Mike On Ads

Someone pointed me to an interesting blog post from StatCounter, that discusses how they were approached by an advertiser to place a ‘spyware’ cookie. What is a spyware cookie? It’s funny, I’ve always thought of “Spyware” as “Shitty desktop software that installs without user consent.” Which is, in fact, exactly what this wikipedia article says about it:

Spyware is computer software that collects personal information about users without their informed consent. The term, coined in 1995 but not widely used for another five years, is often used interchangeably with adware and malware (software designed to infiltrate and damage a computer respectively).

Interestingly enough, this dictionary.com entry has a strikingly different definition:

any software that covertly gathers information about a user while he/she navigates the Internet and transmits the information to an individual or company that uses it for marketing or other purposes

Ok, so I”m getting confused as hell. So next I did a Google Search for “spyware cookie” and clicked on the first entry and found this page.

Spyware Cookies are Intrusive
A spyware cookie is any cookie that crosses the line from helpful to intrusive. Spyware cookies are not interested in making your surfing experience better; the sole interest is to gather free marketing data to promote a sale of a product or service. Spyware cookies are placed on your machine by a consortium of websites that track your movement from one website to another.

Spyware cookies can track your every click and record all information you enter into non-encrypted online forms [...]

So I don’t know where the jackass from “anti-spyware-review.toptenreviews.com” got his education in online technology, but a cookie is a text file. I will personally pay someone $100 if they explain to me how a TEXT file can track your every click and record all information you enter into non-encrypted online forms. But really, what IS the proper definition? Well, I don’t like any of the three above, so why not throw in an academic’s perspective while we’re at it — namely here’s a quote from Ben Edelman’s site:

[...]“spyware” software — programs that monitor user activities, and transmit user information to remote servers and/or show targeted advertisements. As distinguished from the design model anticipated by whatis.com’s definition of adware (“any software application in which advertising banners are displayed while the program is running”), these spyware programs run continuously and show advertisements specifically responding to the web sites that users visit. Companies making programs in this latter category include Gator (recently renamed Claria), WhenU, and 180Solutions. Other spyware programs include keystroke recorders, screen capture programs, and numerous additional software systems that surreptitiously monitor and/or transmit users’ activities.

Wow, similar, but yet again, different! Ok, so since everyone and their mother seems to define spyware, I will too! I see a couple key themes: shitty, intrusive, advertising, personal information, communication, uberpowerful. So here goes!

Spyware, an uberpowerful software application that provides rather shitty and intrusive advertising on a desktop computer which communicates your personal information to some shady 14 year old in a basement in Oklahoma.

Spread the word! I won’t be the one to put this on wikipedia, but I dare someone to try! In all seriousness though — if we as an industry can’t get together an actually define what ‘spyware’ is, how can we stop it?

My girlfriend pointed me to a great ad today while she was browsing a discussion board. “Tickle the fat kid till he barfs!”. Check it out:

For those of you reading through readers, here are the frame by frame screenshots (gotta read the post for the full flash effect, including the peeing of the pants and the end barf…). In case you’re wondering how these make money, read my Punch the Monkey post.

Frame 1 — Pretty cute kid!

Frame 2 — Uhoh… did he just pee himself?

Frame 3 — … ready?

Frame 4 — ACTION!!

Wondering why people run these ads? Exactly for this reason — it’s too difficult NOT to tickle him, and then hopefully on the landing page you’ll give up some personal information and maybe even go for a free iPod.

I’ve created a page on errorsafe: Read it here.

This is a page that anyone involved with online advertising should read — including ad networks, site owners, portals and anybody else who is interested.

-Mike

UPDATE: Seems wordpress doesn’t put ‘pages’ in the feed, so I will track updates both on the page and here. If you are interested in errorsafe updates simply subscribe to the feed and watch this post.

Updates to Errorsafe Page

2007-03-24: Page Created
2007-03-25: Added cannis.org “Work and live in Canada” ads, with creative that has unobfuscated actionscript.
2007-03-27: Added actionscript for Matchservice creative
2007-04-05: Get Safe Online scam
2007-04-06: Added sports betting tips fake ad
2007-04-18: Added traveltray.com, xing.com and thinkindie.com
2007-04-23: Added getfreecar.com, and web.com

Sandi Hardmeier, author of ‘Spyware Sucks‘, has caught AOL not properly auditing their ads and running Banner Pop and Active-X ads. Click for article. What’s interesting is that she caught MSN running Errorsafe just a month ago, which she detailed here.

