Web Search Sites See Clicks Add Up to Big Ad Dollars

The New York Times > Technology: "When the year's largest television audience convenes for the Super Bowl on Sunday, advertisers will be spending an estimated $2.4 million for each 30-second cinema-quality commercial. But just as important to many of those same advertisers is the $1.50 or so a mouse click that they may spend on the Google Internet search site, at any hour on any day, for a few words of plain text that will link prospective customers to the advertisers' Web sites.

The fact that Eli Lilly, Napster, Novartis and Staples are among Super Bowl advertisers that are also regulars on Google is not the only evidence that Web advertising has come of age. On Tuesday, Google, the most popular Internet search company, announced that it had passed a significant milestone by selling $1 billion of advertising during the last three months of 2004. So far Google has been the most successful in blending computer science, consumer behavior and merchant motivation into what, for now at least, is a considerable money machine.

With an overall market of about $3.8 billion last year, keyword search represented more than 40 percent of the total $8.7 billion in Internet ad spending last year in the United States, according to Merrill Lynch. No one expects Google-type ads to quickly render other forms of advertising obsolete in the United States, where marketers spent a total of $264 billion last year in all media.

Under the Google model, the Internet is also an equal-opportunity medium for advertisers. Sellers of all stripes have the opportunity to bid from 5 cents to $100 per mouse click to have their Web links appear alongside Google's pages of search results. Anyone who bids at least the minimum will appear on the list, but unless the bid is competitive, the bidder's name may appear so far down the list that the chances diminish that prospective shoppers will see it.

Unlike Yahoo, which ranks its lists of sponsored ads based on how much the advertiser has bid per click, Google continually adjusts the rankings on the basis of which ads are returning the most money. The merchant who bids $1 a click and gets 100 clicks per thousand people who see the ad, in other words, will receive a higher ranking than the seller who bids $10 but gets only five clicks per thousand. And to keep control of the cost, advertisers have the option of setting a spending cap - once reached, the ads stop running.

Barnard Ltd., a small Chicago company that sells decorations and stage props like artificial food, has used Google keyword searches like "fake food" and "Styrofoam balls" since 2002 - to great effect.

Google, by developing a reputation for returning the most relevant search results, became the most popular search site. In December, Google's site attracted 67.1 million different American users, who each spent an average total of 30 minutes on the site, according to Nielsen/NetRatings. By contrast, Yahoo's search service drew 47.9 million American visitors, who spent an average 12 minutes in December. "