Microsoft Announces Engagement Mapping Ad Technology

AdWords has become a black box beyond the means of many small advertisers. To help some advertisers automate their accounts tools like free conversion tracking and CPA based bidding have came about. But all the tools that help enhance the perceived value of search ads and the value of conversions does nothing for brand ads or the other ads people see before searching and buying.

Content ads, which were relatively expensive when AdSense first came out, have seen their price drop over the years as

  • advertisers adjusted content bids downward
  • smart pricing reduces prices (again, again, and again)
  • quality scores that drives out arbitrage ads
  • the clickable region has got smaller

The value of many publishing based business models has aggressively eroded as

  • publishing markets get saturated
  • AdSense has replaced direct ad sales for many sites
  • Google keeps discounting the price (and perceived value) of non-search ads
  • Google's search based ads get conversion credit for demand created by other ads

Google claims their success is just because they are simply better than the competition and they have been doing search longer (that second claim is untrue - Yahoo! owns Inktomi and AltaVista, which have both been doing search longer than Google). The truth is they have a huge advantage in network effects, have advertising believe that their inventory is worth more than it is, and that other online ads are worth less than they are. It is going to be hard to create a viable competitor unless the metrics for measuring value are changed.

Microsoft's answer to this is called Engagement Mapping, yet another black box, but one that aims to share part of the ad credit with display ads (clicked or not) instead of tying most of the ad value to the search based conversion. Publishers would clearly benefit from this, but if it is hard to get advertisers to buy AdSense ads on Google (where Google essentially giving away the ads) how hard will it be to get advertisers to buy in on this? Perhaps big brands will use it, but smaller companies will not be interested.

If Microsoft does not own a big piece of the search market, another big hurdle is how will they advertisers trust this model without giving Microsoft their analytics data?

How might this pricing model change online publishing (for better or worse)?

Published: February 26, 2008

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Comments

February 26, 2008 - 7:53pm

(IMO) Small companies will not be able to afford it. This new system looks like a system that was likely in development for Atlas or Avenue-A clients before they were purchased, by Microsoft as part of the aQuantitive buy. This is certainly a reporting system for publishers who spend boat loads of cash on banner ads in much the same way they currently report “View Conversions”.

The beautiful thing about properly served banner ads is you can cookie everyone who is exposed to them and then report which ad buys resulted in someone reaching your conformation page. (With or without a click – even if the “Banner ad” is a single pixel)

Don’t you wish you could to that sort of thing with search? Can you imagine a world where you can cookie someone just for making a query… even though you are not displaying a listing? You would be able to test keywords before deciding to place actual ads.

Banner advertising is way more sophisticated, measurable and effective than most people realize. You just need a serious budget to take advantage of it.

February 27, 2008 - 5:32am

Hey Aaron,

Why do you think the PPA space isn't more out in the forefront, while PPC grabs the lion share of the online ad space? I know from Google's perspective it's much more of a cash cow since they get paid from people just surfing, not necessarily having to commit to buy something - But from a merchant's perspective, I'd be much more willing to pay per $75 per sale vs. .20 per click because you don't really have the conversion factor to worry about. Not paying until a say is initiated, to me, makes the most sense and would seem to really make the most sense to most website owners, publishers, etc. Am I missing something?

I know there are some PPA networks out there, but the ones I've seen are either too expensive or you have to be of a certain size to even be considered. Google has their beta PPA program, but you need several hundred PPC conversions per month to be considered (from the info I got from them.)

I'm not sure of the rational behind that one, other than [I guess] they want advertisers who are sure to convert to be displayed on their network?

What are your thoughts on the direction PPC is heading, and do you see PPA gaining any ground?

Christopher Rees
www.PalaestraTraining.com

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