Culture is future » Innovation and digital

10.13.2011

DEBATES 2011 - Referencing, prescription of cultural contents - Advertisement on Google’s search engine by Thomas Guignard

Thomas Guignard, Media and local market Manager of Google France

Introducing his intervention, Thomas Guignard gives general indications of Google’s strategy and history. The firm, which has been created 13 years ago, has a turnover of 9 billions of dollars for the second trimester 2011, corresponding to an operational result of almost 3 billion. The business model of the firm historically relies on B2B with the commercialization of advertising, especially on the research engine Google.

At the roots of the research engine, Sergei Brin and Larry Page had chosen for their thesis’ subject the referencing of web pages. At the time, research engines do exist.  The innovation brought by Google is the “Page Rank”, meaning the links between the web pages as measuring criteria of interest for the Internet user. It is in a second time that the research project gives birth to a business model. This approach, at the opposite of classical business plans, is still predominant in Google’s firm: the goal is to focus on the value-added of the product and service for public with always a scalable dimension of the project insofar as it has a global aim in terms of stakes and utility of “services rendered ” to the Internet users.

Regarding the commercial aspect, Google has evolved in its approach. In the first place, advertising on the research engine was invoiced on the classical model which relies on the CPM. Quite promptly, the option of the pay-per-click was used, being doubled by a bid system for key words buying ( AdWords service for sponsored links buying).

The functioning of bids and display for sponsored links

Two criteria are taken into account for the display of sponsored links, what the advertiser is willing to pay for each click (bids) and the quality score.  

For the PPC bid management, the advertiser indicated the maximum amount that he is willing to pay for each click on the sponsored link related to the key word bought, with the maximum total of expenditures authored every month. The maximum amount of expenditures authorized every month by each advertiser is not taken into account on the displaying criteria of sponsored links. 

Moreover, there is the quality score for each sponsored link. Indeed, some key words bought in bids can be misfit with the content of the website, having no relevance of the user. Including for the sponsored links, Google, has chosen to optimize the relevance of answers brought to its users. Then, it doubles the amount of a quality score bid (is the sponsored link often clicked or not, does it really correspond to the Internet users inquiries that have entered their request?).

The quality score introduces, in the display of sponsored links, index principles and index relevance. Many criteria allow establishing the quality score:

- The clickthrough rate – CTR – for an announce;

- The connection between the key word bought and the request of the user. It is also possible to buy key word with various modes: “exact” (strict correspondence between the key word and the request); “broad” (the key word appears in a request); in “sequence” (several key words in a same request, in the same order or not).

For their marketing campaign on Google, advertisers have:

- The number of impressions of the sponsored link

- The number of click

- The cost per click (sum total of bids won on 10 positions. Indeed, on each result page, only 11 sponsored links are being displayed, 3 on the top and 8 at the right).

Depending on the maximum amount authorized by clicking and the second bidder, the cost-per-click for a displayed link in a first position, is going to evolve: it is going to be superior to 0,01 € to the inferior bid, so not necessarily the maximum authorized bid. With the sum total of bids won and the information on the price paid compared to the other competitive bids, the advertiser can calculate its rate of acquisition – what really costs the getting of a click – or CPA (cost-per-action).

In fact, Thomas Guignard explains that most of the announcers base their bid on the margin level they wish for a contact (cost of acquisition of x Euros for a guaranteed margin of x Euros). The market place AdWords is balanced with margin levels.

The sponsored links, a new approach in a converging environment

The sponsored links – and more generally advertisement on the Internet – represents again a novelty for some advertisers and challenge other available aids when an advertiser plans its campaigns and split his budgets with the relative costs and estimated return on investment.  

The announcers communicate using at the same time online and outline services. The measuring techniques progress on the return on investment and the increasing recourse to the modelization of mix media facilitate the advertisers’ repartition of budgets. The plurimedia campaign are more and more popular.

It is interesting to notice that a convergence between online and outline aids. Today, most of traditional media (TV, newspapers) are available online and outline. This convergence of aids is being traduced by a convergence of different advertising formats.