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.