ISDS705: ISMG Ch. 14: Google: Search, Online Advertising, and Beyond

What is Google's mission?

"To organize the world's information and make it universally accessible and useful." Advertising drives profits and lets the firm offer most of its services for free.

What are the three factors driving online ad growth trends?

(1) increased user time online, (2) improved measurement and accountability, and (3) targeting.

What's a cache? What other products or services have a cache?

*A cache is temporary storage space used for speed computing tasks *Other products that use a cache include web browsers (that store information from sites you visit) and DNS servers (that keep a record of each nameserver)

What is a "search appliance?" Why might an organization choose such a product?

*A search appliance is a rack-mounted server that can index documents within the servers on a corporation's own network *An organization (like a law firm or investment bank) may use this if they utilize a massive amount of documents that could be indexed for faster access

What can be done if you want the content on your Web site to remain off limits to search engine indexing and caching?

*If you want your content to be off-limits from indexing and caching; you can either add a line of HTML to your site that stops crawlers or put your content in the deep Web (behind a firewall or other inaccessible medium)

How do search engines discover pages on the Internet? What kind of capital commitment is necessary to go about doing this? How does this impact competitive dynamics in the industry?

*Search engines discover pages on the web using Web crawlers that find and go through a complete list of public websites; they then create their own list on Google's cache which is what is actually searched by users *The servers necessary to run this operation are incredibly expensive; in 2018 Google spent $25 billion on capital expenditures, mostly on server farms *This impacts the competitive dynamics of the industry as establishing the infrastructure to run a search engine is a massive barrier to entry and creates a massive economy of scale for leaders

How are ads sold via Google search superior to conventional advertising media such as TV, radio, billboard, print, and yellow pages? Consider factors like the available inventory of space to run ads, the cost to run ads, the cost to acquire new advertisers, and the appeal among advertisers.

*There is an unlimited amount of space for ads to be run online, compared to physical media that has a finite amount of space or time *The cost to run ads is drastically lower; advertisers can choose different payment methods, like CPM or PPC, whereas they are billed flat rates for ads in media like newspapers or TV shows (which are often way more costly) *The cost to acquire new advertisers is much lower; new advertisers can simply join Google's ad network by signing up and allocating a budget, whereas the cost to acquire new advertisers is more difficult for other media *Because of the reasons listed above as well as the increasingly larger population using Google, these ads are a good economic decision

List and briefly describe other methods of geotargeting besides IP address, and indicate the situations and devices where these methods would be more and less effective.

- Using wi-fi hotspots and cell towers -GPS chips -User-inputted data -These methods are more effective for mobile devices or devices that constantly change their network but are generally less accurate as they can cover a larger area (and there are also privacy concerns)

What's an interstitial? What's a rich media ad? Have you seen these? Do you think they are effective? Why or why not?

- interstitials (ads that run before a user arrives at a Web site's contents) - which can include animation or video

List the four factors that determine an ad's quality score.

-An ad's click-through rate -Overall history of click performance for keywords linked to the ad -Relevance of the ad to a user's query -Google's assessment of user experience on the landing page

What is bidder's remorse? How does Google's ad discounting impact this phenomenon?

-Bidder's remorse is when a firm excessively overbids rivals and are forced to pay drastically higher than they should be -Google counters this by discounting ads to the minimum necessary CPC for an ad to retain their position in ad ranking

The specific ad formats supported depend on the ad network but can include the following:

-image (or display) ads -rich media ads -interstitials

On a percentage basis, how important is AdSense to Google's revenues?

20% of Google's revenues come from ads on websites/apps the firm doesn't own

Where are ad rates quoted?

Ad rates are quoted in CPM, meaning cost per thousand impressions (the M representing the roman numerical for one thousand).

What do IP addresses help with?

An IP address not only helps with geolocation, it can also indicate a browser's employer or university, which can be further matched with information such as firm size or industry

What are third-party cookies?

An organization can't read cookies that it did not give you. So businessweek.com can't tell if you've also got cookies from forbes.com. But you can see all of the cookies in your browser. Take a look and you'll almost certainly see cookies from dozens of Web sites that you've never visited before. These are third-party cookies (sometimes called tracking cookies), and they are usually served by ad networks or other customer profiling firms.

What's a third-party cookie? What kinds of firms might use these? How are they used?

An organization can't read cookies that it did not give you. So businessweek.com can't tell if you've also got cookies from forbes.com. But you can see all of the cookies in your browser. Take a look and you'll almost certainly see cookies from dozens of Web sites that you've never visited before. These are third-party cookies (sometimes called tracking cookies), and they are usually served by ad networks or other customer profiling firms.

List four major methods for billing online advertising.

