Google flirts with images

Lisa Baertlein

SAN FRANCISCO: Google Inc., which gets most of its revenue from simple text ads linked to key word searches, said it would begin testing richer graphic ads, such as pictures and logos that would appear on the Web sites of its distribution partners.

The move, which is limited to Google's program that finds keywords in Web content to deliver appropriate advertising, is seen as a way for the Web search leader to add another avenue for growth as it heads towards what many expect to be a blockbuster initial public offering.

The use of pictures, logos and other images could give a boost to Google's service that scans the content on Web sites of firms that have tied up with it in order to link advertising to certain key words.

That service, which Google calls AdSense and is known broadly as contextual advertising, has not seen the runaway success of Google's Web-search advertising, observers said.

Google's 2003 net revenues were $962 million, 95 percent of which came from ads. About 15 percent of that revenue came from the company's contextual advertising services, according to financial information disclosed by the company.

During the first quarter of 2004, around 21 percent of Google's $390 in net revenue came from contextual ads.

"This isn't a surprise to us at all. We think it's the right thing for Google to do," said Jeff Lanctot, vice president of media at interactive agency Avenue A, a unit of aQuantive Inc.

"In some ways this is a bit of a nod to the large advertiser," added Lanctot, who has previewed the product. He said bigger advertisers are more likely to have the budgets to keep fresh advertising images on hand.

Google, which said it would make a test version of the new program launched, AdSense about a year ago and has found more acceptance from small advertisers and Web site operators.

Some advertisers have complained that Google's contextual ads are too expensive for the results that they deliver and can show up at inappropriate times, such as a weight-loss ad paired with a story on anorexia.

"This is a way for Google to try to turn that around," said Lanctot, who added that images might not be the answer but a step in the evolution of Google's contextual services.

Overture Services, a unit of Google rival Yahoo Inc., has not announced plans to offer advertisers the option to take out contextual ads with images, but said it is always looking for ways to enhance its programs.

Overture currently works with distribution partners that choose to enhance paid-search listings with images.

Other non-search companies, from Advertising.com to aQuantive's Drive Performance Media unit, already offer services that deliver image ads with contextual relevance.

Google late last year bought Primedia unit Sprinks, it’s biggest contextual advertising rival, which also offered image ads.

© Reuters