Category Archives: advertising

Bad News for Good Newspapers

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Nick Carr summarizes a study in the UK that suggests more perils for news organizations as they move online.    The online editions appear to be “cannibalizing” the offline edition readership.   A university study looked at how online news readers are less likely to buy a newspaper from the same company they read online.

If this proves true across the newspaper landscape it presents newspapers with the twin challenges of needing to beef up the online portal to keep up market share even as their total advertising revenues are tending to go down.   Offline readership generally gives a better ad return per reader, so even as online advertising increases that extra revenue is not likely to keep pace with the offline losses. 

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Paid Content has a great article about online advertising and how the concentration of online advertising in the hands of so few websites is becoming a problem. 

They note this remarkable stat from Zenith regarding distribution of online ad revenue:

So the big problem is not that ad spending is drying up, it’s that the bulk is concentrated in a few sites. Citing the IAB, Reuters points out that the top 50 websites in the U.S. took in more than 90 percent of the revenue from online ads in H107, while the top 10 sites sucked up 70 percent of internet revs for the same period. 

They also quote Zenith as suggesting that even as late as 2009 online advertising will remain a fraction –  under 10% – of the total global ad spend of some 495 billion.     I’m skeptical of that estimate – very skeptical – because online ROIs remain vastly superior to offline, though this advantage is not as obvious as it should be because so much of the spend is done in foolish “old media” ways with large, expensive, poorly targeted campaigns.  As PPC campaign sophistication improves, people continue to move online, video continues to move online, and advertisers increasingly continue to insist on positive ROI we should see online buys approach offline – I’d wildly guess there will be online / offline ad parity by 2015, though interactive TV and video clip advertising may blur the distinction between a TV ad and an online ad.

Information Sharecroppers of the World, Unite ! ?

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Update:  I think Nick (and I) may owe Newsvine an apology, because Newsvine does not really practice sharecropping.   The members own their own content and this means a lot more control than otherwise.    Obviously the landscape is complex with any social media but I don’t think I can object to Newsvine’s model.    My concern is where the site takes ownership of the member content.

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Nick Carr  has a good post today noting how the Newsvine aquisition, and other deals like this, can lead to some information “sharecropper” dissent.     As I pointed out yesterday social media is a great thing, but it seems to be dramatically failing to fund the very forces that make it a great thing – the hardest working content providers that often form the backbone of these entities.     Kevin Rose is worth tens of millions because tens of millions of diggers work for him – for free.   Sure, he’s smarter than most of his minions and he pulled it all together which means he should get a big digg payday some day, but should he, the founders, and the VC funders get *all* of the money when even they’d all agree that digg is valuable primarily because of all the people that do the digging.

Newsvine was a superb project that was beautifully implemented, but like Nick I wonder how long those who helped make Newsvine such a great site will keep working for nothing.     Is  Web 2.0 simply a new twist on feudal economics?

Social media frenzy may kill high quality content. Somebody fix this!

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The news last month that Microsoft may wind up offering Facebook $500,000,000 for a 5% stake is great news … for the tiny number of Facebook insiders who stand to gain from this move which would effectively value the social media giant at about $10,000,000,000.    For the millions of Facebook folks like me who provide the content and faces that drive Facebook it means … um … more advertising.   

Gee, thanks Facebook.   

When people wake up they may start to realize that we’ve got a potential crisis as small numbers of “info intermediators” like Google and Facebook scoop up the lion’s share of the online ocean of cash while the “info creators” are distinctly second class citizens in the big show.   Small time web publishers and mom and pops are in this group.  So are major newspapers like the New York Times and Washington Post and most other print outlets who tend to make relatively little online despite offering much of the web’s best content to date, especially now that the foolish paywalls of some newspaper outlets like NYT are coming down.   Having no paywall will allow them to make more, but it’s not clear to me they’ll make enough to keep all that high quality content coming.  

Print and newspapers are  hurting and that is going to continue.   That’s OK as long as websites and blogs continue to provide great insight and breaking news, but it’s about time the big players in the online world start working *a lot harder* to feed the hands that are feeding them.  It’s about time they realize that the best web ecosystem encourages high quality content and not just socializing for the sake of hanging online with friends.

