Watch for illustrations of the following patterns in this discussion:

You can find more information on these patterns in Chapter 7.

Banner ad placement originally operated on a simplistic model whereby advertisers purchased banner ads in lots (typically of 1,000 or more), and the banners were then placed on websites. The placement of these banner ads was often billed based solely on impressions, regardless of whether anyone actually clicked on the banners. This online advertising model clearly had room for improvement.

Initially, one of the main issues facing advertisers was the lack of any guarantee that the ads were effective; however, this problem was mitigated by the use of tracking software and new business models that charged based on the number of click-throughs. Another issue concerned the fact that some larger companies offering such services asked webmasters to place code in their sites and then served up ads whenever someone issued a request for a page containing that code. It was therefore quite possible that ads aimed at golfers, for example, might appear on fishing or other websites not concerned with golf. The placement pattern looked a lot like Figure 3-2.

Figure 3-2. Basic pattern of banner ad placement

In contrast, Google AdSense is a paid ad service that serves contextually specific ads on web pages and tracks the number of clicks on each ad by visitors to those pages. This form of ad delivery uses a simple yet effective pattern of contextual targeting. Rather than just advertising blindly, AdSense attempts to quantify the context of a user’s experience based on a keyword score within the web pages containing the ads. AdSense then cross-references the keywords with a list of potential target ads that might be of interest to the user of that web resource. As a result, visitors to a web page on golfing will typically see golf-related advertisements rather than completely random content. AdSense also lets web page owners filter out competitors’ ads. For example, a golf club manufacturer could block competing companies’ ads from being displayed on its website. This is a highly useful pattern for preventing competitors from targeting a website owner’s customers. Figure 3-3 shows an example of this pattern.

Figure 3-3. Contextual serving of ads based on user profile patterns

Also attracting website owners to AdSense is the fact that ad revenues are split between Google and the website owner. Other banner ad companies also use this revenue model, but AdSense users have a better chance of increasing their revenues because the ads on their sites are contextually specialized for their audiences, so users are more likely to click on them. Given the fact that net revenue from a website must be calculated once the costs of hosting are subtracted, it makes more business sense to go with a contextual pattern such as that offered by AdSense than with a non-contextual pattern.

Serving contextually specific information based on a single site visit is only one aspect of how online advertising is changing. With the evolution of the Internet and some underlying technologies, the science of targeted advertising is reaching new heights. Dr. Usama Fayyad, chief data officer and senior vice president of Research & Strategic Data Solutions at Yahoo!, stated in the March 2007 issue of Business 2.0 magazine, “I know more about your intent than any 1,000 keywords you could type.”^[33] He knows this because of his Yahoo! research into the click-stream consciousness of web users. Dr. Fayyad is an actual rocket scientist who worked at NASA’s Jet Propulsion Laboratory before moving to Yahoo! to manage the roughly 12 terabytes of user data—more than the entire content of the Library of Congress—that Yahoo! collects every day.

Yahoo! tracks user behavior with a multitude of technologies, including cookies, user account activity, bounce rates, and searches. The major search engine vendors have acquired the ability to build comprehensive user profiles based not just on contextual information from a single web page, but on many aspects of a user’s behavior. For instance, Yahoo! and Google have created services that consumers can use to help them build successful businesses and/or websites. Along those lines, Yahoo!’s acquisition of Overture let people target search terms based on available inventory. Overture’s tools can tell an advertiser how many people search for a specific term in a given month, as well as suggesting similar terms.

Another trend in Web 2.0 advertising is the move away from traditional graphic banner ads and toward text and video media. Bandwidth-light text has an advantage thanks in part to the increasing use of cell phones as people’s primary devices for connecting to the Internet. Jupiter Research reported a trend of growth in all three categories (text, graphical banners, and video), implying either that there are more advertisers or that advertisers are continuing to pull financial resources away from traditional media such as television, magazines, and newspapers.^[34] This phenomenon must be somewhat scary to the incumbent media giants, especially when coupled with the recent history of small upstart Internet companies becoming the largest media sources within just a few years (YouTube and MySpace are good examples).

A third trend concerns the delivery of ever more targeted content. Engaging users in a context in which they’re open to an ad’s content requires walking a narrow line. Many bloggers make a few dollars a month on Google AdWords, but some deliver a more immersive experience, even using text ads within RSS feeds and carrying ads into their readers’ aggregators. This can be effective, but if consumers are bombarded with ads, the entire mechanism starts to void itself out, as the human mind starts to filter out too-frequent advertisements.

Web 2.0 hasn’t done much about the pressing question of how society will continue to react to ads that are often perceived as intrusive and unwelcome. We’re referring to one of the most hated words since the dawn of the Internet: spam.

Email spam is probably the most despised form of advertising on the Web. Despite numerous mechanisms (such as spam filters and legislation) to control it, spam is still rampant. Like spam, banner ads also permeate many corners of the Internet and are common on many web pages. Do banner ads drive people away or do they provide value? Users have expressed time and again that sites that are uncluttered with commercial messages are more attractive. Google was widely heralded as setting a new model for search engines with a simple, noncommercial interface, although web historians could point out that Alta Vista was just as clean in its lack of commercialism. Consumers and users flocked to Google.com when it launched: it provided information they wanted without bombarding them with advertising. Similar models have evolved from companies such as Flickr (discussed in the next section), although the old-world ways of commercial ads still permeate much of the Internet landscape (even to pervasive levels within newer presences such as YouTube and MySpace).

Some have even organized communities to fight advertising. The most notable is Adbusters, an organization based in Vancouver, Canada. Adbusters is a global network of artists, activists, writers, pranksters, students, educators, and entrepreneurs who want a new social activism movement piggybacked on the information age. Their goal is simple: anarchy. Their aim is to topple existing power structures and forge a major shift in the way we’ll live in the 21st century. In a similar vein, Canadian film producer Jill Sharpe released a documentary called Culture Jam,^[35] a stab back at our mainstream media and advertising agencies. “Culture jamming” is a form of public activism that is generally in opposition to commercialism.^[36]

Despite these challenges, Google AdSense delivers a service that many people use and serves ad content that can be mashed into most websites. Google has provided many other value ad services that make it easy for anyone to become an advertiser and get some value for her budget. Google’s stock price continues to rise as a reflection of its perceived strength and dominant position in the new advertising industry.