Thursday, June 19, 2008 Ng: Key to online advertising dollars By Wilson Ng Wired Desktop
SOMETHING happened to Facebook in April 2008 —it stopped being the second largest social net-work in the world.
According to Media Trend Report, Facebook garnered more than 115 million unique visitors for that month, officially overtaking MySpace.
MySpace is still number one in the United States with about 72 million members while Facebook has only about 36 million.
But Facebook garnered many more international accounts, and officially grew by over 75 million members in the last 12 months. MySpace, on other hand, reportedly grew by less than 10 million members.
Last week, Yahoo finally decided not to be taken over by Microsoft. Yahoo announced that it will do search advertising with Google. Such a waste! Right now, as I write this, Yahoo stocks fell more than $10 what Microsoft offered it.
By saying no, Yahoo saw its market value decline by more than $15 billion!
Why is Microsoft so keen to catch up in search? Search is the key to online advertising dollars. You can put ads in the mail and in blogs, but people are most responsive to advertisements when they are searching for something online.
This is contextual advertising and responsive advertising. Contextual advertising is the reason people feel that online ads are better—it actually tries to use some kind of algorithm and intelligence to sense what is the webpage you are reading, and try to put the relevant ads that is associated with it.
For instance, you are reading a blog of a person who talks about his weekend in Boracay. The system senses that the blog is about travel so it will place ads about beach resorts, hotels, air travel plans, etc. on the corner, making the advertisements more relevant to you.
However, just because you are reading a travel blog or an e-mail about a trip to Boracay does not necessarily mean that you really are looking for cheap air tickets or beach resorts. Based on my experience, advertisements of this sort get a click through of even less than 0.1 percent, which means that even if you put the ad there more than a thousand times, it will not be clicked once.
But it’s a different story when you are doing a search for cheap air tickets.
While doing the search, you would most likely notice and click ads in the corner about cheap air tickets.
Thus, the holy grail of getting more online advertisements, which incidentally is slated to increase very strongly still, is to be the de facto search engine.
What’s at stake? This year, online ads are said to total $40 billion and Microsoft only has about $2 billion on it, while Google may already have at least four times as much.
It is estimated that Google now earns more from online ads than Microsoft earns from selling Windows! In 2010, or less than two years away, revenues from online ads are expected to double to $80 billion! Go figure!