Yes, it is true that revenue sharing programs like Google adsense give publishers a nice share of revenues that come directly from activity at their websites.  However lost in this debate is the fact that *most* of Google’s money  (and virtually all of Myspaces), goes into the pocket of Google and Fox (owners of Myspace).   This is because most of the cash comes from searches done at Google.com rather than publishing affiliate sites, and Google keeps all that despite the fact it’s generated *indirectly* from the ocean of content Google has categorized.  Sure Google should make *a lot* from categorizing *your content* so effectively, but should they make 100%?   You can argue this arrangement is fine if the big players turn around and do things with that money that make the internet ecosystem thrive and grow in ways it could not without their involvement.  I think that argument was far more valid a few years ago than it is now.  Literally thousands of  startups are dying off as the Youtubes and Facebooks – built squarely on the shoulders of other people’s content  – scoop up the super gigantic big money.    It is not a problem that startups die – in fact it’s a good part of the ruthless evolution of things – but it’s problematic when the lion’s share of online resources from the work of so many are redistributed to so few.    Not because this is “unfair”,  but because this type of  inequity does not lead to optimal system efficiency and growth.

Social media in all its various and sundry forms is a wonderful development.  Finally we see clearly that people, not computers, will be at the heart of future online developments – probably for some time into the future.    Facebook users are now leading the innovation in this area, though Alice at NYT thinks this could lead to unintended consequences.

To protect this new socially charged online environment from the ravages of our silly, stupid and prurient human interests we’ll need better incentives than the big players currently offer to quality content producers.   Those incentives will ultimately shape the quality of online content for years to come.

Online advertising juggernaut rolls on.

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This Internet Advertising Bureau report notes that online advertising is still showing explosive growth.    Interesting is the fact that the types of online advertising – with search ads at the top – seems to have stabilized somewhat with “pay for performance” one of the few categories that has clearly increased from last year.   

 I don’t think this stability reflects the “optimal” mix of ads, rather it is more an indication of how the big players take some time to get comfortable with innovations in advertising, and still stick to more traditional CPM style approaches rather than the clearly superior PPC and pay per performance models.   Clearly even many of the big advertisers and agencies still have fairly weak SEM and SEO departments so they’ll choose to use big CPM campaigns that are easy to analyze rather than the more productive – but more complicated to manage – PPC and performance approaches.

Online ads are now a mainstay of any good campaign, but it’ll take some years before advertisers realize the foolishness of many online advertising approaches which generally include bloated CPM impression campaigns.   Much more effective are targeted organic and PPC ad campaigns, but these require more analysis and a newer perspective.

The most conspicuously stupid type of campaign – still extremely popular in travel – is to use expensive print advertising in an attempt to boost online visitation.  I studied this *extensively* across many print ad types during my work marketing southern Oregon several years ago and despite the clear results that showed print ads lead to only a tiny number of online visits, many travel marketers still think print is an effective way to promote online.    It’s not, but it will continue until the incentives and simplicity of squandering money on ineffective print advertising go away.   The lack of research in this area is odd to me given the huge total travel advertising spend, but most travel research is self-serving and often sponsored or conducted by the very agencies or entities that benefit from certain results, so stupid biases remain intact for a long time.

Google’s Constitutional Amendment: The Right to Rank as you see fit

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Some of the most lively debate and controversy at search conferences surrounds the issue of Google ranking rights.   At Search Engine Strategies in San Jose the most interesting (and confrontational) session involved Michael Gray taking Matt Cutts to task on Google’s aggressive stand on commercially driven linking.    

The stakes of the “right to rank” question may become even higher in the context of a recent Microsoft v Google case, where MS is suggesting in their court brief against the Google Doubleclick merger that the merger will create something like monopoly conditions in the online advertising space because (according to Microsoft’s sources) Google+Doubleclick serve more than half the world’s online advertising.  

Although I don’t think MS is attacking Google ranking methods directly here it’ll be interesting to see if Google claims that since their algorithm does not rank the free “organic” listings on a commercial basis the suit has less merit than it would if they *did* favor sites in the organic listings.   

