Wednesday, February 2, 2005

Google Doubles Profits on Ad Revenues: Still Room for Profits Elsewhere?

The New York Times along with other majors the doubling of profits in its most recent quarter, driven by ad revenues from its contextual ad programs. Google attributes much of this to advertisers learning how to control their campaigns and target more valuable click audiences, yielding better return on clicks. Notably, though, AdSense revenues from placements on destination Web sites were down in the face of competition from Yahoo!'s Overture unit. Still, with half a billion USD in ad revenues from AdWords and about equal for AdSense, it's a grand performance. The key is that Google is offering its advertising community effective tools to get to the audiences that they require for effective campaign performance. This is the same strategy, of course, that destination Web sites are taking in reaching their own audiences, albeit with more focus on marketing content to specific professional and social communities and more of a diverse and integrated approach to the needs of both advertisers and specific audiences. As Google works towards more personalization capabilities in its search capabilities it's likely that additional revenues from community-oriented publishing will flow to Google ad programs. But at the same time an increasingly well-honed publishing industry already does this in highly focused and contextual ways. Publishers as marketers to and for communities will be the ultimate salvation of the publishing industry, adding far greater value from content contextualized to the well-researched needs of specific communities than ever before, but they will have to get used to more open sources of content such as Google search results, webloggers, governments and corporations competing for different levels of interest in content. The best news of all is that the ad pie as a whole is expanding rapidly, allowing everyone taking a bite to enjoy it.
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