profitlabinc.com

Google Inc. on Monday agreed to pay News Corp. $900 million over three years to provide search and distribute advertising on the popular social network MySpace.com and the rest of the media company’s Fox online network.

Under the agreement, Google, based in Mountain View, Calif., would be the exclusive provider of text-based advertising and keyword-targeted ads on the Fox Interactive Media network. It would also have the right of first refusal on display advertising sold through third parties.

In return, Google would make guaranteed minimum revenue share payments to News Corp. of $900 million… more

It’s a bold, aggressive move from Google, and the significance of this deal goes beyond the mere capture of market share. I see 2 of Google’s most important strategic directives at work in the Myspace deal.

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I am often asked by traffic people to comment on the differences between buying clicks from Google through the Adwords program and earning clicks from Google via the Organic Listings. Putting aside for a moment the fact that method #2 makes me feel like Robert Duvall in a Napalm Storm (lol), the reality is that it comes down to ROI. Assuming you know what you are making per click, the question boils down to what it costs you to buy a click, versus what it costs you to produce a page that will garner a similar click. I must draw attention to the word “similar”, since, in my experience, there is a qualitative difference between the two. But, that difference is shrinking. Here’s why.

Google has been working hard to improve the quality of its search results with, among other efforts, the institution of Trustrank. Now that trust factors figure into determining which organic listings Google displays on its results pages, relevancy and searcher satisfaction are increasing dramatically. The inevitable consequence of this is a reduction in average search time and a reduction of advertiser impressions per search. Fewer impressions sounds like a bad thing for advertisers, but it’s not… more