AdWords-Enter Google

Thursday, October 2, 2008

Net giants like Google and Yahoo!, whose brand name and brand
recall is the highest, needless to say, get the lion’s share of online ad
spending. In 2006, Google was expected to get nearly a quarter of the
online advertising share in the US, while Yahoo! was expected to grab
about 20.7 percent of the chunk (source: news.com.com).
So what makes advertising on Google advantageous when
Yahoo! is the most popular Web site, with 400 million monthly
users? The simple answer is that Google commands 50 per cent
of search hits the world over, with Yahoo! and MSN sliding down
to 23.4 and 9.2 per cent respectively for 2006
(www.money.cnn.com)!
Context-based advertising on search engines allows companies
of all sizes to reach their target audiences. A small company that
wants to advertise in a newspaper would have to shell out thou-
sands of rupees for a small ad, which may or may not be looked at
by potential customers, whereas in context-based advertising, you
only pay if interest is shown by the customer, making the money
spent more worthwhile. Ads are positioned on the sponsored links
according to the cost per click set by the advertiser, and also by the
number of times the ad was clicked by users (called the click-
through rate). The position of an ad could go from second or third
to first position for a particular keyword. 
Let’s take an example to see why online advertising is advanta-
geous. Suppose you have a computer accessories shop in Mumbai
and want to place an ad. For a size of 2 by 3 inches in the middle
pages of a newspaper, it will cost you about Rs 4,000 with a lead-
ing one, and most of the time, it will be ignored by the reader.
Similarly, a 10-second slot on a leading TV channel will cost the
advertiser Rs 1,80,000. And a 10-second slot will not allow brand
recall unless it is shown many times over!
TV also isn’t suitable if your business is catering to only one
city. If you advertise using Google’s AdWords, you can set the
budget you think is appropriate, and set the cost per click and also
target a region. Since you own a computer accessories shop, key-
words relating to your business would be “monitor,” “keyboard,”
“mouse,” etc. When a Net user types in one of these keywords, your
ad is shown in the sponsored links column of the search results,
and the position of your ad will be according to the cost per click
you’d set. If your cost per click is lower than that of your competi-
tors, the placement of your ad will be lower. But, if the number of
clicks to your ad is more, the placement of the ad will rise—irre-
spective of the cost per click!
All said and done, it is obvious that other media cannot be
ignored. When a new product is introduced on media such as TV
or radio, it creates an interest in the consumer—which cannot
be done online. The reach of TV, radio and newspapers is also far
greater than online, at least in countries such as India. Products
like beds, food, cars, and so on cannot be sold online. Online
advertising can only be good for certain goods and services.