The good, bad and ugly of contextual ads from Google, Yahoo

It has happened before, and it will happen again. I was reading a story on the San Jose Mercury News’ Web site about federal agents arresting people for running a sex-trafficking ring out of massage parlors. And when I saw the text ads below the story served through Google AdSense, they were for day spas and massage services in the San Francisco Bay Area.

The ads are deemed relevant by the computer algorithm that might search the story for key words and match them to the key words that these advertisers bought. But the algorithm can’t quite match human judgment that might consider this to be the wrong place for legitimate spas to promote their services.

When Google launched self-service AdSense advertisements in June 2003, these types of mismatched ads proliferated — almost to the point of being a parlor game where you find the weirdest mix of ads and content. But over time, Google AdSense and Yahoo’s competing ContentMatch have improved their algorithms, have worked more closely with big publishers, and have taken feedback from readers and advertisers to improve their systems and reduce mismatches.

Even so, contextual advertisements remain a strange breed, living alongside journalistic content or blog postings as text ads and fighting for attention with rich media ads. Contextual ads have performed well for Google and Yahoo, brought in some good money for online publishers, and given the advertisers some bang for their buck. If all three parties are happy, that’s nice for their business, but how much tolerance should there be for goofy pairings?

John Battelle, who is starting FM Publishing to help bloggers sell ads on their sites, sees advertising as a conversation and believes that there’s only so much an algorithm can do in matching advertisers with publishers.

“I think it rings a sour note in the conversation in the publishing community [when mismatches happen],” Battelle told me. “And sour notes over time can lessen the conversation. I know that the platform guys [at Yahoo and Google] are working really hard to stop that problem, which is really difficult to do, because it’s language. … You can do a hierarchy and say if this is a news story, you show only these types of ads, but then you’re missing out on what might be the right ad.”

As Google improves AdSense, Yahoo is readying a similar self-service platform, which is only in limited beta currently. But Yahoo’s Search Marketing division (formerly Overture) has worked with large publishers for some time and has a long history of matching ads with search key words. Here’s a rundown on the good, bad and ugly of these contextual ad services — and which content works best in matching ads and bringing in more revenues for sites.

The good

The first rule of thumb for contextual ads is the opposite of the old local TV news maxim, “If it bleeds, it leads.” In the case of hard news related to war, terrorism, rapes, murders and other unpleasant current events, the best bet could be to remove contextual ads or just run more generic run-of-site ads. Of course, some site publishers have no problem with hawking commemorative Iraqi War playing cards on stories about people dying in the war.

Yahoo’s ContentMatch uses various sensitivity filters for what ads are shown with content — along with human oversight from a staff of more than 100 editorial people. Paul Volen, who is vice president of product marketing for Yahoo Search Marketing, told me that Yahoo’s human oversight is what differentiates his service from Google’s.

“First, we do have a dynamic proprietary algorithm which takes the theme of a page and matches advertising to it,” Volen told me. “We also add a layer of editorial oversight to that. We look at a site and try to understand if there’s content that’s evergreen and won’t change, like index pages that are generic and aren’t updated every day. In those cases, we could have the editorial staff look at them and come up with the best matches. We work with the publishers pretty closely across their site to figure out how we want to attack the relevancy and matching.”

Google doesn’t have an editorial staff for AdSense, but does assign account managers to bigger sites for the premium level of AdSense services — though it is only available for sites above 20 million page views per month. Gokul Rajaram, group product manager for Google AdSense, told me that there are just too many dynamic pages served for humans to watch every ad that’s served up.

So what content works well with contextual ad services? Usually the more focused the content, and the more commercial it is, the better. So a blog that covers Asian travel should outperform a blog about inner-city crime. Rajaram says there are a number of factors that affect how well the ads do for publishers and advertisers — including how fertile a topic area is for advertisers and where the ads are placed on a page.

“If the advertiser makes $100 per sale, then they’re willing to pay $5 per click,” he said. “If the advertiser only makes $10 then they would only be able to pay one-tenth of that. The cost-per-click depends on the vertical that the advertiser is in, as well as the competitiveness of the term that it’s in. … Finally, there’s the matter of clickthrough rates, which depends on the relevance of the ads and the placement of the ads on the page. What is the mode of the users, are they in a browse mode and just reading news articles?”

