Wednesday, January 27, 2010

Are Targeted Ads in Search Useful?

Among the paid results for "Tiger Woods" is a site called (click photo to enlarge).

Two kinds of results appear when you do a Google search: things that Google thinks are important, and things that its advertisers think are important.

Almost always, Google's unpaid hits are better. The company goes to great lengths to avoid manipulation of its search results, and it is the most sophisticated and comprehensive research tool known to man. With enough time, the best content should rise to the top. 

So why do search ads exist and even enjoy moderate success (a link I found through an unpaid Google hit)? One reason may be that people are in a hurry, so if something in the highlighted advertising box catches their eye, they're bound to click it. Or maybe if they're doing a search to try to buy a camera instead of learning how a camera works, camera ads may be more relevant (though reputable camera companies still comprise the first few unpaid hits).

Consider whether you find the paid or unpaid results more relevant for chat, a celebrity, or a book title.

Can you suggest any counterexamples? If so, please feel free to leave a comment.


Adam Gurri said...

I'd say that most of the time they aren't nearly as relevant as the unpaid results. But Google only needs you to find them relevant a tiny fraction of the time in order to turn a profit.

As a followup to this post I'd highly recommend this post on the economics of the ad auction by Google's own chief economist, Hal Varian.

Greg said...

That's a very good point. It's amazing how Google can show an ad 10,000 times to get one click and still make money.

Anonymous said...

think about ecommerce sites. people click on those paid ads all the time when trying to find that dance dance revolutions game pad for ps2