One of the reasons why Google is so successful at Adwords, and not so successful at Adsense, is that the context in which advertising is placed is extremely important. When people are looking, they also look at ads and click on them if they seem relevant. If someone is reading an interesting news article, it might be less so.
Newspapers have discovered this long back, and classifieds are the most profitable piece of the newspapers’ business (more than display ads, which require an ad/edit ratio).
Would be interesting to identify other contexts in which advertising can be effective… could be a billion dollar problem.
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