Over the past few years, Internet marketing has become the fastest growing sector in marketing services. Many companies now consider search engine optimization and search engine paid placement campaigns as essential components of their business and marketing strategies. Paid online search placements have grown from $1.6 billion in 2003 to almost $3 billion in 2005. Jupiter Research estimates that by 2008 paid search marketing will account for $4.3 billion, or nearly one-third of all online advertising revenue.



With the increased competitiveness and rising costs of online advertising and pay-per-click (PPC) campaigns, contextual advertising offers marketers an alternative approach to reach their target markets. Contextual advertising differs from other forms of online advertising in that ads are placed on web pages by automated systems based on their relationship to the content on a given page. Traditionally, advertisers have faced the challenge of finding the right sites and pages to display their ads. With contextual advertising, automated systems scan the text of a web page for keywords and then select and display ads that relate to what the user is viewing. For example, if a user accesses a page containing information on stock selection, ads about stock research or other related topics might appear. Google's AdSense and Yahoo's Publisher Network are two of the most widely used contextual advertising networks. In recent years, these programs have revolutionized the way that web site traffic is monetized. As is often the case with dramatic innovations, however, problems and controversies have arisen.

With contextual programs, Web site owners no longer need to make sales in order to receive affiliate commissions. Contextual programs pay affiliates a percentage of the revenue generated by each click. Therefore, by the time the visitor reaches the advertiser's site, the webmaster has already made a commission for the click. Because the ads may appear on millions of different pages, Google and Yahoo are able to charge more per click than any other network.

As a result of a compensation structure that rewards clicks rather than conversions, the focus for developing successful traffic building techniques has shifted from quality to quantity. The goal of many webmasters is to aggregate as many clicks as possible, whether they are likely to convert into sales or not. To achieve this goal, many site owners now design sites that encourage, or even trick, visitors to click on ads regardless of their interest in the product or service being sold.

One common practice is to make the ads blend into the site by using the same fonts and colors as the publisher site. As a result, the ads look more like actual site contents than like ads for an external site. In some cases, this integration can be good for the advertiser if visitors are made aware that these ads are links to external sites and clearly understand what type of site they will be visiting. In such a case, the user will consider the link a recommendation from the publisher and will be willing to seriously view the site. Far too often, however, visitors do not realize that they are about to visit an external site until it is too late. Then the visitor quickly hits the back button and the webmaster collects a commission.

An even more extreme form of improper use of contextual advertising is practiced by webmasters who are trying to generate income from sites that aggregate thousands of visitors per day. These webmasters often run sites that offer free products, such as clip art or tools for Myspace.com, to visitors who generally do not make a purchase of any kind. In order to monetize the traffic, the webmasters will place ads in places that visitors are likely to click, such as underneath thumbnails of clip art. The visitor sees a link below the image and surmises that they must click the link to download the image. These webmasters don't care what the ads say or what products are offered since visitors almost never read the ads or stay to visit the advertiser's site. The webmasters? primary concern is to display the most expensive ads. Companies in financial services and other industries that use highly generic, expensive keywords are most likely to fall victim to this practice.

In response, many financial services organizations have discontinued all contextual advertising. While this protects the advertisers from paying for bogus traffic, it also eliminates the high quality traffic that contextual advertising can generate and penalizes legitimate webmasters who could provide that traffic.

We have found an alternative. We have developed a proprietary process that enables us to implement contextual advertising programs that display ads only on sites that provide quality traffic. This process has increased our conversion rates by more than 50%.