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made a deal with Yahoo! in which P&G would pay only for click-throughs and not
for impressions [
9
].
The concept of CTR has stuck with the sponsored-search model from its beginning
through today, even though many have been critical of its value as metric. According
to even early research, CTR has little value as an indicator for return on investment
(ROI) optimization because their correlation-to-conversion rates are often low [
3
].
So, there were a variety of environmental, situational, and commerce factors com-
ing together in mid-1998 that allowed the concept of sponsored search to be accepted
by searchers, advertisers, and online businesses.
How did Sponsored Search Evolve?
Figure 2.2
shows a screenshot of the GoTo.com sponsored-search listings. Note that
the bid price is listed as part of the search result.
The concept of sponsored search was really quite revolutionary. That a word
has a monetary value is truly insightful. Up until that time, search was increas-
ingly viewed as a commodity, even a cost, with search engines basically focusing on
developing portals [
10
]. Sponsored search refocused the search engines back to their
core competency of searching and retrieval. Additionally, with advertisers paying
only when a potential customer clicked on a sponsored result, it permitted account-
ability and metrics with online advertising, which was a strategic advantage relative
to other forms of solely pushed, impression-based advertising mediums (e.g., tele-
vision, radio, or print).
Again, given that the advertiser did not pay unless a searcher clicked on the spon-
sored result, the search engine was servicing the ad at no cost until it was clicked on.
This laid the foundation for distribution of risk, another aspect of online advertising.
The concept of sponsored search really was a game changer for the Web.
Potpourri
: When GoTo.com's sponsored search model was first introduced,
many industry analysts were skeptical. Here are some quotes about the process
at the time:
“It's kind of strange.” - Brett Bullington, executive vice president of Excite [
2
].
“I have questions about whether a consumer cares about this [model] or not.” -
Kate Delhagen, analyst with Forrester Research [
2
].
“They thought it was tainting the search.” - Mark Kraatz, manager of corporate
Web systems for Open Text (commenting on OpenText's experience with paid
listings [
2
]).
“I'm not sure it's really providing value to the user, in the long term. I think they
want some independent sorting.” - Rajive Mathur, Lycos search manager [
1
].
In fact, the whole concept of advertising on the web was questioned. For
example:
“In the larger picture, advertising is almost irrelevant for the success of the
Web.” Jakob Nielsen (1997) Why Advertising Doesn't Work on the Web. Retrieved
March 9, 2011 from
http://www.useit.com/alertbox/9709a.html
