- Allowed Sites setup
The Allowed Sites feature allows you to specify a list of sites where ads from your account may be displayed. If you're using this feature, you'll need to make sure that you've listed all sites where you'd like to display your AdSense ad code.
To check if this is the case, log into your account and visit the 'Allowed Sites' page under your AdSense Setup tab. If the radio button 'Allow any site to show ads for my account ' is populated, you're not being affected by this issue, and you should continue to #2 below. However, if 'Only allow certain sites to show ads for my account' is populated, review the list of sites in the box below -- are all the sites you own listed in this box? If the answer is 'no', you won't be credited for clicks on the missing sites. Please be sure to add all of the sites where you'd like to display your AdSense ad code.
We've noticed some confusion among publishers who have entered the sites of advertisers they'd like to see on their pages into the Allowed Sites list. Please know that this is not the case, as it's not possible to request ads for a particular page - the sites you enter into this box can only be sites where your ads can be placed.
- Invalid clicks
It's possible that you have some clicks that our monitoring system has considered to be invalid. As we've mentioned before, we monitor all clicks and impressions on Google ads for any activity that may artificially drive up an advertiser's costs or a publisher's earnings. Any clicks that our system considers invalid will still appear on your 'Overview' page, under the Reports tab. However, because our advertisers aren't charged for these clicks and impressions, we won't show the earnings for this activity. If you're concerned about suspicious activity in your account, we recommend reviewing your site's logs and letting us know about the situation.
Rest assured that AdSense accounts are properly credited for all clicks and impressions we consider to be valid. We'll post your finalized earnings for a given month on your 'Payment History' page during the first week of the following month. For more information about invalid clicks, please review our Help Center.
Tuesday, January 11, 2011
Seeing clicks but no revenue?
Have you ever checked your reports and noticed that you have clicks reported, but no revenue? We'd like to explain why this may happen, as we frequently receive emails and questions on our Help Forum about this issue. What you're seeing may be due to one of the following:
Monday, January 10, 2011
Fresh year, fresh start
Welcome to 2011! Though it may be hard to stick to all of your New Year's resolutions (we can’t say no to donuts either) we want to help keep you on track by giving you ten quick and easy AdSense resolutions you can be sure to keep:
We hope these tips help you start the year off with a bang. And treat yourself to a donut with the extra revenue you earn -- we promise not to tell.
- Use the new AdSense interface to get more insight, control, and efficiency with your account.
- Enable text and image ads so all available advertisers can bid to appear on your site.
- Use wider ad units which are more reader-friendly and used by more advertisers
- Place ads above the fold and maximize your coverage with three standard AdSense for content ad units, three link units, and two AdSense for search boxes on each page of your site.
- Use channels to measure the outcome of any tests you run by grouping and tracking ad units as you choose.
- Turn those channels into ad placements so advertisers can pick specific groups of ad units on your site that they want to target.
- Go through the AdSense checklist to learn about new AdSense features and brush up on your program knowledge.
- Follow us on Twitter to get quick updates on the latest features, AdSense tips, and Google highlights.
- Join the conversation in the Help Forum to connect with other publishers and get your questions answered.
- Bookmark our troubleshooter so you can quickly diagnose and fix the issue should ads stop showing on your site.
We hope these tips help you start the year off with a bang. And treat yourself to a donut with the extra revenue you earn -- we promise not to tell.
Inside AdSense team
Sunday, January 9, 2011
Show enhanced ads with Google Friend Connect
Today, we're excited to announce a set of new features in Google Friend Connect that let website owners get to know their users, encourage users to get to know each other and personalize their site content, including Google ads. We've just integrated AdSense with Google Friend Connect, giving publishers the option to show ads that match visitors' interests.
When you log in to your Google Friend Connect account, you'll notice a new "Interests" section where you can create a list of questions for users to answer, either as part of your website's registration process or via a poll gadget on the site itself. For instance, if you have a website for guitar enthusiasts, you might ask users to share their preferred brand of guitar, the last concert they attended, their favorite guitar artist, and so on. The details users share are added to their Friend Connect profiles and made publicly available, enabling users to learn more about each other.
These details also allow you to display more relevant ads that match the interests users share. From the "AdSense" section of your Friend Connect account, you can either create new ad units that take users' interests into account or choose to enhance existing ad units on your website.
Please keep in mind that this new integration of AdSense and Friend Connect is separate from interest-based advertising -- the ads in Friend Connect will be matched to your content and the information users have chosen to share publicly with each other.
You can learn more about all the new features on our announcement on the Google Social Web Blog.
When you log in to your Google Friend Connect account, you'll notice a new "Interests" section where you can create a list of questions for users to answer, either as part of your website's registration process or via a poll gadget on the site itself. For instance, if you have a website for guitar enthusiasts, you might ask users to share their preferred brand of guitar, the last concert they attended, their favorite guitar artist, and so on. The details users share are added to their Friend Connect profiles and made publicly available, enabling users to learn more about each other.
These details also allow you to display more relevant ads that match the interests users share. From the "AdSense" section of your Friend Connect account, you can either create new ad units that take users' interests into account or choose to enhance existing ad units on your website.
Please keep in mind that this new integration of AdSense and Friend Connect is separate from interest-based advertising -- the ads in Friend Connect will be matched to your content and the information users have chosen to share publicly with each other.
You can learn more about all the new features on our announcement on the Google Social Web Blog.
Google Friend Connect
Saturday, January 8, 2011
The Difference Between Advertising and Marketing
Word of mouth marketing is a billion dollar industry. It’s also the fastest growing factor in both advertising and marketing.
Many business owners do not know the difference between advertising and marketing often mixing up and confusing the two. Advertising and marketing are individually very important and very different.
If you want your business to have any chance of succeeding it is imperative you thoroughly understand and know how to distinguish them.
The dictionary terms for advertising and marketing will not be described. Even looking up the technical definitions may still leave you confused. Advertising and marketing will be described according to your business and product or service you provide.
Advertising is the means of publicizing yourself through different media. The main purpose of advertising is for branding - namely product or name recognition. There is little psychology or concept behind it.
The demand for Advertising is high and so too is the price. We are now bombarded with so much of it we basically ignore it. Because of its high exposure level, advertising is becoming increasing inefficient.
Once upon a time you could build a business on advertising alone. Today this is virtually impossible. Most small businesses do not have the big money needed to advertise long enough to start getting results.
Marketing on the other hand goes much deeper. It’s the psychology of the entire sales process. Advertising is simply one of the steps or stages in the marketing process.
Marketing is the concept and strategy behind creating your campaign. It involves how you position your business to encourage your consumers to come to you – without having to “sell” to them.
One of the most effective ways to do this is through education. I advise you to use your marketing materials to provide them lots of content to educate your consumers about your service and what it can do to improve their life.
Nobody wants to be sold. Yet people are happy to buy if you give them a list of reasons why. Let your consumers come to their own conclusions instead of commanding or bullying them into coming to you.
Education is a powerful driver in ensuring clients come to you and letting others know about you too. Education is an important factor in word of mouth marketing. And it takes little effort on your part if you take the time to put some thought into your marketing campaign.
Many business owners do not know the difference between advertising and marketing often mixing up and confusing the two. Advertising and marketing are individually very important and very different.
If you want your business to have any chance of succeeding it is imperative you thoroughly understand and know how to distinguish them.
The dictionary terms for advertising and marketing will not be described. Even looking up the technical definitions may still leave you confused. Advertising and marketing will be described according to your business and product or service you provide.
Advertising is the means of publicizing yourself through different media. The main purpose of advertising is for branding - namely product or name recognition. There is little psychology or concept behind it.
The demand for Advertising is high and so too is the price. We are now bombarded with so much of it we basically ignore it. Because of its high exposure level, advertising is becoming increasing inefficient.
Once upon a time you could build a business on advertising alone. Today this is virtually impossible. Most small businesses do not have the big money needed to advertise long enough to start getting results.
Marketing on the other hand goes much deeper. It’s the psychology of the entire sales process. Advertising is simply one of the steps or stages in the marketing process.
Marketing is the concept and strategy behind creating your campaign. It involves how you position your business to encourage your consumers to come to you – without having to “sell” to them.
One of the most effective ways to do this is through education. I advise you to use your marketing materials to provide them lots of content to educate your consumers about your service and what it can do to improve their life.
Nobody wants to be sold. Yet people are happy to buy if you give them a list of reasons why. Let your consumers come to their own conclusions instead of commanding or bullying them into coming to you.
Education is a powerful driver in ensuring clients come to you and letting others know about you too. Education is an important factor in word of mouth marketing. And it takes little effort on your part if you take the time to put some thought into your marketing campaign.
Friday, January 7, 2011
More countries go Western Union
Good news! We’ve expanded Western Union Quick Cash as an AdSense payment method to 10 new countries: Saudi Arabia, Croatia, Iceland, United Arab Emirates, Latvia, Lebanon, Slovenia, Tunisia, Moldova and Malta. If you live in any of these locations, you can now sign up to receive your AdSense payments from your local Western Union agent. With Western Union, you’ll receive your earnings sooner, since you won't have to wait for checks to arrive in the mail or clear at the bank. Plus, AdSense won't charge you a fee to use this payment method.
Please keep in mind these important points:
Please keep in mind these important points:
- Payments will continue to follow our normal payment schedule and will be available for pickup at your local Western Union agent the day after they're issued.
- You'll need to present a government-issued ID that matches your AdSense payee name when picking up your payment. If you need to update or correct the payee name listed in your account, please follow the instructions in our Help Center.
- Right now, only individual payee names can receive payments by Western Union, not businesses.
- Payments must be picked up within 60 days of issue, or they'll expire and be credited back to your account.
- Payments will be made in US dollars, but depending on your local Western Union agent, they may be picked up in your local currency.
AdSense Payments Team
Thursday, January 6, 2011
Payments by Western Union now available in Indonesia
We're excited to introduce Western Union Quick Cash as a new payment method for Indonesia. If you're located in Indonesia, you can now sign up to receive your AdSense payments in cash using the worldwide Western Union money transfer service. This payment method is quick, easy, and free -- that means no more waiting for checks to arrive in the mail or to clear at the bank.
A few things to keep in mind:
A few things to keep in mind:
- Payments follow our normal payment schedule and will be available for pickup at your local Western Union agent the day after they are issued.
- You'll need to present a government-issued ID that matches your AdSense payee name when picking up your payment. If you need to update or correct the payee name listed in your account, please follow the instructions listed in our Help Center.
- Payments by Western Union are currently only available to individual payee names, but not to businesses.
- Payments must be picked up within 35 days of issue or they'll expire. If this happens, a payment hold will be placed on your AdSense account and the payment will be credited back to your account.
- Payments will be made in US dollars, but depending on your local Western Union agent, they may be picked up in your local currency.
AdSense Payments Team
Western Union payment updates
Do you use Western Union as your payment method? If so, we've just made a couple minor updates that we'd like to let you know about.
Expiration date extended
We've now extended the deadline to pick up your Western Union payments from 35 days to 60 days. If you haven't picked up your payment within 60 days of issuance, the payment will be credited back to your account and a payment hold will be placed on your account. You'll then see a notice in your account with more details on how to proceed.
Split payments
As you may know, Western Union has specific payout limits depending on location. In the past, if your payment amount exceeded the Western Union payout limit in your country, we'd send your payment by secured express delivery check instead. Unfortunately, this would also incur a delivery fee, so we're happy to let you know that this is now no longer the case.
Now, if your payment exceeds the maximum payment amount, we'll divide up the amounts but still send them via Western Union. For instance, if the payout limit in your country is $3,000 USD and your payment for the month is $5,000 USD, we'll send you two payments: one for the limit of $3,000 USD and another for the remainder of $2,000 USD. If you're sent multiple Western Union payments, you'll see multiple 'Payment issued' lines on your Payment history page, each with the corresponding MTCN associated with it. Depending on your local Western Union agent, you may need to pick up multiple payments on subsequent days. We recommend consulting your local Western Union agent for further details.
Payment by Western Union is currently available in a limited number of countries, but we're working on expanding the countries we support, and we'll keep you posted with any updates.
Expiration date extended
We've now extended the deadline to pick up your Western Union payments from 35 days to 60 days. If you haven't picked up your payment within 60 days of issuance, the payment will be credited back to your account and a payment hold will be placed on your account. You'll then see a notice in your account with more details on how to proceed.
Split payments
As you may know, Western Union has specific payout limits depending on location. In the past, if your payment amount exceeded the Western Union payout limit in your country, we'd send your payment by secured express delivery check instead. Unfortunately, this would also incur a delivery fee, so we're happy to let you know that this is now no longer the case.
Now, if your payment exceeds the maximum payment amount, we'll divide up the amounts but still send them via Western Union. For instance, if the payout limit in your country is $3,000 USD and your payment for the month is $5,000 USD, we'll send you two payments: one for the limit of $3,000 USD and another for the remainder of $2,000 USD. If you're sent multiple Western Union payments, you'll see multiple 'Payment issued' lines on your Payment history page, each with the corresponding MTCN associated with it. Depending on your local Western Union agent, you may need to pick up multiple payments on subsequent days. We recommend consulting your local Western Union agent for further details.
