Against that, neither Yahoo or Amazon strike me as really competitive. I dont know why, they just seem slack!

Great point! I’m a little ashamed that I failed to think about this in my original post.

A few thoughts: first, even with inferior technology, over time competitors to AdSense can still provide you with a higher eCPM simply by upping the rev share. Granted, if the AdSense algorithm is so far and away superior to their competitors, no amount of additional rev share will make a difference.

But (now on to point #2), I do think that the technology gap between Google and its competitors is constantly narrowing. To wit, while Google natural algorithm is still superior to Yahoo’s, Yahoo has come along way since – say 2001 – when the difference between the two algorithms was enormous.

Moreover, there are companies out there like Quigo that claim to have a much better content matching algorithm than Google (recall that Google did famously serve a Samsonite luggage ad for a news story about someone being murdered, put in some luggage, and stuffed in a car trunk).

So I do think your point is valid today – Google does have the technology lead. It also has the advertiser base and CPC-price lead. Those two factors combined will make it hard for anyone at the moment to consistently compete on an eCPM basis.

I predict, however, that the technology gap will narrow very soon, and the eCPM gap will become eliminated via higher rev shares, continued growth of competitor advertising networks, and the aforementioned improvements in technology.

In the end, I guess the proof is in the pudding. Both you and I currently use AdSense (though for me, we’re talking about $1/week so it’s not exactly putting bread on my table). Everything I am talking about is just plain theory until people like you actually see a financial benefit to trying/switching to an alternative. Let me know if/when this ever happens!

Is there an asymmetry in knowledge about content matching? From the advertising that we do, I’d say that there is. Not all content match networks offer the same CTR, even given the same keywords and the same advert… And this is plausibly down to the sites in the partner network and the quality of match. There’s still a technical race here and Google’s experience and dedication to quality of results for the searcher seem likely to maintain a lead for some time.

Amazon’s strength has been more “Web 2″ – with user contributions, etc. I don’t see much built experience with relevance and content matching – it’s alien to the current successful model. Doesn’t mean it can’t be made to work, just that the team that does this is relatively isolated from much of what made Amazon such a success (AFAICS that is logistics, affiliates and client interaction).

Cheers, JeremyC.