Monday, September 12, 2005

Three threats to sponsored search advertising

Nielsen//NetRatings is introducing a new method for measuring reach and frequency of online ads (using data integration). Taking cookie deletion into account (the habit of a growing numbers of surfers deleting their cookies for security reasons or fear of loss of privacy), advertisers are overpaying for having their ads displayed by sponsored search providers by some 27%, according to Nielsen//NetRatings. The new method will adjust for this habit.

So now we have three major clouds over the sponsored search business. Besides click fraud, there is also the one-time adjustment that Yahoo! recently adopted. The latter will see to it that an impression is only counted once the full ad is displayed (not when the pages is 'turned' before the full ad builds).
  • Click fraud
  • Cookie deletion
  • Partial ad display

Technological advances may reduce the ad revenue for the majors (Google and Yahoo!, to be followed by MSN and AOL) and their distribution partners. But perhaps we will have to learn to live with these things, pretty much the same way store owners have to deal with shoplifting.

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