Payment by Western Union is currently available in a limited number of countries, but we're working on expanding the countries we support, and we'll keep you posted with any updates.
AdSense Payments Team
Wednesday, January 5, 2011
Google Apps welcomes AdSense
Google Apps is Google’s suite of cloud-based messaging and collaboration apps used by over 30 million users in small and large businesses, educational institutions, government agencies, and non-profit organizations around the world. Apps includes products such as Gmail, calendar, documents, spreadsheets and more, specifically optimized for use in organizations.
We recently launched an improvement to Google Apps that made dozens of Google services, including AdSense, available to Apps users for the first time. Before this improvement, Google Apps users had to create a separate account to sign in to AdSense; now, Apps users can access their cloud-based productivity applications along with AdSense using the same account.
For those of you who also have a Google Apps account, we're in the process of finalizing the infrastructure that will allow you to seamlessly transition your existing AdSense account and data over to your Google Apps account. For new users, if your Apps systems administrator has enabled AdSense, you can begin using this services with your existing Apps account at google.com/adsense.
If you haven’t started using Google Apps yet to manage collaboration for your business, learn more about how to lower IT costs and improve productivity at google.com/apps.
For more details, read the complete post on the Google Enterprise blog and follow all the updates on other newly available services for Google Apps users.
We recently launched an improvement to Google Apps that made dozens of Google services, including AdSense, available to Apps users for the first time. Before this improvement, Google Apps users had to create a separate account to sign in to AdSense; now, Apps users can access their cloud-based productivity applications along with AdSense using the same account.
For those of you who also have a Google Apps account, we're in the process of finalizing the infrastructure that will allow you to seamlessly transition your existing AdSense account and data over to your Google Apps account. For new users, if your Apps systems administrator has enabled AdSense, you can begin using this services with your existing Apps account at google.com/adsense.
If you haven’t started using Google Apps yet to manage collaboration for your business, learn more about how to lower IT costs and improve productivity at google.com/apps.
For more details, read the complete post on the Google Enterprise blog and follow all the updates on other newly available services for Google Apps users.
Google Apps Team
Switch to the new version of AdSense for search
Over the last two years, the AdSense team has offered the powerful Google Custom Search Engine (CSE) product as an improvement over the original AdSense for search. After some recent improvements, we're now ready to retire the older version of AdSense for search. If the Google logo on your search results page reads "Powered by Google" instead of the newer "Google Custom Search" then you haven't yet upgraded to the newer version. The new AdSense for search with CSE is available in your account, and we encourage you to make the switch by updating your code as soon as possible.
AdSense for search with CSE gives you more control over your search results without changing how you earn money showing AdSense for search ads. For example, with the new version, you'll have access to advanced features like refinements and promotions. Our team has developed a number of updates and improvements during the past few months, and you can access more advanced features at www.google.com/cse.
Your existing AdSense for search box will continue to work normally for a few more months, and we'll be sure to update you when we retire this version. To take advantage of the benefits offered by the new version of AdSense for search and ensure you don't miss any revenue during the transition, we encourage you to update your code now. You'll just need to regenerate your AdSense for search code by signing in to your account and following these instructions:
AdSense for search with CSE gives you more control over your search results without changing how you earn money showing AdSense for search ads. For example, with the new version, you'll have access to advanced features like refinements and promotions. Our team has developed a number of updates and improvements during the past few months, and you can access more advanced features at www.google.com/cse.
Your existing AdSense for search box will continue to work normally for a few more months, and we'll be sure to update you when we retire this version. To take advantage of the benefits offered by the new version of AdSense for search and ensure you don't miss any revenue during the transition, we encourage you to update your code now. You'll just need to regenerate your AdSense for search code by signing in to your account and following these instructions:
- Visit your "AdSense Setup" tab and select "AdSense for Search."
- Select the sites you'd like your users to be able to search across (Learn More).
- Customize the look and feel of your search engine results.
- Update the code on your website.
Inside AdSense Team
Tuesday, January 4, 2011
Tips for maintaining an AdSense-friendly site with user-generated content
These days, user-generated content is everywhere, from the comments below newspaper articles, to the photos and videos shared on social networks. So it's no surprise that many publishers are monetizing this type of content with AdSense ads. But, while you're familiar with types of content which are compliant with the AdSense program policies, your users might not be. We understand that it's not always easy to monitor hundreds of new comments, posts, user profiles, videos, or photos every day, so here are a few ideas on how to maintain an advertiser-friendly environment on your pages.
As a quick note before we head into the tips, remember that inappropriate content can come in many forms -- images, forum posts, comments, links, and so on. For example, adult content isn't only limited to pornographic images; it can also be sexually explicit forum posts or spam bot comments with links to adult sites, which aren't permitted by our policies. We recommend reviewing our previous Inside AdSense post on this topic for further clarification and a few tests you can try on your content.
Now for the tips, which we've divided in two sections - 'Prevention' and 'Monitoring'.
Prevention
Here are some recommendations for ways to prevent your ads from appearing alongside user-generated content that isn't compliant with our policies:
We suggest these tips to ensure that your existing user-generated content pages remain compliant with our policies:
Posted by Gergana Marinova - AdSense Publisher Support
As a quick note before we head into the tips, remember that inappropriate content can come in many forms -- images, forum posts, comments, links, and so on. For example, adult content isn't only limited to pornographic images; it can also be sexually explicit forum posts or spam bot comments with links to adult sites, which aren't permitted by our policies. We recommend reviewing our previous Inside AdSense post on this topic for further clarification and a few tests you can try on your content.
Now for the tips, which we've divided in two sections - 'Prevention' and 'Monitoring'.
Prevention
Here are some recommendations for ways to prevent your ads from appearing alongside user-generated content that isn't compliant with our policies:
- Publish clear content guidelines and policies that your users will have to accept and adhere to in order to sign up and use your site's services.
- If you own a photo or video sharing site where users are permitted to upload adult or other non-compliant content, clearly structure your content to avoid placing your ad code in sections/categories containing this type of content. The same idea could also be easily applied to online stores with adult sections or to classifieds sites which offer adult dating classifieds.
- Ask users to tag their inappropriate content (e.g. sexually suggestive pictures or videos) as being non family-safe. This can help you perform human evaluations of potentially inappropriate content for AdSense ads. You can also try installing keyword filters for content related to adult topics, violence, or drugs, for instance. While we're unable to provide you with details about setting up these filters for your site, we recommend searching for terms such as "keyword filtering" or "content filtering" on Google.com.
- Implement spambot protection for your comment forms, forums, and guest books. If you need more information on this topic, try a Google search for "spambot protection".
We suggest these tips to ensure that your existing user-generated content pages remain compliant with our policies:
- Set up ways for your community to monitor itself. For example, try adding a "Report inappropriate content" link to your pages, to allow users to flag content for you to review.
- Proactively review pages, videos, photos, etc. with high pageviews on a regular basis.
- Spot-check content based on keywords, content search, or related user accounts. For example, try entering keywords related to inappropriate content in your own search engine and checking the results. Alternatively, you can search on Google.com using the following parameter, replacing 'example.com' with your own site's URL and 'keyword' with a specific word or phrase: "site:example.com keyword".
- Create editorial policies and exercise moderator control in your comments, forums, and guestbook sections.
Posted by Gergana Marinova - AdSense Publisher Support
Engaging users with policy-compliant images and video
As it's becoming easier and easier to embed videos and pictures on websites, many publishers are now enhancing their current text content with relevant videos and photos. We wholeheartedly support adding these different forms of content to improve the user experience on your site -- hey, we like watching entertaining YouTube videos too! But here's a friendly reminder about keeping our program policies in mind when you choose video and image content for your site.
Before posting videos or pictures on a page with Google ads, put yourself in an advertiser's position and consider whether you would want to have your ad displayed on the page. If your content might potentially be seen as offensive or disturbing, an advertiser may not be comfortable running their ads on that page. Here are a few specific types of content that you can check for:
The list above is by no means exhaustive, since there are always some borderline cases which will feature content that may be tame to one person but offensive to another. If you're uncertain about specific pictures or videos, we recommend that you err on the side of caution and refrain from placing this content on pages containing Google ads. In addition, if you host a site with user-generated content, we ask that you continually monitor your network to ensure that ads don't appear alongside the types of content described here.
Posted by Dan Zilic - AdSense Publisher Support
Before posting videos or pictures on a page with Google ads, put yourself in an advertiser's position and consider whether you would want to have your ad displayed on the page. If your content might potentially be seen as offensive or disturbing, an advertiser may not be comfortable running their ads on that page. Here are a few specific types of content that you can check for:
- Adult or mature: Includes, but is not limited to, images and videos containing sexual activity, full nudity, and lewd poses. Please review this recent post to determine whether your content might fall into this category.
- Violent or gory: Can include images and videos of street-fighting, people hurting each other, or gruesome accidents and their victims.
- Culturally insensitive or hate speech: Includes content promoting racial intolerance or advocating against a specific individual, group, or organization.
The list above is by no means exhaustive, since there are always some borderline cases which will feature content that may be tame to one person but offensive to another. If you're uncertain about specific pictures or videos, we recommend that you err on the side of caution and refrain from placing this content on pages containing Google ads. In addition, if you host a site with user-generated content, we ask that you continually monitor your network to ensure that ads don't appear alongside the types of content described here.
Posted by Dan Zilic - AdSense Publisher Support
Play it safe, family-safe
Many of our publishers regularly ask what is exactly considered adult or mature content by AdSense policies. It's a lot easier to understand when we speak about family-safe content. As you may already know, only ads classified as family-safe will be displayed on AdSense publisher websites.
Our policy regarding adult or mature content may include any material that is not appropriate for all audiences. While this obviously includes full nudity or sexual activity, it may also include textually explicit sexual content, image or video content containing lewd or provocative poses, strategically covered nudity, see-through or sheer clothing, and close-ups of anatomy that would be inappropriate if shown nude. Additionally, topics such as sexual health and sex tips may be held to a higher standard of professionalism than content that isn't bordering on mature.
While it's not a sure test, we sometimes suggest that publishers ask themselves the following questions to determine if content is family-safe: Would I be comfortable viewing this content with my parents or children in the same room? Would I feel comfortable viewing this content if my boss walked up behind me while I had this content on my screen? If the answer to either of these questions is no, then it is likely that some advertisers would not be comfortable showing their ads on such content and we might consider it mature.
Posted by Guillermo Bracciaforte - AdSense Publisher Support
Our policy regarding adult or mature content may include any material that is not appropriate for all audiences. While this obviously includes full nudity or sexual activity, it may also include textually explicit sexual content, image or video content containing lewd or provocative poses, strategically covered nudity, see-through or sheer clothing, and close-ups of anatomy that would be inappropriate if shown nude. Additionally, topics such as sexual health and sex tips may be held to a higher standard of professionalism than content that isn't bordering on mature.
While it's not a sure test, we sometimes suggest that publishers ask themselves the following questions to determine if content is family-safe: Would I be comfortable viewing this content with my parents or children in the same room? Would I feel comfortable viewing this content if my boss walked up behind me while I had this content on my screen? If the answer to either of these questions is no, then it is likely that some advertisers would not be comfortable showing their ads on such content and we might consider it mature.
Posted by Guillermo Bracciaforte - AdSense Publisher Support
Policy updates -- and it's not even Thursday!
After our many weeks of policy posts on Thursdays, you're probably intimately familiar with all of our program policies. So we can imagine your surprise when you woke up today, got your morning coffee, and settled in for your daily re-read of the policies -- only to find they were different! To help lessen the shock, we've highlighted the two notable changes below:
We're now requiring AdSense publishers to comply with the spirit of our Page Quality Guidelines. If you're an AdWords advertiser, you might already be familiar with these guidelines, which are intended to provide a better experience for users, advertisers, and publishers alike. If you use any kind of online advertising, know that these guidelines encourage publishers to, among other things, create sites with simple navigation and substantial, useful content.
This new policy requirement doesn't mean that you can't use online advertising; it simply means that if you do, you need to be sure that the way you advertise meets with the guidelines, whether it's through AdWords or through any other advertising program. However you advertise your site, it can always benefit from significant and relevant content, clear navigation, and the other points in our quality guidelines.
The other noteworthy update: now you can place up to three link units on a page. As we've noted in the past, link units are a great way to provide relevant, user-friendly ads in hard-to-fit locations on your site. With the new opportunity to place three link units -- and the plethora of link unit formats -- we hope you'll find great ways of incorporating this unique ad format on your site.
Posted by Julie Beckmann - AdSense Publisher Support
We're now requiring AdSense publishers to comply with the spirit of our Page Quality Guidelines. If you're an AdWords advertiser, you might already be familiar with these guidelines, which are intended to provide a better experience for users, advertisers, and publishers alike. If you use any kind of online advertising, know that these guidelines encourage publishers to, among other things, create sites with simple navigation and substantial, useful content.
