Competition Arrives for Google AdSense

Google AdSense has enjoyed a virtual monopoly on contextual content ad networking for roughly two years. This lack of competition has allowed Google to enlist thousands upon thousands of publishers to join their ad network without even knowing the revenue split being offered. In fact, Google instituted a feature dubbed “Smart Pricing” which can lower a publisher’s income even further should Google so decide unbeknown to the publisher.

We all know that our system of business works best when there are credible competitors available to keep price and terms in balance. So far, contextual ad networking has been swinging wildly out of balance with both publishers and advertisers finding fault with their current agreements and revenues or costs. Finally, some players with a little clout are showing up to offer Google AdSense some competition.

Recently Yahoo introduced it’s beta version of the Yahoo Publisher Network. Yahoo’s network works in much the same way as Google’s. Ad groups are placed in specific places on your web pages and Yahoo serves ads relating to the content of the page. While the other side (the advertisers) of Goggle’s AdSense has been it’s AdWords network, Yahoo uses its own advertising network, Yahoo Search Marketing (formerly Overture) to draw advertiser ads.

Other competitive players include Kontera, Kanoodle and a few smaller players. It stands to reason that without a large base of diversified advertisers, it is difficult to serve relevant ads to all publisher web pages. Since Google’s AdWords and Yahoo’s Search Marketing advertiser networks are the two largest, they will be the most competitive with publishers of their ads. Other smaller networks most likely will struggle to compete with these two giants.

Another player yet to enter this market could wind up offering stiff competition to the two industry giants. Microsoft recently entered the search engine business and announced in September that it is creating a contextual ad network to compete with Google and Yahoo. While Microsoft will face a challenge to create an advertiser network and a publisher network at the same time, it has the resources to quickly do so and rise to become a competitive force.

So, where does this leave us? The competition is just now reaching a point that will affect Google. In response Google has already introduced new features to its advertising networks to try to maintain an advantage over the competition. As the competition continues to heat up for advertiser dollars and publisher web space, we can only expect some fast paced changes to occur re that will benefit both the advertiser and the publisher. The most important development will come when Google and Yahoo decide that transparency in the terms, including revenue splits, to their partner agreements are in their best interests and meet their advertising and publishing partners on a respectable footing.