For a general news site, the breaking news sections might not perform as well as lifestyle, travel, business and technology. One great example of a fertile ground for contextual ads is Weblogs Inc., the network of blogs set up by entrepreneur Jason Calacanis. Calacanis has used AdSense to help jumpstart his business as he also sells display ads on his 80-plus blogs that are very targeted into vertical categories — from digital photography to babies and pregnancy.

For that reason, Calacanis has nothing negative to say about his experience with AdSense.

“The ads are absurdly targeted in my experience,” Calacanis told me via e-mail. “People look at them like content and they don’t even mind them. It’s a revolution in advertising –for the first time since the Super Bowl people want the ads! It’s advertising nirvana for everyone involved: advertiser, publisher, and Google. … Text-based advertisers find out about our site because of Google AdSense and then they wind up buying display ads. So, Google is doing free marketing for us in a way. I’ve found no downside as a publisher — zero.”

Still, Calacanis isn’t putting all his eggs in the contextual ad basket and realizes the majority of his income is from display ads sold directly to advertisers. Plus, he says Weblogs Inc. is considering using the FM Publishing network being set up by Battelle to help match advertisers with blogs using the human touch.

The bad

While automated contextual ad services take the hassle out of selling advertisements for small publishers or bloggers, they might not perform that well for medium-sized sites that aren’t focused on very specific commercial niches or cover more strategic or philosophical subject mattter.

Matt McAlister is vice president and general manager of tech trade magazine InfoWorld’s online operations and also runs the remains of the Industry Standard’s Web site. While the latter site does get about 50,000 unique users per month, according to McAlister, the AdSense ads just don’t seem to fit well or bring in much income.

“In terms of revenues, there’s certainly a threshold that your site needs to reach before [AdSense] does anything for you,” McAlister said. “ has 50,000 uniques, but [the income] is almost laughable. It’s better to do sponsorship, where someone owns a section of the site. I remember examples of the stuff that came up that was either completely abstract or inappropriate. I don’t think it has great value to the people who are using the site. With the site at 50,000 uniques, that should be attractive at a certain level, but I have a feeling it’s not a useful way to use your ad inventory.”

InfoWorld itself is owned by media conglomerate IDG, and its site uses the contextual ad services of a company called Industry Brains. When you click on an InfoWorld story, you’ll see small text ads placed adjacent to the first paragraph or two of the story. They look like AdSense ads but, they’re actually served and created by InfoWorld itself. McAlister says they decided to run these ads in order to help advertisers who wanted to generate leads. In many cases, he said, people tune out graphical ads or don’t ever click on them — but they’re more likely to click on text ads that are relatively relevant.

“We started off by targeting them at a very granular level,” McAlister said. “Our taxonomy has about 200-some terms in it, so we were targeting two or three levels down the tree. But we found that it was better to back out and only target the top level, the top 14 categories, because you’re able to reach a little bit further on the number of impressions you’re able to serve. The targeting at that level wasn’t that effective. They might not be as relevant, but with InfoWorld you don’t have to be that specific to convert ads.”

But McAlister does see the value in contextual ads and clicked on various ads while planning a recent vacation using Yahoo Travel.

“In a vertical like that, where the inventory is limited to a number of partners, then that scarcity creates value,” he said. “But if you’re using a blanket key-words matching system against the text on a page against an infinite number of sites, I don’t think that’s going to have much value for the publisher or the readers.”

Battelle, who also founded the Industry Standard magazine, agrees with McAlister when it comes to automated contextual ads. He reiterates the point that medium-sized publishers are often stuck in the cold with Google and Yahoo. And his experience with AdSense on the popular group blog BoingBoing was that the ads just didn’t fit with the often esoteric subject matter.

“Big publishers are slowly working out human relationships with the Googles and Yahoos of the world and start to filter and create feeds [of ads] that work for them,” he said. “But you can’t have a guy who has 250,000 readers a month as opposed to 2.5 million who can have a conversation with the AdSenses of the world.”