And there are lots of other ways ads are sold besides cost-per-click. Most graphical display ads are sold according to the number of times the ad appears (the impression). Ad rates are quoted in CPM, meaning cost per thousand impressions (the M representing the roman numerical for one thousand). Display ads sold on a CPM basis are often used as part of branding campaigns targeted more at creating awareness than generating click-throughs. Such techniques often work best for promoting products like soft drinks, toothpaste, or movies. Cost-per-action (CPA) ads pay whenever a user clicks through and performs a specified action such as signing up for a service, requesting material, or making a purchase. Affiliate programs are a form of cost-per-action, where vendors share a percentage of revenue with Web sites that direct purchasing customers to their online storefronts. Amazon runs the world's largest affiliate program, and referring sites can earn 4 percent to 15 percent of sales generated from these click-throughs. Purists might not consider affiliate programs as advertising (rather than text or banner ads, Amazon's affiliates offer links and product descriptions that point back to Amazon's Web site), but these programs can be important tools in a firm's promotional arsenal. And rather than buying targeted ads, a firm might sometimes opt to become an exclusive advertiser on a site. For example, a firm could buy access to all ads served on a site's main page; it could secure exclusive access to a region of the page (such as the topmost banner ad); or it may pay to sponsor a particular portion or activity on a Web site (say a parenting forum, or a "click-to-print" button). Such deals can be billed based on a flat rate, CPM, CPC, or any combination of metrics.

Give examples of how the ability to identify a surfer's computer, browser, or operating system can be used to target tech ads.

Communication between a web browser and web server can identify: IP address (which indicates a browser's employer or university, which can be further matched with info such as firm size or industry), type of browser, computer type, as well as computer operating system. The ability to identify a surfer's computer, browser, or OS can be used to target tech ads

What is the content adjacency problem? Why does it occur? What can advertisers do to minimize the likelihood that a content adjacency problem will occur?

Content adjacency problem is when ads appear alongside text which the advertiser is trying to avoid. Negative keywords are words that prevent an ad from showing up when specific terms are present. Implementing these would minimize the likelihood that a content adjacency problem will occur.

What does vendors suffer from?

Content adjacency problems when ads appear alongside text they'd prefer to avoid. In one particularly embarrassing example, a New York Post article detailed a gruesome murder where hacked up body parts were stowed in suitcases. The online version of the article included contextual advertising and was accompanied by...luggage ads

What are cookies used for?

Cookies are used for lots of purposes. Retail Web sites like Amazon use cookies to pay attention to what you've shopped for and bought, tailoring Web sites to display products that the firm suspects you'll be most interested in. Sites also use cookies to keep track of what you put in an online "shopping cart," so if you quit browsing before making a purchase, these items will reappear the next time you visit. And many Web sites also use cookies as part of a "remember me" feature, storing user IDs and passwords. Beware this last one! If you check the "remember me" box on a public Web browser, the next person who uses that browser is potentially using your cookie, and can log in as you!

What is the danger of checking the "remember me" box on a public Web browser?

Cookies are used for lots of purposes. Retail Web sites like Amazon use cookies to pay attention to what you've shopped for and bought, tailoring Web sites to display products that the firm suspects you'll be most interested in. Sites also use cookies to keep track of what you put in an online "shopping cart," so if you quit browsing before making a purchase, these items will reappear the next time you visit. And many Web sites also use cookies as part of a "remember me" feature, storing user IDs and passwords. Beware this last one! If you check the "remember me" box on a public Web browser, the next person who uses that browser is potentially using your cookie, and can log in as you!

What is Google's unofficial motto?

Don't Be Evil

What are other methods of geotargeting?

Firms like Skyhook Wireless can identify a location based on its own map of Wi-Fi hotspots and nearby cell towers. Many mobile devices come equipped with global positioning system (GPS) chips (identifying location via the GPS satellite network). And if a user provides location values such as a home address or zip code to a Web site, then that value might be stored and used again to make a future guess at a user's location.

Which firm invented pay-per-click advertising? Why does Google dominate today and not this firm?

Google didn't invent pay-for-performance search advertising. A firm named GoTo.com (later renamed Overture) pioneered pay-per-click ads and bidding systems and held several key patents governing the technology. Overture provided pay-per-click ad services to both Yahoo! and Microsoft, but it failed to refine and match the killer combination of ad auctions and search technology that made Google a star. Yahoo! eventually bought Overture and sued Google for patent infringement. In 2004, the two firms settled, with Google giving Yahoo! 2.7 million shares in exchange for a "fully paid, perpetual license" to over sixty Overture patents.

What steps has Google taken to give users control over the ads they wish to see?

Google has also placed significant control in the hands of users, with options at program launch that were notably more robust than those of its competitors (Hansell, 2009). Each interest-based ad is accompanied by an "Ads by Google" link that will bring users to a page describing Google advertising and which provides access to the company's "Ads Preferences Manager." This tool allows surfers to see any of the hundreds of potential categorizations that Google has assigned to that browser's tracking cookie. Users can remove categorizations, and even add interests if they want to improve ad targeting. Some topics are too sensitive to track, and the technology avoids profiling race, religion, sexual orientation, health, political or trade union affiliation, and certain financial categories (Mithcell, 2009).

What is keyword advertising?

