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ConversionRater A discussion of online advertising, web entrepreneurship, and personal ramblings from Pat McCarthy.

Monthly Archives: June 2006

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Performancing Partners Ad Network Heads to Beta

June 30, 2006 1:09 pm / Leave a Comment / Pat McCarthy

Performancing has launched an ad network for blogs called Performancing Partners and they’re taking beta invites now. The details are still not totally clear yet, but Nick Wilson says they will be combining images and text, as well as flat pricing based on a CPM and CPA pricing. In true Performancing style, they’ll also be making the community a big part of the project and inviting advertisers and publishers into the conversations.

I don’t want to knock Performancing because I like what they do and I commend them for helping publishers and working on ways to generate revenue for themselves. However, something that I’ve wanted to comment on for a while is how overwhelming the choices are for publishers right now.

There are a lot of options for generating revenue for a website, which one will be the best? Which ones do you spend your time trying? They all have some unique advertisers, but it’s hard to manage relationships with numerous different networks. Performancing is giving publishers yet another option. Will it work better for their site than Adsense? YPN? BlogAds? Adbrite? Text Link Ads? Valueclick? Right Media?

It sounds like they are adding some unique features and embracing the community is great, but it will need to generate publishers revenue to make it worthwhile. Hopefully that will happen for them.

A strategy that I think would be wise for small/new networks such as this, is to leverage the power of an exchange that has advertisers, publishers, and ad serving technology in place, and build on top of that with your special and unique services and offerings. It’s easier when you already have advertiser or publisher scale, and don’t have to worry about doing things like customizing phpAdsNew or some other ad server.

Either way, Performancing is a great group, and I hope they do well.

Posted in: Ad Networks, Advertising, Blogging, Random

Analyzing What Makes Networks Strong

June 30, 2006 12:09 pm / Leave a Comment / Pat McCarthy

Kevin Lee of Did-It.com analyzes for Clickz what “ad servers” need to do to win in today’s day and age of online advertising.  By “ad servers” he’s referring to the search-based advertising networks run by Google, Yahoo, MSN, and display ad networks such as Valueclick, Burst, and others.

His answers are:

  • Critical mass of serious advertisers
  • Critical mass of quality ad impressions
  • Ability to detect click, impression, and action fraud
  • Ability to accept medium-quality publishers without value dilution
  • Ease of use for advertisers (absence of friction)
  • Targeting efficiency, yield maximizer, and relevance engine

That’s a tall order, and I think he’s mostly right about all those items.  There isn’t a single network right now that’s executing really well in all those areas.

However I did want to point out though how this is an example of why an advertising exchange makes more sense than a closed ad network.

Critical mass of serious advertisers

This is a key problem for most networks.  Very few networks have the problem of too many advertisers, and this is especially important if you’re doing contextual targeting as you need more advertisers to cover all the possible different content areas that exist on the web.

An advertising exchange helps solve this by bringing together ad networks and advertisers onto one platform.  As an example the Right Media Exchange has over 50 ad networks participating which equates to over 2900 advertisers.  If those networks were all fragmented closed networks, publishers working with each individually would  have a much smaller amount of advertisers to fulfill the inventory.  It’s that many more ad sales people selling ads onto one platform, providing advertiser critical mass.

Critical mass of quality ad impressions 

Same as above, networks bring their publishers into the exchange and there’s now a critical mass of 10,000 publishers and growing.  The exchange on it’s own also becomes a draw to publishers due to the number of advertisers and ability to fulfill normally unsold inventory.

Ability to detect click, impression, and action fraud

An exchange allows the participants to share information and data that can identify publishers who are causing such issues.  It also increases communication between networks where because ad deals are often passing from network to network hurting visibility, it’s easier for fraud to occur.  Depending on what type of exchange it is, if it’s not entirely CPC pricing there is less chance that click fraud will occur.  For example, the Right Media Exchange actually uses four pricing types, and publishers don’t know necessarily if that individiual ad creative is CPM, dynamic CPM, CPA, or CPC.  Making it hard to know which type of fraud to commit.

Ability to accept medium-quality publishers without value dilution

This is probably exchange-specific, but I know in the case of the Right Media Exchange because each ad impression is auctioned in real time, impressions are paid what they are worth to the winning advertiser at that point in time.  This helps value dilution because lower quality inventory doesn’t have the same sucking of dollars that could occur in other types of optimization.  Essentially, a site with low quality inventory isn’t getting an inaccurate amount of the ad dollars in the system at the expense of quality publishers.

