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Google’s AdSense technology enables advertisers to reach their target audience by placing ads on relevant pages. It began in March 2003 when Google introduced its own “automated content-targeted ads.� The effectiveness of their advertising system as content targeted was challenged at the time by Applied Semantics, which at the time owned the AdSense technology. AdSense at the time claimed to superior to Google’s own technology by providing better results through processing a webpage’s contents, being able to understand and extract key themes of a page, discern ambiguous terms and provide an advanced filtering technology, all of which Google’s technology did not provide(Hane, P.J. 2003).
Google eventually bought over Applied Semantics in April 2003, making it the owner of the AdSense technology as well as it’s CIRCA technology which AdSense is built on. The CIRCA ontology is based on a language independent, scalable ontology consisting of millions of words along with what the words mean, how the words are related conceptually to other meanings (Distinctia, 2003), for example, a word like java might have 2 meanings. One referring to coffee and the other to the programming language (Kawamoto, D., Olsen, S., 2003).
Which ads are placed on a page is also determined by analyzing the content of the page. An algorithm is used to weigh certain page features, such as the size of fonts, tags, body copy and the frequency of certain keywords (Collins, G., 2003).
The attraction for advertisers is that Google employs the PPC model, so they pay by the click, which guarantees that they only need to pay for a service that is working for them (Callan, D., 2004). The contextual nature of the ads also means that they let the advertiser attract the attention of only the portion of web surfers that are likely to be interested in their product. The position of an advertisement on a webpage is determined by the cost of the keyword or cost per click, which Google auctions off at the AdWords site, multiplied by a company’s click through rate, with a minimum rate of 0.05%. This ensures fairness for small businesses, because the cost paid by smaller businesses for the same word as a large business would be in ratio to the company’s click through rate (Callan, D., 2004).
Web masters that want to monetize the content of their sites are provided a means by hosting AdWords on their site. This means that AdSense will place advertisements on a site in relation to the content of pages, and the web master will receive a percentage of the profit Google makes from clicks on the advertisement. The amount made depends on the size and location of the advertisement.
Google recently developed "Smart pricing" to ensure advertisements are priced reasonably depending on it’s positioning on the page, time of day and the content of the page. For example, “an ad for digital cameras on a Web page about photography tips is worth less than a click on the same ad appearing next to a review of digital cameras� (French, G., 2004).
With the arrival of GMail in April 2004, AdSense has expanded its operations from beyond serving websites. Context based advertising has appeared on emails as well, using words from a person’s email to determine the allocation of advertisements. This scanning of emails for key words has sparked some privacy concerns (Hansell, S., 2004).
Google's main competitors for contextual advertising are Sprinks and Yahoo owned Overture Services, which was a client of Applied Semantics until Google bought over it in 2003 (Wired News, 2003).
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Hane, P.,J. (2003, April 28) “Google Buys Applied Semantics� Information Today Inc., Retrieved 14 Sept, 2004 from: infotoday.com
Kawamoto, D., Olsen, S. (2003, April 23) “Google Snaps up Applied Semantics� Cnet News.com, Retrieved 14 Sept, 2004 from: new.com
Distinctia (2003) “Google PageRank Puzzle� Distinctia, Retrieved 14 Sept, 2004 from: distinctia.com
Collins, G. (2003, August 10) “Google AdSense-Website Advertising Revenue� Search Engine Optimization Consultants, Retrieved 14 Sept, 2004 from: seoconsultants.com
French, G. (2004, April 7) "Smart Pricing Changes AdSense Payouts" WebProNews, Retrieved 14 Sept, 2004 from: webpronews.com
Hansell, S. (2004, June 21) “The Internet Ad You Are About To See Has Already Read Your E-mail� The New York Times, Retrieved 14 Sept, 2004 from: nytimes.com
Wired News (2003, Jun. 18) “Oracle Responds with Mo’ Money� Wired News Report, Retrieved 14 Sept, 2004 from: wired.com
Callan, D. (2004) “Google AdWords Guide� akamarketting.com, Retrieved 14 Sept, 2004 from: akamarketing.com
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Sherwin Huang 11:42, 27 Oct 2004 (EST)