Google has only recently begun incorporating video and image ads into search. For the most part, the ads you'll see to the right (and sometimes top) of Google's organic search results appear as keyword advertising, meaning they're targeted based on a user's query. Advertisers bid on the keywords and phrases that they'd like to use to trigger the display of their ad. Linking ads to search was a brilliant move, since the user's search term indicates an overt interest in a given topic. Want to sell hotel stays in Tahiti? Link your ads to the search term "Tahiti Vacation."

What is "Street View"? Where and on what grounds is it being challenged?

Google is increasingly finding itself in precedent-setting cases where the law is vague. Google's Street View, for example, has been the target of legal action in the United States, Canada, Japan, Greece, and the United Kingdom. Varying legal environments create a challenge to the global rollout of any data-driven initiative

What is AdSense?

Google originally developed AdSense to target ads based on keywords automatically detected inside the content of a Web site. A blog post on your favorite sports team, for example, might be accompanied by ads from ticket sellers or sports memorabilia vendors. AdSense and similar online ad networks provide advertisers with access to the long tail of niche Web sites by offering both increased opportunities for ad exposure as well as more-refined targeting opportunities.

Market capitalization and market share change frequently. Investigate Google's current market cap and compare it with other media companies. Do patterns suggested in this case continue to hold? Why or why not?

Google's market capitalization is now close to $222 billion. Walt Disney Co.'s market capitalization is close to $88 billion while Time Warner Inc. has a market capitalization of approximately $39 billion. This pattern is likely to continue as most advertisers now prefer Internet search advertising to conventional advertising and Google's revenue is likely to increase in the future.

What steps does Google take to protect the privacy of user information?

Google's moves are meant to demonstrate transparency in its ad targeting technology, and the firm's policies may help raise the collective privacy bar for the industry. While privacy advocates have praised Google's efforts to put more control in the hands of users, many continue to voice concern over what they see as the increasing amount of information that the firm houses (Helft, 2009). For an avid user, Google could conceivably be holding e-mail (Gmail), photos (Picasa), a Web surfing profile (AdSense and DoubleClick), medical records (Google Health), location (Google Latitude), appointments (Google Calendar), transcripts of phone messages (Google Voice), work files (Google Docs), and more. Google insists that reports portraying it as a data-hoarding Big Brother are inaccurate. The firm is adamant that user data exists in silos that aren't federated (linked) in any way, nor are employees permitted access to multiple data archives without extensive clearance and monitoring. Data is not sold to third parties. Activities in Gmail, Docs, or most other services isn't added to targeting profiles. And any targeting is fully disclosed, with users empowered to opt out at all levels (Mitchell, 2009). But critics counter that corporate intentions and data use policies (articulated in a Web site's Terms of Service) can change over time, and that a firm's good behavior today is no guarantee of good behavior in the future (Mitchell, 2009). Google does enjoy a lot of user goodwill, and it is widely recognized for its unofficial motto "Don't Be Evil." However, some worry that even though Google might not be evil, it could still make a mistake, and that despite its best intentions, a security breach or employee error could leave data dangerously or embarrassingly exposed. Such gaffes and oversights have happened. A March 2009 system flaw inadvertently shared some Google Docs with contacts who were never granted access to them (Kincaid, 2009). And when the firm introduced its Google Buzz social networking service in early 2010, many users were horrified that their most frequently used Gmail contacts were automatically added to Buzz, allowing others to see who you're communicating with. As one report explained, "Suddenly, journalists' clandestine contacts were exposed, secret affairs became dramatically less secret, and stalkers obtained a new tool to harass their victims. Oops" (Gold, 2010). Eleven congressmen subsequently asked the U.S. Federal Trade Commission to investigate the Google Buzz for possible breaches of consumer privacy (Gross, 2010). Privacy advocates also worry that the amount of data stored by Google serves as one-stop shopping for litigators and government investigators. The counter argument points to the fact that Google has continually reflected an aggressive defense of data privacy in court cases. When Viacom sued Google over copyright violations in YouTube, the search giant successfully fought the original subpoena, which had requested user-identifying information (Mitchell, 2009). And Google was the only one of the four largest search engines to resist a 2006 Justice Department subpoena for search queries (Broache, 2006). Google is increasingly finding itself in precedent-setting cases where the law is vague. Google's Street View, for example, has been the target of legal action in the United States, Canada, Japan, Greece, and the United Kingdom. Varying legal environments create a challenge to the global rollout of any data-driven initiative (Sumagaysay, 2009). Ad targeting brings to a head issues of opportunity, privacy, security, risk, and legislation. Google is now taking a more active public relations and lobbying role to prevent misperceptions and to be sure its positions are understood. While the field continues to evolve, Google's experience will lay the groundwork for the future of personalized technology and provide a case study for other firms that need to strike the right balance between utility and privacy. Despite differences, it seems clear to Google, its advocates, and its detractors that with great power comes great responsibility.

List the reasons why Google has been considered a particularly attractive firm to work for. Are all of these associated with perks?

