[02/18/06 UPDATE: We ended up leaving Revenue Science about 2 months after writing this entry due to plumetting revenue. We returned to AdSense and after much work have reached new daily highs which I wrote about on the Dogster, Inc. blog.]
Web-based contextual advertiseming will soon give way to user profile-based advertising. In fact, the change has already begun on Dogster and Catster where we have just switched from serving Google’s AdSense ads to RevenueScience’s text ads, because it simply makes us more money.
Here’s why. Adsense determines what ads to show based upon what words are on the page. On almost every one of our pages a pet-related ad appears hundreds of thousands of times a day. Unfortunately for us, pet-related ads offer very little money, so though we serve 6+ million AdSense ad sets a month we only make about $900/mo. This is pretty silly as Dogster and Catster attract a market sweet spot audience of 80% women, average age of 34, mostly college educated, mostly $70k and up households. And all they get shown are wee-wee pad ads.
Revenue Science, however, serves text ads based upon the type of user that is reading the webpage. They match ads based upon a user’s submitted profile, but in our case, since we require very little human data, they prepared a keyword set based upon our user’s demographics. Day after day our users clicked their ads more often and they are clicking on topics that pay much better. Now our multi-faceted users are shown multi-faceted ad content. This is really Advertising 101 (when you watch a football game you aren’t just shown football ads) but with hindsight, it’s no suprise AdSense chose to gain everyone’s trust by using a page’s words as the ultimate judge of what ads are related. It’s only now that markets are truly large and trusted enough to allow for serving ads based upon a site’s user profile.
The amazing part is that I am sure it’s only a matter of time before the publisher is allowed to seed the keywords will move to the publishers. Since these ads are all cost-per-click (CPC) if ads are not clicked, the publisher makes no money, so market forces force the publisher to only show ads their users will click. In fact I know one publisher that is already offering publisher-seeded keywords, but it is in very limited testing.
I expect that both contextual and user-based advertising will work side-by-side, because contextual is very lucrative for sites whose users are coming seeking information and also works well when the visitor’s profile is unclear or too diverse to characterize. But I also suspect that many publishers will prefer user-based text ads because it gives them more diversity to offer their visitors. AdSense will respond very well to this, they are the nimblest behemoth I’ve ever seen. I’ve meet many in their AdSense group and they strongly reflect Kennedian “best and the brightest” auras. They are going to be playing catch-up on this for a little bit, but it will be a great day for everyone when they offer both options.