circulation"35 is undoubtedly higher. In addition to this specific targeting, respondents to the market investigation noted that online advertising has a unique reporting system that enables the advertiser to check exactly how many users have viewed the ad or clicked on it, moreover allowing a rapid "retargeting" of the ad. Hence the measurement of the effectiveness of online ads can also be more precise compared with the traditional measurement systems used in offline advertising.
The specific pricing mechanism applied to online advertising also distinguishes the two markets: while offline pricing is in general based on "impressions" viewed by a possible number of consumers (and estimated on the basis of general criteria), online advertising is paid on the basis of the number of internet viewers that effectively establish a contact with the ad. As explained in paragraph 15, online advertising pricing is based mainly on two criteria, both derived from the unique relationship established between the internet user and the web page: the "cost per click" and the "cost per impression" criteria. None of the traditional offline media allows for such a precise connection between reach and the cost of the ad.
In its previous Decisions the Commission has also established a distinction between online and offline advertising36.
Further segmentation within the online advertising market
The notifying party also submitted that, if a narrower product market definition was envisaged, that is to say only including the provision of online advertising space, no further distinction should be drawn between the various forms of online advertising. As explained in paragraphs 11 and 13, online ads differ with regard to the way in which they are selected (which leads to a distinction between search and non-search ads) and their visual appearance (text or 'display' ads). Text ads can be search or non-search, whereas display ads are almost exclusively non-search ads.
However, the market investigation has revealed to be rather inconclusive on this point. While there are differentiating factors between search and non-search advertising, the extent to which advertisers would switch from one form of advertising to the other in response to relative price changes remains unclear.
50. From an advertiser's perspective, it has been underlined that search and non- search ads have different effects and serve different purposes. The targeting characteristic constitutes the essential difference influencing the choices of advertisers. As explained in paragraph 12, while for search ads the targeting is based on the user's precisely revealed interests (via the search query), for non- search ads the targeting is connected with a less precise definition of the consumer’s interests, determined by means of criteria such as the context of the
The term has been used by a competitor of Google in its answer to the question regarding the differences between online and offline advertising.
See Commission decision in Case IV/JV.1 – Telia/Telenor/Schibstedt, 27 May 1998, Case IV/M.1439 – Telia/Telenor, 3 October 1999 and Case IV/M.0048 – Vodafone/Vivendi/Canal Plus, 20 July 2000.