This new policy requirement doesn't mean that you can't use online advertising; it simply means that if you do, you need to be sure that the way you advertise meets with the guidelines, whether it's through AdWords or through any other advertising program. However you advertise your site, it can always benefit from significant and relevant content, clear navigation, and the other points in our quality guidelines.
The other noteworthy update: now you can place up to three link units on a page. As we've noted in the past, link units are a great way to provide relevant, user-friendly ads in hard-to-fit locations on your site. With the new opportunity to place three link units -- and the plethora of link unit formats -- we hope you'll find great ways of incorporating this unique ad format on your site.
Posted by Julie Beckmann - AdSense Publisher Support
Accidents happen
As most of you know, our program policies state that publishers are not permitted to click on their own ads for any reason. For this reason, we've received many emails from publishers letting us know that they've accidentally clicked on their own ads. If you're one of these publishers, we truly appreciate the efforts you've made to monitor your account and keep it in good standing. However, we do understand that an accidental click may occur from time to time, so there's no need to contact us each instance this occurs.
Because we closely monitor all account activity using engineering systems and thorough human analysis, chances are we've already detected your clicks on your ads and discounted them. While these clicks still show in your reports, we filter out their associated earnings so that advertisers aren't charged. However, please keep in mind that we don't ignore the clicks completely; if it appears to us that a publisher has been clicking on his own ads to inflate his earnings or an advertiser's costs, we may disable the account to protect our advertisers' interests.
If you've been clicking your ads out of interest or to see who was advertising on your site, we strongly recommend using the AdSense preview tool as an alternative. This tool will allow you to check the destination of ads on your page without the risk of generating invalid clicks. You can also find more ways to view the URLs of your Google ads by visiting our Help Center.
Discuss this post
This marks the last post of our ‘Policy Thursdays’ series – we hope you've found the information from the last few weeks useful. Thanks for following along and participating in the AdSense Help Forum discussions!
Posted by Mike Deeringer - AdSense Publisher Support
Because we closely monitor all account activity using engineering systems and thorough human analysis, chances are we've already detected your clicks on your ads and discounted them. While these clicks still show in your reports, we filter out their associated earnings so that advertisers aren't charged. However, please keep in mind that we don't ignore the clicks completely; if it appears to us that a publisher has been clicking on his own ads to inflate his earnings or an advertiser's costs, we may disable the account to protect our advertisers' interests.
If you've been clicking your ads out of interest or to see who was advertising on your site, we strongly recommend using the AdSense preview tool as an alternative. This tool will allow you to check the destination of ads on your page without the risk of generating invalid clicks. You can also find more ways to view the URLs of your Google ads by visiting our Help Center.
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This marks the last post of our ‘Policy Thursdays’ series – we hope you've found the information from the last few weeks useful. Thanks for following along and participating in the AdSense Help Forum discussions!
Posted by Mike Deeringer - AdSense Publisher Support
Clicks for charity?
In this week's 'Policy Thursday' post, we'd like to follow up on one of Mike's previous posts to highlight a more specific example of encouraging clicks that we often receive emails about. Many publishers have asked if they can place text on their sites which states that all or a portion of the earnings generated through AdSense will be donated to charity or another third party.
While we do appreciate your charitable efforts, this practice is not permitted by our program policies. We want users to click on ads because they are interested in the products or services offered by the advertiser, not because they are interested in supporting a site or a charity. Using this type of language can draw undue attention to the ads, and we aren't able to verify whether earnings are actually donated to the third-party mentioned on each site. As a result, we don't allow publishers to offer these types of incentives.
However, please know that once you've received your payments, you're still welcome to use them however you wish - whether it's donating them to a charity, paying your hosting bills, or treating yourself to a night out on the town. We just ask that you avoid using any language on your site that would directly or indirectly encourage users to click on your ads.
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Posted by Arlene Lee - AdSense Publisher Support
While we do appreciate your charitable efforts, this practice is not permitted by our program policies. We want users to click on ads because they are interested in the products or services offered by the advertiser, not because they are interested in supporting a site or a charity. Using this type of language can draw undue attention to the ads, and we aren't able to verify whether earnings are actually donated to the third-party mentioned on each site. As a result, we don't allow publishers to offer these types of incentives.
However, please know that once you've received your payments, you're still welcome to use them however you wish - whether it's donating them to a charity, paying your hosting bills, or treating yourself to a night out on the town. We just ask that you avoid using any language on your site that would directly or indirectly encourage users to click on your ads.
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Posted by Arlene Lee - AdSense Publisher Support
Don't run the risk of click and miss
As you may know, our tips and guidelines mention that "users should only click on Google ads if they're interested in the services being advertised". While there are many precautions a publisher can take to avoid encouraging clicks on their ads, we've found that some implementations of the ad code can lead to accidental clicks that the publisher may not have been able to predict. Some implementations that could lead to accidental clicks include placing your ads:
- In close proximity to Macromedia Flash games
- Under pop-ups or download prompts
- Near site navigation controls on your pages, such as drop-downs or menu links
Generally, we ask that you not place your ads near features of your site that your users may interact with by clicking. If your site contains elements that increase the number of ad clicks without increasing business results for the advertiser, we may consider these clicks to be invalid. "Business results" can range from an online sale to a page view. If we detect enough of these clicks and determine that the risk to our advertisers is too great, we may disable the account. To maintain compliance with our program policies and ensure that your users don't inadvertently click on the ads on your site, we strongly recommend that you move any ad units that are in close proximity to interactive site features.
As always, thanks in advance for your cooperation!
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Posted by Mike Deeringer - AdSense Publisher Support
- In close proximity to Macromedia Flash games
- Under pop-ups or download prompts
- Near site navigation controls on your pages, such as drop-downs or menu links
Generally, we ask that you not place your ads near features of your site that your users may interact with by clicking. If your site contains elements that increase the number of ad clicks without increasing business results for the advertiser, we may consider these clicks to be invalid. "Business results" can range from an online sale to a page view. If we detect enough of these clicks and determine that the risk to our advertisers is too great, we may disable the account. To maintain compliance with our program policies and ensure that your users don't inadvertently click on the ads on your site, we strongly recommend that you move any ad units that are in close proximity to interactive site features.
As always, thanks in advance for your cooperation!
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Posted by Mike Deeringer - AdSense Publisher Support
Encouraging Clicks
Many of you may remember our December post on the placement of images near ads. In that spirit, we'd like to remind you of a general policy issue: encouraging clicks.
As many of you know, our program policies prohibit any means of encouraging users to click on Google ads or bringing excessive attention to ad units. For example, sites may not contain phrases such as "click the ads," "support our sponsors," "visit these recommended links," or other similar language that could apply to the Google ads on your site. In addition, publishers are not permitted to label the Google ads with text other than "sponsored links" or "advertisements."
In light of this policy, you may be wondering if you're allowed to recommend your referral products to your users. As explained in Dan's post from February, unlike with AdSense for content ads, you can endorse your referral products by calling attention to the button or text link. If you believe in the quality of the product that you're referring, feel free to let your users know.
Generally, visitors should only click on Google ads if they're interested in the services being advertised. Encouraging them to click on your Google ads, either directly or indirectly, can lead to inflated advertiser costs -- and can cause an account to be disabled.
If you'd like to improve the performance of your ad units and attract more interested users, check out our Help Center's optimization tips to take full advantage of what AdSense has to offer.
Discuss this post
Posted by Mike Deeringer - AdSense Publisher Support
As many of you know, our program policies prohibit any means of encouraging users to click on Google ads or bringing excessive attention to ad units. For example, sites may not contain phrases such as "click the ads," "support our sponsors," "visit these recommended links," or other similar language that could apply to the Google ads on your site. In addition, publishers are not permitted to label the Google ads with text other than "sponsored links" or "advertisements."
In light of this policy, you may be wondering if you're allowed to recommend your referral products to your users. As explained in Dan's post from February, unlike with AdSense for content ads, you can endorse your referral products by calling attention to the button or text link. If you believe in the quality of the product that you're referring, feel free to let your users know.
Generally, visitors should only click on Google ads if they're interested in the services being advertised. Encouraging them to click on your Google ads, either directly or indirectly, can lead to inflated advertiser costs -- and can cause an account to be disabled.
If you'd like to improve the performance of your ad units and attract more interested users, check out our Help Center's optimization tips to take full advantage of what AdSense has to offer.
Discuss this post
Posted by Mike Deeringer - AdSense Publisher Support
The Difference Between Advertising and Marketing
Word of mouth marketing is a billion dollar industry. It’s also the fastest growing factor in both advertising and marketing.
Many business owners do not know the difference between advertising and marketing often mixing up and confusing the two. Advertising and marketing are individually very important and very different.
If you want your business to have any chance of succeeding it is imperative you thoroughly understand and know how to distinguish them.
The dictionary terms for advertising and marketing will not be described. Even looking up the technical definitions may still leave you confused. Advertising and marketing will be described according to your business and product or service you provide.
Advertising is the means of publicizing yourself through different media. The main purpose of advertising is for branding - namely product or name recognition. There is little psychology or concept behind it.
The demand for Advertising is high and so too is the price. We are now bombarded with so much of it we basically ignore it. Because of its high exposure level, advertising is becoming increasing inefficient.
Once upon a time you could build a business on advertising alone. Today this is virtually impossible. Most small businesses do not have the big money needed to advertise long enough to start getting results.
Marketing on the other hand goes much deeper. It’s the psychology of the entire sales process. Advertising is simply one of the steps or stages in the marketing process.
Marketing is the concept and strategy behind creating your campaign. It involves how you position your business to encourage your consumers to come to you – without having to “sell” to them.
One of the most effective ways to do this is through education. I advise you to use your marketing materials to provide them lots of content to educate your consumers about your service and what it can do to improve their life.
Nobody wants to be sold. Yet people are happy to buy if you give them a list of reasons why. Let your consumers come to their own conclusions instead of commanding or bullying them into coming to you.
Education is a powerful driver in ensuring clients come to you and letting others know about you too. Education is an important factor in word of mouth marketing. And it takes little effort on your part if you take the time to put some thought into your marketing campaign.
Many business owners do not know the difference between advertising and marketing often mixing up and confusing the two. Advertising and marketing are individually very important and very different.
If you want your business to have any chance of succeeding it is imperative you thoroughly understand and know how to distinguish them.
The dictionary terms for advertising and marketing will not be described. Even looking up the technical definitions may still leave you confused. Advertising and marketing will be described according to your business and product or service you provide.
Advertising is the means of publicizing yourself through different media. The main purpose of advertising is for branding - namely product or name recognition. There is little psychology or concept behind it.
The demand for Advertising is high and so too is the price. We are now bombarded with so much of it we basically ignore it. Because of its high exposure level, advertising is becoming increasing inefficient.
Once upon a time you could build a business on advertising alone. Today this is virtually impossible. Most small businesses do not have the big money needed to advertise long enough to start getting results.
Marketing on the other hand goes much deeper. It’s the psychology of the entire sales process. Advertising is simply one of the steps or stages in the marketing process.
Marketing is the concept and strategy behind creating your campaign. It involves how you position your business to encourage your consumers to come to you – without having to “sell” to them.
One of the most effective ways to do this is through education. I advise you to use your marketing materials to provide them lots of content to educate your consumers about your service and what it can do to improve their life.
Nobody wants to be sold. Yet people are happy to buy if you give them a list of reasons why. Let your consumers come to their own conclusions instead of commanding or bullying them into coming to you.
Education is a powerful driver in ensuring clients come to you and letting others know about you too. Education is an important factor in word of mouth marketing. And it takes little effort on your part if you take the time to put some thought into your marketing campaign.
Monday, January 3, 2011
AdSense Policies
What is Google AdSense?
Google AdSense is a free, simple way for website publishers of all sizes to earn money by displaying targeted Google ads on their websites. AdSense also lets you provide Google search to your site users, while earning money by displaying Google ads on the search results pages.
AdSense outlined
- Get paid for displaying targeted Google ads on your site
- Customize ads easily to match your site's look and feel
- Track your success with online reports
- Read how publishers found success with AdSense in our case studies
How does it work?
1.Choose the type and placement of ad units to be displayed
-Specify where you want ads to appear
-Choose what types of ads can compete for those slots
2.Highest-paying ads display
- Advertisers bid on your inventory in a real-time auction
- Always show the highest-paying ad
3.Get paid
- Google bills advertisers and ad networks
-Get paid through our reliable payment options
More features
-Filter competitors’ or unwanted ads
-Choose within a wide variety of ad formats
- Identify opportunities with performance reports and Google Analytics integration
- Read how publishers found success with AdSense in our case studies
If you have a website that complies with our program policies and eligibility criteria, we encourage you to give a try to AdSense.
Google AdSense Program Policies
Publishers participating in the AdSense program are required to adhere to the following policies, so please read them carefully. If you fail to comply with these policies, we reserve the right to disable ad serving to your site and/or disable your AdSense account at any time. If your account is disabled, you will not be eligible for further participation in the AdSense program.
Because we may change our policies at any time, please check here often for updates. Pursuant to our Terms and Conditions, it's your responsibility to keep up to date with, and adhere to, the policies posted here.
