Googles Next Step: Banner Ads

The search company's rapid expansion continues as it jumps into the market for selling the bigger, graphical ads it had been known for replacing.

Google Inc., known for spurning large, graphical ads on its own Web site, is expanding into the banner advertising market.

The Mountain View, Calif., company late on Wednesday started a beta test of what it calls image ads for its popular AdWords program, company officials said. The image ads, though, will not appear on Googles own site—at least for now. Instead, Google is offering partner Web sites in its AdSense program the option of accepting the graphical ads.

Until now, those partners have received the same type of text-based ads as appear alongside Google search results. With AdSense, ads are triggered based on an analysis of the keywords with the content of the Web page, rather than on search terms. Google plans to follow the same contextual-ad approach for the image ads, said spokesman Michael Mayzel, in a statement.

In a posting on its AdWords site, Google says that the addition of image ads does not mark a shift in focus for the company, which has been credited along with Yahoo Inc.s Overture Services for popularizing keyword-triggered text ads. Mayzel also said that advertisers and publishers regularly requested banner-type ads.

"Were simply combining images—which attract considerable attention—with our proven AdWords targeting technology," the company wrote in the posting. "Because of this, we can offer advertisers yet another highly efficient way to reach the right customers."

The move into image ads comes amid a barrage of new services from Google. Also Wednesday, it began testing a new Google Groups mailing list service that lets users create and manage lists as well as read and post to its Usenet archive. Last month, it offered a free e-mail service, Gmail, in a limited beta.

/zimages/3/28571.gifClick here to read what Google co-founder Sergey Brin has to say about Gmail.

Advertising is core to Googles business and will be increasingly important as the company nears a public offering. About 95 percent of its revenues come from advertising, according to Googles S-1 filing with the Securities and Exchange Commission.

/zimages/3/28571.gifTo read more about Googles upcoming IPO, click here.

With its new image ad program, Mayzel said Google is offering its AdWords advertisers four industry-standard sizes of image ads: banner ads, leaderboard ads, inline rectangle ads and skyscraper ads. Google also is adding its own set of information at the bottom of the image ads: both the URL for the ad link and a Google link where users can send feedback.

Placement of the image ads will be based on the same formula Google uses for its text-based ads. The ranking is based on both the cost-per-click paid by the advertisers as well as the click-through rate.

The company did not say when the image ads will move out of beta, but they are available now to advertisers and publishing partners.

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