Google's perks, culture, and sense of mission have allowed the firm to assemble one of the most impressive rosters of technical talent anywhere. No employee of Google is more than 100 feet away from nourishment. Engineers find Google a particularly attractive place to work, in part due to a corporate policy of offering "20 percent time," the ability to work the equivalent of one day a week on new projects that interest them.

How can users restrict cookie use on their Web browsers? What is the downside of blocking cookies?

If all of this creeps you out, remember that you're in control. The most popular Web browsers allow you to block all cookies, block just third-party cookies, purge your cookie file, or even ask for your approval before accepting a cookie. Of course, if you block cookies, you block any benefits that come along with them, and some Web site features may require cookies to work properly. Also note that while deleting a cookie breaks a link between your browser and that Web site, if you supply identifying information in the future (say by logging into an old profile), the site might be able to assign your old profile data to the new cookie.

What is Internet Advertising Bureau (IAB)?

Industry trade group that sets common standards for display ads so that a single creative (the design and content of the advertisement) can run unmodified across multiple ad networks and Web sites

Which method is used to bill most graphical advertising? What's the term used for this method and what does it stand for?

Most graphical display ads are sold according to the number of times the ad appears (the impression). Ad rates are quoted in CPM, meaning cost per thousand impressions (the M representing the roman numerical for one thousand). Display ads sold on a CPM basis are often used as part of branding campaigns targeted more at creating awareness than generating click-throughs. Such techniques often work best for promoting products like soft drinks, toothpaste, or movies.

How much do firms typically pay for a single click?

Most pay between 30 cents and $1 but they can vary wildly based on industry and market conditions

What are cookies?

Much of this targeting occurs whenever you visit a Web site, where a behind-the-scenes software dialogue takes place between Web browser and Web server that can reveal a number of pieces of information, including IP address, the type of browser used, the computer type, its operating system, and unique identifiers, called cookies.

Can a firm buy a top ad ranking? Why or why not?

No, they cannot; but they can boost their ad rank by making their ads higher quality or paying more per click

What factors are needed to determine Ad Rank?

One factor that goes into determining an ad's quality score is the click-through rate (CTR) for the ad, the number of users who clicked an ad divided by the number of times the ad was delivered (the impressions). The CTR measures the percentage of people who clicked on an ad to arrive at a destination-site. Also included in a quality score are the overall history of click performance for the keywords linked to the ad, the relevance of an ad's text to the user's query, and Google's automated assessment of the user experience on the landing page—the Web site displayed when a user clicks on the ad. Ads that don't get many clicks, ad descriptions that have nothing to do with query terms, and ads that direct users to generic pages that load slowly or aren't strongly related to the keywords and descriptions used in an ad, will all lower an ad's chance of being displayed. When an ad is clicked, advertisers don't actually pay their maximum CPC; Google discounts ads to just one cent more than the minimum necessary to maintain an ad's position on the page. So if you bid one dollar per click, but the ad ranked below you bids ninety cents, you'll pay just ninety-one cents if the ad is clicked. Discounting was a brilliant move. No one wants to get caught excessively overbidding rivals, so discounting helps reduce the possibility of this so-called bidder's remorse. And with this risk minimized, the system actually encouraged higher bids (Levy, 2009)! Ad ranking and cost-per-click calculations take place as part of an automated auction that occurs every time a user conducts a search. Advertisers get a running total of ad performance statistics so that they can monitor the return on their investment and tweak promotional efforts for better results. And this whole system is automated for self service—all it takes is a credit card, an ad idea, and you're ready to go.

But what if you want the content on your Web site to remain off limits to search engine indexing and caching?

Organizations have created a set of standards to stop the spider crawl, and all commercial search engines have agreed to respect these standards. One way is to put a line of HTML code invisibly embedded in a Web site that tells all software robots to stop indexing a page, stop following links on the page, or stop offering old page archives in a cache. Users don't see this code, but commercial Web crawlers do. For those familiar with HTML code (the language used to describe a Web site), the command to stop Web crawlers from indexing a page, following links, and listing archives of cached pages looks like this: 〈META NAME="ROBOTS" CONTENT="NOINDEX, NOFOLLOW, NOARCHIVE"〉

What is PageRank?

Search engines use different algorithms for determining the order of organic search results, but at Google the method is called PageRank (a bit of a play on words, it ranks Web pages, and was initially developed by Google cofounder Larry Page). Google does not accept money for placement of links in organic search results. Instead, PageRank results are a kind of popularity contest. Web pages that have more pages linking to them are ranked higher.

What are click farms?

So organized crime tried to raise the bar, running so-called click farms to spread fraud across dozens of IP addresses. The Times of India uncovered one such effort where Indian housewives were receiving up to twenty five cents for each ad click made on fraudster-run Web sites (Vidyasagar, 2004). But an unusually large number of clicks from Indian IP addresses foiled these schemes as well.

To create these massive indexes, search firms use software to crawl the Web and uncover as much information as they can find. This software is referred to by several different names such as:

Software robots, spiders, web crawlers

Which topics does "Ads Preferences Manager" avoid in its targeting system?

