Google Introduces Onsite Advertiser Sign-Up; The Threat To Other Ad and Affilate Networks Grows (GOOG, VCLK)

Google emailed the publishers that use its AdSense program yesterday; the email included the following:

New Revenue Opportunities

Onsite Advertiser Sign-up

Earlier this year, we launched site targeting, a new way of targeting ads to sites in the content network, that offers advertisers more flexibility and publishers more ad inventory. To make it easier for more advertisers to create ads targeting your site, directly from your pages, we are introducing the Onsite Advertiser Sign-up feature.

When you use Onsite Advertiser Sign-up, your ad units will display an 'Advertise on this site' link that guides advertisers to create a Google AdWords ad automatically targeted to your site, and your site alone. You can customize the landing page advertisers view when they sign up so that it features your logo and communicates important details about your site . By allowing advertisers to create ads targeting your site precisely at their moment of interest, Onsite Advertiser Sign-Up helps create greater demand for your ad space, and more revenue for you.

To learn more, you can take a tour of Onsite Advertiser Sign-up. Your ad units will automatically take advantage of this feature, but if you'd prefer not to participate, you can opt out by updating the settings on your 'My Account' tab.

This is a critical development for publishers like Seeking Alpha. We get emails from advertisers every week asking to advertise on our site, but we don't have the resources to negotiate, accept, implement and bill for their ads, so we turn them away. Now, advertisers can come to our sites and quickly decide to advertise on them. We do nothing.

(We're opted in to the program, so you should be able to see how the program works by checking out any of the Seeking Alpha sites; currently, though, we're still waiting for implementation. JenSense also reports that "while the new "Advertise on this site" feature was officially launched on Friday, the feature wasn't actually seen live until late yesterday... I have not seen this feature on any of my own sites... It does seem to be live on other sites though. Perhaps it is part of a rolling release where all publisher sites will begin seeing it at the same time.")

The Google AdSense team has a simple mission: to ensure that publishers earn more with Google than with other forms of online advertising. That brings Google into direct conflict with not only the other ad networks, but also with the affiliate networks, which pay publishers a percentage of sales from their referrals rather than for page views or clicks on ads. The obvious publicly-traded stock: ValueClick (ticker: VCLK).

The argument for affiliate marketing has gone like this: Affiliate marketing offers advertisers more visibility, because they only pay if an actual sale occurs. And affiliate marketing can be more lucrative for publishers that can promote products specific to their sites.

But this argument seems tenuous. Sure, some sites -- such as coupon sites or affiliates that build dedicated e-commerce stores with no fulfilment back-end -- will always do better with affiliate deals. But for everyone else, Google is moving closer and closer to matching specific advertisers with specific publishers, and allowing advertisers to track the success of their ads via free analytics.

And Google's advantage over the affiliate marketers is that Google's system is an auction, where advertisers bid for placement on publishers' sites. That will ultimately make Google ads more lucrative for publishers than affilate deals which are set unilaterally by the advertisers. Click on VCLK chart to enlarge.

Comments

[Jeff Molander:]

Excellent points, again, David.

How long before companies like ValueClick (VCLK) follow in the footsteps of Think Partnership (acquire contextual technologies... if not networks)? A majority of multi-channel marketers/advertisers have already realized that affiliate marketing is all about search and loyalty sites. How long before advertisers realize that affiliate marketing is not scalable and this is its primary flaw? Most of my clients already have to be honest. They live with this frustration... and they are frustraited make no mistake.

Advertisers have few concerns regarding ad network transparency (where clicks come from). Witness all the hoo-haa over click fraud as just one example. Click fraud is all but an accepted cost of doing business for all who participate in it. Who has time, or money, for anti-fraud software/services and begging Google for credit when they've already demonstrated an un-willingness to cooperate in fighting click fraud?

When it comes to affiliate networks transparency is demanded. More thoughts and a prediction on this subject here.

2005 Dec 02 01:55 PM

[PJ Brunet:]

One major implication here is this--an advertiser bids for space on my page, now my authority rank, naturally, goes sky high leaving the scraper sites in the dust, where they belong.

Google should win big here because it will have this new army of internet threshers... I'd think with enough click data you could begin to automate this threshing process, or at least make more broad, sweeping decisions as far as per-site ad distribution.

2005 Dec 02 03:39 PM