"We are making twice as much money on the Google ads as we did on any other advertising we ran in the [same] slot," said Erin Martin, who oversees Google's ads at Web reference site Infoplease.com, the online version of the "Time Almanac."
Robert Hoskins, who runs a site in Gilbert, Ariz., focused on the high-speed wireless-data industry, said Google's AdSense program has allowed his site to rake in an extra $3,000 a month. He spends a lot of time selling other kinds of ads, too, which generate about $6,000 to $12,000 a month.
By contrast, Google's ad program is labor-free. "It takes us five minutes to add a script and Google does the rest while we sleep," said Hoskins. "The Google script automatically populates the pages with the right type of advertising."
Michael Sullivan buys Google and Overture keyword ads to promote his Internet furniture site, RiverHouseTraders.com. Since he started buying the ads two years ago, he said, traffic has quadrupled. He credited his nearly $1 million in sales last year to the success of the 300 or so "keywords" he has purchased at Google and Overture -- including "wrought iron bar stools" and "wrought iron beds." For "wall mirror," a term he often bids on, Sullivan said he usually has to pay 25 to 30 cents per click to achieve premium placement.
That's typical, according to a report prepared by Piper Jaffray's Rashtchy that estimated the average cost-per-click paid by advertisers is 29 cents.
Prices are rising as more advertisers sign up. Google reports it has 150,000 advertisers on board, while Overture has more than 100,000. Yahoo recently bought Overture, which pioneered the sponsored-search model, for $1.7 billion.
One big worry for participating publishers is mismatches between stories and ads. On washingtonpost.com this week, a sponsored Google link that said "Sell your San Diego home" appeared below a story about the California wildfires.
"I personally watch for this all of the time," said Christopher M. Schroeder, chief executive and publisher of The Washington Post's Internet subsidiary, adding that the staff removes inappropriate matches when they see them.
But Schroeder said more often than not, the sponsored links Google shows are relevant, such as ads for tickets to the U.S. Open matched with stories about Wimbledon.
Sheryl Sandberg, vice president of global sales and operations for Google, said the company worries about mismatches resulting from its automated targeting system. Google staffers write special filters, she said, to block offensive ads and keep advertisers from trying to capitalize on, say, stories about airplane crashes.
Another glitch has risen over trademarks. Google said it is appealing a ruling this month by a French court ordering it to block ads that exploit trademarked "keywords" that an advertiser doesn't own. The case arose when several companies, including airline EasyJet, bid on the trademarks of two French travel firms, including the phrase "Bourse des Vols." Google is facing a similar lawsuit from handbag maker Louis Vuitton.
The search advertising market, meanwhile, is heating up. Last week, Google bought a rival ad-targeting system, called Sprinks, from Primedia. It targets ads by predesignated categories. Both Google and Yahoo are experimenting with ways to map ads based on geographic data, too.
Last Thursday Google started offering advertisers the option of targeting ads by state or region, including the 210 designated marketing areas in the United States. Google's regional system, still in trial form, identifies location by looking at where a Web surfer is accessing the Internet, relying on each computer's Internet protocol address.
Already, rivals are scrambling to catch up. Microsoft Corp. announced this year that it is developing its own Web search technology, IBM Corp. has developed Web search for the business market that could prove to be a sleeper, and Amazon.com recently kick-started a subsidiary dubbed "A9" to develop its own Web search tools.
As Google prepares to become a public company next year, there is no telling which competitor might be lurking at the back of the Internet auction market, preparing to snipe a piece of its success.
