AdSense is a house of cards, built on a foundation that forces advertisers to overpay for contextual ads. If Google allowed separate bids, it would risk losing revenue on multiple fronts: from the lower bids, the loss of distribution, and the loss of revenue share. The company bet it could keep prices high and revenue shares low as it built this program. But with smart advertisers turning off their AdSense ads, it’s time for Google to give advertisers what they want.
Google must create a separate marketplace for bidding on AdSense ads. Contextual advertising will be a very large business. At appropriate prices it can be a very effective advertising tool. Forcing advertisers to pay inflated prices can only stunt the business’s growth and hurt Google’s reputation as a fair and friendly company. Creating a separate marketplace would probably also force Google to reveal the revenue share it offers publishers. An added measure of transparency would surely be welcome.
Google can’t — and shouldn’t — do it all. Others will — and should — do what Elliott wants.
Google is the last mass medium. It deals in big numbers. It is forever hungry for inventory. It is essentially shallow. Whether you are buying an ad on a search term or on a term that happens in (cont)text, you’re essentially buying a coincidence. What you really want to buy is a relationship.