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Unformatted text preview: rive a specif ic actio n. Search users want to learn
so mething, buy so mething, research a pro blem, o r get a questio n answered. To the extent that the
hunt o verlaps with ads, it wo rks. Just searched o n a medical term? Go o gle will sho w yo u an ad f ro m
a drug co mpany. Lo o king f o r a to y? Yo u’ll see Go o gle ads f ro m eBay sellers and o ther o nline sho ps.
Type in a vacatio n destinatio n and yo u get a lo ng list o f ads f ro m travel pro viders aggressively
co urting yo ur spending. Even better, Go o gle o nly charges text advertisers when a user clicks
thro ugh. No clicks? The ad runs at no co st to the advertiser. Fro m a return o n investment perspective, this is extrao rdinarily ef f icient. Ho w o f ten do users click o n Go o gle ads? Eno ugh f o r
this to be the single mo st pro f itable activity amo ng any Internet f irm. In 2011, Go o gle revenue
came in at nearly $ 38 billio n. P ro f its exceeded $ 9.7 billio n, almo st all o f this f ro m pay-per-click ads
(see Chapter 14 "Go o gle in Three P arts: Search, Online Advertising, and Beyo nd" f o r mo re details). While users go to Go o gle to hunt, they go to Facebo o k as if they were go ing o n a hike—they have a
ro ugh idea o f what they’ll enco unter, but they’re there to explo re and lo o k aro und and enjo y the
sights (o r site). They’ve usually allo cated time f o r f un, and they do n’t want to leave the terrain when
they’re having co nversatio ns, lo o king at pho to s o r video s, and checking o ut updates f ro m f riends. These usage patterns are ref lected in click-thro ugh rates. Go o gle users click o n ads aro und 2
percent o f the time (and at a much higher rate when searching f o r pro duct inf o rmatio n). At
Facebo o k, click-thro ughs are abo ut 0.04 percent.B. Urstadt, “The Business o f So cial Netwo rks,”
Techno lo gy Rev iew , July/ August 2008. Rates quo ted in this piece seem high, but a large
discrepancy between site rates ho lds acro ss repo rted data. Mo st banner ads do n’t charge per click but rather CPM (co st per tho usand) impressions (each
time an ad appears o n so meo ne’s screen). But Facebo o k banner ads...
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- Winter '14