Keyword based advertising is “Unfair”
The article “Small Players Seek an Alternative to the Expense of Pay-Per-Click” by Darren Dahl discusses about the issues regarding the pay per click advertisement method that most websites such as Google uses. The article starts by introducing us to an individual named Tom Telford, who wanted to advertise his new business. He looked to Google’s AdWords program and it allowed him to be very successful. The way this program worked is that it would select a few keywords to sell to the advertisers and the way it would work is that whenever someone performs a search related to this keyword, the advertiser’s ad would appear in the search results and they would pay for each click. Mr. Telford agreed to pay google 60 cents for every time his ad was clicked and it allowed his business to be very successful and his sales and customers grew rapidly. However, an issue with this method has come up in recent years and the issue is that the prices for the pay per clicks are rising as competition for certain industries are growing. For example, Mr. Telford started a new management company and he had to pay $1.25 per click which was double of what he initially payed and this was due to competition. According to Mr. Telford, “For a while, I was spending more than I was getting,” “It finally hit me to ask, ‘Can I sustain this?’”. We have come to see that smaller companies struggle a lot with this because they do not generate enough revenue to be able to compete for better ad slots than bigger companies
This article is related to the topic of Sponsored Search Markets. We learned about how online advertising was improved to be more efficient. This was done by displaying advertisements to the appropriate audience that will be interested in the content. The method of keyword-based advertising is very successful in that it displays ads to the users that are more interested in the content or product being advertised, which in turn allows the advertiser to gain more customers/ revenue. When a user makes a search online relating to a topic, google can use keywords relating to their search to display advertisements to the user and it is obvious that the user is more likely to be interested in that ad since it is a topic that they researched online. This topic of keyword-based advertising can be seen in the article that many businesses advertise their products using this method. Chapter 15 of the class textbook also discusses how the allocation of slots are made available to advertisers. The textbook explains that “the slots higher up on the page are more expensive, since users click on these at a higher rate”. This same topic is discussed in the article by Dahl. Dahl mentions that smaller companies tend to suffer more using keyword/pay-per-click advertising strategy because they are unable to pay for the higher slots.