Some topics are too sensitive to track, and the technology avoids profiling race, religion, sexual orientation, health, political or trade union affiliation, and certain financial categories

How does studying ad-related fraud help?

Studying ad-related fraud helps marketers, managers, and technologists understand potential vulnerabilities, as well as the methods used to combat them. This process also builds tech-centric critical thinking, valuation, and risk assessment skills.

What is the click-through rate (CTR)?

The CTR measures the percentage of people who clicked on an ad to arrive at a destination-site.

Does a cookie accurately identify a user? Why or why not?

The cookie is just a line of identifying text assigned and retrieved by a given Web server and stored on your computer by your browser. Upon accepting this cookie your browser has been tagged, like an animal. As you surf around the firm's Web site, that cookie can be used to build a profile associated with your activities. If you're on a portal like Yahoo! you might type in your zip code, enter stocks that you'd like to track, and identify the sports teams you'd like to see scores for. The next time you return to the Web site, your browser responds to the server's "Have I see you before?" question with the equivalent of "Yes, you know me;," and it presents the cookie that the site gave you earlier. The site can then match this cookie against your browsing profile, showing you the weather, stock quotes, sports scores, and other info that it thinks you're interested in.

What is a cookie? How are cookies used? Is a cookie a computer program? Which firms can read the cookies in your Web browser?

The cookie is just a line of identifying text assigned and retrieved by a given Web server and stored on your computer by your browser. Upon accepting this cookie your browser has been tagged, like an animal. As you surf around the firm's Web site, that cookie can be used to build a profile associated with your activities. If you're on a portal like Yahoo! you might type in your zip code, enter stocks that you'd like to track, and identify the sports teams you'd like to see scores for. The next time you return to the Web site, your browser responds to the server's "Have I see you before?" question with the equivalent of "Yes, you know me;," and it presents the cookie that the site gave you earlier. The site can then match this cookie against your browsing profile, showing you the weather, stock quotes, sports scores, and other info that it thinks you're interested in. Cookies are used for lots of purposes. Retail Web sites like Amazon use cookies to pay attention to what you've shopped for and bought, tailoring Web sites to display products that the firm suspects you'll be most interested in. Sites also use cookies to keep track of what you put in an online "shopping cart," so if you quit browsing before making a purchase, these items will reappear the next time you visit. And many Web sites also use cookies as part of a "remember me" feature, storing user IDs and passwords. Beware this last one! If you check the "remember me" box on a public Web browser, the next person who uses that browser is potentially using your cookie, and can log in as you! An organization can't read cookies that it did not give you. So businessweek.com can't tell if you've also got cookies from forbes.com. But you can see all of the cookies in your browser. Take a look and you'll almost certainly see cookies from dozens of Web sites that you've never visited before. These are third-party cookies (sometimes called tracking cookies), and they are usually served by ad networks or other customer profiling firms.

What factors determine the appeal of an ad network to advertisers and content providers? Which of these factors are potentially sources of competitive advantage?

The factors that determine the appeal of an ad network to advertisers and content providers are Google's algorithm since ads are more effective, and the two sided market since more ads generates more revenue content providers and vice versa. The two sided market makes it harder to enter the market and compete, especially due to the network effects.

What is the IAB and why is it necessary?

The industry trade group, the Internet Advertising Bureau (IAB) sets common standards for display ads so that a single creative (the design and content of the advertisement) can run unmodified across multiple ad networks and Web sites

What is link fraud?

The less scrupulous have tried creating a series of bogus Web sites, all linking back to the pages they're trying to promote (this is called link fraud, and Google actively works to uncover and shut down such efforts). We do know that links from some Web sites carry more weight than others. For example, links from Web sites that Google deems as "influential," and links from most ".edu" Web sites, have greater weight in PageRank calculations than links from run-of-the-mill ".com" sites.

What does Google's matchmaking capabilities represent?

The most successful business idea in history.

What is Search Engine Marketing (SEM)?

The practice of running and optimizing search engine ad campaigns. SEM is a hot topic in an increasingly influential field, so it's worth spending some time learning how search advertising works on the Internet's largest search engine.

What is search engine optimization (SEO)?

The process of improving a page's organic search results. SEO has become a critical function for many marketing organizations since if a firm's pages aren't near the top of search results, customers may never discover its site.

What is market capitalization (market cap)?

The value of the firm calculated by multiplying its share price by the number of shares, makes Google the most valuable media company on the planet.

Sometimes Web sites returned by major search engines don't contain the words or phrases that initially brought you to the site. Why might this happen?

These sites may have been boosted in search engine ratings for other reasons (like different weightings for certain criteria or user behavior)

Why do ad networks appeal to advertisers? Why do they appeal to content providers? What functions are assumed by the firm overseeing the ad network?

They appeal to advertisers because Google lines up the advertisers, provides the targeting technology, serves the ads, and handles the advertiser payment collection. They appeal to content providers because they can just sign up online, put a bit of Google supplied HTML code on their pages, and wait for Google to send them cash. Some functions are that firms need to be very efficient and be able to handle the payments.