How does it work?
1.Choose the type and placement of ad units to be displayed
-Specify where you want ads to appear
-Choose what types of ads can compete for those slots
2.Highest-paying ads display
- Advertisers bid on your inventory in a real-time auction
- Always show the highest-paying ad
3.Get paid
- Google bills advertisers and ad networks
-Get paid through our reliable payment options
More features
-Filter competitors’ or unwanted ads
-Choose within a wide variety of ad formats
- Identify opportunities with performance reports and Google Analytics integration
- Read how publishers found success with AdSense in our case studies
If you have a website that complies with our program policies and eligibility criteria, we encourage you to give a try to AdSense.
Google AdSense Program Policies
Publishers participating in the AdSense program are required to adhere to the following policies, so please read them carefully. If you fail to comply with these policies, we reserve the right to disable ad serving to your site and/or disable your AdSense account at any time. If your account is disabled, you will not be eligible for further participation in the AdSense program.
Because we may change our policies at any time, please check here often for updates. Pursuant to our Terms and Conditions, it's your responsibility to keep up to date with, and adhere to, the policies posted here.
Google AdSense is a free, simple way for website publishers of all sizes to earn money by displaying targeted Google ads on their websites. AdSense also lets you provide Google search to your site users, while earning money by displaying Google ads on the search results pages.
AdSense outlined
- Get paid for displaying targeted Google ads on your site
- Customize ads easily to match your site's look and feel
- Track your success with online reports
- Read how publishers found success with AdSense in our case studies
How does it work?
1.Choose the type and placement of ad units to be displayed
-Specify where you want ads to appear
-Choose what types of ads can compete for those slots
2.Highest-paying ads display
- Advertisers bid on your inventory in a real-time auction
- Always show the highest-paying ad
3.Get paid
- Google bills advertisers and ad networks
-Get paid through our reliable payment options
More features
-Filter competitors’ or unwanted ads
-Choose within a wide variety of ad formats
- Identify opportunities with performance reports and Google Analytics integration
- Read how publishers found success with AdSense in our case studies
If you have a website that complies with our program policies and eligibility criteria, we encourage you to give a try to AdSense.
Google AdSense Program Policies
Publishers participating in the AdSense program are required to adhere to the following policies, so please read them carefully. If you fail to comply with these policies, we reserve the right to disable ad serving to your site and/or disable your AdSense account at any time. If your account is disabled, you will not be eligible for further participation in the AdSense program.
Because we may change our policies at any time, please check here often for updates. Pursuant to our Terms and Conditions, it's your responsibility to keep up to date with, and adhere to, the policies posted here.
How does it work?
1.Choose the type and placement of ad units to be displayed
-Specify where you want ads to appear
-Choose what types of ads can compete for those slots
2.Highest-paying ads display
- Advertisers bid on your inventory in a real-time auction
- Always show the highest-paying ad
3.Get paid
- Google bills advertisers and ad networks
-Get paid through our reliable payment options
More features
-Filter competitors’ or unwanted ads
-Choose within a wide variety of ad formats
- Identify opportunities with performance reports and Google Analytics integration
- Read how publishers found success with AdSense in our case studies
If you have a website that complies with our program policies and eligibility criteria, we encourage you to give a try to AdSense.
Google AdSense Program Policies
Publishers participating in the AdSense program are required to adhere to the following policies, so please read them carefully. If you fail to comply with these policies, we reserve the right to disable ad serving to your site and/or disable your AdSense account at any time. If your account is disabled, you will not be eligible for further participation in the AdSense program.
Because we may change our policies at any time, please check here often for updates. Pursuant to our Terms and Conditions, it's your responsibility to keep up to date with, and adhere to, the policies posted here.
AdSense
AdSense is an ad serving application run by Google Inc. Website owners can enroll in this program to enable text, image, and video advertisements on their websites. These advertisements are administered by Google and generate revenue on either a per-click or per-impression basis. Google beta tested a cost-per-action service, but discontinued it in October 2008 in favor of a DoubleClick offering (also owned by Google). In Q1 2010, Google earned US$2.04 billion ($8.16 billion annualized), or 30% of total revenue, through AdSense.
Google uses its Internet search technology to serve advertisements based on website content, the user's geographical location, and other factors. Those wanting to advertise with Google's targeted advertisement system may enroll through AdWords. AdSense has become a popular method of placing advertising on a website because the advertisements are less intrusive than most banners, and the content of the advertisements is often relevant to the website.
Many websites use AdSense to monetize their content; it is the most popular advertising network. AdSense has been particularly important for delivering advertising revenue to small websites that do not have the resources for developing advertising sales programs and sales people. To fill a website with advertisements that are relevant to the topics discussed, webmasters implement a brief script on the websites' pages. Websites that are content-rich have been very successful with this advertising program, as noted in a number of publisher case studies on the AdSense website.
Some webmasters invest significant effort into maximizing their own AdSense income. They do this in three ways:[citation needed]
Oingo, Inc., a privately held company located in Los Angeles, was started in 1998 by Gilad Elbaz and Adam Weissman. Oingo developed a proprietary search algorithm that was based on word meanings and built upon an underlying lexicon called WordNet, which was developed over the previous 15 years by researchers at Princeton University, led by George Miller.
Oingo changed its name to Applied Semantics (company) in 2001,which was later acquired by Google in April 2003 for US$102 million.
In 2009, Google AdSense announced that it would now be offering new features, including the ability to "enable multiple networks to display ads".
AdSense for Feeds works by inserting images into a feed. When the image is displayed by a RSS reader or Web browser, Google writes the advertising content into the image that it returns. The advertisement content is chosen based on the content of the feed surrounding the image. When the user clicks the image, he or she is redirected to the advertiser's website in the same way as regular AdSense advertisements.
AdSense for Feeds remained in its beta state until August 15, 2008, when it became available to all AdSense users.
AdSense for mobile content
AdSense for mobile content allows publishers to generate earnings from their mobile websites using targeted Google advertisements. Just like AdSense for content, Google matches advertisements to the content of a website — in this case, a mobile website.
AdSense for domains
Adsense for domains allows advertisements to be placed on domain names that have not been developed. This offers domain name owners a way to monetize domain names that are otherwise dormant. Adsense for domains is currently being offered to some users, with plans to make it available to all in stages.
On December 12, 2008, TechCrunch reported that AdSense for Domains is available for all US publishers.
AdSense for video
AdSense for video allows publishers with video content to generate revenue using ad placements from Google's extensive Advertising network including popular Youtube videos.
Source : http://en.wikipedia.org/wiki/Adsense
Google uses its Internet search technology to serve advertisements based on website content, the user's geographical location, and other factors. Those wanting to advertise with Google's targeted advertisement system may enroll through AdWords. AdSense has become a popular method of placing advertising on a website because the advertisements are less intrusive than most banners, and the content of the advertisements is often relevant to the website.
Many websites use AdSense to monetize their content; it is the most popular advertising network. AdSense has been particularly important for delivering advertising revenue to small websites that do not have the resources for developing advertising sales programs and sales people. To fill a website with advertisements that are relevant to the topics discussed, webmasters implement a brief script on the websites' pages. Websites that are content-rich have been very successful with this advertising program, as noted in a number of publisher case studies on the AdSense website.
Some webmasters invest significant effort into maximizing their own AdSense income. They do this in three ways:[citation needed]
- They use a wide range of traffic-generating techniques, including but not limited to online advertising.
- They build valuable content on their websites that attracts AdSense advertisements, which pay out the most when they are clicked.
- They use text content on their websites that encourages visitors to click on advertisements. Note that Google prohibits webmasters from using phrases like "Click on my AdSense ads" to increase click rates. The phrases accepted are "Sponsored Links" and "Advertisements".
Oingo, Inc., a privately held company located in Los Angeles, was started in 1998 by Gilad Elbaz and Adam Weissman. Oingo developed a proprietary search algorithm that was based on word meanings and built upon an underlying lexicon called WordNet, which was developed over the previous 15 years by researchers at Princeton University, led by George Miller.
Oingo changed its name to Applied Semantics (company) in 2001,which was later acquired by Google in April 2003 for US$102 million.
In 2009, Google AdSense announced that it would now be offering new features, including the ability to "enable multiple networks to display ads".
AdSense for Feeds
In May 2005, Google announced a limited-participation beta version of AdSense for Feeds, a version of AdSense that runs on RSS and Atom feeds that have more than 100 active subscribers. According to the Official Google Blog, "advertisers have their ads placed in the most appropriate feed articles; publishers are paid for their original content; readers see relevant advertising—and in the long run, more quality feeds to choose from."
AdSense for Feeds works by inserting images into a feed. When the image is displayed by a RSS reader or Web browser, Google writes the advertising content into the image that it returns. The advertisement content is chosen based on the content of the feed surrounding the image. When the user clicks the image, he or she is redirected to the advertiser's website in the same way as regular AdSense advertisements.
AdSense for Feeds remained in its beta state until August 15, 2008, when it became available to all AdSense users.
AdSense for search
A companion to the regular AdSense program, AdSense for search, allows website owners to place Google search boxes on their websites. When a user searches the Internet or the website with the search box, Google shares 51% of the advertising revenue it makes from those searches with the website owner.[5] However the publisher is paid only if the advertisements on the page are clicked; AdSense does not pay publishers for mere searches.
AdSense for mobile content
AdSense for mobile content allows publishers to generate earnings from their mobile websites using targeted Google advertisements. Just like AdSense for content, Google matches advertisements to the content of a website — in this case, a mobile website.
AdSense for domains
Adsense for domains allows advertisements to be placed on domain names that have not been developed. This offers domain name owners a way to monetize domain names that are otherwise dormant. Adsense for domains is currently being offered to some users, with plans to make it available to all in stages.
On December 12, 2008, TechCrunch reported that AdSense for Domains is available for all US publishers.
AdSense for video
AdSense for video allows publishers with video content to generate revenue using ad placements from Google's extensive Advertising network including popular Youtube videos.
Source : http://en.wikipedia.org/wiki/Adsense
AdWords
AdWords is Google's flagship advertising product and main source of revenue. Google's total advertising revenues were USD$23 billion in 2009 AdWords offers pay-per-click (PPC) advertising, and site-targeted advertising for both text, banner, and rich-media ads. The AdWords program includes local, national, and international distribution. Google's text advertisements are short, consisting of one headline and two additional text lines. Image ads can be one of several different Interactive Advertising Bureau (IAB) standard sizes.
Sales and Support for Google's AdWords division is based in Mountain View, California, with major secondary offices in Ann Arbor, Michigan, the company's third-largest US facility behind its Mountain View, California, headquarters and New York City office. Engineering for AdWords is based in Mountain View, California.
Pay-Per-Click advertisements (PPC)
Advertisers select the words that should trigger their ads and the maximum amount they will pay per click. When a user searches Google's search engine on www.google.com or the relevant local/national google server (e.g. www.google.co.uk for The United Kingdom), ads (also known as creatives by Google) for relevant words are shown as "sponsored links" on the right side of the screen, and sometimes above the main search results. Clickthrough rates (CTR) for the ads are about 8% for the first ad, 5% for the second one, and 2.5% for the third one. Search results can return from 0 to 12 ads.
The ordering of the paid-for listings depends on other advertisers' bids (PPC) and the "quality score" of all ads shown for a given search. The quality score is calculated by historical click-through rates, relevance of an advertiser's ad text and keywords, an advertiser's account history, and other relevance factors as determined by Google. The quality score is also used by Google to set the minimum bids for an advertiser's keywords The minimum bid takes into consideration the quality of the landing page as well, which includes the relevancy and originality of content, navigability, and transparency into the nature of the business Though Google has released a list of full guidelines for sites, the precise formula and meaning of relevance and its definition is in part secret to Google and the parameters used can change dynamically.
The auction mechanism that determines the order of the ads is a generalized second-price auction This is claimed to have the property that the participants do not necessarily fare best when they truthfully reveal any private information asked for by the auction mechanism (in this case, the value of the keyword to them, in the form of a "truthful" bid).
AdWords Features
IP Address Exclusion
In addition to controlling ad placements through methods such as location and language targeting, ad targeting can be refined with Internet Protocol (IP) address exclusion. This feature enables advertisers to specify IP address ranges where they don't want their ads to appear.
Up to 20 IP addresses, or ranges of addresses, can be excluded per campaign. All ads in the campaign are prevented from showing for users with the IP addresses specified.
Location-based exclusion is also offered as a method of narrowing targeted users.[11]
Frequency Capping
Frequency capping limits the number of times ads appear to the same unique user on the Google Content Network. It doesn't apply to the Search Network. If frequency capping is enabled for a campaign, a limit must be specified as to the number of impressions allowed per day, week, or month for an individual user. The cap can be configured to apply to each ad, ad group, or campaign.
Placement targeted advertisements (formerly Site-Targeted Advertisements)
In 2003 Google introduced site-targeted advertising. Using the AdWords control panel, advertisers can enter keywords, domain names, topics, and demographic targeting preferences, and Google places the ads on what they see as relevant sites within their content network. If domain names are targeted, Google also provides a list of related sites for placement. Advertisers may bid on a cost per impression (CPI) or cost per click (CPC) basis for site targeting.
