Is There an Internet Advertising Bubble?

It is easy to look at Google's stock price and think that it is overpriced, but marketing drives all markets, and there is a huge divide between how people consume media and marketing spend:

There is a growing divergence between how consumers spend their time and how advertisers allocate their marketing budgets. Last year, U.S. consumers spent nearly a third of their total media-consumption time engaged with online or interactive media, a dramatic increase from just two or three years ago. At the same time, Fortune 500 companies allocated only 6 percent of their marketing budgets to online media in 2006, up from 5 percent in 2005.

The web offers more precise targeting, a more interactive and engaging experience, bias toward wealthier consumers, and quicker feedback loops. That all trims waste.

As sales funnels get more efficient, and big advertisers move online, the ad markets will move past direct ROI measurements toward total lifetime value measurements and brand based metrics. If the web has 1/3 of consumer media consumption time before video was hot what percentage will it enjoy with the growth of video?

Some People Just Want to Waste Your Time

Price points are a reflection of value. Set them too low and you attract the wrong people. If information is personalized free is almost always the wrong price. Some people will warn how little money they have, in spite of spamming for a half dozen sites in competitive high profit verticals. If they ask for services with the little or no money warning they are probably worthy of little or no attention.

Some customers will search for your old price or old offers on other sites and demand hours of your time and/or full refunds. No matter what you do that customer was going to want a full refund. You just have to determine how much of your time you want to give them for nothing.

Some clients have subsidiaries that will try to get free information out of you. If a company does not pay directly then they are not taking you seriously. To best appreciate this, it is worth noting that an advertising firm for a high touch fashion website (which tried squeezing free SEO information out of me) just emailed me an advertising request for advertising on Threadwatch. Could they be any more clueless?

Much of the free information also isn't worth listening to. Some platform speakers drone on about how everyone else in their industry is an idiot. If they hate themselves so much why are they still in the field? Why don't they move into a field they enjoy?

Yahoo! Quality Based Pricing

Yahoo! announced their Panama API today. They also announced the beginning roll out of their quality based pricing for content websites:

Previously, you were charged the same for traffic from all web sites within our distribution network. Now, with quality-based pricing, you may be charged less for certain clicks than you otherwise would pay, depending on the overall quality of the traffic provided by our distribution partners. As a result, your click charges can decrease.

As Yahoo! cleans up their content network look for many of their partners to switch to Google, which has a deeper ad network and better relevancy algorithm.

Automated Content Development & Moral Dilemmas in Marketing

Fantomaster had a great comment about whether automated content generation is moral:

I don't really get the "moral dilemma". Would you say the same about press releases, product announcements, ads, commented statistical tables and other forms of corporate droidspeak? And if not - why not?

I mean, it's not as if the Web as a whole were particularly dominated by high end literary prose, deeply suggestive well crafted poetry or similar feats of human creativity.

And, when you think of it, what is Mahalo but a human compiled scraper? Why is it ok that the WSJ publishes auto-generated looking advertorials? Thompson, like search engines, already produces automated content.

Journalistic integrity matters most to those who need you to believe others are unethical for their business models to work.

Data Collection: Google's Biggest Competitive Advantage

Today Google bought Feedburner, which (along with AdSense, AdWords, the Toolbar, Analytics, user accounts, Google Feed Reader, Google Checkout, Youtube, etc) is yet another source of data acquisition for them.

Earlier today I posted about a small and harmless javascript that can be used to see which competing sites visitors visit before going to your site. In the second comment about it a guy named Dave nearly exploded.

While everyone is running around polluting links on the web graph (and fighting over who the spammer is and what is spam), Google is busy building something only they can build, because they are the only ones who get a free pass on collecting user data as a feature.

Spy on Visitor Browsing History for Competitive Research

Spyjax allows you to view the browsing history of website visitors. You upload a list of competing URLs and see which ones the browser visited before visiting your site, which can be used to let you know what competing sites people typically visit before seeing your site. By tracking this, you can replicate the features and/or marketing strategy of other well visited sites and move yourself earlier into the buy cycle.