I’ve spent a lot of time tracking down this scam and I think it’s time to share that knowledge. Shortly I will post all my knowledge of this scam — what to look out for and how I think as an industry we can stop it. Stay tuned.

-Mike

Check it out — www.newyorktime.net.

Ok, so what’s the deal here? There’s clearly no website here, all I see are ads that are related to the New York Times. Well, what you’ve accidentally stumbled upon is a page managed by the new and highly lucrative Domainer industry. Domainers are companies that acquire massive numbers of domains, create pages filled with ads, and then rake in the cash. According to this CNN article the domain ‘Candy.com’ rakes in almost $300 per day in advertising revenue. In a year that means by simply placing ads on this page, someone can make almost $110,000! Crazy right?

Now here’s the best part. When I went to newyorktime.net, the second ad on the page was for the real New York Times. Check out the URLs we hit when we click:

So first off, notice that the ad is being run through Google. Ok, so Google likes the Domainer space. Next we hit ‘ad.doubleclick.net’, Doubleclick’s adserver. This implies that the advertiser paying for this click I just performed is using their own adserver. Next, we go to ‘homedelivery.nytimes.com’ and I see an offer page for getting the real New York Times delivered to my house. The really interesting piece here is that chances are that the New York Times is paying for this click as part of their Home Delivery ad campaign. Chances are that the majority of visitors to ‘newyorktime.com’ actually meant to go to the ‘newyorktimes.com’, and the actual New York Times is now paying to redirect users to where they intended to go.

Considering you can buy a domain for $8.95, that’s not a bad deal right? So, is this a scam or a valid business model? Lets look at it from two different perspectives, the advertisers paying for the ads and the people looking to buy domains.

The Advertiser: So you might say, “Why does the New York Times have to pay to send users that mistyped a domain to go to the real site?” You’re right, that kinda sucks, but then again, why didn’t the New York Times buy all potential spellings of their domain? Even so, now consider the case where the New York Times advertises on www.thenews.com, another parked domain. In this case, the user is clearly looking for a news bit didn’t actually mistype the domain. If you owned a news site, wouldn’t you want to bring this user to your property? Exactly! Parked domains provide some of the most targeted and highly relevant users in the world, and advertisers are willing to pay big bucks to show you ads.

The Domain Buyer: Here is where I think more debate comes in. For the average Joe, it is now practically impossible to get any sort of normal .com domain name. All of the good ones have simply been taken. But on the other hand, these Domainers do bring a certain efficiency to the market. It’s hard to argue that the true value of ‘candy.com’ is $8.95 when you can make $300 a day in advertising profit! Creating domain marketplaces creates efficiency. The domain names that people will type in themselves because they are that good will cost in a lot of money whereas ‘mikeonads.com’ was still freely available a month ago =). So, if prices only go up how is this good for the buyer? Well — because key domains become available. If Candy.com were $8.95, some mom & pop shop in Kansas City will buy it for their little kid’s candy stand. The thing is, of the thousands of people who go to Candy.com every day, very few of them will live in Kansas City. On the other hand, a large candy producing corporation wants to help it’s brand with a short domain name and can also better monetize the thousands of visitors that will naturally come to Candy.com every day. So yes, there’s no more ‘free lunch’ when purchasing a domain, but if you get funded for a legitimate business, you no longer have to worry that you’ll have to settle for ‘thebestcandymakerintheworld.com’. Instead, if you think it’s valuable enough purchase a domain like ‘Candy.com’ from it’s owner, or domains like ‘Candycenter.com’ from Domain Marketplace companies like BuyDomains.

The one thing that I would like to see is a centralized marketplace for domains. Currently there are too many methods, just try doing a Google search for ‘Domain Marketplace’.

More posts to come on this topic. There are definitely some questionable topics here — search rankings via fake content, etc. etc. which need to be discussed. But at the core — the true value domainers bring to the internet industry is efficient pricing of domain names. And hey, if you could make a free $100k/yr just because you own Candy.com, wouldn’t you?