This would, of course, beg the key point that Google’s ranking power is now so high that it can make or break companies – offline as well as online – depending on how they rank in the organic “free” listings.   This confers on Google an obligation that IMHO they still do not take seriously enough – the obligation to minimize the collateral damage and maximize the correct rankings using, if necessary, more human intervention.     In short I’m saying that until the results are *so good* that only highly subjective opinions are coming into play Google needs to do *more* than is currently done, based on the principle that “with great wealth comes great responsibility”.    Ironically I think Google’s success has to a large extent insulated them from the growing criticism in the webmaster community.   Some of that criticism is self serving, e.g. spammers who are unhappy their tactics now fail, but much of the criticism is coming from users and newly minted webmasters or mom and pops who are frustrated because they can’t seem to get ranked properly for even the most obvious queries.   Google blames the spammers for this, but it’s a dynamic process and more transparency from Google – perhaps with stronger forms of site and webmaster ID for “official” or clearly white hat sites – could go a long way to solving the transparency problems.

Over at Matt Cutts’ blog he makes this point about a recent ASK court case decision in favor of a search engine’s right to rank as they see fit.  This point lies at the heart of the right to rank debate:

 Again, it makes sense that search engines get to decide how to rank/remove content in their own index…

I replied over there:

Matt …hmmm….wouldn’t you agree that this has some clear limits?   What would you call crossing the line on this freedom to rank however you see fit?
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If Google pulled what Yahoo did some time ago and essentially forced sites to pay for inclusion or be excluded would that fall within the sensical realm?  
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MSN is claiming (somewhat ironically and hypocritically, but correctly) that Google’s ad power is becoming close enough to a monopoly that remedies are in order.  Historically there has been trouble when a single company or country controlled more than half a resource – why no problem here?      

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Google + Doubleclick? Microsoft cries “Advertiser Monopolizer!”

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Dana Baran over at WebGuild blog has a great short article summarizing Microsoft’s case against a Google takeover of Doubleclick.   The chart (from the MS legal team?) has what appears to be an excellent summary of the total online advertising spend.  I assume this is for 2006 but not sure.   It shows approximately a 20 billion total ad spend with Google scooping up 30% followed by Doubleclick at 22%, Yahoo at 19%, Microsoft at 17%, and all the rest at 12%. 

Microsoft’s point seems to be that Google and Doubleclick should not merge because, as the two leading recipients of online advertising revenue, this would create a player with more than half the market and thus too much power over the marketplace and advertisers. 

Improving Google

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Ha – it’s presumptuous to suggest improvements to huge companies like Google, but that is what the internet, and blogging in particular, is all about.    Master UK SEO  Dave Naylor has got five suggestions over at his blog and several others have chimed in.     I wasn’t sure why  Dave suggested clustering all the WordPress sites, forcing people to get a new domain, but this small inconvenience might be a good form of spam filtering because it prevents spammers from using free WordPress sites.       There’s now a conflict between the desire of search engines to screen out “junk” content and spammers and the desire to rapidly include new content.    It is not as easy as many like to think to even define junk content.    Last year I had a good talk with Brian White of Google’s search quality team about how to “value” content.  I posed a question along these lines:

What if you have two sites that are extremely similar in content and quality.
Both are about pet cats.
Both are of horrible quality with terrible grammer, bad facts, and spelling errors.

Site 1 is from  a spammer to boost rankings for a site selling pet food.
Site 2 is from a 3rd grade student working hard on her school report.

In this case site 1 is spam and site 2 is not, but how does Google tell the difference since they are virtually identical?

His answer was to suggest that the links structure in to these sites is likely to be different, and that through this you could probably determine which was the “real” and which was the “spam” site.

Of course this gets even more interesting when you make site 1 – the “spammy” site – of much higher quality.    In that case you might have a case where 99% of all users would prefer going to the site that is trying to manipulate Google but Google has removed that site and left the lower quality, natural one.

This is a very interesting case because I think search has recently devolved into many such ranking challenges.   Much of the content pouring online now is specifically designed to fool the search engines.

This would be an example of what  I’ve noted before – how linking relationships built the web and now the value of linking seems to be hurting it.

