Google Updates AdWords with Demographics

Google surprised? And by a move from MSN, no less? Say it isn’t so! But it is. MSN’s adCenter began offering demographic targeting of its advertising a week before Google managed to roll out demographic targeting of its own. But the two programs are rather different. Keep reading, or you might not realize what you’re buying.

It’s a little unusual for Google to get caught flatfooted. But that seems to be what happened in this case. Microsoft’s MSN adCenter received a lot of praise when it launched March 6. In particular, many were impressed that the service offered demographic targeting to advertisers.

In response, Google updated its AdWords control panel interface to also provide demographic targeting of content ads. Aside from the fact that Google is actually being a follower rather than a leader in this case, this is huge. Advertising based on demographics is considered to be much more effective than more broad-based advertising, because you’re able to reach the exact audience that would be most interested in your product or service.

So far, Google’s demographic targeting service is only available for the United States. The demographic data comes from ComScore Networks. Google uses the demographic data only to choose the sites that AdWords suggests advertisers run site targeted advertising on. The service does not target specific users visiting particular websites.

Of course, this isn’t exactly useful if you aren’t targeting the United States. On the other hand, with the U.S. still the leading Internet market, this looks like a good start. It’s still a little early to get a lot of information about these two services, but it has set the forums buzzing and plenty of people seem at least curious about what the two services can offer them. If you’re wondering what all the buzz is about too, keep reading; I’m going to explain what demographics are, why they matter, and take a look at how these two services compare.

Loosely defined, demographics can be thought of as the science concerning the kind of information that gets collected about people on government surveys. This covers age, gender, household income, occupation, ethnicity, marital status, whether the person has any children (and of what ages), what region a person lives in, and so on. This is the kind of information that is very valuable to advertisers; they will pay through the nose to be able to take advantage of demographics.

The reason for this is pretty simple. People who have certain demographic information in common seem to have certain interests in common. This is why, for instance, people who own their own homes are usually the ones targeted by credit card companies; the companies figure that homeowners have a respectable income and they’ve already proven that they’re willing to purchase things and take a while to pay them off. Or, to put more of a technological spin on it, this is why people who purchase consumer electronics regularly might receive offers to subscribe to PC World but not Martha Stewart Living.

So what does this mean? Advertisers who are trying to reach a more specific audience can receive suggestions for websites to run their ads. These suggestions will be based on the demographic points that they put in. So if advertisers have a product or service that they know will appeal to single moms living in the South who own their own homes and have a certain level of income, for example, they have a much better shot at reaching exactly that audience.

Now that’s already pretty powerful, but in a sense, it doesn’t quite go far enough. What do you suppose would happen if you combine the ability to do demographic targeting of search advertising with Local Search, now being offered by all three of the major search engines? Local search is the perfect venue for ads demographically targeted by region. It’s amazing to think that you’ve been able to do local search in the search engines for a year, but advertisers still can’t say that they want their ads to show up when someone does a search on, say, “pizza 33351.” Search Google Local with that query and you get a map and several local pizza shops—but only two sponsored listings appear at the bottom, and those seem to be national ones for chains.

So while Google’s demographic offering is currently springing out of AdWords, we’re looking forward to seeing them spread to AdSense. MSN, as we’ll see, may already be well on the way to getting the message. This is practically what Local Search was made for. It could give small businesses a more even footing when trying to compete with national chains in their own area.

First of all, adCenter is not free; you’ll have to pay $5 by credit card to sign up. It is only for buying advertising, not for selling clicks on your own site. You do bid for advertising; minimum cost is five cents per click. If you have competition, you only pay one cent above the advertiser below you, similar to the way Overture handles it.

MSN offers something called Parameters. This allows you to add things other than keywords to your ad copy. You can add up to three parameters per URL. If you are keen to track the performance of your advertising, you might want to use the first parameter to store a unique URL per keyword. If you have a lot of ads that are similar, and you want to customize the ad based on search query, this is a quick way to go about it.

Now for the interesting part: the demographics. You can target by location, sex, income, time of day, day of week, and more. You control how much you target the ad; you can apply all, some, or none of the targets to your ad. You do the targeting in the Settings tab of adCenter, after you provide a start and end date for your campaign. You can place incremental bids on each target (apparently MSN understands the value of demographic targeting).

You’re probably wondering about the accuracy of the targeting data. Since the data is drawn from the forms filled out by Microsoft Passport users, it is as accurate as those forms. And the traffic from such ads? One adCenter user, talking about how well it converts, said that “I have been very happy with it, just wish there was more.” So you can probably expect a little less traffic, but a higher level of conversions—which makes sense for the narrower targeting you can get from using demographically based advertising.

Here’s an interesting point taken directly from MSN’s adCenter to keep in mind: “MSN adCenter provides advertisers like you the opportunity to expose your business to the right audience. Using adCenter’s targeting features, you can choose to have your ad displayed to audiences performing searches using your keywords who specifically fit the targeting criteria you choose…” Note that these are audiences doing searches, which, as you’ll see, is very different from what Google is offering.

Google’s demographic update focuses on the AdWords site tool. It lets you pick your preferences in up to three different demographic categories. From those preferences, the system performs its analysis and creates a list of available Google Network sites that are popular with that particular audience. It will try to match all of the demographic information you put in, so if you put in three items, it tries to match all three, not just one or two.

This option is found on the “identify sites” page when you create a new site-targeted campaign. The demographic information, as already mentioned, comes from ComScore. Google explains on its information page that it currently only has demographics for U.S. users, which is why only advertisers that target the U.S. can use this service.

So what kinds of demographic options are available? You can choose gender, six different age groups, seven different levels of annual household income, five different ethnicities, and whether or not there are children in the household. These options are more detailed than those offered through MSN adCenter. As previously mentioned, both offer regional targeting.

As previously mentioned, though, this is rather different from what MSN is offering. MSN adCenter’s demographic targeting hits audiences who are specifically searching for information, while Google’s targeting is site-specific. To use a more familiar example, picture the kinds of ads you see in a magazine geared to a particular audience. Google’s new demographically targeted ads currently work that way. Now think about regular search engine advertising, and how that is a step above advertising in publications targeted to a particular audience. MSN adCenter’s demographic targeting is a step above Google’s version of demographic targeting in the same way, and for the same reason: the exact audience you want is actively searching for what you can offer them.

It’s interesting to see Google playing catch up for a change. That won’t last forever, though; if Google isn’t offering demographically targeted advertising that appears in the search engine results by the end of next month, I would be very surprised. I hope MSN enjoys its advantage while it lasts.

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