How can you combat embarrassment of the content adjacency problem?

To combat embarrassment, ad networks provide opportunities for both advertisers and content providers to screen out potentially undesirable pairings based on factors like vendor, Web site, and category. Advertisers can also use negative keywords, which tell networks to avoid showing ads when specific words appear (e.g., setting negative keywords to "murder" or "killer" could have spared luggage advertisers from the embarrassing problem mentioned above). Ad networks also refine ad-placement software based on feedback from prior incidents

(T/F): . Most graphical display ads are sold according to the number of times the ad appears (the impression)

True

(T/F): A cookie is a unique line of identifying text, assigned and retrieved by a given Web server and stored on a computer by the browser, that can be used to build a profile associated with your Web activities.

True

(T/F): A lack of standards, concerns regarding compatibility with gameplay, and the cost of developing and distributing games are all stifling the growth of in-game ads.

True

(T/F): Ad networks handle advertiser recruitment, ad serving, and revenue collection, opening up revenue earning possibilities to even the smallest publishers.

True

(T/F): AdSense ads are targeted based on keywords that Google detects inside the content of a Web site.

True

(T/F): AdSense and similar online ad networks provide advertisers with access to the long tail of niche Web sites.

True

(T/F): Advertisers choose and bid on the keywords and phrases that they'd like to use to trigger the display of their ad.

True

(T/F): Advertisers pay for cost-per-click advertising only if an ad is clicked on. Google makes no money on CPC ads that are displayed but not clicked.

True

(T/F): Advertisers usually don't pay their maximum CPC. Instead, Google discounts ads to just one cent more than the minimum necessary to maintain an ad's position on the page—a practice that encourages higher bids.

True

(T/F): Advertising ROI can be improved through targeting. Targeting allows a firm to serve ads to specific categories of users, so firms can send ads to groups it is most interested in reaching, and those that are most likely to respond to an effort.

True

(T/F): An IP address not only helps with geolocation; it can also be matched against other databases to identify the organization providing the user with Internet access (such as a firm or university), that organization's industry, size, and related statistics.

True

(T/F): And rather than buying targeted ads, a firm might sometimes opt to become an exclusive advertiser on a site. For example, a firm could buy access to all ads served on a site's main page; it could secure exclusive access to a region of the page (such as the topmost banner ad); or it may pay to sponsor a particular portion or activity on a Web site (say a parenting forum, or a "click-to-print" button). Such deals can be billed based on a flat rate, CPM, CPC, or any combination of metrics.

True

(T/F): Digital media is decreasing time spent through traditional media consumption channels (e.g., radio, TV, newspapers), potentially lowering the audience reach of these old channels and making them less attractive for advertisers.

True

(T/F): Even the best-intentioned and most competent firms can have a security breach that compromises stored information. Google has suffered privacy breaches from product flaws and poorly planned feature rollouts. Such issues may lead to further investigation, legislation, and regulation.

True

(T/F): Fraud can undermine the revenue model behind search engines, ad networks, and the ad-based Internet. It also threatens honest competition among rivals that advertise online.

True

(T/F): Fraud rates are widely disputed. However, it is clear that if widespread fraud were allowed to occur, advertisers would see lower ROI from online ad efforts, and Internet business models would suffer. The continued strength of the online advertising market suggests that while fraud may be impossible to stop completely, most fraud is under control.

True

(T/F): Geotargeting can also be enabled by the satellite-based global positioning system (GPS) or based on estimating location from cell phone towers or Wi-Fi hotspots.

True

(T/F): Geotargeting occurs when computer systems identify a user's physical location (sometimes called geolocation) for the purpose of delivering tailored ads or other content.

True

(T/F): Google allows users to install a cookie or plug-in that opts them out of interest-based tracking.

True

(T/F): Google also serves ads through non-Google partner sites that join its ad network. These partners distribute ads for Google in exchange for a percentage of the take.

True

(T/F): Google determines ad rank by multiplying CPC by Quality Score. Ads with low ranks might not display at all.

True

(T/F): Google dominates Internet search volume and controls the lion's share of the Internet search advertising business and online advertising dollars. The firm also earns more total advertising revenue than any other firm, online or off.

True

(T/F): Google has taken several steps to protect user privacy and has thus far refused to link query history or registration data to ad targeting.

True

(T/F): Google operates from a massive network of server farms containing hundreds of thousands of servers built from standard, off-the-shelf items. The cost of the operation is a significant barrier to entry for competitors. Google's share of search suggests the firm can realize economies of scales over rivals required to make similar investments while delivering fewer results (and hence ads).

True

(T/F): Google uses IP addresses to target ads.

True

(T/F): Google's "Ads Preferences Manager" allows surfers to see, remove, and add to, any of the categorizations that Google has assigned to that browser's tracking cookie. The technology also avoids targeting certain sensitive topics.

True

(T/F): Google's market cap makes it the most valuable media company in the world; it has been rated as having the world's strongest brand.