The problem is that a Web page with content on it — whether a reported article or a blog rant — isn’t the same as a page that has basic search results. So the interaction between key-word triggered ads and the content is different and more subtle to work out. That’s how Battelle sees FM Publishing squeezing in to serve high-traffic blogs.

“Search has proven that point with this great aggregator on one end of the conversation, where people were putting their question into a search box, and a magic list came up that appeared to be relevant,” Battelle said. “But what about the places where the conversation is already happening? A blog is not where someone is putting a question into a search box, but where a community is already very real, and you need to know the mores of that community before you can enter that conversation in way where you’ll be accepted.”

Jennifer Slegg runs a blog covering contextual ads called JenSense. Slegg compared ad relevancy using early versions of Yahoo’s self-service network and says they still have a ways to go to match up with Google AdSense. She also mentioned one other fault with the AdSense matching system — dynamic content pages aren’t checked by Google very often.

“Bloggers have a harder time with relevancy, particularly on their blog index page when they post frequently,” Slegg told me via e-mail. “Because Google indexes about once per month, writing a single entry about popcorn right before the [Google] bot visits can result in popcorn ads for about a month, even if the majority of the posts are about a tech subject. Targeting on individual blog entry pages is usually very good. This is why many of the news sites running contextual ad programs do not often run ads on the pages that change frequently, such as the index page and the subsection pages, but run it on the articles themselves.”

The ugly

While many of the early kinks of contextual mismatches have been worked out at big news sites, there still remains a gray area that’s difficult to catch. Just spend some time digging through the local news online, and you’re bound to come up with a doozy or two.

For instance, a story on about police spying on activists ends with ads for doing public records searches — basically spying on people. And below an obituary for a rabbi in is an ad link to humorous Yiddish garb. While publishers and the technology companies might be watching for problems, they still slip through.

I talked with one of the advertisers who was included below the Mercury News story about the massage parlor busts. Pierce Salguero is executive director of Tao Mountain, a non-profit which offers courses in Thai massage and herbal medicine. He wasn’t sure why his ad came up in that case and told me that he actually used the terms “sex” and “prostitution” as negative key words in AdSense so the ad wouldn’t come up in association with these search terms or content.

“[Mismatches] probably happen more often than I know about which is unfortunate, because we’re not a spa,” Salguero said. “We’re a non-profit network of researchers who are working at the medical application and history and context of traditional medicine in Thailand.”

But despite the problems, Salguero wouldn’t give up using Google and Yahoo for lead generation for his programs. He says he gets 80 to 85 percent of his business through paid search and contextual ads online vs. print ads and the occasional direct mailer.

“It’s definitely been worth doing no matter what snafus might have happened along the way,” Salguero said.

One sign of the effectiveness of these types of ads is that the publishers themselves have been experimenting with buying paid search and contextual ads to promote their own stories. and have both been pretty aggressive at using key words related to stories they want to promote.

Tim Ruder, vice president of marketing at WashingtonPost.Newsweek Interactive, told me they have promoted stories as well as sections of the site. The only problem is that as this method of promotion becomes more popular, the cost of key words will go up and it will lose its allure.

“We’ve seen that happen across the board within search,” Ruder told me. “As it becomes more competitive, you make all this stuff based on return-on-investment decisions. The ability to make a healthy ROI is harder and harder as it becomes more competitive.”

One ugly side effect of this promotion is when competitors end up promoting their news stories as a place to get more information on a rival site’s ad box. While Ruder hasn’t seen any promotions come up on, he did briefly see a promo on a page. But these are the type of glitches that are easily reported to Google or Yahoo, or fixed through filtering — as long as you can keep up with all the pages served.

Ruder notes that does already offer self-service ads for job listings and other classifieds but thinks the key word auctions at Google and Yahoo are a bit more complex to emulate. In the end, publishers of all sizes will have to weigh out how much return they’ll get from automated contextual ads and whether it makes sense to split ad revenues with the tech companies.

About Robert Niles

Robert Niles is the former editor of OJR, and no longer associated with the site. You may find him now at