With placement targeting, it is possible for an ad to take up the entire ad block rather than have the ad block split into 2 to 4 ads, resulting in higher visibility for the advertiser.
The minimum cost-per-thousand impressions bid for placement targeted campaigns is 25 cents. There is no minimum CPC bid, however.
AdWords distribution
All AdWords ads are eligible to be shown on www.google.com. Advertisers also have the option of enabling their ads to show on Google's partner networks. The "search network" includes AOL search, Ask.com, and Netscape. Like www.google.com, these search engines show AdWords ads in response to user searches, but do not effect quality score.
The "Google Display Network" (formerly referred to as the "content network") shows AdWords ads on sites that are not search engines. These content network sites are those that use AdSense and DoubleClick, the other side of the Google advertising model. AdSense is used by website owners who wish to make money by displaying ads on their websites. Click through rates on the display network are typically much lower than those on the search network and are therefore ignored when calculating an advertiser's quality score. It has been reported that using both AdSense and AdWords may cause a website to pay Google a commission when the website advertises itself.
Google automatically determines the subject of pages and displays relevant ads based on the advertisers' keyword lists. AdSense publishers may select channels to help direct Google's ad placements on their pages, to increase performance of their ad units. There are many different types of ads that can run across Google's network, including text ads, image ads (banner ads), mobile text ads, and in-page video ads.
Google AdWords' main competitors are Yahoo! Search Marketing and Microsoft adCenter.
AdWords account management
To help clients with the complexity of building and managing AdWords accounts search engine marketing agencies and consultants offer account management as a business service. This has allowed organizations without advertising expertise to reach a global, online audience. Google has started the Google Advertising Professionals program to certify agencies and consultants who have met specific qualifications and passed an exam Google also provides account management software, called AdWords Editor.
Another useful feature is the My Client Centre available to Google Professionals (even if not yet passed the exam or budget parameters) whereby a Google professional has access and a dashboard summary of several accounts and can move between those accounts without logging in to each account.
The Google Adwords Keyword Tool provides a list of related keywords for a specific website or keyword.
Recently, numerous complaints have been filed with the San Jose Better Business Bureau (BBB) regarding treatment small businesses have received from Google Adwords customer service. As a result, the company now has a C- rating with the San Jose BBB.
Click-to-Call
Google Click-to-Call was a service provided by Google which allows users to call advertisers from Google search results pages. Users enter their phone number, Google calls them back and connects to the advertiser. Calling charges are paid by Google. It was discontinued in 2007.. For some time similar click-to-call functionality was available for results in Google Maps. In the Froyo release of Google's operating system, in certain advertisements, there is a very similar functionality, where a user can easily call an advertiser.
History
The original idea was invented by Bill Gross from Idealab who, in turn borrowed the idea from Yellow Pages. Google wanted to buy the idea but a deal could not be reached.[citation needed] Not wanting to give up on this form of advertisement, the company launched its own solution, AdWords in 2000. AdWords followed a model that was significantly similar to Bill Gross' creation which led to legal action between the two parties. Eventually the dispute was settled out of court.[citation needed]
At first AdWords advertisers would pay a monthly amount, and Google would then set up and manage their campaign. To accommodate small businesses and those who wanted to manage their own campaigns, Google soon introduced the AdWords self-service portal. Starting in 2005 Google provided a campaign management service called Jumpstarto assist advertisers in setting up their campaigns. However, this service is no longer available, so companies needing assistance must hire a third-party service provider.
In 2005, Google launched the Google Advertising Professional (GAP) Program to certify individuals and companies who completed AdWords training and passed an exam. Due to the complexity of AdWords and the amount of money at stake, some advertisers hire a consultant to manage their campaigns.
In 2008, Google launched the Google Online Marketing Challenge (http://www.google.com/onlinechallenge/), an in-class academic exercise for tertiary students. Over 8,000 students from 47 countries participated in the 2008 Challenge and over 10,000 students from 58 countries took part in 2009. The Challenge runs annually, roughly from January to June. Registration is at the instructor rather than student level.
In 2009, Google revised the AdWords interface, introduced Local Business Ads for Google Maps and Video Ads.
Legal context
AdWords has generated lawsuits in the area of trademark law (see Google, Inc. v. Am. Blind & Wallpaper Factory and Rescuecom Corp. v. Google, Inc.), fraud (see Goddard v. Google, Inc.), and click fraud. In 2006, Google settled a click fraud lawsuit for US$90 million
Overture Services, Inc. sued Google for patent infringement in April 2002 in relation to the AdWords service. Following Yahoo!'s acquisition of Overture, the suit was settled in 2004 with Google agreeing to issue 2.7 million shares of common stock to Yahoo! in exchange for a perpetual license under the patent
Technology
The AdWords system was initially implemented on top of the MySQL database engine. After the system had been launched, management decided to use a commercial database (Oracle) instead. The system became much slower, so eventually it was returned to MySQL The interface has also been revamped to offer better work flow with additional new features, such as Spreadsheet Editing, Search Query Reports, and better conversion metrics.
As of April 2008 Google AdWords no longer allows for the display URL to deviate from that of the destination URL. Prior to its introduction, Google paid advertisements could feature different landing page URLs to that of what was being displayed on the search network. Google expounds that the policy change stems from both user and advertiser feedback. The concern prompting the restriction change is believed to be the premise on which users clicked advertisements. Users were in some cases, being misled and further targeted by AdWords advertisers.
Google has other restrictions, for example the advertising of a book by Aaron Greenspan called Authoritas: One Student's Harvard Admissions and the Founding of the Facebook Era, was restricted from advertising on AdWords because it contained the word Facebook in it. Google's rationale was that it was prohibited from advertising a book which used a trademarked name in its title.
Allowed keywords
Google has also come under fire for allowing AdWords advertisers to bid on trademarked keywords. In 2004, Google started allowing advertisers to bid on a wide variety of search terms in the US and Canada, including the trademarks of their competitors in May 2008 expanded this policy to the UK and Ireland. Advertisers are restricted from using other companies' trademarks in their advertisement text if the trademark has been registered with Advertising Legal Support team. Google does, however, require certification to run regulated keywords, such as those related to pharmaceuticals keywords, and some keywords, such as those related to hacking, are not allowed at all. These restrictions may vary by location.From June 2007, Google banned AdWords adverts for student essay writing services, a move which was welcomed by universities.
sumber : http://en.wikipedia.org
Sales and Support for Google's AdWords division is based in Mountain View, California, with major secondary offices in Ann Arbor, Michigan, the company's third-largest US facility behind its Mountain View, California, headquarters and New York City office. Engineering for AdWords is based in Mountain View, California.
Pay-Per-Click advertisements (PPC)
Advertisers select the words that should trigger their ads and the maximum amount they will pay per click. When a user searches Google's search engine on www.google.com or the relevant local/national google server (e.g. www.google.co.uk for The United Kingdom), ads (also known as creatives by Google) for relevant words are shown as "sponsored links" on the right side of the screen, and sometimes above the main search results. Clickthrough rates (CTR) for the ads are about 8% for the first ad, 5% for the second one, and 2.5% for the third one. Search results can return from 0 to 12 ads.
The ordering of the paid-for listings depends on other advertisers' bids (PPC) and the "quality score" of all ads shown for a given search. The quality score is calculated by historical click-through rates, relevance of an advertiser's ad text and keywords, an advertiser's account history, and other relevance factors as determined by Google. The quality score is also used by Google to set the minimum bids for an advertiser's keywords The minimum bid takes into consideration the quality of the landing page as well, which includes the relevancy and originality of content, navigability, and transparency into the nature of the business Though Google has released a list of full guidelines for sites, the precise formula and meaning of relevance and its definition is in part secret to Google and the parameters used can change dynamically.
The auction mechanism that determines the order of the ads is a generalized second-price auction This is claimed to have the property that the participants do not necessarily fare best when they truthfully reveal any private information asked for by the auction mechanism (in this case, the value of the keyword to them, in the form of a "truthful" bid).
AdWords Features
IP Address Exclusion
In addition to controlling ad placements through methods such as location and language targeting, ad targeting can be refined with Internet Protocol (IP) address exclusion. This feature enables advertisers to specify IP address ranges where they don't want their ads to appear.
Up to 20 IP addresses, or ranges of addresses, can be excluded per campaign. All ads in the campaign are prevented from showing for users with the IP addresses specified.
Location-based exclusion is also offered as a method of narrowing targeted users.[11]
Frequency Capping
Frequency capping limits the number of times ads appear to the same unique user on the Google Content Network. It doesn't apply to the Search Network. If frequency capping is enabled for a campaign, a limit must be specified as to the number of impressions allowed per day, week, or month for an individual user. The cap can be configured to apply to each ad, ad group, or campaign.
Placement targeted advertisements (formerly Site-Targeted Advertisements)
In 2003 Google introduced site-targeted advertising. Using the AdWords control panel, advertisers can enter keywords, domain names, topics, and demographic targeting preferences, and Google places the ads on what they see as relevant sites within their content network. If domain names are targeted, Google also provides a list of related sites for placement. Advertisers may bid on a cost per impression (CPI) or cost per click (CPC) basis for site targeting.
With placement targeting, it is possible for an ad to take up the entire ad block rather than have the ad block split into 2 to 4 ads, resulting in higher visibility for the advertiser.
The minimum cost-per-thousand impressions bid for placement targeted campaigns is 25 cents. There is no minimum CPC bid, however.
AdWords distribution
All AdWords ads are eligible to be shown on www.google.com. Advertisers also have the option of enabling their ads to show on Google's partner networks. The "search network" includes AOL search, Ask.com, and Netscape. Like www.google.com, these search engines show AdWords ads in response to user searches, but do not effect quality score.
The "Google Display Network" (formerly referred to as the "content network") shows AdWords ads on sites that are not search engines. These content network sites are those that use AdSense and DoubleClick, the other side of the Google advertising model. AdSense is used by website owners who wish to make money by displaying ads on their websites. Click through rates on the display network are typically much lower than those on the search network and are therefore ignored when calculating an advertiser's quality score. It has been reported that using both AdSense and AdWords may cause a website to pay Google a commission when the website advertises itself.
Google automatically determines the subject of pages and displays relevant ads based on the advertisers' keyword lists. AdSense publishers may select channels to help direct Google's ad placements on their pages, to increase performance of their ad units. There are many different types of ads that can run across Google's network, including text ads, image ads (banner ads), mobile text ads, and in-page video ads.
Google AdWords' main competitors are Yahoo! Search Marketing and Microsoft adCenter.
AdWords account management
To help clients with the complexity of building and managing AdWords accounts search engine marketing agencies and consultants offer account management as a business service. This has allowed organizations without advertising expertise to reach a global, online audience. Google has started the Google Advertising Professionals program to certify agencies and consultants who have met specific qualifications and passed an exam Google also provides account management software, called AdWords Editor.
Another useful feature is the My Client Centre available to Google Professionals (even if not yet passed the exam or budget parameters) whereby a Google professional has access and a dashboard summary of several accounts and can move between those accounts without logging in to each account.
The Google Adwords Keyword Tool provides a list of related keywords for a specific website or keyword.
Recently, numerous complaints have been filed with the San Jose Better Business Bureau (BBB) regarding treatment small businesses have received from Google Adwords customer service. As a result, the company now has a C- rating with the San Jose BBB.
Click-to-Call
Google Click-to-Call was a service provided by Google which allows users to call advertisers from Google search results pages. Users enter their phone number, Google calls them back and connects to the advertiser. Calling charges are paid by Google. It was discontinued in 2007.. For some time similar click-to-call functionality was available for results in Google Maps. In the Froyo release of Google's operating system, in certain advertisements, there is a very similar functionality, where a user can easily call an advertiser.
History
The original idea was invented by Bill Gross from Idealab who, in turn borrowed the idea from Yellow Pages. Google wanted to buy the idea but a deal could not be reached.[citation needed] Not wanting to give up on this form of advertisement, the company launched its own solution, AdWords in 2000. AdWords followed a model that was significantly similar to Bill Gross' creation which led to legal action between the two parties. Eventually the dispute was settled out of court.[citation needed]
At first AdWords advertisers would pay a monthly amount, and Google would then set up and manage their campaign. To accommodate small businesses and those who wanted to manage their own campaigns, Google soon introduced the AdWords self-service portal. Starting in 2005 Google provided a campaign management service called Jumpstarto assist advertisers in setting up their campaigns. However, this service is no longer available, so companies needing assistance must hire a third-party service provider.
In 2005, Google launched the Google Advertising Professional (GAP) Program to certify individuals and companies who completed AdWords training and passed an exam. Due to the complexity of AdWords and the amount of money at stake, some advertisers hire a consultant to manage their campaigns.
In 2008, Google launched the Google Online Marketing Challenge (http://www.google.com/onlinechallenge/), an in-class academic exercise for tertiary students. Over 8,000 students from 47 countries participated in the 2008 Challenge and over 10,000 students from 58 countries took part in 2009. The Challenge runs annually, roughly from January to June. Registration is at the instructor rather than student level.