True

(T/F): In addition to cost-per-click, ads can be sold based on the number of times the ad appears (impressions), whenever a user performs a specified action such as signing up for a service, requesting material, or making a purchase (cost-per-action), or on an exclusive basis which may be billed at a flat rate.

True

(T/F): In-game advertising shows promise, with successful branding campaigns run as part of sports games, through in-game product placement, or via sponsorship of casual games, or in brand-focused advergames.

True

(T/F): Measurement techniques allow advertisers to track the performance of their ads—indicating things such as how often an ad is displayed, how often an ad is clicked, where an ad was displayed when it was clicked, and more. Measurement metrics can be linked to payment schemes, improving return on investment (ROI) and accountability compared to many types of conventional advertising.

True

(T/F): Online advertising represents the only advertising category trending with positive growth.

True

(T/F): Possible consequences resulting from the misuse of customer tracking and profiling technologies include user resistance and legislation. Mishandled user privacy could curtail targeting opportunities and limit growth in online advertising. With less ad support, many of the Internet's free services could suffer.

True

(T/F): Ranked search results are often referred to as organic or natural search. PageRank is Google's algorithm for ranking search results. PageRank orders organic search results based largely on the number of Web sites linking to them, and the "weight" of each page as measured by its "influence."

True

(T/F): Roughly two-thirds of Google's revenues come from ads served on its own sites, and the vast majority of this revenue comes from search engine ads.

True

(T/F): Search engine optimization (SEO) is the process of using natural or organic search to increase a Web site's traffic volume and visitor quality. The scope and influence of search has made SEO an increasingly vital marketing function.

True

(T/F): Some privacy advocates have voiced concern over what they see as the increasing amount of information that Google houses.

True

(T/F): The communication between Web browser and Web server can identify IP address, the type of browser used, the computer type, its operating system, time and date of access, and duration of Web page visit, and can read and assign unique identifiers, called cookies—all of which can be used in customer profiling and ad targeting.

True

(T/F): The most popular Web browsers allow you to block all cookies, block just third-party cookies, purge your cookie file, or even ask for your approval before accepting a cookie.

True

(T/F): There are many forms of online fraud, including enriching fraud (meant to line the pockets of the perpetrators), depleting fraud (meant to waste the ad budgets of rivals), disbarring fraud (meant to frame the innocent as fraudsters), and methods to lower rival ad rank performance, or gain search engine ranking algorithms.

True

(T/F): There are three reasons driving online ad growth trends: (1) increasing user time online, (2) improved measurement and accountability, and (3) targeting.

True

(T/F): Users don't really search the Web; they search an archived copy built by crawling and indexing discoverable documents.

True

(T/F): Web ad formats include, but are not limited to, the following: image (or display) ads (such as horizontally oriented banners, smaller rectangular buttons, and vertically oriented skyscraper ads), rich media ads (which can include animation or video), and interstitials (ads that run before a user arrives at a Web site's contents).

True

(T/F): Web site owners can hide pages from popular search engine Web crawlers using a number of methods, including HTML tags, a no-index file, or ensuring that Web sites aren't linked to other pages and haven't been submitted to Web sites for indexing.

True

(T/F): While fraudsters have devised ingenious ways to exploit the system (including click farms and zombie attacks), IP addresses and detailed usage pattern monitoring increasingly reveal bogus activity.

True

What are the major ad format categories?

Web ad formats include, but are not limited to, the following: image (or display) ads (such as horizontally oriented banners, smaller rectangular buttons, and vertically oriented skyscraper ads), rich media ads (which can include animation or video), and interstitials (ads that run before a user arrives at a Web site's contents).

What is a domain name service (DNS)?

Web sites visible, every online firm provides a list of all of the public, named servers on its network. For example, Yahoo! has different servers that can be found at http://www.yahoo.com, sports.yahoo.com, weather.yahoo.com, finance.yahoo.com, and so on.

Ad Networks and Competitive Advantage

While advertisers can use multiple ad networks, there are several key strategic factors driving the industry. For Google, its ad network is a distribution play. The ability to reach more potential customers across more Web sites attracts more advertisers to Google. And content providers (the Web sites that distribute these ads) want there to be as many advertisers as possible in the ad networks that they join, since this should increase the price of advertising, the number of ads served, and the accuracy of user targeting. If advertisers attract content providers, which in turn attract more advertisers, then we've just described network effects! More participants bringing in more revenue also help the firm benefit from scale economies—offering a better return on investment from its ad technology and infrastructure. No wonder Google's been on such a tear—the firm's loaded with assets for competitive advantage!

What has Google been called? What is Google's "tirck"

a one-trick pony; Google's "trick" is matchmaking -- pairing Internet surfers with advertisers and taking a cut along the way.

What is cost-per-action (CPA)?

ads pay whenever a user clicks through and performs a specified action such as signing up for a service, requesting material, or making a purchase

What is interstitials?

ads that run before a user arrives at a Web site's contents

What is pay-per-click (PPC)?

advertisers don't spend a penny unless someone actually clicks on their ad. Note that the term pay-per-click is sometimes used interchangeably with the term cost per-click (CPC).