Ease of use for advertisers (absence of friction)

As someone who has advertised on numerous platforms, this is one near and dear to me.  There are certain ad systems that I just couldn’t spend the time to learn and master, and those systems that were easiest to use got the majority of my dollars.  An exchange doesn’t really have an inherent huge value over a closed network in interface design, although one could argue that an exchange being open means it’s more likely to provide APIs for easy integration with other tools advertisers may be comfortable with.  It’s also possible that entrepreneurs will see the opportunity to create better interfaces with an API to these platforms.

Targeting efficiency, yield maximizer, and relevance engine

This is another one in which there is a big opportunity for exchanges with APIs to not only provide their own targeting/yield/relevance algorithms, but for other companies to build their own solutions on top of it as well.  Why is this important?  Well, one company’s algorithm may work great for a certain type of advertiser or publisher, and not so well for others.  As an example Google’s contextual algorithm can work nicely for a web site about a niche topic, but not work very well for a company like MySpace where the profile pages are hard to target contextually relevant ads to because of the diverse content on each profile.  So if an exchange could theoretically allow publishers and advertisers to select from various algorithms, they might have a winning formula right there.

Kevin’s summary is right on the money:

We can expect to see major improvements in non-search relevance and targeting in networks over the next year. The consumer will win as ad relevance increases, but the real driver will be money. The networks understand that in the end, all other things being approximately equal, the best ad server wins.

It’ll be fun to watch and participate in.

Posted in: Ad Networks, Advertising, Google, Random, Right Media

Is JellyFish Revolutionary?

June 29, 2006 1:14 am / 2 Comments / Pat McCarthy

Scott Karp at Publishing 2.0 takes a very positive look at new e-commerce startup JellyFish. I agree that there is a lot to like, but I’m not sure I’d position them as being groundbreaking just yet.

First, the real hook of their idea is to provide cash rebates to users, which is nothing new, and hasn’t really been revolutionary on the web thus far. They’re talking a lot about the liquidity and efficiency of it all, and I can see a little bit where that’s the case, but when I look at prices I don’t see much that’s changed.

So, I can get 2% cash back after the return period has passed? Is that really that much to get excited about as a user?

Okay, so they’re providing a lot of other neat features with comparison shopping, search relevancy, etc. These things combined with CPC advertising for the merchants and cash rebates for the customers does make for an interesting mix and a potentially improved shopping experience, but the proof is in the success.

I understand their opportunity to create a liquid market where merchants are driving down prices (or giving more cash back) in order to be ranked higher in results and get more sales. This opportunity does exist, but they’ll need to execute on many fronts to get there.

The site is designed well, and is easy to use, but I had serious problems finding products through their main search. A search for “ipod” left me with everything potentially related to Ipods, except actual ipods. That left such a sour taste in my mouth hunting for Ipods I doubt I’d ever go back to Jellyfish if I were a normal consumer trying it out. They have to nail product search, it’s the key component of an “every product” shopping site.

Another thing that bugged me, and maybe this is being nitpicky, but the stock photographs with nameless testimonials rotating on the front page seems dishonest and cheesy to me.  If Jellyfish just launched, how did they get photos of these customers without names who say things like “Search engines are great for finding information, but when I want to buy something I always go to JellyFish.”

Is that a real picture of a real customer saying that?  If not, don’t make it look like it is.
I also tried a few specific examples to see how they compared. To be fair, they have just launched and I know selection will improve if they gain more advertisers and customers. However, I picked out a Sony Plasma TV Jellyfish had listed.

Sony PFM 42X1 at Jellyfish


The 1.5% cash back gets me $36 off on an expensive item that I’ll receive sometime down the road. Or, I could go to Amazon where I have an account and buy it for $300 less right now:

Sony PFM 42X1 at Amazon

Where will I buy?  It’s a chicken and the egg problem. How do you get advertisers/merchants/products without the customers, and how do you get customers without the products? That will be the challenge for Jellyfish. If they can manage to grow both they have a shot at creating a very good shopping experience. I would really hesitate to call it revolutionary, unless they’re consistently saving me more money than Amazon.com and have the majority of products I want to buy. If they do that, I’ll call it revolutionary.

Posted in: Ecommerce, Random, Startups, Web 2.0

Will Publishers Still Need Internal Salespeople?

June 27, 2006 4:14 pm / 1 Comment / Pat McCarthy

Fred Wilson discusses the rise of third-party ad networks and wonders if in the near future publishers will be earning better eCPMs from ad networks then from deals their own internal salespeople can sell.
I think this is a case that can’t be generalized.  There will always be some high value CPM campaigns out there that can’t be automated through a third-party ad network, and the advertiser will have to work directly with the publisher’s sales team on negotiating and implementing custom campaigns.

Of course, there are ad networks and rep firms that do this already, thus alleviating the need for many publishers to have a sales team, but in the case of very large publishers, they keep more profit from having some employees on staff to sell and implement direct campaigns.

