Overture Will Separate Bidding for Contextual Listings
With the change, Overture answers a major advertiser complaint: contextual listings perform poorer than search listings.
In a few weeks, Overture advertisers can change their bids for Content Match keywords, which had been the same as bids for search keywords. The default setting will keep the bids the same in both areas. Overture also plans to eliminate the 20 percent discount it gave for Content Match keywords when it launched in June.
"The idea is that it will give advertisers greater control of their spend and their return on investment," Overture spokeswoman Gaude Paez said.
Overture rival Google, which operates the much larger AdSense contextual listings program, does not let advertisers bid separately for contextual and search listings. Overture and Google advertisers can opt out of the contextual listings programs.
In contextual listings programs, an advertiser's keyword text listing is placed on a Web page with relevant content. For example, a news site's story about a NASCAR race might display text listings for NASCAR memorabilia or tickets.
Overture's move was taken after feedback from advertisers, Paez said. Many advertisers have said that content listings usually do not convert nearly as well as search listings, which often are returned during an active-consideration phase of the purchasing cycle.
"We have, for the majority of our clients, opted out of the contextual," said Scott Ferber, chief executive of Advertising.com, a performance-based marketing firm in Baltimore. "The pricing between the two has been identical but we find the performance has not been the same."
Overture has tread lightly with Content Match since its launch. Unlike Google, Overture has tightly controlled distribution to just a few partners, including Edmunds.com, ESPN.com and parts of MSN. Content Match listings can be found in areas of Yahoo like finance, games, travel and weather.
Overture and Google use algorithmic search technology to scan content pages and match them with appropriate keywords. Search companies see contextual listings as a way to greatly increase their ad inventory by going beyond search results pages.
The technology is still new -- Google began AdSense last March and Overture started Content Match in June -- and, in some cases, has produced embarrassments. In a well-publicized goof, AdSense listings for luggage retailers were next to a New York Post story about body parts found in a suitcase.
Despite such growing pains, publishers have flocked to AdSense to make money off low-priced or unused ad inventory. AdSense has provided revenue opportunities to small sites like Weblogs as well as big sites like NYTimes.com, Forbes.com and washingtonpost.com.
The program is not without critics, however. Jupiter Research analyst Nate Elliott said Google risked alienating advertisers by forcing them to pay the same price for clicks from a Weblog as they would for clicks from a Google search.
"It's a different marketplace," he said. "It's a different kind of advertising, it performs at different levels and you have to let the advertisers bid on it differently."
Google declined comment on Overture's move, but said a single bidding process kept its ad programs easier for marketers to manage. "In order to minimize complexity in bidding decisions, at this time we aren't asking advertisers to make separate bidding decisions for contextual and search advertising, or any of the other factors that affect how their ads get targeted," a company spokesman said. Still, some industry executives said Google would eventually make similar changes to AdSense.
"I believe that Google will follow suit," said Fredrick Marckini, chief executive of iProspect, a search marketing firm in Arlington, MA. "Advertisers go where the clicks and conversions are and where they have control."
With separate bidding for each, contextual listings are likely to command a lower price, potentially drawing more advertisers while returning to publishers lower revenues, at least in the short term.
"Right now, publishers are benefiting from advertisers being forced to overpay," Elliott said.
One search company, Primedia's Sprinks, let advertisers bid separately for contextual and search listings, boasting revenue per click comparable to search keywords. However, Google bought Sprinks, seen as the main competition for AdSense, in October and shut the service the next month.
Three former executives at Sprinks landed at third-tier search provider Kanoodle, which plans to start a contextual listings product shortly called KontextTarget, with a separate bidding system from Kanoodle's paid search program.
"Every single media buy has different goals, different protocols and different success rates," said Lance Podell, president of Kanoodle's contextual advertising unit. "They need to be measured accurately and separately."
Contextual listings remains a small market, slated to account for $100 million in sales this year, according to U.S. Bancorp Piper Jaffray. In 2008, the investment bank expects the market to grow to $1.4 billion.
Marckini said other changes to contextual listing programs, including giving advertisers control over which sites show their ad links, could help the market grow faster: "The more control you give the advertiser over their placement, the more they'll spend."