Search Relevancy & Keeping Promises

Paypal.com has been down for hours. I usually make a good number of sales, but today my site is on vacation. One way to lose a market leading position is to screw your partners out of millions of dollars of sales. Hopefully some of the people who were thinking of buying my ebook come back when I change processors or Paypal has a product worth using. One of my clients had some blank database pages ranking in the search results. Imagine what a searcher does if they land on one of these. Would they ever want to come back to that site again? Or did they lose all trust on the first click? If the page has no value and I lose trust on the first visit I would rather not get the ad impression than get the one impression and lose the visitor forever.

Another client had a button for their soon to be launched product on their site which said on sale now. The sales page said coming soon. When the product actually launches fewer people will click through to it because they will assume that it is still not available.

The best spot to sell is on our own sites, but we all do some form of anti-selling. No easier way to undermine profit potential than placing roadblocks that kill trust or conversion on our own sites.

The Faults of Human Review

Danny Sullivan's recently made a post highlighting the downside of human review for search engines:

[Tim] Mayer reminded that what's relevant for a query can often change over time. Google's Udi Manber, vice president of engineering, made similar remarks when I spoke with him about human-crafted results when I was visiting at Google yesterday.

One example he pointed out was how Google's human quality reviewers -- people that Google pays to provide a human double-check on the quality of its results, so they can then better tune the search algorithm -- started to downgrade results for [cars] when information about the movie Cars started turning up. The algorithm had picked up that the movie was important to that term before some of the human reviewers were aware of it.

Obviously human review is used at all major search engines, but even when outsourcing reviews humans have limits just like with producing content. Even if Google has 10,000 quality raters those people can only be trained to find and rate certain things.

Why Nobody Clicks Your AdSense Ads

I don't understand why Will Wheaton considers both Google AdSense and Federated Media as jokes for not being able to sell his ad space for more than a couple hundred a month. Consider his ads were

  • laregly irrelevant due to the nature of his site

  • tucked away in the right side bar
  • on a tech blog where nobody clicks

If you want to sell brand ads sell them yourself, or create your own product to sell. If you are selling anything else you have to integrate them into your site. I have seen a CTR in excess of 10% off a single Google AdLinks unit. Those ads were targeted, aggressively integrated, and commercially oriented. That ad unit suffered from none of the faults of Will's ad model.

You need to do more than get free subscribers to create a business model. There are always new things to talk about in the tech, gadgets, and my life categories, but most of them probably have little commercial value.

Dan Thies New SEO Fast Start 2007 Out

Dan Thies recently launched his new SEO Fast Start book. You can download the PDF here, or sign up for his updates and join his community here. His guide is 100 pages long and aimed mostly at beginners, but it also covers a bit more, and as his community develops he will continue to give away more content in more formats. His book is generally quite straightforward and easy to understand. He wrote it in a way that is big picture oriented such that it won't need to be updated too frequently. His section on dynamic linking is worth a read. It mentions that by creating an internal navigational structure that places more PageRank deeper into a site, typically most sites will get more traffic than a site with a link navigation scheme that is top heavy (I have been reviewing a number of sites recently and this is a large recurring issue). He recommended using GSiteCrawler to generate sitemaps, and OptiSpider to view the internal link structure of larger sites.

You can see how OptiSpider compares a page's topic to what the internal links say the page is about by looking at the below picture.
OptiSpider.

Probably the only part of Dan's book that I don't agree with is on is his advice on how to use nofollow. Some of the advice, like add nofollow on all of the links that point to other sites, unless you have agreed to a direct link for some reason seems a bit aggressive to me. A web that consisted only of paid or nepotistic links would not be a web worth being on.

I don't like using nofollow on most (or all) outbound links for three major reasons

  • If something is worth mentioning then I think it is worth mentioning to both people and search bots.

  • I think excessive use of nofollow carves up the web, leaving scars in it and making it more wounded for those who use it.
  • What was once white hat became gray then black. There is nothing saying that search engines won't eventually penalize sites for excessive or manipulative use of no follow. Just how nofollow magically made paid links evil one day, so might excessive use of nofollow the day Google realizes how damaging it is to the web.

Update: Dan describes what he meant about the use of Nofollow in a comment below, and further clarified his take on nofollow here.

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