By: Tim Bradbury
Google’s announcement of AdSense, a new program that enables publishers to serve text-based Google AdWords ads on their sites, is positioned as a grand opportunity for publishers to share in revenue generated by these ads. Instead it ought to send shivers down the spine of every publisher who counts on classifieds for income.
Mountain View, Calif.-based Google has the potential to do to newspapers (and others who sell business services classifieds off and online) what Monster.com and HotJobs.com did to newspapers with helped wanted ads: poach away that business. And it isn’t just Google. Overture Services Inc. of Pasadena, Calif., offers a competing program. Now comes the report that Microsoft “searchbots” are reportedly scouring the Web to build a database and search tools that could compete with Google.
According to a recent survey of small and medium-size businesses in the U.S., from the Kelsey Group and OneStat, 43% of respondents use Web site marketing.
That’s good news, because Web marketing is now second only to yellow pages as a primary way to attract customers (newspaper, direct mail, and magazines follow in the rankings.) The bad news from the same study is that 17% of small and medium-size companies are already utilizing search engine advertising.
Google is clearly putting classifieds in its cross hairs. Through its recent acquisition of Applied Semantics, Google achieved a de facto relationship with USAToday.com. Meanwhile, a number of local news sites, including those affiliated with other newspapers, are exploring some sort of relationship with Google.
While on the surface this may seem like a smart revenue-generating idea, it is clearly a dance with the devil.
How long will it be before small businesses (and after that, savvy individuals) realize that instead of buying local classifieds to attract new business in their regions, they can buy keyword searches, have their ads pop up on Google-based geo-targeted results, and ONLY pay for clicks on the ads? Moreover, customers can use credit cards to immediately pay for the featured item.
Other than rejecting the tempting offer from Google, the best defense for publishers (and their companion offline publications) is to build brand value and trust. Customers are comfortable doing business with local media brands they have known for years in their offline iterations and transfer that trust to their Web sites. Small wonder that local news sites are among the most successful of all Web sites in attracting not only classified listings, but increasingly ads of all kinds.
Paid listings can undercut that trust by their very nature. The National Summit on Web Credibility will report later this month confusion about paid-listing disclosure. Some participants in a small study found the disclosure information unclear, buried, or written more for advertisers than consumers. Unfortunately, the U.S. Federal Trade Commission (FTC) guidelines for search engines don’t expect consumers to follow disclosure links to determine if a link is a paid placement. Instead, FTC guidelines only recommend that paid links be clearly labeled right on the search results page.
When searchers discover many search engine results are actually paid listings, they become distrustful and take a negative view of search. So found a recent Consumer Web Watch study. This confirms findings from iProspect. Its study found searchers are six times more likely to click a free, organic listing than a paid one. Before learning listings can be bought and sold, users considered search engines to be unbiased and objective.
New revenue from paid search listings might seem on the surface to be a great way to generate new revenue, but in the end it could cost you more in old revenue.
Editor’s note: Google AdSense ads can be seen on E&P Online, through a partnership between Google and E&P Online’s parent company, VNU.
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