Google’s Chief Business Officer Nikesh Arora, however, indicated at the Dive into Media conference in southern California that the company has no intention of changing course. Arora brushed off a question I posed about whether Google would reinstate the more granular ad options, and emphasized that the new AdWords system meant advertisers would no longer have to run hundreds of different ad campaigns to target all demographics and devices.

The changes to AdWords are important since Google has such an out-sized footprint in online advertising and because everyone is watching how the company is responding to internet users’ large-scale migration to mobile devices. So far, ads on smaller screens have proved much less lucrative than desktop ads — frustrating publishers and worrying Google investors.

Google announced its response last week in the form of a blog post describing the new “Enhanced Campaigns.” The new system means mobile ad purchases will be a default option when people sign up to buy Google AdWords (though they can turn the mobile part off). Another major change is Google’s decision to treat tablets and desktops as the same device for ad purposes. This goes against the philosophy of advertisers and publishers who consider the experience tablet a distinct, more immersive experience (though the distinction may be less when, as here, it concerns internet searching).

Ad industry blogs like 360i and AdExchanger have noted that Google is moving away from more granular forms of marketing while advertisers have complained about a loss of control.

On the flip side, some Google watchers have praised Enhanced Campaigns as a much-needed way to consolidate ad campaigns, and to make it easier for small ad buyers to join the mobile ad-buying landscape. At the All Things D event, Arora described how Google is also making it easier for advertisers to take advantage of distinct, new ad options associated with mobile — such as overlaying time and geographic location onto search queries.

In this context, the simplified options make sense, especially as advertisers right now confront the prospect of having to run hundreds of separate AdWords campaigns to account for all demographics and devices. And the Enhanced Campaigns will no doubt juice Google’s ad prices as more people join the mobile auction market, creating more competition for local searches such as “pizza Brooklyn Park Slope.” 

But overall, the new system still seems to shortchange publishers and advertisers. Tablets provide a unique user experience and could be a fount of advertising innovation; Google’s decision eliminates some of this potential. A better option would have been to unveil the Enhanced Campaign system but to also make the older, more granular options available to those who ask for it.

(Note: We’re going to be talking about alternative monetization strategies at our paidContent Live conference in New York on April 17).

In the past, Gorman would have been out of luck. That’s because, despite the internet’s rapid growth, most small and medium businesses had few viable online ad options beyond Google or Bing. This is changing, however, as upstart ad companies tap into new publishing tools and social media to offer effective online campaigns for as low as $20 a pop.

In Gorman’s case, he laid down $1000 on two such companies, Outbrain and Virurl, and was delighted with the results. While he pays as much as $10 for a customer to click on one of this Google ads, he found he paid 8 cents and 5 cents at the other sites and also earned a surge of traffics.

This may sound too good to be true but, for the growing number of businesses priced out of Google Adwords,  it could be the real deal.

A new type of advertising: how it works

Instead of buying a search keyword like they do with Google Adwords, advertisers like Lawyer.com can pay Outbrain and Virurl to act as distributors for their messages. They supply the message in the form of a link to a piece of content — a picture, a story or a video. Outbrain and Virurl then spray the link across the web via third party publishers and on social media sites like Tumblr and Twitter.

Compared to Google Adwords, the upstart services are remarkable for their simplicity: Outbrain and Virurl provide a website for the advertiser to upload a content link, and to set a budget and duration for the ad campaign. While Outbrain has traditionally worked with publishers to augment and monetize their traffic, it recently added an advertising tool called Amplify for small and medium businesses.  Here are screenshots of how the purchase process looks:

Here’s Outbrain: 

Here’s Virurl: 

The advertiser can use a credit card to get the campaign up and running almost immediately compared to the 5 days that Gorman says it takes for Google to approve content (the delay is important for brands that want to jump on time-sensitive ad opportunities like Big Bird). As for the money, the advertiser’s allocated budget is depleted every time someone clicks on the link; some of the money goes to the publisher who hosts the ad and the rest goes to the distributors — in Gorman’s case, to Outbrain or Virurl. The distributors also share real-time analytics that let the advertiser monitor the campaign.

To be clear, the two would-be Adwords-competitors have different business models. Outbrain is bigger and works primarily with major publishers, including premium ones like CNN and Time, to find augment traffic or to find spots for ad-driven content. Virurl, on the other hand, is aimed at getting ad content to go viral on social networks like Twitter where “influencers” retweet the links and are paid for clicks. But, from a small business perspective, the underlying strategy is the same: find ad content that people want to see and pay to distribute it.

Gorman notes that the young ad companies’ geographic targeting isn’t as good as Google (“you can target down to the lamp post with Google AdWords”) but that they do permit users to choose between US and oversees viewers. He also says they have been forthcoming about fraudulent clicks and will refund money for suspicious traffic.

What it means for businesses: a scramble for quality content

The advent of cheap, easily managed ad campaigns is good news for companies like Lawyer.com. But there is, of course, a catch.To sign up for these distribution networks, a company can’t just show up with 20 bucks — it also needs to have a piece of content that people want to see.

“We spend a lot on screening. We’re pretty fanatical about taking on only quality,” said Outbrain CEO Yaron Galai by phone, explaining that the company rejects half of all would-be clients. He added that advertisers like GE are producing “wonderful content” such as a video interview with the inventor of the LED. Media companies looking to acquire more traffic to meet ad needs are also logical customers for Outbrain.

In the case of Lawyer.com, Gorman said the site produces quality original content that suits Outbrain. But what about other small companies? Galai said small, non-media companies are unlikely to have the capacity to produce quality content and their best bet is to use “earned media” like reviews or press mentions. If they are ambitious, they could of course still try to make Outbrain’s quality cut; a bakery might, for instance, start a cupcake or recipe blog.

