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Has Google Taken the Whole Contextual Ad Market?

kidmercury | 11 November, 2005 09:37

Andy Hagans over at Performancing.com writes:

Many--if not most--bloggers receive most of their advertising revenue from Google Adsense. The reason is simple: despite the program's annoying tendencies towards secrecy (Smart Pricing), Adsense pays out far better than alternatives (usually). But there was one slight problem--we were all dependant on one entity for monetization. Umm, *eek!*

Which is why so many of us jumped for joy when Yahoo! finally announced YPN, their Adsense alternative. The program has been in BETA for a while, and I've tested it out on my own blogs. I've got to say, YPN is nowhere near to rivalling Adsense, and I'll tell you why in one word:

Depth.

Adsense has it. YPN doesn't.

Hagans goes on to note that Google is experiencing the benefits of being the first mover to successfully enter the contextual advertising space. And he's spot on. Consider:

  • Contextual advertising networks are, as the name implies, network goods: the more members they have, the more valuable they are. Hagans' argument is that AdSense is superior to YPN largely because it has more advertisers in its network, hence allowing publishers to show the most targeted ads.
  • How did Google build such a large network? By being the first firm to successfully enter the contextual ad space. They made contextual ads easy, and leveraged their brand and network of adwords clients to create a market where none previously existed.

Who can beat them? Well, it's going to be someone that has a network of advertisers that can rival Google's.

At least from my perspective, it looks like Google's got this market cornered for quite some time.


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