Dave Barousse has a great blog post on giveaway advertisers (same guys as my ‘punch the monkey’ post) using blog spam to promote giveaway offers. Check it out here.

Over the past two years at Right Media on more than one occasion have I talked to an end user who was frustrated with ‘popups’ on his computer. The emails that have been sent can become pretty extreme. I remember notes like, “Burn in hell, I hope you die”, “Stop those f*cking popups you f*ckers” or “Get this sh*t off my computer!!” (you get the point). Although these are rather extreme responses, there is most definitely a huge misunderstanding of popups out in the world.

First off, what is a popup? In it’s simplest form, it’s an advertisement that is shown in it’s own window. Popups get onto your computer via two methods: the websites you visit or some software installed on your machine. In my mind, it’s the latter that has given popups such a terrible terrible name. There is nothing more despicable than spyware and I am strongly opposed to any valueless (or minimal value) software that later bombards you with popups.

Ok, we’ll write about desktop software later (trust me, I’ll get all riled up if I start now), so lets stick to normal websites for now. So first, the most basic question, why do websites show popups? It’s not difficult for them to integrate an ad in their page, so why do they have to open a new one? Well, the answer is pretty simple — popups work. People click, convert, interact, they do everything more with popups, even though they hate them! I’ve never quite understood this myself, but basically you are 10 to 100 times more likely to do something with a popup compared to a simple banner ad, and this translates into vastly higher rates.

If you think about it, it kind of makes sense. Simple ads blend into pages and are easy to miss. You might be flipping through pages quickly and not paying attention to any of the ads. Popups, and especially popunders break the normal flow of your web browsing. A popup requires an action (closure of the window), and a popunder gives a quick “hey whatsup” when you think you’re ending your browsing session. Now web sites need to make money off the content they provide to you (generally for free), and hence they want to make the most they can from the ads they show you. If a site can double it’s revenue by showing you one popup for each session, then of course there’s a huge incentive for them to do this.

So I’m starting to sound pro-popup… well, I’m not! Here’s the thing, I have popup blocking software installed, yet I continue to get popups from webpages. I have actively set my browser to not show me popup advertisements, yet I still do? Isn’t there something wrong there? Lets think about it this way:

1 – Do I have the right to refuse popup advertisements from a website who’s content I get for free?
2 – Does the advertiser have a right to bypass my popup blocker?

Well, I’m shitty at legaleze, so lets just think morally here. On the first, I think that I have the right to refuse popup ads. I’m opening a site in one window, I give the site the rights to display content in that one window. If they want, they can show ads all throughout the damn window, if they’re site is unusable I’ll just stop visiting. For example, check out Cheatcodes.com (screenshot below). The number of ads is just ridiculous. But here’s the thing, it doesn’t actually bother me, because I’ll simply go out and find another website that can supply me with cheatcodes that isn’t going to bombard me with ads. So in short — yes, I feel strongly that I have the right to block popups. Just think about it technically. On a windows machine, every new window is a new application process — so in essence, I’m saying I have the right to block a website from launching a new application process on my machine.

So on #2 – My stance here is pretty similar to #1 — A popup is a new window. When I load a web page then I grant that page the right to place content in that space. I do not give them the right to open a new process and throw popups in there! I’ve seen some really raunchy popups, and no, you do not have the right to bypass my software! Earlier today I got an extremely raunchy ad for ‘sex-search’ (I won’t post a screenshot), but lets say the url is here in case you’re curious: sex search landing page.

Ok, so basically I’ve just said that I think popups shouldn’t exist — well — not really. Here’s my proposal, rather, a ‘truce’. People hate popups, but they work, they make money, so it makes sense for the websites we like to better monetize their inventory so that they can provide us with better content.

1. Publishes will limit popups to once per user per day
2. Publishers will allow users to ‘opt-out’ of popups
3. Publishers will ensure that all popup ads are ‘clean’, quality advertisements (see screenshot below)
4. Users will remove popup bypassing software, or, ‘opt-in’ to popups for their favorite websites

Ok, so I’m dreaming and such a ‘truce’ will never happen. First off, the misperception out there about popups, people hate them and will probably never actively ‘opt-in’ to receive them from quality websites. Second, there will always be that site (or many many of them) that try to take advantage of this truce. What I can hopefully motivate you to think about is who’s getting paid for you to look at that pop. Assuming you’re clean of adware, it’s probably the website you just visited, so don’t complain too much, you’re browsing the web for free aren’t you! Site owners — Don’t abuse the power you have over a user’s browser. If you do choose to do popups, limit the frequency and keep them tasteful.