In 2009, Google revised the AdWords interface, introduced Local Business Ads for Google Maps and Video Ads.
Legal context
AdWords has generated lawsuits in the area of trademark law (see Google, Inc. v. Am. Blind & Wallpaper Factory and Rescuecom Corp. v. Google, Inc.), fraud (see Goddard v. Google, Inc.), and click fraud. In 2006, Google settled a click fraud lawsuit for US$90 million
Overture Services, Inc. sued Google for patent infringement in April 2002 in relation to the AdWords service. Following Yahoo!'s acquisition of Overture, the suit was settled in 2004 with Google agreeing to issue 2.7 million shares of common stock to Yahoo! in exchange for a perpetual license under the patent
Technology
The AdWords system was initially implemented on top of the MySQL database engine. After the system had been launched, management decided to use a commercial database (Oracle) instead. The system became much slower, so eventually it was returned to MySQL The interface has also been revamped to offer better work flow with additional new features, such as Spreadsheet Editing, Search Query Reports, and better conversion metrics.
As of April 2008 Google AdWords no longer allows for the display URL to deviate from that of the destination URL. Prior to its introduction, Google paid advertisements could feature different landing page URLs to that of what was being displayed on the search network. Google expounds that the policy change stems from both user and advertiser feedback. The concern prompting the restriction change is believed to be the premise on which users clicked advertisements. Users were in some cases, being misled and further targeted by AdWords advertisers.
Google has other restrictions, for example the advertising of a book by Aaron Greenspan called Authoritas: One Student's Harvard Admissions and the Founding of the Facebook Era, was restricted from advertising on AdWords because it contained the word Facebook in it. Google's rationale was that it was prohibited from advertising a book which used a trademarked name in its title.
Allowed keywords
Google has also come under fire for allowing AdWords advertisers to bid on trademarked keywords. In 2004, Google started allowing advertisers to bid on a wide variety of search terms in the US and Canada, including the trademarks of their competitors in May 2008 expanded this policy to the UK and Ireland. Advertisers are restricted from using other companies' trademarks in their advertisement text if the trademark has been registered with Advertising Legal Support team. Google does, however, require certification to run regulated keywords, such as those related to pharmaceuticals keywords, and some keywords, such as those related to hacking, are not allowed at all. These restrictions may vary by location.From June 2007, Google banned AdWords adverts for student essay writing services, a move which was welcomed by universities.
sumber : http://en.wikipedia.org
Online Advertising
Online advertising is a form of promotion that uses the Internet and World Wide Web for the expressed purpose of delivering marketing messages to attract customers. Examples of online advertising include contextual ads on search engine results pages, banner ads, Rich Media Ads, Social network advertising, interstitial ads, online classified advertising, advertising networks and e-mail marketing, including e-mail spam.
Competitive advantage over traditional advertising
One major benefit of online advertising is the immediate publishing of information and content that is not limited by geography or time. To that end, the emerging area of interactive advertising presents fresh challenges for advertisers who have hitherto adopted an interruptive strategy.
Another benefit is the efficiency of advertiser's investment. Online advertising allows for the customization of advertisements, including content and posted websites. For example, AdWords, Yahoo! Search Marketing and Google AdSense enable ads to be shown on relevant web pages or alongside search results of related keywords.
Revenue models
The three most common ways in which online advertising is purchased are CPM, CPC, and CPA.
* CPM (Cost Per Mille), also called "Cost Per Thousand (CPT), is where advertisers pay for exposure of their message to a specific audience. "Per mille" means per thousand impressions, or loads of an advertisement. However, some impressions may not be counted, such as a reload or internal user action.
* CPV (Cost Per Visitor) is where advertisers pay for the delivery of a Targeted Visitor to the advertisers website.
* CPV (Cost Per View) is when an advertiser pays for each unique user view of an advertisement or website (usually used with pop-ups, pop-unders and interstitial ads).
* CPC (Cost Per Click) is also known as Pay per click (PPC). Advertisers pay each time a user clicks on their listing and is redirected to their website. They do not actually pay for the listing, but only when the listing is clicked on. This system allows advertising specialists to refine searches and gain information about their market. Under the Pay per click pricing system, advertisers pay for the right to be listed under a series of target rich words that direct relevant traffic to their website, and pay only when someone clicks on their listing which links directly to their website. CPC differs from CPV in that each click is paid for regardless of whether the user makes it to the target site.
* CPA (Cost Per Action) or (Cost Per Acquisition) advertising is performance based and is common in the affiliate marketing sector of the business. In this payment scheme, the publisher takes all the risk of running the ad, and the advertiser pays only for the amount of users who complete a transaction, such as a purchase or sign-up. This is the best type of rate to pay for banner advertisements and the worst type of rate to charge.
o Similarly, CPL (Cost Per Lead) advertising is identical to CPA advertising and is based on the user completing a form, registering for a newsletter or some other action that the merchant feels will lead to a sale.
o Also common, CPO (Cost Per Order) advertising is based on each time an order is transacted.
o CPE (Cost Per Engagement) is a form of Cost Per Action pricing first introduced in March 2008. Differing from cost-per-impression or cost-per-click models, a CPE model means advertising impressions are free and advertisers pay only when a user engages with their specific ad unit. Engagement is defined as a user interacting with an ad in any number of ways.[1]
* Cost per conversion Describes the cost of acquiring a customer, typically calculated by dividing the total cost of an ad campaign by the number of conversions. The definition of "Conversion" varies depending on the situation: it is sometimes considered to be a lead, a sale, or a purchase.
Source : http://en.wikipedia.org/wiki/Online_advertising
Competitive advantage over traditional advertising
One major benefit of online advertising is the immediate publishing of information and content that is not limited by geography or time. To that end, the emerging area of interactive advertising presents fresh challenges for advertisers who have hitherto adopted an interruptive strategy.
Another benefit is the efficiency of advertiser's investment. Online advertising allows for the customization of advertisements, including content and posted websites. For example, AdWords, Yahoo! Search Marketing and Google AdSense enable ads to be shown on relevant web pages or alongside search results of related keywords.
Revenue models
The three most common ways in which online advertising is purchased are CPM, CPC, and CPA.
* CPM (Cost Per Mille), also called "Cost Per Thousand (CPT), is where advertisers pay for exposure of their message to a specific audience. "Per mille" means per thousand impressions, or loads of an advertisement. However, some impressions may not be counted, such as a reload or internal user action.
* CPV (Cost Per Visitor) is where advertisers pay for the delivery of a Targeted Visitor to the advertisers website.
* CPV (Cost Per View) is when an advertiser pays for each unique user view of an advertisement or website (usually used with pop-ups, pop-unders and interstitial ads).
* CPC (Cost Per Click) is also known as Pay per click (PPC). Advertisers pay each time a user clicks on their listing and is redirected to their website. They do not actually pay for the listing, but only when the listing is clicked on. This system allows advertising specialists to refine searches and gain information about their market. Under the Pay per click pricing system, advertisers pay for the right to be listed under a series of target rich words that direct relevant traffic to their website, and pay only when someone clicks on their listing which links directly to their website. CPC differs from CPV in that each click is paid for regardless of whether the user makes it to the target site.
* CPA (Cost Per Action) or (Cost Per Acquisition) advertising is performance based and is common in the affiliate marketing sector of the business. In this payment scheme, the publisher takes all the risk of running the ad, and the advertiser pays only for the amount of users who complete a transaction, such as a purchase or sign-up. This is the best type of rate to pay for banner advertisements and the worst type of rate to charge.
o Similarly, CPL (Cost Per Lead) advertising is identical to CPA advertising and is based on the user completing a form, registering for a newsletter or some other action that the merchant feels will lead to a sale.
o Also common, CPO (Cost Per Order) advertising is based on each time an order is transacted.
o CPE (Cost Per Engagement) is a form of Cost Per Action pricing first introduced in March 2008. Differing from cost-per-impression or cost-per-click models, a CPE model means advertising impressions are free and advertisers pay only when a user engages with their specific ad unit. Engagement is defined as a user interacting with an ad in any number of ways.[1]
* Cost per conversion Describes the cost of acquiring a customer, typically calculated by dividing the total cost of an ad campaign by the number of conversions. The definition of "Conversion" varies depending on the situation: it is sometimes considered to be a lead, a sale, or a purchase.
Source : http://en.wikipedia.org/wiki/Online_advertising
Affiliate Marketing
Affiliate marketing is a marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's own marketing efforts. Examples include rewards sites, where users are rewarded with cash or gifts, for the completion of an offer, and the referral of others to the site. The industry has four core players: the merchant (also known as 'retailer' or 'brand'), the network, the publisher (also known as 'the affiliate'), and the customer. The market has grown in complexity to warrant a secondary tier of players, including affiliate management agencies, super-affiliates and specialized third parties vendors.
Affiliate marketing overlaps with other Internet marketing methods to some degree, because affiliates often use regular advertising methods. Those methods include organic search engine optimization, paid search engine marketing, e-mail marketing, and in some sense display advertising. On the other hand, affiliates sometimes use less orthodox techniques, such as publishing reviews of products or services offered by a partner.
Affiliate marketing—using one website to drive traffic to another—is a form of online marketing, which is frequently overlooked by advertisers. While search engines, e-mail, and website syndication capture much of the attention of online retailers, affiliate marketing carries a much lower profile. Still, affiliates continue to play a significant role in e-retailers' marketing strategies.
Origin
The concept of revenue sharing—paying commission for referred business—predates affiliate marketing and the Internet. The translation of the revenue share principles to mainstream e-commerce happened almost four years after the origination of the World Wide Web in November 1994.[citation needed]
The concept of affiliate marketing on the Internet was conceived of, put into practice and patented by William J. Tobin, the founder of PC Flowers & Gifts. Launched on the Prodigy Network in 1989, PC Flowers & Gifts remained on the service until 1996. By 1993, PC Flowers & Gifts generated sales in excess of $6 million dollars per year on the Prodigy service. In 1989, PC Flowers and Gifts developed the business model of paying a commission on sales to The Prodigy network (Reference-Chicago Tribune-Oct, 4, 1995) (Ref The Sunsentinal 1991 and www.dankawaski.com). Mr. Tobin applied for a patent on tracking and affiliate marketing on January 22, 1996 and was issued U.S. Patent number 6,141,666 on Oct 31, 2000. Mr. Tobin also received Japanese Patent number 4021941 on Oct 5, 2007 and U.S. Patent number 7,505,913 on Mar 17, 2009 for affiliate marketing and tracking (Reference-Business Wire-Jan, 24, 2000).
Cybererotica was among the early innovators in affiliate marketing with a cost per click program.
During November 1994, CDNOW launched its BuyWeb program. CDNOW had the idea that music-oriented websites could review or list albums on their pages that their visitors may be interested in purchasing. These websites could also offer a link that would take the visitor directly to CDNOW to purchase the albums. The idea for remote purchasing originally arose because of conversations with music label Geffen Records in the fall of 1994. The management at Geffen wanted to sell its artists' CDs directly from its website, but did not want to implement this capability itself. Geffen asked CDNOW if it could design a program where CDNOW would handle the order fulfillment. Geffen realized that CDNOW could link directly from the artist on its website to Geffen's website, bypassing the CDNOW home page and going directly to an artist's music page.
Amazon.com (Amazon) launched its associate program in July 1996: Amazon associates could place banner or text links on their site for individual books, or link directly to the Amazon home page.[citation needed]
When visitors clicked from the associate's website through to Amazon and purchased a book, the associate received a commission. Amazon was not the first merchant to offer an affiliate program, but its program was the first to become widely known and serve as a model for subsequent programs.
In February 2000, Amazon announced that it had been granted a patent on components of an affiliate program. The patent application was submitted in June 1997, which predates most affiliate programs, but not PC Flowers & Gifts.com (October 1994), AutoWeb.com (October 1995), Kbkids.com/BrainPlay.com (January 1996), EPage (April 1996), and several others.
Historic development
Affiliate marketing has grown quickly since its inception. The e-commerce website, viewed as a marketing toy in the early days of the Internet, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. According to one report, the total sales amount generated through affiliate networks in 2006 was £2.16 billion in the United Kingdom alone. The estimates were £1.35 billion in sales in 2005. MarketingSherpa's research team estimated that, in 2006, affiliates worldwide earned US$6.5 billion in bounty and commissions from a variety of sources in retail, personal finance, gaming and gambling, travel, telecom, education, publishing, and forms of lead generation other than contextual advertising programs.
Currently the most active sectors for affiliate marketing are the adult, gambling, retail industries and file-sharing services. The three sectors expected to experience the greatest growth are the mobile phone, finance, and travel sectors. Soon after these sectors came the entertainment (particularly gaming) and Internet-related services (particularly broadband) sectors. Also several of the affiliate solution providers expect to see increased interest from business-to-business marketers and advertisers in using affiliate marketing as part of their mix.
