Monthly Archives: March 2007

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Will Free Ad Serving From Google Win?

March 29, 2007 9:59 pm / 4 Comments /

As I already suggested previously, John Battelle has also now posted saying Google’s upcoming foray into third-party ad serving will be with a free product.

John suggests that the reason Google would take on that cost for free, is to get access to the margins and data of everyone. While I can’t say that’s not true, I think he leaves out perhaps the more important part of why I think they’re making it free.

Like any ad network, Google Adsense can only make money when it has inventory in which it can sell ads. Every ad network and direct advertiser is competing with each other over the available publisher inventory out there on the web. Because Adsense is primarily CPC, there is no limit to the amount of inventory that Adsense wants to consume. At no point do they ever run out of ad dollars, because it’s all charged per click.

For these reasons, the goal of most ad networks is to hold as much inventory as they can captive for their advertisers. They want this inventory all for themselves to monetize, and would like to keep their networks “closed” from competition.

The closed access to publisher inventory is becoming increasingly more competitive, especially as ad exchanges come to life that actually make ad networks compete on a level playing field for access to publisher inventory. Publishers are starting to learn that it’s NOT in their best interest to allow ad networks to control large chunks of inventory. They earn more revenue when ad networks must prove their worth and compete for their inventory.

Guess what, Google doesn’t want to compete. So, how can they increasingly get more access to publisher inventory? Why not give them a free ad server, make Adsense built into it, and have Adsense be the “default” for all unsold ad impressions. As Google moves more into display advertising and premium ad sales, they’ll probably tie that in as well and want the right to sell ads into the inventory of publishers using their free ad server.

The bottom line, is will this work for Google?

There are definitely people out there that like the price of free. However, there are free ad serving options that exist today like basic ad serving along with an ad exchange tied into it with RMX Direct or a free open source ad server you host yourself like OpenAds.org (formerly phpAdsNew).

And like Google Analytics customers learned, free has it’s price. Google Analytics has had a lot of scaling problems that resulted in downtime, slowness in reports updating with data, and other issues. Free also gets you a level of support that serious ad serving customers might find unsatisfactory.

Additionally, while the Analytics industry freaked out a little bit when Google went free, it actually just brought more interest into the space and allowed some of the products that cost money to differentiate themselves and truly prove to customers what that money gets them.

Along with that, John is right that there are lots of customers that won’t feel comfortable letting their ad network also see all their advertising information. Google seems to lose a little trust each and every day from the media and web community, will people trust them for ad serving?

As with anything it’s too early to tell, but I can tell you that as a company in the same advertising space, and as a guy who runs a product that will most likely be competing with Google’s product, bring it on.

Posted in: Advertising

Doubleclick For Sale, and GoogleClick Coming Soon

March 28, 2007 10:49 am / Leave a Comment /

As the WSJ reports, apparently DoubleClick is looking for suitors, and Microsoft is one who is rumored to be interested.

It’s hard to know if that would be a great move for Microsoft or not. There are so many moving advertising parts at each company it’s tough to analyze.

Immediately focus turns on what this means for Google, and John Battelle brings up the notion of GoogleClick, Google’s entry into the third-party ad serving space with which he ends it by just saying “More Soon”.

I’ve been hearing rumors from various places for month that Google already has an ad serving product in private beta being tested with a few publishers, but that they’re out trying to get other top publishers to try it out. While I don’t know exact details, I’ve heard rumors that it’s free and would be subsidized by making Adsense the default for unsold (remnant) impressions. Interesting, sounds a lot like RMX Direct, except without the benefit of being able to have a whole exchange as well as Adsense or others as your option for unsold impressions.

I think we’ll hear a lot more about this in Q2.

Posted in: Advertising

Unlimited Storage for Yahoo! Mail, Crazy?

March 27, 2007 9:11 pm / 2 Comments /

While I expected computer data storage, and thus mail storage, to continue to expand, I didn’t think the next leap was going to be to unlimited storage. Yet, apparently Yahoo is making that move for all users.

While this is cool, I wonder if storage is a huge competitive difference with the major mail services already offering 2+ GB of storage? If you’re a solid Gmail user, would you leave for Yahoo Mail due to the storage? Techcrunch has an analysis on if this makes Yahoo Mail the best product.

There’s a great historical quote from David Nakayama, the Yahoo group vice president of engineering:

“I remember getting in a room to plan our RocketMail launch over a decade ago and worrying that our original plan of a 2MB quota wasn’t enough, and that we needed to be radical and DOUBLE the storage to 4MB per account! It’s ironic that I routinely send and receive individual mail attachments bigger than that now. Our total capacity for mail accounts back then was 200GB for all of our customers. At Yahoo!, we’re now receiving more inbound mail than that every 10 minutes.”

