Google and advertising

When I worked in the Human-Computer Interaction field, there was this one study that posted the top search results in big, flashing red letters. Users ignored it, thinking it was a banner ad. This study coined the term "banner blindness" and argued that users were literally blind to banner advertising.

Doc Searles has a nice Suitwatch column out today where he chats with Richard Cooper, who runs Google's Adwords program. Google's Adword strategy comes right out of a Chicago micro textbook:

People bid on placement based on keywords. They set the maximum cost per click (CPC) they're willing to pay. In effect, they set their true reservation price: the maximum they're willing to pay. They pay no more than slightly above the next lowest competitor, so there's no winner's curse where you outbid everybody by an extreme margin

Ah, a Vickrey auction (almost)! And not only do they get the economics right, but they also listen to customers and improve position based on clickthrough, while stripping out those irritating, bandwidth stealing banners. Very impressive.

Doc takes his case too far though, signing the death knell for regular, image based advertising. Many products are image products, and we would value them less if they did not come with fancy image marketing. Examples include soft drinks, beer, snacks, clothes, and cars. People like to consume image in some cases, but not in others. Doc opened his piece by moaning how tech companies wanted their ads to focus on features that would drive sales, and ignored coolness. Looks like he still doesn't know when people care about image and when they don't.