My Own Pirate Radio

Lots happening in search recently, especially in the local search segment.

• On Friday Google announced it acquired DoubleClick for $3.1B, beating out Yahoo!, Time Warner (AOL’s owner), and Microsoft in the bidding. This gives Google ability to place display ads (graphical ads) on sites, in addition to their existing text ads. In an ironic twist, both Microsoft Corp. and AT&T Inc. called for antitrust regulators to investigate the deal.
• Two days ago Google struck a deal with Clear Channel Communications to sell airtime on their 675 radio stations to Google’s advertisers. Clear Channel is America’s largest radio broadcaster.
• Also this week, Yahoo! expanded its agreement with a consortium of newspaper publishers to run their content on Yahoo!’s websites, and to place advertisements on the sites of the newspapers.
• In late March the News Corporation and NBC Universal struck a video content distribution deal with AOL, Yaho, MSN and MySpace. Some are casting this as an ill-fated effort to compete with YouTube (I agree), while the dealmakers claim it is more about creating a shared network of content and ads.

It’s neat seeing all the old media companies come around, albeit belatedly, to doing deals with the new media companies. It’s nice for the old media companies; they get a handy cash infusion, some positive PR, and new ad inventory to sell. But this is just a short-term fix. The new media companies get the better part of this deal, because:

1. They get to tap into the local sales force of the old media companies. This reduces a huge barrier to success in local search: the cost of creating and running a local advertising sales force, a.k.a. “feet on the street”.
2. They get to demonstrate their reach, innovation, and cost efficiencies to a new advertising base. (Google and Yahoo! are surely saying nice things about not trying to steal away advertisers from their new radio, television and newspaper publishing partners, but you’ve got to be skeptical about that in the medium to long term. Ad dollars are shifting online, fast. These deals only grease the skids.)

For an overview of US local search market trends, see LennAnn Prescott’s Hitwise blog post.

BusinessWeek also has more commentary on Google’s recent moves in the ad business.

Advertising continues to evolve. It used to be “cost-per-impression”: broadcast TV and radio ads, junk mail, billboards, banner ads. Then we got “cost-per-click”, the business model that powers most search engines today. Now a few companies are trying “cost-per-action”, where the advertiser pays only when a click on an ad leads to an action they define… like buying a product.

Google is apparently rolling out a broad trial of pay-per-action with some of their advertisers.

Because they are often paying for actions more likely to lead to sales than would a simple click on a link to a Web site, cost-per-action ads are often more expensive than cost-per-click ads. McGovern says that, on average, advertisers pay about 100 times more for a sale than they do for a lead on a customer, which is arguably what a click is. For example, an advertiser who is willing to pay 5¢ for a click on its baseball card ad is likely to spend $5 or more for a user who buys a baseball card.

This new approach will certainly have its challenges — new types of fraud, for instance — but I hope it goes well. Anything that more closely aligns advertising with results is good… it’s a step towards what we might call “efficient advertising”, and away from the spam-the-world approach that has dominated to date.

Now if we could just figure out how to make pay-per-action work with all that junk mail… hmmm.

[This is part 2 in a series.] Some people are pretty serious about promoting their blog. I am more laissez-faire about it; I love getting comments and email from readers, and I do keep an eye on reader numbers, but at the same time I don’t do much to drive traffic beyond attempting to write interesting content. For those of you who are more serious about proactively driving traffic, here are two posts you should check out.

1. This nice post by Alec Saunders gives great practical advice on how to get your blog noticed. Alec has been blogging for years, and it shows in his content, approach, and large visitor following. I’m a fan.

2. “The 120 Day Wonder: How to Evangelize a Blog”, by Guy Kawasaki. He is a little too mercenary for my tastes, particularly in his use of email addresses, but then as the consumate evangelist Kawasaki probably wouldn’t have it any other way. He also did an earlier blurb on his blog stats, “Total BS (Blog Statistics)”.

Mark Evans writes in “Web 2.0: Post-Newsweek Thoughts”,

Me: “So what’s Kijiji’s business model? How does it make money?”
Them: “We don’t have a business model. Everything on the site is free.”
Me: “Oh, then I guess Kijiji is a real Web 2.0 company.”
For months, I’ve been ranting about how the lack of viable business models within all these cool Web 2.0 services/applications is a huge and troubling problem. How can you create a business if the service is given away free?

It is odd, but it makes more sense when you look at the company ownership. eBay owns 25% of Craigslist, and wholly owns Kijiji. eBay is not in the same class as the so-called Web 2.0 companies. Very different motivations and much deeper pockets. Read the rest of this entry »

During my time in the MSN Search team we worked hard on making advertising “relevant and accretive to the user experience”. In other words, if you’re thinking of displaying an ad to your customer, make sure the ad actually helps the customer accomplish something they want. This is one of the premises modern search engine businesses are built on: the ads on search result pages are useful more often than not, because they are based on the words you yourself typed in. It’s simple, it’s relevant, and it works.

Many online businesses are heading in the same direction—relevant ads, often text-based rather than graphical—and backing away from the untargeted ads typical of old-school Web portals and conventional media such as TV, radio, and print. Sadly, most brick-and-mortar world companies I’m familiar with simply haven’t grasped the “useful advertising” concept, or don’t care to. Case in point: Esso (Exxon Mobil) recently installed TV screens in their gas stations around Toronto.

Read the rest of this entry »