Google formally unveiled its first advertising program, and the company claims the text-based ads on its site have click-through rates four times higher than the industry average for banner advertising.
The search engine company began running ads in January, but the effort was a trial run, Google officials said. So far, 200 advertisers have signed on, and now Google is actively seeking more. The site delivers 14 million searches per day and is growing 20 percent each month; the ads show up about one out of every 10 times a person visits the site.
Until recently, Google's licensing arrangements with 80 other sites served as its sole source of revenue; now the goal is to split the model evenly between advertising and licensing.
Each ad that appears is carefully linked to a keyword a person types in and is therefore targeted, company executives said. So when a visitor types in "Australia," one ad that pops up is from a travel site that says "Travel to Australia with iExplore and get off the beaten path."
Google created the technology for its ad program in-house and sells its own advertising space. Staffers work closely with the advertisers to develop the messages. The one or two ads that appear on a page look and feel like the search results, but are differentiated by highlights. "If you treat advertisements as a great search result, they will work as a great search result," said Omid Kordestani, vice president of business development and sales at Google.
Other companies, such as Ask Jeeves, are experimenting with text-based messages, but ads with rich media were more popular at Jupiter Communications' Online Advertising Forum last week, where Google announced its program.
Indeed, many of Google's potential customers ask to use attention-grabbing tools such as video. The Google team won't do it, though, because such ads would slow the site down, and the company has prided itself on speed and simplicity. Keeping sites simple may end up being the best solution for advertisers, given that Jupiter's research estimated Americans are currently exposed to 520 marketing messages per day.
"Our idea is the reverse of a portal, in that we're about getting results you want and then getting [you] off the site," Kordestani said. "We get stickiness through frequency."
Media Metrix ranked Google fifth among search and navigation sites, with 4.3 million unique visitors in June. NPD Group's New Media Services found that 94 percent of Google's users would recommend the service to a friend, which is one of the best ways to acquire new customers.
In fact, Google hasn't spent a penny on advertising itself since it launched in September 1998.