The latest craze in online advertising nowadays seems that everyone wants to build an ‘exchange’ or a ‘marketplace’. Sure, there are certain efficiencies that a marketplace provides, but in all honesty, it’s all about the cookie.

You see, there’s no need for more marketplaces, there are plenty of them — Adsense, Ad.com, Tribal Fusion, and any other ‘ad-network’ that you can think of. The problem with each of them is that they are ‘closed’ marketplaces. Not just from a ‘business’ perspective, but from a technology perspective as well. Sure, anybody with credit and a legitimate offer can buy from any ad-network, but lets say you want to buy based on your own data. It’s simply not technically possible to do that today. Well, sorry, it is technically possible, just a royal pain in the a$$ if you do.

Lets say you’re a marketer and you have some information about a set of online visitors that is extremely valueable. E.g., lets say you know for a fact that they want to buy a car because they took part in one of your promotions. Now, first off, lets just assume that every network has behavioral capabilities (which they don’t). If you wanted to buy your users when they hit inventory that’s available on one of the many marketplaces (networks) out there, you would have to pass that data into your users’s cookie for each marketplace’s cookie. You see, when you come to this site, you get a cookie from mikeonads.com. I can write whatever I want into that cookie. I can’t see any of your others cookies nor can anybody see my cookie when you go to other sites. So, how do you get data into each Marketplace’s cookie? Sadly, this is not something you can “push out” to the user, you can only set or change cookie information when a user comes to you. E.g., if after-the-fact you decide you want to work with Marketplace D when you’re already working with A,B & C, then the only way in which you can tell put your data into Marketplace D’s cookie is when the user comes BACK to your site!

So how do you actually set information in another person’s domain if you can only access information in your own cookie space? Rather simple actually, anywhere on your page you include a link to a tiny 1×1 gif image to the 3rd parties server with some information attached to it. For example, you could put:

http://ad.someadserver.com/setbehavior?site=marketer1&behavior=likescars

Someadserver.com would then interpret that as “marketer1″ just told me that this user “likescars”, let me store that in my cookie. Can you imagine putting 20 pixels on your promotion page just to gather data? Well, that sounds like a pain doesn’t it? Well it is — and hence, most people don’t do it. So, you say, I hear there are these new ‘exchanges’ out there (e.g. Right Media has one, DoubleClick is building one, and several others are trying). Well, what really defines an exchange? It’s a platform that lets buyers, sellers and brokers all work together using the same system. And what is the only way that will work in online advertising — a single cookie domain.

If all the mini-marketplaces out there worked on the same platform, then our marketer earlier wouldn’t have much of an issue reaching his audience. He would simply put his data into the exchange cookie and then buy from whichever sellers on the exchange have ads to show to his users. It’s not just behavioral targeting that benefits from an exchange, many other factors as well.

Lets say a second marketer wants to reach as many unique users as possible with his new ad campaign. So, he goes out to all the major ad networks and places a buy with the top 10 networks and portals and informs each of them that they are only to show each user his ads once and only once. Well, ignoring the fact that some people clear cookies and hence they lose the ‘frequency cookie’, how many different ad networks serve you ads on a given day? If you go to one site, they might be working with Ad.com, another with Tribal Fusion, etc. etc.. Well, if this marketer is paying big bucks, each network will choose to show you this ad, but only once of course! The problem is, none of these mini marketplaces knows about the other, so nobody will know if you first saw the ad on the NY-Times from Ad.com when you show up on Yahoo. The end result, you might actually end up seeing the same ad many times! Guess what — a unified cookie solves that problem!

So why the title “Battle over the Cookie”? Well, people are starting to catch on that if they own the cookie, they own the market. Think about it, if one exchange succeeds in capturing a massive percentage of the market, the barriers to entry will be practically insurmountable. What value is your exchange if you can’t provide services like global frequency caps, cross publisher behavioral targeting, etc. etc.