But I think Fred is on to something, which is that algorithms and markets are improving and many publishers are getting results from networks that rival or beat what an internal salesperson can do.

I do think we’ll see a continuing shift though where closed networks like Google Adsense, Valueclick, and others won’t be able to provide the CPM that an open advertising exchange can provide. Why?  Because it’s about advertisers and valueing impressions.  At some point as exchanges grow they’ll reach and surpass the scale of the larger closed ad networks.
Not to mention the difficulties publishers have in trying out, implementing, correctly measuring, and managing multiple ad networks on who all have different systems.  I live that pain.

Posted in: Ad Networks, Advertising, Random

Coming out of Hiding

June 24, 2006 11:43 pm / Leave a Comment / Pat McCarthy

We’ve been building and operating an open online advertising exchange for over a year now at Right Media, but we’ve been pretty quiet about it from a media/marketing point of view.

This past week we finally opened the veil and began telling our story to the media.  Overall it was interesting to watch, many of the articles had some inaccuracies about what we do, but it was good to get the story out there.  Here are just a few of the mentionings if you care to read more:

Online Ad Exchanges Sprout Up – Clickz.com

Ad Exchanges Bid to Open the Marketplace – DMNews

Companies to bid on ad space directly – TechSpot News

Melanie’s Round Up – John Battelle’s Searchblog

Right Media Launches Open Media Exchange – Adotas

Posted in: Random, Right Media

Google Analytics Launches a Blog

June 24, 2006 10:23 pm / 3 Comments / Pat McCarthy

Personally, I love it when companies launch blogs for specific products or services.  If I’m a user of that product or service, I usually find the blog to be a great resource for furthering my knowledge and I notice that it keeps me more engaged as a user.  As long as it’s done well.

Along those lines, Google Analytics has just released it’s own blog for their web analytics application.  The blog is only three posts deep right now, but posts like this one on calculating what a visit is worth are the kind of posts that not only Google Analytics users can benefit from, but anyone who uses web analytics.

Posted in: Google, Web Analytics

Is Google’s CPA Network a Big Deal?

June 21, 2006 7:32 pm / 1 Comment / Pat McCarthy

Google is apparently launching a CPA network product called Content Referral.  It’s been immediately seen as a potential serious competitive threat for Valueclick’s Commission Junction, and others see it as the latest Adsense-related experiment that may or may not payoff.

It will be interesting to watch because according to their invite email Google is relaxing Adsense rules and allowing publishers to use the links in the form of personal recommendations.

It could be valuable for Google because it will be another service and ad type to offer publishers, but it also opens up a can of worms that Google will have to handle.  Will it kill Commission Junction or other affiliate networks?  Not if they still provide value to publishers and advertisers it won’t.

Posted in: Advertising, Google, Random

Heading to New York

June 18, 2006 10:56 pm / Leave a Comment / Pat McCarthy

I’m off to New York today for some meetings and work at the corporate office.  It’s always a good time and good to have face to face contact with the New York team.  If anyone in town would like to get together, drop me an email.  I already have a few meetings lined up, but may be able to fit a couple more in.

Posted in: Random, Right Media

Google Adds Dayparting, Will It Help?

June 16, 2006 12:19 am / 6 Comments / Pat McCarthy

Google announced on their Inside Adwords blog that they have added dayparting to Adwords.  For those who don’t know, dayparting is the ability schedule ads to show at different times of the day.  An example would be using different ads for day and night, or just deciding to only advertise at a certain time of day.

I’m sure this is something that many of Google’s more advanced advertisers have been wanting for a long time, and it’s something MSN AdCenter has that Adwords did not.  As John Battelle points out though, is this that big of a deal?  How many advertisers will actually find a good use for it?
A user has to turn on this feature in their settings, but I think one of the things that has made Adwords successful over the years is it’s ease of use, and as they continually add new options and features, there are that many more things a user can screw up or waste time and money trying out.

Posted in: Advertising, Google, Random

News Corp. Looking For Ad Technologies

June 14, 2006 8:10 am / Leave a Comment / Pat McCarthy

Apparently Peter Chernin, the President and COO of News Corp, said at a recent conference that they were looking at various ad serving technologies to help them find ways to make money off all that MySpace traffic. They are the #2 property on the web in page views, but WAY down the list in amount of revenue generated.

Since advertising is an obvious way to generate revenue, it seems like a natural fit for them to own or work closely with various ad technologies to make the best of it. It’s interesting to note that they are #6 in search engine market share, even though they aren’t a search engine. Obviously there is revenue to be made there, which is why they’re talking to Google and MSN about it, and potentially even auctioning off the right to serve search ads to that traffic. Do you think they’ll get a pretty good revenue share on that?

Posted in: Advertising, Random, Social Networks

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