*Google’s Appearance in 2000 Altered the Meaning of the Term “Keyword Advertising”

Reading pre-2000 legal literature on the issue of keyword advertising I started wondering if it could actually still be applied to post-2ooo cases, as the appearance of Google and its advertising platform AdWords have significantly altered the way the very term “keyword advertising” is used and understood as Google, due to its effective Page Rank algorithm, has from the very beginning of its advertising activity always differentiated between advertising and search results. This change however remained largely unnoticed by most of the German/Austrian legal literature.

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Fain/Pedersen, in their paper Sponsored Search: a Brief History, defined Sponsored Search (= Keyword Advertising) as following:

– Advertiser-provided content: a set of advertiser hyperlinks annotated with keyword tags, titles, and descriptions.

– Advertiser-provided bids that value traffic on specified concepts or keywords. – Combining a manual and automated review process to ensure that advertiser content is in fact relevant to the target keyword.

– Matching advertiser content to user queries as they are received by a search engine.

– Displaying advertiser content in some rank order in some placement alongside other algorithmic (i.e., non-sponsored) search engine content.

– Gathering data, metering clicks, and charging advertisers based on consumer clicks on their displayed content.

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According to Clark in Fain/Petersen, Togo.com (later Overture, later Yahoo! Search Marketing) in 1998 was the first to combine all these elements.[1] The principle of matching ads and search queries however is attributed to OpenText who briefly offered this service in 1996.[2]  LinkStar was the first company to use the cost-per-click pricing for search advertising in 1996 .[3]

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Scott Karp, referring to John Battelle’s The Search says:

“In late 1999, Google began testing a program to sell ads on a CMP (cost per thousand impressions) basis, the dominant ad model of the time. But instead of using banner ads, the dominant ad format of the time, Google decided to sell only unobtrusive text ads. And they decided to target those ads based on search terms, and to keep the ads separate from the main search results. Advertising first appeared on Google.com in January 2000 […]”.


Hargittai, The Role of Expertise in Navigating Links of Influence, in Turow/Tsui (Ed), The Hyperlinked Society: Questioning Connections in the Digital Age, Michigan Press (2008) 85ff.

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While other search engines mixed search results and paid ads also with the goal of increasing the overall-quality of their search results (following the idea that you can fight spam by making spammers pay a trivial sum for each time their message is displayed), Google took the ideas of cost per click and keyword triggered ads  from (back then) ToGo.com, but -as its Page Rank algorithm was strong enough to filter out most search engine spam-, from the very start always displayed ads and (organic) search results separately. In 2002 Google further modified the system by incorporating click feedback.

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Google, according to Batelle, contrary to its competitors back in 2000, has never mixed search results and advertisement and never accepted payments to influence/improve the display of certain search results (Paid Inclusion). Of course Google’s labelling system has been modified over time and some search results are indeed on the borderline between ads and search results (e.g. Ad Extensionons on Google Local Search or Ads on Google Product Search).

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Conclusion:

Thus it is highly questionable if legal literature “Keyword Advertising“, written BEFORE October 2000 on can/should still be applied to Google AdWords cases AFTER that date. But, for example, in its Wein&Co decision even the Austrian Supreme Court (OGH) and subsequently a large number of Austrian authors actually referred (concerning aspects of unfair competition) to an article by Schönherr (ÖBl 1999, 267) written back in 1999 [sic!].

Such pre-Google-literature should, in my opinion – without extensive further questioning – not be applied to post 2000 cases, as Google has definitely not only changed the way in which Keyword Advertising is actually carried out by search engines, but ,as a consequence, also the way the term “Keyword Advertising” is now understood in a more narrow sense, separate from all other forms of Search Engine Marketing.

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[1] Clark (1998). “Start-Up Plans Internet Search Service Tying Results to Advertising Spending.” Wall Street Journal. Feb. 20.
[2] CNET. (1996). “Engine Sells Results, Draws Fire.” CNET News.com. June 21. 1996.
[3] CNET. (1996). “Another Engine Takes Ads by the Click.” CNET News.com. May 22. 1996.

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