Online advertising is all about purchasing intent

A while ago I dug up this quote from Business Week from 2000:

But how will Google ever make money? There’s the rub. The company’s adamant refusal to use banner or other graphical ads eliminates what is the most lucrative income stream for rival search engines. Although Google does have other revenue sources, such as licensing and text-based advertisements, the privately held company’s business remains limited compared with its competitors’.

We now know what people were missing back then and why Google generates such massive revenues from advertising.  The lesson is that the RPMs* of online ads are directly proportional to the degree** to which the user has purchasing intent.  This is why when you search Google for “cameras” you’ll see ads everywhere (and those advertisers are paying high CPCs), but when you search for “Abraham Lincoln’s birthday” Google doesn’t even bother to show ads at all.

This is also why Nextag will have revenues this year in the ballpark of Facebook’s revenues, even though Nextag gets a fraction of the visits:

Screen shot 2009-09-27 at 9.33.10 AMScreen shot 2009-09-27 at 9.32.46 AM

When people talk about search being a great business model (for, say, Twitter), they should distinguish between search with puchasing intent, which is an incredible business model, and search without purchasing intent, which is a terrible one.

This may change as brand advertising moves to the web.  But for now web advertising is dominated by “direct response” ads, and those are all about purchasing intent.

* RPMs = revenue per thousand impressions – can we please agree to start saying RPMs instead of CPMs or eCPMs?  :)

** degree being how close the user is to actually purchasing multiplied by the profit margin on what they are purchasing

44 thoughts on “Online advertising is all about purchasing intent

  1. Pingback: My Homepage
  2. Pingback: Trackback
  3. Pingback: Trackback
  4. Pingback: OEM Polaris Parts
  5. Pingback: youtube video
  6. Pingback: diabetes forecast
  7. Pingback: visit this site
  8. Pingback: advice
  9. Pingback: Green Dry cleaners
  10. Pingback: go see
  11. Pingback: visit
  12. Pingback: film
  13. Pingback: rug cleaning
  14. Pingback: Trackback
  15. Pingback: try here
  16. Hello there I am so excited I found youir site, I really
    found you by error, while I was searching on Aol for something else, Anyhow I am here now and would juwt like to sayy many thanks for a incredible post and a all round interesting
    blog (I also love the theme/design), I don’t have time to read iit
    all at the moment but I have bookmarked it and aleo added
    your RSS feeds,so when I have time I will be back tto
    read a great deal more, Please do keep up the siperb work.

  17. I was curious if you ever considered changing the page layout of your site?
    Its very well written; I love what youve got to say.
    But maybe you could a little mofe in thee way of content so people could connect
    with it better. Youve got an awful lot of text forr only having one or
    two pictures. Maybe youu could spafe it out better?

  18. Hey there! I could have sworn I’ve been to this site before but after checking
    through some of the post I realized it’s new to me.
    Nonetheless, I’m definitely delighted I found it and I’ll be
    book-marking and checking back often!

  19. Even if the subject matter isn’t work related, there must be a positive aspect of
    team building being demonstrated and you as the educator must be explaining the justification for
    tyis gaming event. You have a whole assortment of tactical
    play styles preset for you to use in matches or you can try
    your skill att making your own and saving them to use in games.

    The game board (which represents your corporation) has 6 different divisions, under each of which there
    are 6 departments.

  20. Thank you, I have recently been looking for information approximately this topic for a
    long time and yours is the best I’ve foound oout so far.
    However, what in regards to the bottom line? Aree you
    positive concerning the supply?

  21. That is really interesting, You’re a very professional blogger.
    I have joined your rss feed and sit up for in quest of more of your excellent post.
    Additionally, I’ve shared your web site in my social networks

  22. I just like the helpful info you supply in your articles.
    I will bookmark your weblog and take a look at again here regularly.

    I am slightly sure I will learn many new stuff right right here!
    Good luck for the next!

  23. One danger fot it is, in the event the user is within pain and then smokes cannabis to alleviate that pain,
    anf the husband or she’s better, some activities may seem easier to do but should sometimes be avoided.

    Libertarian Party of Florida candidate for Attorney
    General, Bill Wohlsifer wrote the Cathy Jordan Medical Cannabis Act,
    that was re-introduced this legislative session allowing for a
    broader use of medicinal marijuana in Florida. Most users of medicinal cannabis lack an expedient vessel to use for inhaling
    the healing smoke from the herb.

  24. Thankfully, there are plenty of providers that
    soccer fans can choose from when it comes to buying soccer jerseys and soccer boots.
    ” Verbal attacks such as name-calling and humiliation can negatively impact self-worth to a dramatic degree. On top of their wide selection, the prices they offer are very reasonable.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s