Google has recently introduced banner ads for their adsense program, so perhaps all the talk about how text ads perform better is not true.

You could argue that banner ads are a different thing, that they are richer media and thus brand advertising. But the difference is that Google’s image ads do not pay publishers on an impressions basis, but for clicks, just like current contextual text ads.

Adwords works. People click on text ads which are relevant to a search because they are actively looking for something. But perhaps when ads are served alongside static content, the conversion rate is lower, and perhaps people are starting to ignore them now that the novelty has worn off. So maybe in your face image ads are back, for good reason.

The problem for Google is that image ads are not only ‘in your face’, they are very much in the face of a website. With the renewed confidence that content publishers now have, my guess is that CPM impressions based advertising will be back. If publishers have leverage they will want the guaranteed revenue that being paid for traffic gives them.

Google got rid of all CPM advertising making a big bet on the best of both worlds CPC model that sits in between an advertiser and publishers needs. If CPM is back is that bad news for Google?

Google’s ad plans provoke grumbling

HotBot’s New Desktop Search Toolbar:

“HotBot’s new Desktop Search utility not only searches the web, it indexes files and email on your computer, making them searchable as well.”

It’s only a matter of time before Google do this and perhaps what has held them back was fear of being too aggressive against Microsoft.

As I’ve said before, it is crazy that we can search millions of other computers, thousands of miles apart, more quickly than our own machine.

Microsoft should have done this 8 years ago, we should not have to wait because of the stagnation created by a monopoly.

Another meme spreads round the web, the Sergey pic is on Hot or Not:

Is Sergey HOT or NOT?

My enemies’ enemies are my friends, not when my enemy’s enemies are hosted by my enemy.

Sign up for the Google Newsletter at Yahoo Groups

Another classic via NTK

Search Beyond Google outlines newer search engines’ challenges to Google and they all seem to be based upon different approaches from Pagerank.

Was Pagerank what really made Google or was it the fact that they had elegant usability and design, weren’t a ‘big bad company’ and were perceived to be cool for the people that matter when building a tech company - the techies, the early adopters who are the biggest users and potential evangelists?

Pagerank is arguably obsolete at this point, as weblogs and trackback and Tripadvisor.com demonstrate.

Surely the trophy collection of PhDs that work at Google are better used to optimize Adwords or tackle the physics of cooling fans in the server farms than all be tweaking Pagerank?

Is search a software problem or is Google an advertising company with great hardware hosting skills, that pretends to be focused on the arcana of search algorithms because it sounds cool if your PR needs to focus on what’s hip in the tech world?

John Battelle:

“the rumors are flying again about Jeeves being in play. CBS Marketwatch is fueling them, saying AOL might buy the company and drop Google. I don’t think so, but you never know”

Certainly if Ask Jeeves don’t get bought they look very lonely out there as a destination site powered by Google ads revenue. They are less vulnerable than Looksmart in that there is little incentive for Google to ditch them as a channel in the same way that MSN ditched Looksmart as a provider (although Google have leverage in terms of split on ad revenue).

I agree with John that they won’t get bought by AOL. They have traffic and a search product but their ad network is provided by Google. AOL have more traffic and search, despite the hype, is a commodity. AOL would be better off with an ad network.

At $40 billion a year for traditional print advertising (10 times the size of the existing search engine advertising market), the online Yellow Pages advertising market is the biggest revenue opportunity for search engines now that the pay-per-performance revenue model is cemented. Since most services transactions happen offline, Google/Overture style PPC (Pay Per Click) is the perfect way to charge advertisers.

Latest figures show that search for local services is twice usual estimates, at 25% of all commercial searches online.

The market for local services has traditionally been owned by the phone companies who used phone numbers as the key for Yellow Pages listings, however, Yellow Pages publishers have been lazy and arrogant and are just realizing that they could be crushed by the likes of Google, since the majority of revenues will soon come from online advertising. Traditional publishers’ online Yellow Pages are usually very poorly executed, for example, Dex only introduced searchable listings (instead of browsing a directory) at the beginning of this year.

The model for online local services is probably Citysearch who offer paid listings alongside the directory and include value added content such as ratings. Craigslist should be in there but the lack of focus means that the biggest services advertised have gravitated to the seedy or low cost end of the market, Craiglist’s biggest services advertisers seem to be prostitutes, whereas Yellow Pages’ are doctors, dentists and lawyers.

Although Yahoo has had a local services tab for a while, it hasn’t linked this to pay-per-performance advertising, however, an Overture service is in the works. In addition, Google will surely ditch their increasingly defunct DMOZ powered ‘directory’ tab for the Yellow Pages service at Google labs. For Google, Yellow pages may have an added bonus - since local services require a search term plus some information about yourself, such as location, storing this information in a profile benefits users and helps build in a ’switching cost’ to lock in users. Perhaps this is the kind of profiling service they should morph Orkut into.

There may be an opportunity for weblog publishing tools to package a product geared to small business websites. In order for PPC local services ads to work, they must click through to a webpage about the service, but most of the 100M local businesses in the US do not yet have a website.

TiVo and PVR wishlist:

1. All PVR’s are sold as commodity hardware with no signup or subscription fee or tie in to Cable or Satellite.

2. TV listings are provided for free by ad supported online services.

3. Opt-in targeted ads based upon your personal and viewing profile (with ability to remove items from viewing profile) are served alongside listings.

4. You have total control and ownership of your profile to block certain advertisers or limit your profile.

5. Either onscreen or via a webpage you can buy from ads based on what you have watched. For example if you watched a travel show about Hawaii you can choose special vacation deals from your nearest airport (you can store your zipcode in the profile), if you want to buy what they are wearing on Sex in the City (heaven forbid), then you can.

Basically I want to walk into a store buy a PVR with no signup and use a different company for free listings that serve the equivalent of search engine text ads but for TV.

Perhaps Google should think ‘inside the box’.

Three major players in search, Yahoo, Google and soon Microsoft makes for more players than some of the other big Internet services, occupied by the likes of Ebay, Amazon, Netflix.

Here’s a wild prediction for the first massive merger of the rebound: Microsoft will buy Yahoo (if they can get away with being that aggressive).

MarketingWonk, on agency snobbery towards adwords/adsense:

“I’m getting negative vibes from the professional ad community, but mostly I think because syndicated text ads isn’t glamourous [sic] and it cuts out a lot of middle men and agencies.”