So you must of all heard about AOL’s white label version of Adwords by now, which will allow advertisers to run paid adverts directly with AOL rather than through Google. Search Engine Land had the full scoop.

The announcement has received a really positive response from those in the industry. Allowing advertisers to purchase paid ads directly means a lot of rubbish that comes along with the search network can be avoided. AOL has always subsidised the poor performance (conversion and return) of other search partners that get lumped into the search network.

Allowing advertisers complete control of the CPC on AOL directly will ultimately allow greater control and improved performance which is a positive step.

But there are questions over the impact the private deal might have in the long term. Will advertisers bother going direct with AOL? Is volume high enough? Is it to much hassle to move? How will it effect CPC’s accross AOL with two seperate platforms?

Vinny Lingham in particular looked in significant detail at the impact the private deal might have on the market place and suggests 3 possible outcomes -

1. Google CPC’s will drop as marketers move their spend directly onto AOL and adjust ROI’s according on Google. This will impact Google’s financials, as they will have to pay out a lot more money to AOL.

2. Google CPC’s will increase as dumb money floods the market because marketers are either too lazy or overworked to load AOL campaigns (highly unlikely in the long term) and instead they make it more profitable for Google to show Adwords direct ads for AOL, than AOL marketplace ads. I doubt this would occur though, but it’s a possibility.

3. Google CPC remain unchanged as AOL take-up rates are too low to impact the overall conversion number in the short to medium term.

While the exact impact is hard to predict, interestingly its the effects of the deal that might mean bigger changes to Googles own system. With greater control and transparency offered by AOL directly and the possibility of losing revenue, will Google need to make changes to their own system a bit quicker?

Will the introduction of the white label deal mean Google will have to provide greater control and transparency accross their networks?

Lets take a look at what might eventually come to fruition -

1) Greater transparency accross both content and search networks. Google are currently testing new reports which aim to provide greater visibility accross the content network to start with. They detail performance to individual content domain level. Will the same report be introduced for the search network?

2) Along with greater transparency, will Google provide search partner site exclusion? Google already offer content site exclusion, but currently limit search partner exclusion only to parked domains via an Adwords rep. Will Google be forced to introduce this change quickly with the arrival of the AOL private label system? What many would like to see is a choice of search partners to opt into, rather than out of.

3) Google allows seperate bidding for the content network already. Will we eventually be able to control bidding seperately for the search network? Will Google go a step further and allow complete control of bids per individual partner in the long-term?

While Google has made some positive steps recently, much of the above seems a long way off. Will the AOL deal move some of these features into reality? Or will the AOL private label deals possible revenue loss be far less than the cost and impact of the changes outlined above to Google?!