Posted in: Yahoo

Amazon ContextLinks Hits Beta

March 27, 2007 4:27 pm / Leave a Comment /

Amazon has announced that their ContextLinks product is now in beta and is available for their affiliates to put into use.

ContextLinks reads the context of your page, and then changes any phrases on your page into relevant links to Amazon products with your affiliate ID so you get commissions. You simply place one piece of code on the page and it does this automatically. It’s a pretty low effort way to possibly earn affiliate commissions. You can see ContextLinks in action at Muppet Central News, they are the underlined links in the article text.

This should work well on sites that are heavily product focused where a system like AuctionAds.com works well.

Posted in: Advertising

Yahoo! Getting the Lead On Google In The Next Hot Space: Mobile

March 27, 2007 10:10 am / 1 Comment /

Yahoo has a bunch of efforts underway in the mobile space, and they’ve announced the launch of their new mobile ad network. I’ve been using the Yahoo! Go OneSearch mobile product for a couple of months now, and really have enjoyed it. It will be interesting to see how Yahoo’s mobile ad network grows as more publishers embrace the growing mobile space.

What’s interesting is that it appears so far that Yahoo is ahead of Google in the mobile space. From the recent New York Times article:

“We are being very aggressive on mobile and moving extremely fast to get the building blocks in place,” said Steve Boom, Yahoo’s senior vice president for broadband and mobile. “We felt that business services for publishers is something that was lacking.”

Yahoo, which has fallen a distant second behind Google in Internet search and search-related advertising, has been busy promoting new mobile search software, which it introduced in January. The software, called oneSearch, is intended to allow users to quickly find information like sports scores and weather reports without scrolling through a long list of Web links.

“One area where Google has not outshined Yahoo is mobile search,” said Kevin Heisler, an analyst at Jupiter Research.

By focusing on publishers and advertisers, Yahoo is courting groups that are essential to its success on the mobile Internet. The company hopes to start delivering text, display and video ads on third-party mobile Web sites by the summer, Mr. Boom said. It announced in February that it would deliver graphical ads on its own mobile Web service.

Advertising on sites arrayed for mobile phones is a tiny market, but it is expected to grow quickly, and a number of companies, including the leading wireless carriers, are jockeying for position. Yahoo and Google have both been delivering ads linked to search results on cellphones since last year, but Yahoo is the first of the major Internet firms to introduce a mobile ad network.

I’d be shocked if Google is not taking the mobile advertising space very seriously. Will we see a similar path where Overture pioneered PPC advertising and Google one-upped them? Will Yahoo’s lead in mobile make them the winner long term, or will Google one-up them in the mobile advertising space by coming up with a better product later?

There are also some promising startups like AdMob and Third Screen Media, but I think the likely scenario is that they are purchased by bigger players opposed to any of them becoming the dominant mobile advertising solution themselves.

I don’t think we know the answers to these questions today on what will happen, but I think it’s at least good news for Yahoo that they’re leading the mobile race now instead of trailing Google into it.

Other coverage:
Techmeme, Mashable, Venturebeat, Search Engine Land

Posted in: Yahoo

Top-Tier vs. Lower-Tier Ad Networks

March 27, 2007 9:39 am / 1 Comment /

Mike Seiman of CPX Interactive has written a nice guest blog post on the Right Media Blog about the untapped opportunity of working with “Lower-Tier” ad networks and reevaluating what they can do for you.

The most well-known display ad networks have enjoyed success and having good reputations by focusing on the metric of effective CPM instead of total revenue delivered to publishers. How do they do this? They pay high rates for the impressions that they really want, and then send the rest to unpaid defaults where the publisher must then redirect to another ad network to try and get that inventory bought. This can continue in a chain until it hits a “lower-tier” ad network who has the ability to monetize any quality of inventory.

Because ad networks working on the Right Media Exchange can monetize 100% of inventory for publishers they end up paying high rates for top quality inventory but low rates for lower quality inventory ending up with a lower average effective CPM than some of the well-known ad networks who are only buying the high quality inventory and making the publishers send the inventory they don’t want elsewhere. Why should a network that’s actually delivering more total revenue for a publisher get put into a “lower tier” box when delivers more revenue? This occurs just because people focus on effective CPM as the most important metric.

