Calacanis is only partially right about AdSense
Posted by matt on 12 Oct 2006 | Tagged as: advertising, media, business, attention, gestures, google, economy, youtube, stevegillmor, calacanis, microsoft, gillmor, multimedia, aol, CPA, marketing, CPC, CPM, spam, longtail, fredwilson, jasoncalacanis, gillmorgang, yahoo, adsense, directmarketing, directmail, behavioraltargeting, cost-per-click, cost-per-action
On a recent Backwards Gang episode of the Gillmor Gang (hard to tell which one eh?), Jason argues about AdSense being more like Direct Marketing and that it will be the incumbent form of marketing for next few decades. He also touches upon the YouTube/AdSense relationship at his blog
Well, he’s partially right but he’s missing one important part of the recipe.
I agree that AdSense is more like Direct Marketing than advertising and it’s way more efficient than prior forms af advertising given that it’s pay-per-click.
The important piece of the puzzle that Jason is missing is the quality list, something of a cornerstone for Direct Mail or Email advertising.
A better list is a better open-rate, and a bigger ROI.
The fact that AdSense is only contextual is a shortcoming, and for both Google and the advertisers, making it more efficient will make more money for each respectively.
Despite it being pay-per-click, more click-throughs mean more revenue for both Google and the advertiser.
Where is the quality list in AdSense?
You could argue that it’s in the context of the web page, but this is only superficially true.
To rev things up, or “press on the gas,” as Jason would say, a bit of behavioral targeting needs to be added to the mix.
Get more of these ads in front of people who really want them, or are at a particular point of the buying cycle and your CTRs will go up, and revenue will follow.
This can all work in conjunction with contextual data, but will enhance contextual delivery immensely.
So while I agree with Jason’s prediction that AdSense will dominate for years to come, I think Google must improve upon it, or else risk losing marketshare to a behaviorally enhanced version of adsense that may provide a similar ROI, but in a condensed amount of time, which equates to money.
If Jason thinks that Google will rise to Microsoft levels of dominance in this space, they are going to have to address the quality list or lead, in this case, by the use of behavioral targeting.
I think they will. In fact, I think it will be an integral part of their Cost-Per-Action experimentation that began when the rumblings about click-fraud were at a peak.
