygiene products. Such a system would be a win-win for both advertisers and viewers: viewers would find ads more useful and less irritating, while advertisers would be willing to pay higher rates for ads that were precisely targeted at relevant subgroups. And that would solve the "TiVo problem" once and for all: not by forcing users to watch ads they'd rather avoid, but by finding ways to show users ads they actually find entertaining and useful.

Filed Under: ads, content, relevancy, tv commercials
Companies: google, tivo

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  1. identicon
    Twinrova, 31 Oct 2007 @ 4:27am

    Ads should die, not be revamped

    Treating ads as content isn't going to help the industry no matter what. With today's technology and "expensive" programming, if ads are the way to recoup revenue expenses, we're all boned.

    Web ads:
    It's a known fact that people are "stupid" when it comes to the internet. If it's a link, it's going to be clicked regardless if it's an ad or not. The average web surfer still has no clue how web pages work and, more importantly, hasn't grasped the concept of the difference between a content link and ad link.

    And since this article states ads should be more like content, this will only add to the confusion to help people know the difference.

    TV ads:
    Has anyone here at TechDirt noticed the loss of the "2 minute" ad window? These things have grown to as much as 4 minutes and people just don't seem to care.

    Oh, wait. Actually, they do care but there's nothing they can do about it. DVR usage is increasing as people are beginning to learn that these sweet devices can actually allow a user to fast forward past ads.

    And "studies" indicating people will watch ads seem to contradict other "studies" that show ~90% of DVR users skip ads (I'm definitely one of them).

    Turning ads into content is a useless strategy because it's doomed to fail when people bore of the change and thus, return to the habit of trying to bypass them.

    A new feature of ads seems to be taking visual media by storm, and that's product placement. Eidos is a gaming studio that is incorporating in-game ads which doesn't seem to be irritating the gaming market.

    People are complaining about TV ads because of the number of them, and it doesn't matter if they're "enjoyable" or not. Who here can watch the same ad 10+ times per week?

    The ad system of this country is poorly designed and maintained and I have to disagree that turning them into content will make a difference.

    Because once Corporate America gets its hands on it, "content ads" will be destroyed very quickly leading to yet another topic for TechDirt to discuss in the future.

    Enjoy your Halloween.

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