Of course, if you’re using a tool like RMX Direct you can actually have the network that will pay the most for each impression buy that impression when it comes in, and we thank CPX Interactive for participating as an ad network in our product.

Posted in: Advertising

Fighting Against Errorsafe

March 26, 2007 8:37 am / 2 Comments /

MikeOnAds, a colleague of mine at Right Media, has taken on one of the dark parts of the online advertising world. He’s created a page that educates and suggests action for how to deal with the Errorsafe scam, a type of advertising that ends up installing nasty desktop software on user’s machines.

Give it a good read, there’s a lot there, but it’s important that people know about the problem and that the online advertising industry works to stop it.

Posted in: Advertising, Right Media

Web Business Lessons Learned From a Basketball Player

March 24, 2007 1:32 am / 1 Comment /

porter.jpgIn honor of my team advancing from the Sweet 16 of the NCAA Tournament to the Elite 8 to take on defending national champion Florida, I thought I’d tell the story of Tajuan Porter and see what we can learn from it as it relates to running a web business.

Tajuan Porter is a 5-foot 6-inch freshman who plays for the Oregon Ducks. This is obscenely short for college basketball standards, as there are only a couple of players in the entire country who are that small, and they usually don’t have much success.

Porter was successful in high school, but college coaches who saw him chose not to offer him scholarships due to his height and figured he couldn’t succeed at the high college level. Ernie Kent, coach of the Oregon Ducks, saw something special in Porter and was the only major-conference school to offer him a scholarship. Oregon fans and players figured Porter was a backup plan who wouldn’t make much of an impact at Oregon.

When thinking about starting a website or blog, you may have something that’s standing in the way of your success. Perhaps it’s not knowing much about the web, perhaps it’s a lack of time, perhaps it’s a lack of money to get it started, perhaps it’s a lack of technology skill, or perhaps people just think you’re crazy. Your friends, coworkers, or family may be saying things about you like people were saying about Porter. That you just can’t get it done for whatever reason. Are you going to let people be right? Or are you going to focus on improving in every area you can to get it done?

When Porter arrived in the summer before basketball season tipped off, the players saw Porter and like everyone else figured his height would keep him from succeeding.

What players, fans, and other college coaches didn’t realize was that instead of letting people tell Porter what he couldn’t do because of his size, he chose not to dwell on what he couldn’t change and instead develop skills and abilities that would allow him to actually succeed.

Porter started the first game of the year for the Ducks, and scored 28 pts, an amazing amount for a freshman in his first college game. Many thought it was a fluke until in the next two games he scored 27 pts and then set an Oregon freshman record by scoring 38 pts and hitting 10 three-point shots.

You’d think everyone would have immediately started to believe in Porter at this point. But again, people pointed out that the teams Oregon was playing weren’t very good, and that Porter was just lucky that weekend.

Sure enough, Porter cooled off after injurying his toe but continued to play with the pain. He had some games where he didn’t play that well, and fans and local media began to question his defense and wonder if he was hurting the team by being out on the floor if he wasn’t scoring like he was before.

Some websites and blogs get off to a great start like Porter did, but then hit a down period where the buzz cools off and time gets tough. People start to question whether you can do it, whether you’re on the right path, and if you can make it happen. Businesses don’t just rise on a steady growth path. There are peaks and valleys, and the valleys may really test you.

As the end of the regular season came around Porter got over his injury and started scoring and playing like he did at the beginning of the year. He was the MVP of the Pac-10 tournament the Ducks won. Now in the NCAA tournament he shot the Ducks through the 2nd round by hitting 4 three-ponit shots in the 2nd half, and then followed it up by tying a record with hitting 8 three-point shots and scoring 33 pts against UNLV to advance to the Elite 8. Now he’s not only playing well, he’s totally overcome his height disadvantage and is simply dominating the competition. The reward? He now gets to play defending champion Florida to go to the Final Four. How is Porter going to react going up against possibly the best team in the country on the biggest stage?

The comparison for a web business is that when you do fight through your weaknesses and achieve solid to great success, sometimes your reward is that you get to take on the big dog, such as Google, or Yahoo, or Microsoft. Or on a smaller level, once your blog achieves great success in your niche, perhaps you’re now competing with the biggest blog in your space. You may feel like it’s a battle that can’t be won. Are you going to give up?

Really, it’s a classic story, but it’s one of the reasons I enjoy the entertainment and stories in sports. You get to witness how people react in various situations, and Porter’s story has been fun and motivating to follow. The 5-6 underdog has used his weakness to grow his skills in other areas and build up such a strong heart and build his confidence to the point of playing like one of the best in the country. It doesn’t seem possible, but he’s doing it. Congratulations Porter, and let’s hope that we can all fight through the weaknesses in our websites and blogs to become big successes as well.