Virurl, which was featured at a Paley Media Center’s “Next Big Thing” event, is less finicky about the content it sends out. But the social advertising start-up likewise uses a quality control process to weed out junky ads.

“A human in our Santa Monica office, views the content and either approves or rejects it. We will never drive anyone to a product page or anything that is spammy or a clear ad … The underlying philosophy is that – If the advertiser put enough thought into tapping into human emotion it will likely be approved,” wrote CEO Francisco Diaz-Mitoma in an email message.

The bottom line is that the new ad distributors offer small businesses a low-cost way to get their brands before huge numbers of potential customers — provided they have the ingenuity to make or earn quality content. The people who see the ad content may not have the same “intent-level” as those who click on Google search ads but, for now, the price advantage mean companies like Outbrain and Virurl could one day emerge as viable competitors to Google.

(Image by Monkey Business Images via Shutterstock)

The French claim grows out of a 2010 incident in which Google abruptly terminated the AdWords account of NavX, a company that lets drivers download the location of speed traps, on the grounds the sale of radar detectors appeared to violate French law and Google’s advertising policy.

The case made headlines after the French Competition Authority issued an interim order in June 2010 that required Google to clarify its ad policy and to reinstate NavX’s AdWords account. The regulator closed the case four months later after Google agreed to provide notice before terminating accounts and to provide guidelines about which sort of ads it considered inappropriate.

The NavX ruling, which technically applies only to radar companies, also figured prominently in a French report last December that suggested Google was using its dominant market position to harm other competitors.

The French Competition Authority doesn’t award damages but NavX is hoping to use its findings to bolster its cash claim against Google in commercial court. To this end, the company is trumpeting a new special assessment that purportedly shows how much revenue it lost as a result of being delisted from Google Adwords. By its reckoning, NAVZ is owed 20 million euros for the incident, which caused it to lay off 12 of its staff, plus another 3 million euros in moral damages (about $31 million).

The case is significant because it could provide a window into the value of Google advertising. But more importantly, it will test the waters for Google’s legal exposure in Europe regarding its AdWords practices. The company has so far fought off nearly a dozen lawsuits in the United States, some of them reportedly tied to Microsoft (NSDQ: MSFT), related to various aspects of its lucrative Adwords business. But it not fare so well in Europe.

European courts have repeatedly shown themselves hostile to the US search giant, including a series of Belgian rulings that fined Google for news-related copyright infringement. If NavX prevails in its Paris lawsuit, the case could open the floodgates for a series of similar claims. The lawsuit, which a French business paper predicts will go to trial in January, is based on both breach of contract and antitrust claims.

The case also comes at a time when the European Commission is completing a massive inquiry into Google’s business practices. The French regulator described many of these, including alleged manipulation of search rankings, in its report while also declaring that it would wait to take action on the basis of the EC’s findings.

This week, Google’s chairman, Eric Schmidt, met with top European competition regulators. As the Guardian reports, the company faces large fines and new regulations if the EC concludes it has abused its dominant market position. Google may be in a tight spot given reports of a 400-page “statement of objections” and claims that it committed “multiple and multifaceted abuses.”

Google declined to comment for this story.

The suit, filed last week by a company called San Francisco Comprehensive Tours, alleges the ads Groupon buys through Google’s AdWords program are misleading. S.F. Comprehensive Tours bids on terms like “San Francisco Tours” and “Napa Tours” through Google’s AdWords program, and has been doing so since 2005. Advertisers in AdWords are given the most favorable positions via an “instant auction” process that Google (NSDQ: GOOG) created. And while money counts-as the lawsuit notes-it isn’t the only factor.

The tour company has been participating in AdWords since 2005, and until fall 2010-when Groupon started advertising on its favorite terms-the company’s experience with AdWords was “satisfactory and profitable,” with its ads “consistently displayed in one of the top 3-4 spots.”

The company claims its costs started to skyrocket when Groupon started bidding, though it doesn’t say by how much. The company claims that Groupon is breaking false-advertising laws, because by bidding on terms like “San Francisco Tours” and “Alcatraz Tours” it was implying it had such tours to offer.

Of course, Groupon is a daily-deal service with one local deal per day, and that’s almost always not a tour. Groupon runs ad copy with phrases like: “It’s like San Francisco at 90% off.” The tour company says those ads are effective in getting people to click through even though Groupon isn’t offering tours at 90% off. By getting people to click through frequently, Groupon’s ads are seen as more efficient and effective by Google-which raises the price for good ad placement by other companies, like S.F. Comprehensive Tours, even more.

The lawsuit also notes that some of the URLs in Groupon’s ads simply didn’t work. For example, consumers who typed in “Alcatraz Tours” got a page saying “Oops! That page doesn’t exist.” Of course, it seems like one could file that under “ineffective advertising” rather than “false advertising”-and that seems like a general problem with this lawsuit. For example, is just saying to consumers “Do Napa at 50-90% off” really a specific promise that you will offer them a tour? It seems like Groupon just wants to get the attention of particular shoppers for a moment, like any advertiser would.

In any case, Groupon is growing very rapidly, and if it keeps up its large ad spending, this lawsuit is a reminder that it will be unsettling to the online advertising habits of some established players. Last year, AdAge reported that Groupon’s chief competitor LivingSocial spent $2.3 million on Google advertising in a single month, so it’s certainly possible Groupon is spending that much or more.

We reached out to Groupon for a comment and will update the story if we hear back.

San Francisco Comprehensive Tours v. Groupon