So who’s fighting? Well, my employer (Right Media) for one. Doubleclick is said to be launching a marketplace, AdECN is another. I’d expect others to start soon — as long as someone hasn’t won, there’s still a chance.

Doesn’t it sound scary that an entire industry is so dependent on a little piece of data that many users hate? How many spyware-detection programs flag cookies as ‘desktop software’? Well, in case it hasn’t gotten to you, it’s terrifying and the industry is scared. If Congress were to pass a law that said 3rd party cookies are illegal, what would we do? There are some interesting technology solutions out there that claim they can identify you by your computer ‘fingerprint’ that might be able to help, but in the near-term, the industry would be screwed.

So kids… hate online advertising? Clear your cookies. Like the websites you vist? Keep ‘em =).

We’ve all seen this ad… it loudly proclaims “Punch the monkey to win a free _____”, fill in the blank with whatever is new and out today. A ps3, an xbox, maybe even an iphone (which hasn’t even been released yet). It’s perhaps one of the strangest phenomenons of online advertising, and I have yet to meet a person not in the industry who understands how these make money.

So lets look at an example I just saw on myspace.com:

So, if I hit this monkey ten times, I’m going to get a FREE PS3!!! OMG that’s awesome, I’ve always wanted a ps3 (or not.. had it been a ‘free wii’ ad I would have been much more likely to click)! But wait… someone told me once, “There’s no such thing as a free lunch.” Ok, so what’s the catch? Somebody is paying somebody here right? And how can I possibly get a ps3?

So, lets walk through the ad and follow the money. First, we gotta hit the monkey (kind of fun actually). GOT HIM!

Ok, so this takes me to http://onlinerewardcenter.com/rd_p?p=154103&t=528&c=12814-ps3_728_monkeygame&a=, where I see that I actually have a CHOICE of the free gift I can get… life is getting better! Now, at this stage, no money has exchanged hands yet. Publisher hasn’t gotten paid, and advertiser hasn’t made a penny.

Now entering in my zip on this page takes me to the next page which is some sort of registration form:

Ok, seems harmless enough. Why don’t we try filling this out? Before we do, lets take a look at the ‘terms and conditions’ (conveniently hidden at the bottom of the page). Hrm…

By participating in the programs offered on the Site (each, a “Program”), you signify your express consent to receive information from Company in electronic format. You will need a computer with browser and Internet access to receive such electronic records. Electronic records may include terms and conditions, agreements, privacy policies, Gift redemption voucher(s) (each, a “Gift Redemption Voucher”) and other items.

Translation — We can send you any email we like if you fill out this form.

In attempting to become a Member, you agree to provide your personal contact information (you must provide your full legal name, postal address, land line or mobile telephone number and valid email address) in order to receive solicitations, marketing materials and other communications from us and third party advertisers and marketers (collectively, “Third Party Partners”), via e-mail, telemarketing, direct marketing, mobile marketing and any other method, as set forth in the Privacy Policy. In addition, you agree to participate in the Programs in exchange for the chance to receive a gift or other promotional offer from Company (“Gift”).

Translation — We will be sending you a lot of email/regular mail since you just agreed to it

Well, that doesn’t seem too bad. This is the first interesting piece. By filling out this form, you are now ‘converting’ on the very first step of this offer, namely, providing personal information. As you can see from the terms and conditions, this company is going to (with your consent) sell your personal information to various marketers. If you do continue, expect to see a large increase in the amount of email you get — ok… lets be honest, spam email, as even though you consented and opted-in to this, it’s not the type of email you’ll be reading. So how much is this information worth? It really depends on who you are and how much info you provide. Last I heard, an name and email address was worth about $1.00, whereas full registration information (address, phone, etc.) was worth more like $2.50 – $5.00. So if I fill out this form, somebody is going to make a couple bucks!

Ok, well, I REALLY want that FREE ps3, so lets do it! I can handle a bit of ‘bulk email’. So, what do we see now:

Surveys? I don’t want surveys, I want my free PS3!!! Ok, skip this.. it says I must answer truthfully to get my free PS3.. Ahhh… it just keeps asking me these questions!!! Where is my free PS3?

Ok, lets take a look at the Program Requirements. How many questions do I have to answer??

