Millions of businesses are now using Google's AdWords system to advertise on Google. The system works very simply: businesses create an advert to be displayed in the 'Sponsored Search' area of search results after a user 'Googles' for a certain keyword or term. Each time the advertisement is clicked on, the advertiser pays Google for that click - sometimes as little as 1p, sometimes as much as £1. Being the most popular search engine at present, Google is very attractive to advertisers; if your advert is more likely to be seen umpteen times per day on Google but only a fraction of that on other engines, it makes sense for advertisers to pick Google over the competition.
Advertising with AdWords is not the only option on Google, either. AdSense, Google's AdWords companion, is combined with Google's new custom search engine and allows webmasters and bloggers to tailor Google searches for inclusion on their websites or blogs with AdWords advertisements automatically shown. This means that advertisers will have an even further reach than they did through standard Google searches; their adverts will now be shown on sites tailored to related products or services, reaching their target audience in the easiest way possible.
Google's innovative advertising strategy is generating a huge income for the company. Channel 4's chief executive, Andy Duncan, has estimated a revenue of £900m for Google this year, compared to £800m for Channel 4. Last month, the Internet Advertising Bureau released figures indicating a 40 percent increase - a massive £917m - in online marketing over the first half of 2006; that's half the size of the UK's television advertising market.
MSN have tried to match up to Google's market share with the launch of AdCenter, a competitor to Google's AdWords; but with only 10 percent of the search market compared to Google's 50 percent, it's going to be an uphill struggle. And after a 38 percent fall in earnings, Yahoo is also revamping its search advertising system which is due to make its debut early in the new year.
