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Fewer AdWords Ads Means More Google Revenue?

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If you’ve noticed, the way Robert Scoble did, Google has cut the number of AdWords ads appearing in its search results. And though that seems like a counterintuitive move, potentially angering advertisers while dropping profits for Google, it may be smarter than you think.

The Scobleizer, networking like a geisha at a the Ichiriki Teahouse, chatted up a nameless Googler attending a party Jeff Pulver didn’t invite the rest of us to. The Googler confirmed that there are fewer ads in the SERPs, and that, yes, it would decrease revenue.

But only in the short term. Google is banking on its famous relevancy while making "way for its new ‘pay per action’ advertising type."

The concept is like one of those riddles with an answer so simple it’s nearly invisible:

Fewer, very relevant ads yields higher chance someone clicks on them. And advertisers won’t complain as much about accidental, non-closing clicks.

In the long run, explained the Googler, that brings in more revenue. Google’s internal numbers also suggested that with fewer ads cluttering up the SERPs, users were more inclined to trust them.

Scoble writes:

This is brilliant. Advertisers are going to LOVE this. Imagine I ran a print shop, like PrintingForLess. Now I could tie my advertising onto actually getting a sale, or getting a good lead. You see why Google needed more relevant advertising before turning this on. They want only potential buyers to see an ad. Anything else is noise. Noise reduces buying behavior.

Robert also gives three nice examples of search results on his blog, so it’s worth a visit to compare "San Francisco sushi" results on Google, Live, and Yahoo.  

Fewer AdWords Ads Means More Google Revenue?
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