2. For this promotion, Playstation 3, you must complete a total of 10 offers as follows: Page 1 – complete any 2 offers; Page 2 – complete any 2 offers; Page 3 – complete any 6 offers to get your gift. [...] If you do not correctly, and fully, complete the number of Offers required on each page, you will not be entitled to a Gift. If you have any questions, please contact us.

I have to complete 10 offers? Holy shit. What’s an offer? Well, after finally getting through the survey, I get to ‘page 1′ of the official offers, and they aren’t the kind of thing to sign-up for on a whim. I see Netflix, Blockbuster, a Discover card? (who has a discover card anyways?).

Ok, so lets get to the point, can I get a free ps3? If so, what’s the catch, and who gets what?

The offers that this marketer has are all pay-per-lead based. For example, one of the offers I can signup to fullfill my requirement of ’10 offers’ is a Netflix subscription. Netflix probably pays somewhere between $50-$100 for a new user, bam, marketer makes money. Other offers are credit cards, book clubs, and a whole assortment of random stuff. For every ‘offer’ that I sign up for the marketer makes money. If I actually do go out and fill out 10 offers I’m guessing the marketer is making between $300-$1000, depending on what I signup for. How much is a ps3? Exactly, the fact is, even after sending you a ps3, they still make money! Not to mention the money they make from selling your personal information and from all the users that only completed one to nine offers and didn’t fully complete the process.

Interestingly enough, the advertisers behind the offers don’t mind this at all. There are ample choices of offers to choose from, which means that if you signup for Netflix in an attempt to get a ps3, you’re probably somewhat interested in Netflix already.

Is it worth it? Hell no. Most offers are subscription based, which means that once your’e done with this whole process and get your PS3 you have to go back and cancel all 10 before you get charged up the a$$ in fees. I would personally just spend an extra month or two saving and go buy the damn thing in the store. Although — If you do go through the process, at least go for the free wii =).

So why do you see so many of these offers when you browse the web? As you read above, the payout happens early in the process, when you giveup your personal information. This is a very easy thing for users to do and many do it without realizing what they’re signing up for, and hence, these offers can pay high CPMs. Also, since there is no ‘marketing budget’ here, the money will simply keep flowing as users continue to signup.

There is also a good lesson here for more ‘traditional’ marketers. There can be huge value in a user’s personal information. I’m not saying to go out and start selling it, but instead of aiming on getting users to signup for your deal directly after clicking on your ad, why not start by just asking him about who he is and what he likes? You can then easily send more information or retarget the user (more on that later) in future campaigns. The less impulsive the purchase, the harder it is to get someone to signup.

Interested in reading more? Wired has a great article here.

So you own a small site, you have about 5000 page views a day, and you start thinking to yourself, “Hey, it’d be awesome if I could make some money off of my great website.” So you start shopping around for advertisers and quickly get the sense that all small sites work primarily with google. Now why would this be? There are four key ways in which advertisers can monetize your inventory:

1. Branded Display — e.g. Ad.com, Niche-networks
2. Contextual — e.g. Google Adsense, Yahoo, Quigo
3. Behavioral — e.g. Tribal Fusion, Tacoda
4. Performance Display — e.g. Fastclick/Valueclick, CPA Empire

Before I delve into these into more detail, everyone has to understand something: advertising is all about reaching relevant eyeballs. Whatever the method used, the end goal is the same — if I’m selling sexy shoes, I want people to buy sexy shoes. I can go about this a couple ways but at the end of the day, I’m going to compare the amount of money I spent on advertising and the amount of profit I made from the sexy shoes that I sold. The smaller and the easier it is to purchase my good, the more likely I am going to be focused on ROI & performance. If I’m Netflix selling $4.99 subscriptions, it’s easy to track who signed up from where as I will have tens of thousands of people signing up per month. On the other hand, it’s difficult for Ford to track ad campaign performance… it’s hard to prove you bought a new Ford F150 because you saw an ad for it on automotive.com.