Source : http://en.wikipedia.org/wiki/Affiliate_marketing
Affiliate marketing overlaps with other Internet marketing methods to some degree, because affiliates often use regular advertising methods. Those methods include organic search engine optimization, paid search engine marketing, e-mail marketing, and in some sense display advertising. On the other hand, affiliates sometimes use less orthodox techniques, such as publishing reviews of products or services offered by a partner.
Affiliate marketing—using one website to drive traffic to another—is a form of online marketing, which is frequently overlooked by advertisers. While search engines, e-mail, and website syndication capture much of the attention of online retailers, affiliate marketing carries a much lower profile. Still, affiliates continue to play a significant role in e-retailers' marketing strategies.
Origin
The concept of revenue sharing—paying commission for referred business—predates affiliate marketing and the Internet. The translation of the revenue share principles to mainstream e-commerce happened almost four years after the origination of the World Wide Web in November 1994.[citation needed]
The concept of affiliate marketing on the Internet was conceived of, put into practice and patented by William J. Tobin, the founder of PC Flowers & Gifts. Launched on the Prodigy Network in 1989, PC Flowers & Gifts remained on the service until 1996. By 1993, PC Flowers & Gifts generated sales in excess of $6 million dollars per year on the Prodigy service. In 1989, PC Flowers and Gifts developed the business model of paying a commission on sales to The Prodigy network (Reference-Chicago Tribune-Oct, 4, 1995) (Ref The Sunsentinal 1991 and www.dankawaski.com). Mr. Tobin applied for a patent on tracking and affiliate marketing on January 22, 1996 and was issued U.S. Patent number 6,141,666 on Oct 31, 2000. Mr. Tobin also received Japanese Patent number 4021941 on Oct 5, 2007 and U.S. Patent number 7,505,913 on Mar 17, 2009 for affiliate marketing and tracking (Reference-Business Wire-Jan, 24, 2000).
Cybererotica was among the early innovators in affiliate marketing with a cost per click program.
During November 1994, CDNOW launched its BuyWeb program. CDNOW had the idea that music-oriented websites could review or list albums on their pages that their visitors may be interested in purchasing. These websites could also offer a link that would take the visitor directly to CDNOW to purchase the albums. The idea for remote purchasing originally arose because of conversations with music label Geffen Records in the fall of 1994. The management at Geffen wanted to sell its artists' CDs directly from its website, but did not want to implement this capability itself. Geffen asked CDNOW if it could design a program where CDNOW would handle the order fulfillment. Geffen realized that CDNOW could link directly from the artist on its website to Geffen's website, bypassing the CDNOW home page and going directly to an artist's music page.
Amazon.com (Amazon) launched its associate program in July 1996: Amazon associates could place banner or text links on their site for individual books, or link directly to the Amazon home page.[citation needed]
When visitors clicked from the associate's website through to Amazon and purchased a book, the associate received a commission. Amazon was not the first merchant to offer an affiliate program, but its program was the first to become widely known and serve as a model for subsequent programs.
In February 2000, Amazon announced that it had been granted a patent on components of an affiliate program. The patent application was submitted in June 1997, which predates most affiliate programs, but not PC Flowers & Gifts.com (October 1994), AutoWeb.com (October 1995), Kbkids.com/BrainPlay.com (January 1996), EPage (April 1996), and several others.
Historic development
Affiliate marketing has grown quickly since its inception. The e-commerce website, viewed as a marketing toy in the early days of the Internet, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. According to one report, the total sales amount generated through affiliate networks in 2006 was £2.16 billion in the United Kingdom alone. The estimates were £1.35 billion in sales in 2005. MarketingSherpa's research team estimated that, in 2006, affiliates worldwide earned US$6.5 billion in bounty and commissions from a variety of sources in retail, personal finance, gaming and gambling, travel, telecom, education, publishing, and forms of lead generation other than contextual advertising programs.
Currently the most active sectors for affiliate marketing are the adult, gambling, retail industries and file-sharing services. The three sectors expected to experience the greatest growth are the mobile phone, finance, and travel sectors. Soon after these sectors came the entertainment (particularly gaming) and Internet-related services (particularly broadband) sectors. Also several of the affiliate solution providers expect to see increased interest from business-to-business marketers and advertisers in using affiliate marketing as part of their mix.
Source : http://en.wikipedia.org/wiki/Affiliate_marketing
Ad Serving
Ad serving describes the technology and service that places advertisements on web sites. Ad serving technology companies provide software to web sites and advertisers to serve ads, count them, choose the ads that will make the website or advertiser most money, and monitor progress of different advertising campaigns.
Overview
An ad server is a computer server, specifically a web server, that stores advertisements used in online marketing and delivers them to website visitors.
The content of the webserver is constantly updated so that the website or webpage on which the ads are displayed contains new advertisements -- e.g., banners (static images/animations) or text -- when the site or page is visited or refreshed by a user.
In addition, the ad server also performs various other tasks like counting the number of impressions/clicks for an ad campaign and report generation, which helps in determining the ROI for an advertiser on a particular website.[citation needed]
Ad servers come in two flavors: local ad servers and third-party or remote ad servers. Local ad servers are typically run by a single publisher and serve ads to that publisher's domains, allowing fine-grained creative, formatting, and content control by that publisher. Remote ad servers can serve ads across domains owned by multiple publishers. They deliver the ads from one central source so that advertisers and publishers can track the distribution of their online advertisements, and have one location for controlling the rotation and distribution of their advertisements across the web.
Overview
An ad server is a computer server, specifically a web server, that stores advertisements used in online marketing and delivers them to website visitors.
The content of the webserver is constantly updated so that the website or webpage on which the ads are displayed contains new advertisements -- e.g., banners (static images/animations) or text -- when the site or page is visited or refreshed by a user.
In addition, the ad server also performs various other tasks like counting the number of impressions/clicks for an ad campaign and report generation, which helps in determining the ROI for an advertiser on a particular website.[citation needed]
Ad servers come in two flavors: local ad servers and third-party or remote ad servers. Local ad servers are typically run by a single publisher and serve ads to that publisher's domains, allowing fine-grained creative, formatting, and content control by that publisher. Remote ad servers can serve ads across domains owned by multiple publishers. They deliver the ads from one central source so that advertisers and publishers can track the distribution of their online advertisements, and have one location for controlling the rotation and distribution of their advertisements across the web.
Advertising
A Coca-Cola advertisement from the 1890s
Advertising is a form of communication intended to persuade an audience (viewers, readers or listeners) to purchase or take some action upon products, ideals, or services. It includes the name of a product or service and how that product or service could benefit the consumer, to persuade a target market to purchase or to consume that particular brand. These brands are usually paid for or identified through sponsors and viewed via various media. Advertising can also serve to communicate an idea to a large number of people in an attempt to convince them to take a certain action.
Commercial advertisers often seek to generate increased consumption of their products or services through branding, which involves the repetition of an image or product name in an effort to associate related qualities with the brand in the minds of consumers. Non-commercial advertisers that spend money to advertise items other than a consumer product or service include political parties, interest groups, religious organizations and governmental agencies. Nonprofit organizations may rely on free modes of persuasion, such as a public service announcement.
Advertising is a form of communication intended to persuade an audience (viewers, readers or listeners) to purchase or take some action upon products, ideals, or services. It includes the name of a product or service and how that product or service could benefit the consumer, to persuade a target market to purchase or to consume that particular brand. These brands are usually paid for or identified through sponsors and viewed via various media. Advertising can also serve to communicate an idea to a large number of people in an attempt to convince them to take a certain action.
Commercial advertisers often seek to generate increased consumption of their products or services through branding, which involves the repetition of an image or product name in an effort to associate related qualities with the brand in the minds of consumers. Non-commercial advertisers that spend money to advertise items other than a consumer product or service include political parties, interest groups, religious organizations and governmental agencies. Nonprofit organizations may rely on free modes of persuasion, such as a public service announcement.
Paypal
PayPal performs payment processing for online vendors, auction sites, and other commercial users, for which it charges a fee. It sometimes also charges a transaction fee for receiving money (a percentage of the amount sent plus an additional fixed amount). The fees charged depend on the currency used, the payment option used, the country of the sender, the country of the recipient, the amount sent and the recipient's account type.In addition, eBay purchases made by credit card through PayPal may incur a "foreign transaction fee" if the seller is located in another country, as credit card issuers are automatically informed of the seller's country of origin.
On October 3, 2002, PayPal became a wholly owned subsidiary of eBay. Its corporate headquarters are in San Jose, California, United States at eBay's North First Street satellite office campus. The company also has significant operations in Omaha, Nebraska; Scottsdale, Arizona; and Austin, Texas in the U.S., Chennai, Dublin, Berlin and Tel-Aviv. As of July 2007, across Europe, PayPal also operates as a Luxembourg-based bank.
On March 17, 2010, PayPal entered into an agreement with China UnionPay (CUP), China's bankcard association, to allow Chinese consumers to use PayPal to shop online.[citation needed] PayPal is planning to expand its workforce in Asia to 2,000 by the end of the year 2010.
On October 3, 2002, PayPal became a wholly owned subsidiary of eBay. Its corporate headquarters are in San Jose, California, United States at eBay's North First Street satellite office campus. The company also has significant operations in Omaha, Nebraska; Scottsdale, Arizona; and Austin, Texas in the U.S., Chennai, Dublin, Berlin and Tel-Aviv. As of July 2007, across Europe, PayPal also operates as a Luxembourg-based bank.
On March 17, 2010, PayPal entered into an agreement with China UnionPay (CUP), China's bankcard association, to allow Chinese consumers to use PayPal to shop online.[citation needed] PayPal is planning to expand its workforce in Asia to 2,000 by the end of the year 2010.
Forex Bank
Forex AB is a Swedish financial services company. The company was started in 1927 as a currency exchange service for travellers, at the Central Station in Stockholm. The owner of Gyllenspet's Barber Shop, according to the legend, discovered that most of his customers were tourists in need of currency for their trips. The owner began keeping the major currencies on hand.
The company was subsequently acquired by Statens Järnvägar (now SJ AB), the Swedish State Railways, which expanded the operations until it was sold off to one of the managers, Rolf Friberg, in 1965. The company was the only one apart from the banks that was licensed to conduct currency exchange in Sweden.
The company was subsequently acquired by Statens Järnvägar (now SJ AB), the Swedish State Railways, which expanded the operations until it was sold off to one of the managers, Rolf Friberg, in 1965. The company was the only one apart from the banks that was licensed to conduct currency exchange in Sweden.
Market Capitalization
Market capitalization/capitalisation (often market cap) is a measurement of size of a business enterprise (corporation) equal to the share price times the number of shares outstanding (shares that have been authorized, issued, and purchased by investors) of a publicly traded company. As owning stock represents ownership of the company, including all its equity, capitalization could represent the public opinion of a company's net worth and is a determining factor in stock valuation. Likewise, the capitalization of stock markets or economic regions may be compared to other economic indicators. The total market capitalization of all publicly traded companies in the world was US$51.2 trillion in January 2007 and rose as high as US$57.5 trillion in May 2008 before dropping below US$50 trillion in August 2008 and slightly above US$40 trillion in September 2008.
Forex Fixing
An exchange rate is the rate at which one currency may be traded (bought or sold) for another currency. Normally it is more expensive to buy another currency than it is to sell that currency. This differential is referred to as the "spread" and the difference between the buy rate and the sell rate is referred to as the "mid rate".
Unlike gold fixing exchange rate fixing or forex fixing does not have a universal method to globally stabilize the exchange rates. Without any central point of reference, it is up to every country to control their own exchange rates with other currencies in what is now a highly volatile and potentially lucrative but dangerously volatile market.
There are various ways that any country can peg its currency to all the other currencies that it may have forex dealings with. Broadly these fall into three regimes:
* Hard Pegs — No separate legal tender; currency bound by arrangement
* Intermediate — From soft pegging through to tightly managed "floats"
* Floating — Freely managed or freely floating against other currencies, driven by supply and demand economics
Exchange rate fixing or the pegging of an individual country's exchange rate is generally done in an attempt to control that country's inflation. But this may have the undesired effect of slowing growth and even curbing the country's productivity. Assistance from the International Monetary Fund (IMF) is often called upon.
Unlike gold fixing exchange rate fixing or forex fixing does not have a universal method to globally stabilize the exchange rates. Without any central point of reference, it is up to every country to control their own exchange rates with other currencies in what is now a highly volatile and potentially lucrative but dangerously volatile market.
There are various ways that any country can peg its currency to all the other currencies that it may have forex dealings with. Broadly these fall into three regimes:
* Hard Pegs — No separate legal tender; currency bound by arrangement
* Intermediate — From soft pegging through to tightly managed "floats"
* Floating — Freely managed or freely floating against other currencies, driven by supply and demand economics
Exchange rate fixing or the pegging of an individual country's exchange rate is generally done in an attempt to control that country's inflation. But this may have the undesired effect of slowing growth and even curbing the country's productivity. Assistance from the International Monetary Fund (IMF) is often called upon.
