Online business Toolkit

Google makes move into banner ads

Evan Hansen CNET News

Published: 13 May 2004 08:55 BST

Search engine giant Google plans for the first time to sell ads that include images, a surprise reversal for a company that has won regard for its pioneering use of text-only marketing pitches and for keeping its home page religiously free of banner advertising.

A posting on the company's Web site describes the new programme, which will allow customers to place image, or banner, ads on third-party Web sites that participate in its Adsense programme. Adsense promises to place ads on Web pages that are relevant to a marketer's message, based on an analysis of the page's content.

The posting noted that Google will not put image ads on its own site for now, but said it looks "forward to offering more image ad distribution options in the future."

The image ad programme launched late on Wednesday in a beta, or test, version, said Tim Armstrong, Google's vice president of advertising sales. He said the decision to wade into banners came after nine months of interviews with Web surfers, publishers and advertisers, and was based on what he called Google's core mission.

"The noise in the advertising market is really going up over ROI (return on investment)," he said. "There was a pretty clear signal from advertisers that there is an opportunity to use Google's relevance technology for images as well as text. Over the last 14 months, we've been able to grow a network of content publishers [that use Adsense] and the message was to make it more useful."

In just a few years, Google has grown from a start-up to an Internet giant, thanks in large part to an advertising programme modelled on the ground-breaking efforts of Yahoo's Overture Services division. Both companies auction search keywords to the highest bidder and ask customers to pay only when Web surfers click on advertisements.

So far, these pitches have steered clear of designs incorporating images, which have been deemed a distraction that would likely diminish the end user's experience. Although it's not clear image ads will be coming to Google's own site any time soon, the company is poised to put them to its first test, potentially opening the door for wider use.

The move puts Google more firmly into the camp of Internet advertising network providers such as DoubleClick, a company that came to define intrusive Web advertising during the dot-com boom.

Using attention-grabbing methods could help make up for shortfalls in Google's relevance technology, which has not proven as clear a winner on ordinary Web pages as its has alongside lists of its search results. Google's Armstrong declined to discuss response rates for AdSense, saying that the company is continuing to innovate to improve relevance and return on investment for its advertisers.

In an FAQ describing the new programme, Google said it would offer four layouts of varying sizes: leaderboard, banner, skyscraper and medium rectangle. The image ads will be limited to 50KB in size -- much larger than the typical 1KB-2KB for text-only ads. Nevertheless, Google said the limit will ensure that the images have a minimal effect on load time for most sites.

Armstrong added that Google will include a "user bar" along the bottom of its image ads displaying the address of the site ads link to, a feedback button to let users send messages about an ad directly to Google, and an "Ad by Google" label.

Google is looking to expand its advertising programmes as it prepares for an initial public offering that could value the company at more than $25bn.

The company has already gone well past its bread and butter Adwords search engine advertising programme.

In recent weeks it has reversed a policy restricting the sale of trademarked terms to non-trademark holders and has begun testing a system for automatically matching ads to little-used keywords.

Sales from US search-engine marketing will reach $2.1bn in 2004, up from $1.6bn last year, according to Jupiter Research. By 2008, sales are expected to hit $4.3bn.

According to a securities filing, Google generated $961.9m in revenue in fiscal 2003 and posted $105.6m in net profit. That marked the third consecutive year of profits for the Web's most popular search engine. During the most recent quarter, which ended 31 March, Google collected $389.6m in revenue and posted a $64m profit.

Google's image ad programme was noted on Wednesday on online newsletter Search Engine Journal.

"There have been some questions about whether Google is getting away from core business, and I feel that we're not," Armstrong said. "The thought from four years ago was to come up with a way to create better relevancy for ads. We've done that with text ads, and that's how we've come to this."