Startup Diaries

CM Summit Summery and What We Know About Advertising

Federated Media CM summit just concluded (and thanks John for inviting me to speak) and I thought it will be a good time to try and summarize the event.
First of all I got to say that the level of the event was very high. Starting from the quality of the speakers, the people who attended and even the fact that the Internet was working with full speed from the first minute, a rare thing around conferences.
The only thing that I was disappointed a little about was that John didn't ask David Rosenblatt from Google some harder questions (or maybe it's just me who like to see Google grilled a little).

But what did I learn from the summit?
I saw and heard many interesting things, but above them all was what Deb Schultz said in her presentation: We all have no idea what the hell are we doing.
Marketers still don't understand what do we want from them, and how to really use all of our new tools and sites to get what they need. On the other side, we probably need to do much better job at communicating our messages and adapting them to what marketers actually asking us for.
Geeks and Marketers need to learn to work together from day one.
The agencies and the people in them need to adopt much faster to this changing world, and we need to work with them from the first day we start to develop our products.
And maybe above all is that we need to listen more to the users. It's not just about delivering a better ROI for the advertiser but also delivering better experience to the end user.

Do Advertisers Don't Know How to Learn?

I'm sitting in a supernova session about the future of advertising. The panel keeps talking about the fact that as everything is so new, most advertisers still don't know how to view the Internet.

I just have to pop up a question - Everything so new???
In an age where every business book talks about the need to be agile, how can we look at the Internet as something new?

The Internet is here for more than 10 years (in its large commercial sense).
Web 2.0 is already here for more than 2 years.
Video is here for almost two years.
Online shopping is here for years.
So what do we mean by saying everything is still new??

Technorati Tags: supernova2007

Open Ad Network And How To Kill Google

Nice post By Sean Ammirati in Read/Write Web about the need for an Open Ad Network (like an open source project).

The idea is to develop an open source ad network that will let publishers get 100% of revenues from ads, and build a business model based on services.

Although the idea is interesting, I think there are two main problems with it:

1. Ad networks today generate millions (and billions) of dollars in revenue from taking a cut from each ad revenue. This model is so successful because it can scale up all the time.
   get more publishers to use your network - instantly get more money.
   whenever a publisher gets bigger and more successful, also your revenues from it get bigger.
   Compare that to a services model and you will see the big difference. There is a limit to how much revenue each publisher can generate for you.
2. The real issue here is also the ROI you give to advertisers. Today most advertisers go to Google because of the high ROI they can generate for them (because of their excellent targeting system).
   Where most of the advertisers go, most of the publishers will go.
   kind of a magic circle that is very hard to break

 

So where is the solution?
How do you come up with the Google Killer?
My answer to this is Video!

No one today (including Google) knows how to target ads to videos (although some companies are trying to do that - see AdBrite and ScanScout).
First of all there is the technical difficulty of parsing the video and get all the words (compared to text) out of it.
But I believe that it doesn't end here. We use words in video in a very different way than we use it in text.
In video we explain much of the things using pictures and sound. I think that in most videos, even if you parsed all the words out of it, you will still not be able to actually understand what the video is all about.

So what does it all means?
It means that in video, Google doesn't have any advantage on the next guy. This is the place where other players can gain momentum, gain publishers and advertisers by keeping to themselves a lower cut of the cake, and offer some new innovative products.

Earning More From Google Ads

I stabled over the web site of TopPayingKeyword.com today.
There are a lot of companies that offers keyword research tools, to help bid on the right keyword in Google. At first look I thought this is just another one of them, but it appears they offer something completely different.

When you put Google Adsense advertisements in your site, you share the revenue of every click with Google. Advertisements with higher CPC/CPM will get you and Google more money.
Now, when advertisers buy keywords, some of the keywords are more expensive than others. Following this logic, advertisements that shows up near this keywords in a site are more expensive, thus generating more money to you (the publisher) from every user click.

So TopPayingKeywords actually help you determine what key words you should use in your site content as much as you can, in order to make Google show more expensive advertisements.

Don't get me wrong, personally I don't believe in this system. I think that in the long run, good content will bring more users which will translate into higher revenues.
Still, their approach make you think on how Google AdSense works, and if advertisers really gets what they should for their money.

First Incentives Platform for Web Based Businesses

Last week we revealed our first public beta of our platform - NuConomy Studio.

NuConomy Studio is probably the first ever developed incentives platform for the web. We worked very hard to develop an innovative solution, that specifically answer some of the most urgent problems of the new Web 2.0 era.

You can find a lot of information in our company web site or in our company blog (including the official press release), but I'll try to explain it a little in my own word here:

Our vision is that in today world, in the end of the day, its talent that wins. The web sites that will attract the most talented people, will be the ones to triumph.
We also believe that talented people should be rewarded for their contribution. The situation where people are contributing more and more hours to web sites, and those web sites keeps all the advertising money for themselves can't go on. The Internet opened a huge opportunity for talented people to show their talent, and they should also be able to earn and live from it.

But how do you do it? How do you know what users should be rewarded and how much?

Until today, it was very hard to answer this question.
Let's look at the web sites that already operate a revenue sharing program (like Reever.com for example).
Basically, all those web sites ask the user for his Google Ads ID and Password, and 50% of the time they will show advertisements with the user ID. This mean that if someone will click on a banner when you user ID is used, you will get the money.
Although in first look this system sound great, it has a few inherent problems. Probably the most obvious one is that users are not rewarded on their contribution.
Let's take for example a case where a blogger at blogger.com would have exposed some huge scandal in the Bush administration. This blogger post will result in millions op people going to blogger.com. But how many of them will actually click on advertisers links? Statistically, technology blogs create much more clicks than political blogs.
So in this case, another blogger that will write a review on the latest Dell laptop has a chance to get a higher revenue share from blogger.com.