Marketing Plan
A marketing plan is a written document that details the necessary actions to achieve one or more marketing objectives. It can be for a product or service, a brand, or a product line. Marketing plans cover between one and five years. A marketing plan may be part of an overall business plan. Solid marketing strategy is the foundation of a well-written marketing plan. While a marketing plan contains a list of actions, a marketing plan without a sound strategic foundation is of little use.
Sunday, January 2, 2011
Foreign Exchange Market / Forex
The foreign exchange market (forex, FX, or currency market) is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies.
The primary purpose of the foreign exchange is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import British goods and pay Pound Sterling, even though the business's income is in US dollars. It also supports speculation, and facilitates the carry trade, in which investors borrow low-yielding currencies and lend (invest in) high-yielding currencies, and which (it has been claimed) may lead to loss of competitiveness in some countries.
In a typical foreign exchange transaction, a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market began forming after February 1973, when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.The foreign exchange market is unique because of
* its huge trading volume, leading to high liquidity;
* its geographical dispersion;
* its continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday;
* the variety of factors that affect exchange rates;
* the low margins of relative profit compared with other markets of fixed income; and
* the use of leverage to enhance profit margins with respect to account size.
As such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding market manipulation by central banks.[citation needed] According to the Bank for International Settlements,[3] as of April 2010, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April 2007.
The $3.98 trillion break-down is as follows:
* $1.490 trillion in spot transactions
* $475 billion in outright forwards
* $1.765 trillion in foreign exchange swaps
* $43 billion currency swaps
* $207 billion in options and other products
Market size and liquidity
The foreign exchange market is the largest and most liquid financial market in the world. Traders include large banks, central banks, currency speculators, corporations, governments, and other financial institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Daily turnover was reported to be over US$3.98 trillion in April 2010 by the Bank for International Settlements.
Of the $3.98 trillion daily global turnover, trading in London accounted for around $1.85 trillion, or 36.7% of the total, making London by far the global center for foreign exchange. In second and third places respectively, trading in New York City accounted for 17.9%, and Tokyo accounted for 6.2%. In addition to "traditional" turnover, $2.1 trillion was traded in derivatives.
Exchange-traded FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts.
Several other developed countries also permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts. Most emerging countries do not permit FX derivative products on their exchanges in view of prevalent controls on the capital accounts. However, a few select emerging countries (e.g., Korea, South Africa, India—; ) have already successfully experimented with the currency futures exchanges, despite having some controls on the capital account.
FX futures volume has grown rapidly in recent years, and accounts for about 7% of the total foreign exchange market volume, according to The Wall Street Journal Europe (5/5/06, p. 20).
Top 10 currency traders
% of overall volume, May 2010 Rank Name Market share
1 Germany Deutsche Bank 18.06%
2 Switzerland UBS AG 11.30%
3 United Kingdom Barclays Capital 11.08%
4 United States Citi 7.69%
5 United Kingdom Royal Bank of Scotland 6.50%
6 United States JPMorgan 6.35%
7 United Kingdom HSBC 4.55%
8 Switzerland Credit Suisse 4.44%
9 United States Goldman Sachs 4.28%
10 United States Morgan Stanley 2.91%
Foreign exchange trading increased by over a third in the 12 months to April 2010 and has more than doubled since 2001. This is largely due to the growing importance of foreign exchange as an asset class and an increase in fund management assets, particularly of hedge funds and pension funds. The diverse selection of execution venues have made it easier for retail traders to trade in the foreign exchange market. In 2009, retail traders constituted over 5% of the whole FX market volumes (see retail trading platforms).
Because foreign exchange is an OTC market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house. The biggest geographic trading centre is the UK, primarily London, which according to TheCityUK estimates has increased its share of global turnover in traditional transactions from 34.6% in April 2007 to 36.7% in April 2010. Due to London's dominance in the market, a particular currency's quoted price is usually the London market price. For instance, when the IMF calculates the value of its SDRs every day, they use the London market prices at noon that day.
Market participants
Unlike a stock market, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest commercial banks and securities dealers. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle. The difference between the bid and ask prices widens (from 0-1 pip to 1-2 pips for some currencies such as the EUR). This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the "line" (the amount of money with which they are trading). The top-tier inter-bank market accounts for 53% of all transactions. After that there are usually smaller banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX-metal market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size” Central banks also participate in the foreign exchange market to align currencies to their economic needs.
Banks
The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank's own account. Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for large fees. Today, however, much of this business has moved on to more efficient electronic systems. The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago.
Commercial companies
An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.
Central banks
National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.
Forex Fixing
Forex fixing is the daily monetary exchange rate fixed by the national bank of each country. The idea is that central bank use the fixing time and exchange rate to evaluate behavior of their currency. Fixing exchange rates reflects the real value of equilibrium in the forex market. Banks, dealers and online foreign exchange traders use fixing rates as a trend indicator.
The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank. Several scenarios of this nature were seen in the 1992–93 ERM collapse, and in more recent times in Southeast Asia.
Hedge funds as speculators
About 70% to 90%[citation needed] of the foreign exchange transactions are speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency. Hedge funds have gained a reputation for aggressive currency speculation since 1996. They control billions of dollars of equity and may borrow billions more, and thus may overwhelm intervention by central banks to support almost any currency, if the economic fundamentals are in the hedge funds' favor.
Investment management firms
Investment management firms (who typically manage large accounts on behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.
Some investment management firms also have more speculative specialist currency overlay operations, which manage clients' currency exposures with the aim of generating profits as well as limiting risk. Whilst the number of this type of specialist firms is quite small, many have a large value of assets under management (AUM), and hence can generate large trades.
Retail foreign exchange brokers
Retail traders (individuals) constitute a growing segment of this market, both in size and importance. Currently, they participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated in the USA by the CFTC and NFA have in the past been subjected to periodic foreign exchange scams.[8][9] To deal with the issue, the NFA and CFTC began (as of 2009) imposing stricter requirements, particularly in relation to the amount of Net Capitalization required of its members. As a result many of the smaller, and perhaps questionable brokers are now gone.
There are two main types of retail FX brokers offering the opportunity for speculative currency trading: brokers and dealers or market makers. Brokers serve as an agent of the customer in the broader FX market, by seeking the best price in the market for a retail order and dealing on behalf of the retail customer. They charge a commission or mark-up in addition to the price obtained in the market. Dealers or market makers, by contrast, typically act as principal in the transaction versus the retail customer, and quote a price they are willing to deal at—the customer has the choice whether or not to trade at that price.
In assessing the suitability of an FX trading service, the customer should consider the ramifications of whether the service provider is acting as principal or agent. When the service provider acts as agent, the customer is generally assured of a known cost above the best inter-dealer FX rate. When the service provider acts as principal, no commission is paid, but the price offered may not be the best available in the market—since the service provider is taking the other side of the transaction, a conflict of interest may occur.
Source : http://en.wikipedia.org/wiki/Forex
The primary purpose of the foreign exchange is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import British goods and pay Pound Sterling, even though the business's income is in US dollars. It also supports speculation, and facilitates the carry trade, in which investors borrow low-yielding currencies and lend (invest in) high-yielding currencies, and which (it has been claimed) may lead to loss of competitiveness in some countries.
In a typical foreign exchange transaction, a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market began forming after February 1973, when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.The foreign exchange market is unique because of
* its huge trading volume, leading to high liquidity;
* its geographical dispersion;
* its continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday;
* the variety of factors that affect exchange rates;
* the low margins of relative profit compared with other markets of fixed income; and
* the use of leverage to enhance profit margins with respect to account size.
As such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding market manipulation by central banks.[citation needed] According to the Bank for International Settlements,[3] as of April 2010, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April 2007.
The $3.98 trillion break-down is as follows:
* $1.490 trillion in spot transactions
* $475 billion in outright forwards
* $1.765 trillion in foreign exchange swaps
* $43 billion currency swaps
* $207 billion in options and other products
Market size and liquidity
The foreign exchange market is the largest and most liquid financial market in the world. Traders include large banks, central banks, currency speculators, corporations, governments, and other financial institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Daily turnover was reported to be over US$3.98 trillion in April 2010 by the Bank for International Settlements.
Of the $3.98 trillion daily global turnover, trading in London accounted for around $1.85 trillion, or 36.7% of the total, making London by far the global center for foreign exchange. In second and third places respectively, trading in New York City accounted for 17.9%, and Tokyo accounted for 6.2%. In addition to "traditional" turnover, $2.1 trillion was traded in derivatives.
Exchange-traded FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts.
Several other developed countries also permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts. Most emerging countries do not permit FX derivative products on their exchanges in view of prevalent controls on the capital accounts. However, a few select emerging countries (e.g., Korea, South Africa, India—; ) have already successfully experimented with the currency futures exchanges, despite having some controls on the capital account.
FX futures volume has grown rapidly in recent years, and accounts for about 7% of the total foreign exchange market volume, according to The Wall Street Journal Europe (5/5/06, p. 20).
Top 10 currency traders
% of overall volume, May 2010 Rank Name Market share
1 Germany Deutsche Bank 18.06%
2 Switzerland UBS AG 11.30%
3 United Kingdom Barclays Capital 11.08%
4 United States Citi 7.69%
5 United Kingdom Royal Bank of Scotland 6.50%
6 United States JPMorgan 6.35%
7 United Kingdom HSBC 4.55%
8 Switzerland Credit Suisse 4.44%
9 United States Goldman Sachs 4.28%
10 United States Morgan Stanley 2.91%
Foreign exchange trading increased by over a third in the 12 months to April 2010 and has more than doubled since 2001. This is largely due to the growing importance of foreign exchange as an asset class and an increase in fund management assets, particularly of hedge funds and pension funds. The diverse selection of execution venues have made it easier for retail traders to trade in the foreign exchange market. In 2009, retail traders constituted over 5% of the whole FX market volumes (see retail trading platforms).
Because foreign exchange is an OTC market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house. The biggest geographic trading centre is the UK, primarily London, which according to TheCityUK estimates has increased its share of global turnover in traditional transactions from 34.6% in April 2007 to 36.7% in April 2010. Due to London's dominance in the market, a particular currency's quoted price is usually the London market price. For instance, when the IMF calculates the value of its SDRs every day, they use the London market prices at noon that day.
Market participants
Unlike a stock market, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest commercial banks and securities dealers. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle. The difference between the bid and ask prices widens (from 0-1 pip to 1-2 pips for some currencies such as the EUR). This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the "line" (the amount of money with which they are trading). The top-tier inter-bank market accounts for 53% of all transactions. After that there are usually smaller banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX-metal market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size” Central banks also participate in the foreign exchange market to align currencies to their economic needs.
Banks
The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank's own account. Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for large fees. Today, however, much of this business has moved on to more efficient electronic systems. The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago.
Commercial companies
An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.
Central banks
National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.
Forex Fixing
Forex fixing is the daily monetary exchange rate fixed by the national bank of each country. The idea is that central bank use the fixing time and exchange rate to evaluate behavior of their currency. Fixing exchange rates reflects the real value of equilibrium in the forex market. Banks, dealers and online foreign exchange traders use fixing rates as a trend indicator.
The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank. Several scenarios of this nature were seen in the 1992–93 ERM collapse, and in more recent times in Southeast Asia.
Hedge funds as speculators
About 70% to 90%[citation needed] of the foreign exchange transactions are speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency. Hedge funds have gained a reputation for aggressive currency speculation since 1996. They control billions of dollars of equity and may borrow billions more, and thus may overwhelm intervention by central banks to support almost any currency, if the economic fundamentals are in the hedge funds' favor.
Investment management firms
Investment management firms (who typically manage large accounts on behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.
Some investment management firms also have more speculative specialist currency overlay operations, which manage clients' currency exposures with the aim of generating profits as well as limiting risk. Whilst the number of this type of specialist firms is quite small, many have a large value of assets under management (AUM), and hence can generate large trades.
Retail foreign exchange brokers
Retail traders (individuals) constitute a growing segment of this market, both in size and importance. Currently, they participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated in the USA by the CFTC and NFA have in the past been subjected to periodic foreign exchange scams.[8][9] To deal with the issue, the NFA and CFTC began (as of 2009) imposing stricter requirements, particularly in relation to the amount of Net Capitalization required of its members. As a result many of the smaller, and perhaps questionable brokers are now gone.
There are two main types of retail FX brokers offering the opportunity for speculative currency trading: brokers and dealers or market makers. Brokers serve as an agent of the customer in the broader FX market, by seeking the best price in the market for a retail order and dealing on behalf of the retail customer. They charge a commission or mark-up in addition to the price obtained in the market. Dealers or market makers, by contrast, typically act as principal in the transaction versus the retail customer, and quote a price they are willing to deal at—the customer has the choice whether or not to trade at that price.
In assessing the suitability of an FX trading service, the customer should consider the ramifications of whether the service provider is acting as principal or agent. When the service provider acts as agent, the customer is generally assured of a known cost above the best inter-dealer FX rate. When the service provider acts as principal, no commission is paid, but the price offered may not be the best available in the market—since the service provider is taking the other side of the transaction, a conflict of interest may occur.
Source : http://en.wikipedia.org/wiki/Forex
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