Google: No Plans to Separate Search, Contextual Bidding

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NEW YORK -- Despite research that as many as four out of five marketers find contextual listings convert differently than search, Google told an audience at Search Engine Strategies yesterday that it had no plans to separate the bidding.

"We've been studying this for over a year," said Tim Armstrong, Google's vice president of advertising. "We have seen the conversion rates to be very similar" between search and contextual listings.

Google advertisers can choose to opt out of its contextual paid listings program, AdSense, which displays paid links of content Web pages. In just a year, AdSense has spread across the Web to thousands of sites, from large ones like to small niche sites.

Advertisers have grumbled that clicks from AdSense listings convert at a much lower rate than search listings, despite the clicks costing the same. Jupiter Research analyst Nate Elliott said it found that nearly 80 percent of marketers reported different conversion rates for contextual listings than search listings.

Search marketing firms on the panel attested to the need for different approaches. Joshua Stylman, managing partner of New York search marketing firm Reprise Media, said such disparities are to be expected because readers of content pages are at a different part of the buying cycle than searchers, who are ready to buy.

"Our media team is pretty adamant they want to target these people differently," he said.

Brad Byrd, director of business development at Sausalito, CA, search marketing firm NewGate, said that each advertiser's case differs but that contextual listings nearly always perform differently than search listings.

"In general, we find you end up paying higher for the AdSense product," he said.

The search marketing firms were backed by a show of hands from the audience in which about 50 voted for separate marketplaces and just a pair preferred a single bidding process.

Google competitors have taken note of the advertiser impatience. Yahoo's Overture unit, which displays contextual listings on Yahoo and some parts of MSN, separated the bidding on Content Match listings from search listings in January.

"We decided it was the right thing to do to launch a separate marketplace," said Paul Volen, vice president of partner development and strategy at Overture. He said that in tests Overture found the conversion rate for Content Match listings was, in aggregate, just 3 percent lower than search listings.

Likewise, Kanoodle also lets advertisers bid only for contextual listings.

"Content requires a separate solution from search," said Lance Podell, president of Kanoodle's contextual advertising unit.

Google's Armstrong said the search giant "takes the issue very seriously" and had an economist looking at ways to improve the system without adding complexity. "We haven't seen a conclusive case to separate it yet."

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