Google To Offer Impression-Based Pricing

by Shankar Gupta, Apr 25, 2005, 7:15 AM

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In a move that potentially cuts down on click fraud, Google today is expected to announce that it will now allow advertisers who participate in AdSense to purchase inventory on a cost-per-thousand impression basis, rather than cost-per-click. The search giant also will announce today that AdSense advertisers may now purchase ad space on the sites of specific publishers, and also serve image ads through AdSense.

The upgrades, currently offered in beta to a select set of Google advertisers, will be rolled out to all Google advertisers within the next few weeks, a Google spokesman said. Advertisers will be able to select specific Web sites on which to place their ads, and then set a cost-per-thousand impression bid, as opposed to paying on a cost-per-click basis. Google already calculates likely cost-per-thousand impression prices by looking at cost-per-click and click-through rates.

The move away from cost-per-click pricing could help Google cut down on click fraud stemming from publishers' generating phony clicks on ads in order to receive a portion of the pay-per-click fee. Many industry observers think click fraud is a significant problem facing search engines--although the scope remains murky. Last November, Google sued a publisher in its AdSense network, Auctions Expert International, for allegedly fraudulently clicking on ads that had been served by Google.

eMarketer analyst David Hallerman said Google's strategy of offering to charge based on cost per thousand impressions might be attractive to some marketers who are anxious about fraudulent clicks. "If some advertisers have been concerned, it can allay their fears," he said.

In other revamps to the program, advertisers now will be able to serve image ads and animated ads. Google also introduced a new ad format for its AdSense publishers--a 160x600 "skyscraper" unit. Google's head of advertising sales strategy, Patrick Keane, said the ads will face a "very strict" editorial review before they can be served via AdSense, and have some restrictions on their formats: No flash ads--animated .gif files only--and ads cannot strobe or loop more than three times. In addition to Google's review, publishers will be able to block individual advertisers if they so choose.

Google also will offer advertisers a "site selection tool," which will hunt for sites that match a particular theme or concept using keyword searches.

Keane said that the changes give advertisers greater flexibility in terms of placing ads, while also giving publishers new creative formats. "We think this is a win for the three constituencies that matter to Google," said Keane. "Google in general is always evolving our advertising network. Our core mission here is a better user experience, and the opportunity for a new creative format is going to be better for our users as well."

David Hallerman added that the upgrades take Google a step closer toward offering branded advertising. "To give the advertiser the ability to choose a publisher--and to charge it on the CPM basis, which could be better for both parties, and moving on to allow graphical elements--are really the first major moves into some sort of branding advertising, which is one of the steps they need to diversify their income stream," he said.

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