Wednesday, July 20, 2005
Pay per Click
Soon to be out of testing, search pioneer Bill Gross' Snap.com is hoping to be ahead of the "exploding search market." The upstart received $10 million in venture capital to enter the soon to be realized third generation of search.
Bill Gross is known for search advertising innovations like paid placement and the widely used pay-per-click method when they were introduced on GoTo.com. GoTo.com later became Overture Services which was bought by Yahoo! in 2003 for $1.7 billion.
Paid placement, where advertisers pay to be listed higher in search engine rankings, is still widely used among various search engines. Pay-per-click (PPC) advertising is a method whereby advertisers are charged commissions every time an their ad is clicked. Search giant Google uses this very method in its AdWords program.
But noting the problem of click fraud, where (just one example) rival advertisers use programs to click on competitors' ads to drain their marketing budgets, Gross plans to set up a new model with Snap.com called cost-per-action (CPA). CPA would charge commissions only when customers complete an action tied to revenue.
Some estimate the instance of click fraud to be 10 to 20 percent, while a recent lawsuit filed against Google claims it is as high as 38 percent.
Gross acknowledges the abuses of his brainchild, PPC advertising, and believes that CPA will grow in popularity.
``I believe the commercial side of search will evolve toward cost-per-action in the next five to 10 years,'' Gross said.
In addition to revising ad revenue models, Snap.com will take similar measures as those by Yahoo! to personalize the search experience.
Gross says that while traditional search engines use factors like page rank and link-strength to create search results that are the same for everyone, Snap.com will build search results based around user preferences and declared intent.
Snap.com is operated by Perfect Market Technologies, Inc., which announced that Mayfield, a venture capital investment company based in Menlo Park, Ca., provided $10 million designated to launching the new search engine.
"We were excited by the opportunity to invest in Snap.com as our entry into the exploding search market," said Allen Morgan, Managing Director of Mayfield. "We believe that there will be more than one winner and Snap.com has all the right ingredients.
"Internet search advertising is now a $6 billion industry but remains underdeveloped when considering its potential in the $280 billion U.S. advertising market," said Bill Gross, CEO of Idealab. "Our mission is to deliver the fastest, most relevant search results for users, and irrefutable ROI to advertisers."
While Gross is reluctant to predict the actual success of Snap, he remains hopeful.
``We feel there is so much more innovation that can take place in search,'' he said.
``It's hard to say that little Snap will ever beat Google, but I think we can become a viable alternative.''
Bill Gross is known for search advertising innovations like paid placement and the widely used pay-per-click method when they were introduced on GoTo.com. GoTo.com later became Overture Services which was bought by Yahoo! in 2003 for $1.7 billion.
Paid placement, where advertisers pay to be listed higher in search engine rankings, is still widely used among various search engines. Pay-per-click (PPC) advertising is a method whereby advertisers are charged commissions every time an their ad is clicked. Search giant Google uses this very method in its AdWords program.
But noting the problem of click fraud, where (just one example) rival advertisers use programs to click on competitors' ads to drain their marketing budgets, Gross plans to set up a new model with Snap.com called cost-per-action (CPA). CPA would charge commissions only when customers complete an action tied to revenue.
Some estimate the instance of click fraud to be 10 to 20 percent, while a recent lawsuit filed against Google claims it is as high as 38 percent.
Gross acknowledges the abuses of his brainchild, PPC advertising, and believes that CPA will grow in popularity.
``I believe the commercial side of search will evolve toward cost-per-action in the next five to 10 years,'' Gross said.
In addition to revising ad revenue models, Snap.com will take similar measures as those by Yahoo! to personalize the search experience.
Gross says that while traditional search engines use factors like page rank and link-strength to create search results that are the same for everyone, Snap.com will build search results based around user preferences and declared intent.
Snap.com is operated by Perfect Market Technologies, Inc., which announced that Mayfield, a venture capital investment company based in Menlo Park, Ca., provided $10 million designated to launching the new search engine.
"We were excited by the opportunity to invest in Snap.com as our entry into the exploding search market," said Allen Morgan, Managing Director of Mayfield. "We believe that there will be more than one winner and Snap.com has all the right ingredients.
"Internet search advertising is now a $6 billion industry but remains underdeveloped when considering its potential in the $280 billion U.S. advertising market," said Bill Gross, CEO of Idealab. "Our mission is to deliver the fastest, most relevant search results for users, and irrefutable ROI to advertisers."
While Gross is reluctant to predict the actual success of Snap, he remains hopeful.
``We feel there is so much more innovation that can take place in search,'' he said.
``It's hard to say that little Snap will ever beat Google, but I think we can become a viable alternative.''
