Search engine marketing firms have reported much lower than expected results from contextual advertising campaigns, comparing click-throughs and actual purchases to the numbers shown by banner advertising. For the accountants and business planners at Google and Overture the news couldn’t come at a worse time. Both Google and Overture are depending on Contextual Advertising programs as significant revenue sources this year. If the bottom drops out of this emerging market, as it has from the once popular banner advertising market, both search firms could take a pretty large financial hit.

Contextual Advertising is the process of placing ads on websites based on the keywords found on specific pages within the site or based on the keywords entered by the site-user. Probably the most well known example is Google’s AdWords/AdSence program that allows advertisers to pay for their ads to appear when certain keywords are entered, and pays website owners for the right to place ads on their websites. Contextual advertising is a relativity new concept and still presents some rather funny results for advertisers. For example, a search for OJ Simpson Jeep Chase brought two context ads, one from a company named “Bulls Balls.Com” which sells the Ultimate Jeep Accessories, and the other from “Stop-Sign.Com”, an anti-virus firm. Neither ad has very much to do with a low-speed police chase, an event that was broadcast live to millions of viewers around the world.

Contextual Advertising might still prove to be a winning concept with advertisers and Internet users but several factors need to be improved before the model can be considered successful.

First of all, ads must be relevant to the interests of the Internet user. Like television viewers, most people don’t use the medium for the chance to see the commercials but most of us realize that advertising is a necessary cost-covering component for most website owners. Unlike TV viewers however, we don’t need to wait for the commercials to change the channel or go to the bathroom.

Next, advertising rates need to come down to meet realistic expectations. StepForth is not recommending contextual advertising opportunities to the majority of our clients as we don’t believe this form of marketing will bring a strong enough return to justify the cost and effort. The costs are still absurdly high and, for the most part, the click-throughs are absurdly low.

Lastly, search engines and websites presenting advertising to Internet users need to consider the reason people visit websites, they are looking for information on specific topics. An advertisement for Jeep Accessories is not likely going to be clicked on by someone looking for an account of O. J.’s infamous LA adventure. Given that, a marketing professional is not likely going to spend his or her client’s money for an ad that isn’t getting the attention it deserves.

The bottom line is that people didn’t trust banner ads and don’t seem to be showing a great deal of faith in contextual advertising. The truest time for testing is just beginning and Christmas will be a deciding factor.