Cry Me a Big Media River

While doing my daily online advertising reading this morning I came across an interesting article that both distressed me and made me laugh at the same time. It was written by one Jim Spanfeller who among other things is the president and CEO of Forbes.com. In his article, published on paidContent.org, Spanfeller went on the Google assault. In it he waxed absurdly about how "the parasitical nature of its business" is causing Google to be rewarded disproportionately for other people's work. Spanfeller argues that because of the "ill-conceived" last click attribution model Google is winning big as most web users utilize their search box as a navigation tool online. You see, a user searching for Honda's website might type "honda" in their search box then click on the paid link among the search results returned. By selling these branded search terms to the very brands that own them, Spanfeller argues, Google is muddying the value chain and maximizing on the flaws of the last click methodology. Spanfeller even goes as far as to suggest, however poorly, that Google's business model threatens to destroy "the core building blocks of our democracy". I'll spare you the rest of his poorly contrived argument.

First, let me say that nothing spells clear desperation like when the CEO of one company writes an article blaming the problems of his company, and entire industry, on another company. Further, to try and link the destruction of the established web publishing industry to the destruction of our democracy is both ridiculous and pathetic. While many of the points that Mr. Spanfeller makes are with merit, his conclusion is nothing short of absurd. The problem with the branded professional journalism institutions is not a search engine, it's their revenue model. A model which they adapted from print and is both outdated and completely inappropriate for online. This revenue model assumes that content created by branded professional journalism institutions should be held above all other content for the mere fact that it was created by said institutions. It also assumes that advertisers should be willing to advertise on this "premium" content for a premium price. Both are completely wrong assumptions.

Yes, I agree "the advertising lifeblood for branded professional journalism seems to be shrinking ". But, the world doesn't need big brand journalism institutions, all we need is good journalism. One does not necessarily produce the other. Further, the days when the big players like Forbes held a monopoly on reach, circulation, and research resources are over. Now anyone with enough time can research and produce compelling content and put it in mass circulation all from the comfort of their homes. This is a reality that you must come to grips with Mr. Spanfeller. Your "premium" content isn't so premium anymore. So stop complaining that Google does not consider "paid" journalism over user-generated blogs. For years the established media outlets have abused their power with undeclared agendas. They've pushed products, politicians, and causes all disguised as news. They've vilified their opponents with little accountability for years on end. Well, now the audience is revolting. Readers vote with their clicks and if they would rather visit myblog.com over forbes.com, then the vote is in and you loose.

Further, what is premium content anyway? In the measurable, finitely trackable world of online advertising premium content is really any content that drives conversions for an advertiser. What that means Mr. Spanfeller is the notion that advertisers will pay higher CPMs to run advertising on your content just because it's produced by Forbes doesn't hold water online. Any advertiser with half a brain is looking directly at the ROI. The bottom line is your content isn't driving enough ROI to warrant paying you disproportionately for it. If it did, rest assured you would be getting your due.

So, your content cost too much to produce and is not compelling enough to draw huge numbers of web users. It also isn't generating the advertising ROI to warrant a profitable price. Who is to blame for this Mr. Spanfeller, Google? Is this your answer to your industry's woes? You clearly lack any idea for a solution, needless to say a thorough understanding of the dynamics of online media. Here is an idea, rethink your approach, change your model, use technology don't attack it.

If you don't like the fact that Google is profiting from directing users to your content then block the Google spider. While you're at it block all the search engine spiders because they're just as bad, right? With that logic you must also hate yellow pages and directory assistance services too so stop all business activities with them, they must also be part of the problem.

Oh, and about the last click attribution model, yes it's severely flawed. However, Forbes.com and other such publishers had absolutely no problem with the last click attribution model when they were successfully demanding $50+ CPMs for their inventory. Now that their premium content isn't exactly premium anymore they're all pointing fingers and looking for a scapegoat. The stream of each industry is constantly changing. Those companies who are leaves in the stream adapt and flow with the stream, e.g. Apple, IBM, Amazon. Those who are rocks in the stream wither and die. Don't be a Rock Mr. Spanfeller, nobody likes rocks.

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What is Online Advertising?

Online advertising is a form of advertising that uses the Internet and World Wide Web in order to deliver marketing messages and attract customers. Examples of online advertising include contextual ads (ads relevant to some content or context) on search engine results pages, banner ads, Rich Media Ads (flash, video, silverlight), Social network advertising, advertising networks and e-mail marketing, including e-mail spam sadly.

A major result of online advertising is information and content that is not limited by geography or time. Online advertising differs from traditional advertising in a few important ways. First, online advertising is much more measurable than traditional advertising. With online advertising an advertiser can count exactly how many potential customers saw their ad, how many times each customer saw each ad, and how many customers responded to the ad by clicking or otherwise converting. Further, an advertiser has control over exactly which ad a customer sees, when they see the ad, and how often they see any ad. An advertiser is also able to customize each ad to a unique user's interest or context. Compared with traditional advertising where most advertisers do a scatter shot campaign hoping to catch some potential customers at the right time, online advertising is much more targeted and accountable. The market for online advertising media inventory is much more efficient than that of traditional advertising. By this I mean the price which advertisers pay for their online media is more closely controlled by true supply and demand for that media, and is filtered from sellers manipulation. Of course this varies greatly depending on where you buy your media.

The emerging area of interactive advertising presents fresh challenges for advertisers who have hitherto adopted an interruptive strategy.

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What is affiliate marketing?