What are affiliate programs?

are a form of cost-per-action, where vendors share a percentage of revenue with Web sites that direct purchasing customers to their online storefronts. Amazon runs the world's largest affiliate program, and referring sites can earn 4 percent to 15 percent of sales generated from these click-throughs. Purists might not consider affiliate programs as advertising (rather than text or banner ads, Amazon's affiliates offer links and product descriptions that point back to Amazon's Web site), but these programs can be important tools in a firm's promotional arsenal.

How are Ads in Google Search geotargeted?

based on IP address; Every device connected to the Internet has a unique IP address assigned by the organization connecting the device to the network. Normally you don't see your IP address (a set of four numbers, from 0 to 255, separated by periods; e.g., 136.167.2.220). But the range of IP addresses "owned" by major organizations and Internet service providers (ISPs) is public knowledge. In many cases it's possible to make an accurate guess as to where a computer, laptop, or mobile phone is located simply by cross-referencing a device's current IP address with this public list.

What is contextual advertising?

based on keywords is lucrative, but like all technology solutions it has its limitations

How does studying Google helps us?

gives us an idea of how quickly technology-fueled market disruptions can happen, and how deeply these disruptions penetrate various industries.

What is Geotargerting?

occurs when computer systems identify a user's physical location (sometimes called the geolocation) for the purpose of delivering tailored ads or other content. On Google AdWords, for example, advertisers can specify that their ads only appear for Web surfers located in a particular country, state, metropolitan region, or a given distance around a precise locale. They can even draw a custom ad-targeting region on a map and tell Google to only show ads to users detected inside that space.

What are advergames?

online mini games

What is a Cache?

refers to a temporary storage space used to speed computing tasks

What is an image (or display) ads?

such as horizontally oriented banners, smaller rectangular buttons, and vertically oriented "skyscraper" ads

What are impressions?

the number of times an ad appears on a Web site

What is a proxy servers?

third-party computers that pass traffic to and from a specific address without revealing the address of the connected users.

What is a query?

to perform a search

List the negative consequences that could result from the misuse of tracking cookies.

ut while targeting can benefit Web surfers, users will resist if they feel that they are being mistreated, exploited, or put at risk. Negative backlash might also result in a change in legislation. The U.S. Federal Trade Commission has already called for more transparency and user control in online advertising and for requesting user consent (opt-in) when collecting sensitive data (Singel, 2009). Mishandled user privacy could curtail targeting opportunities, limiting growth across the online advertising field. And with less ad support, many of the Internet's free services could suffer. Google's roll-out of interest-based ads shows the firm's sensitivity to these issues. First, while major rivals have all linked query history to ad targeting, Google steadfastly refuses to do this. Other sites often link registration data (including user-submitted demographics such as gender and age) with tracking cookies, but Google avoids this practice as well.

What are content adjacency problems?

when ads appear alongside text they'd prefer to avoid

What is click fraud?

when site operators generate bogus ad clicks to earn PPC income.

What is a rich media ad?

which can include animation or video

What are zombie networks?

—hordes of surreptitiously infiltrated computers, linked and controlled by rogue software (Mann, 2006). To create zombie networks (sometimes called bot nets), hackers exploit security holes, spread viruses, or use so-called phishing techniques to trick users into installing software that will lie dormant, awaiting commands from a central location. The controlling machine then sends out tasks for each zombie, instructing them to visit Web sites and click on ads in a way that mimics real traffic. Zombie bot nets can be massive. Dutch authorities once took down a gang that controlled some 1.5 million machines

What are more common types of fraud that are attempted in online advertising?

• Enriching click fraud—when site operators generate bogus ad clicks to earn PPC income. • Enriching impression fraud—when site operators generate false page views (and hence ad impressions) in order to boost their site's CPM earnings. • Depleting click fraud—clicking a rival's ads to exhaust their PPC advertising budget. • Depleting impression fraud—generating bogus impressions to exhaust a rival's CPM ad budget. • Rank-based impression fraud—on-sites where ad rank is based on click performance, fraudsters repeatedly search keywords linked to rival ads or access pages where rival ads appear. The goal is to generate impressions without clicks. This process lowers the performance rank (quality score) of a rival's ads, possibly dropping ads from rank results, and allowing fraudsters to subsequently bid less for the advertising slots previously occupied by rivals. • Disbarring fraud—attempting to frame a rival by generating bogus clicks or impressions that appear to be associated with the rival, in hopes that this rival will be banned from an ad network or punished in search engine listings. • Link fraud (also known as spamdexing or link farming)—creating a series of bogus Web sites, all linking back to a page, in hopes of increasing that page's results in organic search. • Keyword stuffing—packing a Web site with unrelated keywords (sometimes hidden in fonts that are the same color as a Web site's background) in hopes of either luring users who wouldn't normally visit a Web site, or attracting higher-value contextual ads.