Ok… so eyeballs it is… lets look at the four methods above now:

Brand: If your site is good enough to be on the brand wagon you’re in luck. Branded advertisers have high standards on the inventory they will run on. The demand that it is relevant to their campaigns (e.g. Ford will want to run only on Auto sites) and they are willing to pay a premium to get there. Campaigns are generally CPM with little or no concern for performance. The problem here is that unless a site’s users are extremely desireable it’s hard for a site with low volume to get onto a branded site list. Ford wants to sell cars — to do this they want to find car buyers and associate the ‘Ford’ brand with their target audience. They might run campaigns for a new sexy sportscar on gaming sites and ads for more fuel efficient sedans on the New York Times travel section (who knows?).

Contextual: Thanks to Google this has become the big mama of online advertising. Contextual engines scrape your pages content and choose advertisers that match the content. Got a site about shoes, expect to see shoe advertisements. Now, going back to the eyeball idea, if I’m selling shoes, I want people interested in shoes. If you have a site that reviews the latest and sexiest shoes, then I will want my ad on there. On the other hand, if you have a personal blog and are complaining about how the shoe salesman smelled bad at the mall today, I probably don’t want my ad on your page. Contextual rocks on relevant page content and sucks on most Web 2.0 sites. When was the last time you saw a relevant text ad on Myspace.com?

Behavioral: Unlike Brand and Contextual, this is the first type of ad where we don’t care much at all about the page-content. We have an idea of what the users eyeballs are like and want to show him ads that he is going to enjoy the most. If you’re not famiiar with behavioral networks, read my post here. The biggest challenge here is for a site to get INTO the behavioral network. Even though for the purposes of serving one ad they don’t care what your site content is like, they will most surely want to use your site and your users to expand their reach & user information databases. Tribal Fusion, for example, requires 2k uniques per day, “professional site design” and a “highly active user-base”.

Performance Banners: Ok, so I saved my favorite (and perhaps worst for a small site) for last. Performance based advertising means that somebody is tracking clicks and/or conversions (actions) on their campaign and either only paying out on an actual “action” or adjusting bids on different sites according to the performance. Don’t be fooled by networks that pay you on a ‘CPM’, unless the ads they are showing are brand advertisements, somebody somewhere is tracking ROI & performance, and it’s impacting the CPM you’re getting paid. So why doesn’t this work for small sites you may ask? Well, long story short… small sites suck. Ok, it’s a bit of an exaggeration, small sites suck for performance would be a more accurate statement.

Lets go back to eyeballs. Your site has eyeballs, and I’m going to pay you everytime one of your eyeballs buys a pair of sexy shoes. Lets say the shoes cost $30, my production cost is $0.50 (yay for sweat shops!) so I’m willing to pay you $14.50 for every person from your site that buys one of my pairs of sexy shoes. Now there is one other advertiser in the network I’m working with he is selling sports gear (hats and stuff) and is willing to pay $10.00 to the publisher for every purchase.

Now, when a users comes to your site, which ad should the network show? Lets say your site is brand new to the network. Well, this network has no contextual technology to tell me what the site is about and he also doesn’t have a behavioral engine, so what can the network do? The only thing he can, test his campaigns on the site and learn what the performance is like.

Ok, for the next 5000 impressions (1k unique users?) the network randomly chooses between the sexy shoes and the sports paraphernalia. Now what… what do you think the chances are that somebody actually bought a pair of shoes or a hat? On the average site, I would imagine, right around 5-10%. Think about it, if the average CPM on your site is around ~$0.50, and this offer were to be competitive, you shouldn’t be expecting a single conversion until you’ve run at least 30,000 impressions. For better statistical accuracy on the performance of this campaign on one site, think more like 300,000 impressions. Starting to see why small sites suck? The amount of volume necessary to ‘optimize’ the average campaign is simply too much for the measly 5k impressions a day. Imagine if the network had 500 campaigns. How can learning be done on 500 campaigns with just 5000 impressions a day?

Of course there are various techniques to limit the amount of learning that needs to be done, but the fact remains that significant volume must be sent to an performance advertiser before one can get a good idea of the actual performance.

So, what should the small site guy do? Think about your eyeballs & page content. Is your content very relevant to the eyeballs? Then go contextual. Do you have particularly valuable eyeballs? Go for behavioral or brand. None of the above? Try performance based networks, but don’t expect good CPMs until you get high enough volume for some sort of learning to be done.

Next up? Not sure, probably some thoughts on learning techniques, merging behavioral and performance, and other ideas…