Posted in: Startups

Google Showing Less Ads in Search Results, but Why?

March 22, 2007 9:40 pm / 1 Comment /

Robert Scoble posted today about his observation about Google putting fewer ads on their search results, and how a Google employee confirmed this and said internal research showed that in the short term this costs them revenue, but in the long term it helps revenue because users trust the ads more and it leads to more clicks and buying behavior.

First, I think we have to ask if we believe this is true. I’d guess that Google would not make such a move without being very confident that it was going to eventually lead to more revenue. As a public company, it’s even risky to hurt short term results in this manner, so I’m betting it doesn’t even hurt their short term revenue results that much.

Scoble then theorizes that the purpose of this is also related to their Pay-Per-Action program:

Anyway, Google is doing that to make way for its new “pay per action” advertising type (announced yesterday). This is brilliant. Advertisers are going to LOVE this. Imagine I ran a print shop, like PrintingForLess. Now I could tie my advertising onto actually getting a sale, or getting a good lead. You see why Google needed more relevant advertising before turning this on. They want only potential buyers to see an ad. Anything else is noise. Noise reduces buying behavior.

Well, something doesn’t jive here because according to Google the Pay-Per-Action ads are only going to appear on their Adsense content network:

Pay-per-action ads are eligible to appear on publisher sites in the Google content network, and publishers can choose specific pay-per-action ads that are relevant to their site to run in new ad units that they create.

So, for at least right now, Google is not putting PPA ads in their search results, which is the area that Scoble is talking about. So either Scoble is incorrect in his theory, or his Google contact gave him information that points to it being likely that PPA ads will be showing up on Google search results soon.

Posted in: Advertising, Google

Jumping to Conclusions on Google’s Pay-Per-Action

March 20, 2007 9:19 pm / 5 Comments /

There are lots of bloggers talking about Google’s launch of their Pay-Per-Action (beta) program which is really just adding CPA ad units to Adsense with a name to not associate it with CPA directly.

My first reaction is that people are jumping to lots of conclusions about what this program means, what it will do, who it’s competing with, and what it will mean for advertisers, publishers, and arbitrageurs.

I was going to refrain from making a post about this until I had really digested it more and potentially even tried out the beta program if accepted, but since Pete Caputa somehow confused me for being smart, I’ll at least post a few thoughts.

CPA is harder on publishers
There’s no arguing that with CPA ads, publishers take all the risk. This is good for advertisers, and generally it’s harder on publishers. However, GOOD publishers who understand CPA, persuasion architecture, delivering users who will convert, and funneling your site correctly, can actually make more money from CPA then they would from CPC or even a flat CPM. Publishers who don’t understand these things and are used the normal Adsense model will most likely struggle to generate more money with this ad type because of the difference in how you monetize a user.

CPA is a different ball game
There is an assumption that this will be a major challenge to affiliate networks like Commission Junction and Linkshare. Maybe it will be, but I can say that these networks provide a lot of value because they help advertisers create the right kinds of creatives and really optimize CPA. How much advice is Google going to really give on setting everything up? How much human touch will they provide to this process? With Google’s program, if the advertiser’s landing page sucks will Google consult to help them improve it? Sure, they provide access to their Website Optimizer Tool, but those who have tried multi-variate testing know that isn’t just a cut and dry automated process like Google is trying to make all of this.

Will this hurt lead generation or affiliate arbitrage?
I’m not sure I care. Businesses need to provide value, and if Google just made it more efficient so that it’s harder to arbitrage stuff, so be it. I’m not necessarily against arbitrage, but you can’t expect companies to leave things inefficient. Arbitrageurs are always looking for an edge, and most likely they’ll still find one somehow and somewhere.

Overall thoughts
Until we see the program in action, see what advertisers succeed with it, and how publishers can work with it and what types of results they get it’s hard to predict what will happen. The general assumption is that since Google has dominated with Adwords/Adsense/CPC they will dominate CPA by adding it to the mix. Well, Google HAS NOT dominated CPM and display advertising when they added it to Adwords/Adsense. I don’t think it’s a given by any means that this will work as well, however I do give it a better shot. I think the CPA direct marketing advertisers are closer to being the same group that does well with CPC now, while flat CPM and display advertising tend to be a different type of advertiser. It will be interesting to watch.

Posted in: Google

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