More and more readers are asking this question now than in the past. In a recent poll readers were asked whether they’ve done any affiliate marketing on their blogs. The results revealed that:

29% of readers regularly do it

24% occasionally do it

27% have never done affiliate marketing on their blogs

6% used to do it but don’t any more

14% don’t know what affiliate marketing is

If you're a serious online advertiser or publisher you should be extremely familiar with what affiliate marketing is, how it works, and how you can make a profit using it. I'll only cover the first two topics in this post, but will follow up in later posts about making money with affiliate marketing.

So what is affiliate marketing?

Affiliate marketing is a marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's own marketing efforts. Examples include rewards sites, where users are rewarded with cash or gifts, for the completion of an offer, and the referral of others to the site. The industry has four core players: the merchant (also known as 'retailer' or 'brand'), the network, the publisher (also known as 'the affiliate'), and the customer (the end user who is making a purchase). The market has grown in complexity to warrant a secondary tier of players, including affiliate management agencies, super-affiliates and specialized third parties vendors, but we wouldn't dig too deep into those here.

Perhaps the simplest way to explain affiliate marketing is that it is a way of making money online whereby you as a publisher are rewarded for helping a business by promoting their product, service or site. There are a number of forms of these types of promotions but in most cases they involve you as a publisher earning a commission when someone follows a link on your blog to another site where they then buy something. Other variations on this are where you earn an amount for referring a visitor who takes some kind of action – for example when they sign up for something and give an email address, where they complete a survey, where they leave a name and address etc.

Affiliate marketing is frequently overlooked by advertisers. While search engines, e-mail, and website syndication capture much of the attention of online retailers, affiliate marketing carries a much lower profile. Still, affiliates continue to play a significant role in e-retailers' marketing strategies.

Pros and cons of affiliate marketing

Cost per action/sale affiliate marketing methods require that referred visitors do more than visit the advertiser's website before the affiliate receives commission. The advertiser must convert that visitor (turn that visitor into a paying customer) first, before the affiliate is paid. It is in the best interest for the affiliate to send the most closely targeted traffic to the advertiser as possible to increase the chance of a conversion. The risk and loss is shared between the affiliate and the advertiser. Merchants favor affiliate marketing because of this "pay for performance" model, meaning that the merchant does not incur a marketing expense unless results are accrued (excluding any initial setup cost).

Some businesses owe much of their success to this marketing technique, a notable example being Amazon.com. Unlike display advertising, however, affiliate marketing is not easily scalable.

Affiliate marketing isn’t the only way to make money from websites and it won’t suit every publisher but there are a few reasons why it can be profitable to you as a publisher. Perhaps the biggest of these reasons is that affiliate marketing seems to work best when there’s a relationship of trust between the publisher and their readership. I’ve found that as this trust deepens that readers are more likely to follow the recommendations that a blogger makes. Of course this can also be a negative with affiliate marketing – promote the wrong product and trust can be broken.

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What is a PPC (Pay Per Click) campaign

Pay per click (PPC) is an Internet advertising model used on websites where advertisers pay a predetermined fee only when their ad is clicked, not each time their ad is displayed. With search engines, advertisers typically bid on keyword phrases relevant to their target market. Content sites commonly charge a fixed price per click rather than use a bidding system.

Advertisers typically setup ppc campaigns on a PPC network and define how much they are willing to spend for each click that their campaign receives. Advertisers select keywords, keyword phrases, keyword groups, or categories in which they want their advertisements to appear.

CPC or Cost Per Click

Cost per click (CPC) is the sum paid by an advertiser to search engines and other Internet publishers for a single click on their advertisement, which directs one visitor to the advertiser's website.

PPC Bidding

Bidding in PPC campaign is the process where advertisers who are willing to spend the most money for a relevant advertisement get listed first on the publisher's website. *Google's PPC ranking system assesses CPC (cost per click), ad relevance, click through rate, and daily budget, so the order on which the ads appear is based on a number of factors. In the bid-based model, the advertiser signs a contract that allows them to compete against other advertisers in a private auction hosted by a publisher or, more commonly, an advertising network. Each advertiser informs the publisher of the maximum amount that he or she is willing to pay for a given ad spot (often based on a keyword), usually using online tools to do so. The auction plays out in an automated fashion every time a visitor triggers the ad spot.

PPC & Affiliates

In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, PPC implements the so-called affiliate model, that provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites. The affiliates provide purchase-point click-through to the merchant. It is a pay-for-performance model: If an affiliate does not generate sales, it represents no cost to the merchant. Variations include banner exchange, pay-per-click, and revenue sharing programs.

Benefits to PPC

When you setup a PPC campaign you can control the traffic. While a new website takes time to rank well in search engines, with PPC you can turn the traffic on and off. With PPC you can create almost instant traffic.

Unlike organic search listings you control the information (i.e. description) and where the visitor is directed on your website.

Another benefit to PPC listings is the opportunities for international exposure. Organic search listings vary in different geographical regions. With PPC you control where you are seen.

Click Fraud

Fraud has plagued PPC advertising medium since its inception, and while many PPC networks have made significant progress in combatting click fraud, it is still something to be cognizant of.

Tracking PPC

In order to determine how effective a PPC campaign is, it is important to implement tracking. Just because an advertisement has a high number of click throughs does not mean it is the best ad. It is easy to get users to click on "Free Software" but few of those clicks will convert to sales.

The Goal of PPC

A successful PPC campaign should be targeted not too narrowly and not too broadly. Direct the user to a relevant landing page that has a direct relationship to the keyword or phrase.

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