Here were my 5 suggestions to Dave / Google:

* Paid site reviews to identify simple problems or penalties. The subtle confusion Google spawns from ambiguous rules applied to mom and pop sites who have no clue is hurting everybody, including Google.

* Implement “site ID” where all sites showing adsense must have a contact person who is identified publicly. Forward site complaints to this person.

* Have more Google parties but drop the cold hamburgers from Google Dance 2007

* Transparency on publisher revenue share from Adsense

* MORE transparency on guidelines and penalties. Less vague references to “sites built for users not adsense”.

C’mon Yahoo, C’mon Yang! This investor is still optimistic!

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WSJ’s recent Yahoo story does not sound very optimistic about Yahoo’s potential to recapture the former glory Yahoo enjoyed in terms of stock price. The gist is that new CEO Yang is not going to “overhaul” the company, especially in the area of advertising sales where Yahoo clearly has enormous potential for bigger profits, and even a shot at eventually co-dominating the online advertising landscape.

It is this potential that interests me as a YHOO investor. Google’s done a fine job of monetizing internet activity in the search space, and GOOG’s capitalization of some 160 billion dollars reflects this fact. Yahoo was arguably too early to the PPC game with the purchase of Overture – the early leader in the PPC space. My assumption is that this kept Yahoo from innovating aggressively and allowed Google to sweep in with their contextual matching brilliancy and eat Yahoo’s PPC profit lunch. This feast continues despite the fact that Yahoo retains a significant portion of total online search activity and also remains in a position to monetize a large amount of other types of internet traffic.

Also, Yahoo’s making great strides in the Web 2.0 space thanks to a kick-ass developer team. Yahoo’s Flickr remains the best photo sharing application with a huge community. If Yahoo could use their 2.0 cleverness to crack the nut of better monetizing the traffic spawned by Flickr and even other non-Yahoo online communities like Myspace or Facebook it would be helpful to the bottom line.

Yahoo remains capitalized at a small fraction of Google – about 20%. This is consistent with the pessimism expressed in the WSJ article but does not seem consistent with Yahoo’s profit potential in the exploding world of online advertising.

There used to be a game where Yahoo employees would sneak into the Google lunch room to eat a free and delicious Google lunch. Jerry Yang, how about providing a free lunch at Yahoo and then focusing the employee’s attention on taking back all those free and delicious PPC profits?

Less glibly I’d suggest you focus on the Yahoo Publisher Network evangelism and monetization. So far Yahoo has failed – fairly dramatically – to gain publisher interest and loyalty in this lucrative sector of online advertising. Google adsense publishers are ripe for change and innovation in this space. Make it so!

Portland Search Marketing Group, SearchFest 2008, and SES San Jose

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Here’s a great post from Scott about SES San Jose. The Portland SEM community is growing fast and I wish I could get up there more often and attend some meetings and hang with my fellow Oregon techno peeples, but Portland is almost as far away from me as Silicon Valley, the undisputed capital of … well … most of the really neat stuff happening online these days. In fact my frequent trips to Silicon Valley may be skewing my perception of how fast things are changing. For example very few people I know here in Oregon, and few of my hundreds of close relatives back east are on Facebook or Flickr. It’s even tough to get people to join Flickr so they can see pix of themselves I’ve taken. Ludditism is no longer the problem for most people, rather it’s just silly human stubbornness about technology.

In any case I do want to plug Scott and the SEM PDX conference coming up in March of 2008 –“SearchFest 2008”.

Here is the blurb from the SEM PDX mail I just got:

SEMpdx Presents Searchfest 2008
When: Monday, March 10, 2008
Where: Portland Zoo
Format: All Day Event with Dual Tracks

Confirmed Speakers (to date):
Rand Fishkin, SEOmoz
Matt McGee, Marchex / Small Business SEM
Jeff Pruitt, SEMPO / ICrossing
Stoney deGeyter, Pole Position Marketing
John Andrews, Competitive Webmastering / Master of Sphinn
Marshall Simmonds, New York Times
Paul Colligan, The Affiliate Guy
Dan Harbison, Portland Trailblazers / Iamatrailblazersfan.com

More top speakers to be announced soon. Stay tuned!