Is this how it suppose to work?
Does the user that wrote about the Dell laptop is the one we really want to reward and make sure he stays with our brand?
Of course not.
The problem is that we don't measure users contribution. The current revenue sharing programs are simply don't base on performance.

So to wrap it up, by using NuConomy incentives platform, you will gain the following advantages over current way of operating revenue sharing programs:

• Operate incentives programs based on exact users contribution to the business (performance based)
• Give users incentives to promote your all brand and not just their personal page and content
• Measure users by long term commitment, making it more profitable to be loyal and not go to one of your competitors
• Use and combine any advertising network you want and not just Google Ads
• Users do not need to have a Google Ads user ID

 

I would love to hear your opinion about this. Are we right in our approach? Do you have any suggestions how to make it better?

In order to make all of this work correctly we used some innovative approach to web analytics, and how we measure users contribution. In my next post I will talk about this in further details.

Click Fraud

Business Week published last month an excellent cover story about the subject of Click Fraud.

Click fraud is probably one of the biggest problems we face in the web world. No one can say exactly how extensive is the problem, but we are probably talking about hundreds of millions of dollars that advertisers pay for nothing.

In the heart of the problem lies the fact that it is quite easy to fake clicks. Simply pay for someone to click randomly on links in your site. I had a friend who opened a dummy web site, put some dummy content, added google ads and asked his brother to click the ads every now and than. He got about 20$ from Google every month (which mean the advertiser paid a lot more for those clicks).

The problem gets even worse when companies are using click fraud as a way to fight the competition. For example company A that competes with company B, pay people around the world to click ads of company B, thus making company B waste all of her advertising budget.

Sure, you can check IP addresses and click patterns, but in the end, there will always be people who will write a better click fraud bot engine.

The other side of the problem is the fact that neither Google, Yahoo or Microsoft explain what they are doing to fight click fraud (or how they decide to reimburse advertisers that complain about being robbed using click fraud).
Although they have a reasonable reason (stating that if they will disclose their methods, it will just help hackers take advantage of the system) for doing that, the situation simply leave the advertisers in the dark.
In the end of the day you simply don't know how much money you lose for nothing. Worse, in order to complain to Google and demand money back, advertisers need a great deal of resources to inspect and explore the raw data given by Google. Many small advertisers will never have the time or resources to do that.

So how can we solve this problem?

There is no easy answer. Lets assume that as long as we will improve fraud detection algorithms, there will be hackers that will improve fraud techniques. So the answer should not be to simply improve our systems.
Probably better is to find other ways to measure the effectiveness of advertisement. Find some ways that are harder to fraud (Note. There will always be fraud, like in any other system. Our target should be to minimize it as much as possible).

Instead of simply measure clicks and impressions, a better way will be to measure actions. Legitimate users that clicks on ads and go to a company web site will probably do some actions on that site. There will probably look for some information there.
We can measure those actions. We can determine the effectiveness of the click. We can demand more money for more effective clicks, and much less or none for clicks that didn't end in any special actions.
This will require much more participation and time from non legit users, and thus will reduce the amount of click fraud significantly.

AJAX Design and the Page Views Holy Grail

In his post about the new Netscape mail system, Jason Calacanis made an excellent point about site design. When you design pages using AJAX, you actually lose page views. In today Internet economy losing Page views means losing money.
This brings up a very important question - What are you going for, better user experience or better statistics for your site?

I wonder if there is anyone out there who measured the number of page views sites are losing because of the use of AJAX. How many page views did Yahoo lost after redesigning their home page to use more AJAX? Did in turn the use of AJAX brought enough more traffic to compensate this loss? If MySpace would use a more slick AJAX design, would they still be the most successful site on the Internet?

I guess those questions just emphasize the problem of traditional measurement of CPM. Instead of simply measuring the number of times an ad was served, it is probably better if we could have measured an ad effectiveness using the following criteria:

1. Number of unique user sessions the ad was served to
2. Amount of time people watched the ad
3. The rate between number of times the as was served to the number of times it was actually clicked on

Put those criteria into a formula that gives each one a factor, and you'll get the real CPM an advertiser should pay for the ad.

UPDATE: An after thought... How does HitWise and Comscore measure page views statistics? If I do 5 AJAX calls when I load my page, do they "catch" them and count them as 5 page hits?
Maybe the use of AJAX is actually doing the opposite - inflating your page views count?

The Future of Marketing

PaidContent.org reported today about a new campaign CBS is running for its new prime time programs.
The campaign will be based on interactive posters.
What are interactive posters you ask? Well, basically these are posters that can interact with you using Bluetooth.

Yes... exactly what you hear... Imagine yourself passing near a poster for the new Madonna album and getting a streaming of the album hits directly to your mobile phone or iPod. Wow. Is this cool or not?? Just think of the possibilities!

Cinemas could use this to broadcast you the movie trailers when you stand near the movie poster... While standing outside of cloth shop you will be streamed the latest fashion show... While browsing a computer shop you will get a video demo of the product you are looking at... This market is simply huge!

Of course that a lot more people should have Bluetooth and video enabled phones in order to have a real impact, but as with every technology, this is just a matter of time...