The ad-supported web: Will it fall under its own weight?

Banner advertisingFor the past (nearly) 20 years, the biggest thing that’s kept the Internet free for users is advertising – banner display advertising in particular.

Bloggers and other online publishers large and small rely on revenue from web banner ads to fund their activities. That’s because the vast majority of them don’t have pay walls … nor do they sell much in the way of products and services.

Because of this, the temptation is for publishers to serve up as many display ads as possible on each page.

It’s not unusual to see web pages that tile ten or more ads in the right-hand column. Usually the content of these ads has no relevance to readers, and the overall appearance isn’t conducive at all to reader engagement, either.

And that’s the problem.

Because of conditioning, people don’t even “see” these ads anymore. The advertising space has become one big blur – as easy to gloss over as if the ads weren’t even there to begin with.  (When’s the last time you clicked on a banner ad?)

Attempts to come up with other display advertising types – pop-ups and pop-unders, animations and other rich media, skycrapers and so forth – haven’t done much to change the picture. Indeed, they’re so ubiquitous – and so predictable – we don’t even consider the ads to be annoying anymore; they’re just part of the “décor.”

I’ve blogged before about how clickthrough rates on banner advertising are bouncing along in the basement, making them less and less valuable for advertisers to consider placing. And ads that are priced on a pay-per-click basis can’t be giving advertisers much in the way of revenue either, since relevance and engagement rates are so abysmally low.

The bottom line is that we now have a “lose-lose-lose” situation in online advertising:

  • Advertisers lose because of near-zero user engagement, thereby limiting their potential to drive business.
  • Publishers lose because ad revenues aren’t sufficient to bankroll their activities.
  • Readers lose because of lack of relevance and an incredible degree of page clutter.

So it seems that the ad-supported online publishing model is in a bit of a fix – and the question is how things can evolve to create a more satisfying result for all parties.

I’d be interested in hearing your thoughts on this issue:  What will online publishing look like in another five or ten years?  Anyone willing to hazard a guess?

Google Gone Wild: Has its AdWords pay-per-click program become too costly for businesses?

Google advertisingNo one should be surprised by the huge success of Google’s AdWords pay-per-click advertising program. Almost single-handedly, that service has vaulted the company into the top ranks of U.S. corporations.

And why not? As an advertising concept, pay-per-click has no peer. Capturing the attention of customers when they’re in the midst of searching for specific goods and services is the ultimate in effective targeting.

What’s more, Google’s pioneering advertising model, where advertisers set their own bid pricing and pay only when someone clicks on a link to their web landing pages, made the program affordable for everyone – from the biggest national brands down to the neighborhood store.

Google also offered all sorts of geographic and time-of-day filters to make it easier for businesses to target people at the right time and the right place … yet another boon to smaller businesses that otherwise couldn’t hope to compete against the big national players.

Many advertisers were able to participate in pay-per-click programs at a fraction of the cost of traditional display advertising, where advertisers pay significant fees up-front for “wait and wish for” customer engagement.

A few years back, it wasn’t unusual to be able to conduct a lucrative AdWords program bidding, with clickthrough pricing running well below $1 per click.

Because Google continues to possess the lion’s share of search activity (two-thirds or more of all search volume despite the best efforts of Bing/Yahoo and others to chip away at it), it was only natural for more and more advertisers to gravitate to Google’s AdWords program as the best venue for pay-per-click advertising.

But the temptation to get in the game has had the predictable result: pay-per-click bid rates have been climbing steadily.

Whereas before, an advertiser could expect to get good exposure on search results pages with a modest bid, it’s not possible to accomplish that anymore without bidding $5, $10, $15 or even more per click.

That’s beginning to drive some businesses away – particularly smaller ones without the deep pockets of the big firms.  For for many of them, it’s simply not sustainable to pay that much money just to get someone to visit their website.

AdGooroo, a search intelligence database firm that studies the pay-per-click market, reports that ~96% of pay-per-click advertisers spend less than $10,000 per month on such programs. That compares to millions of dollars spent by the largest companies.

Richard Stokes, AdGooroo’s founder, states this: “The only way for smaller advertisers to get an edge is to spend a lot of time improving the quality and relevance of their ads. The problem is that everyone else is doing that as well.”

So where does this leave us now? We’re beginning to get some hints that Google may have tapped out on advertiser demand. Some companies are dropping pay-per-click programs altogether, while others are scaling back while redirecting resources to other forms of promotion – traditional and social.

We have additional proof of this in the earnings report filed by Google just last week. The company reported that advertising sales continue to grow, but at a slowing rate.

And even more interestingly, average cost-per-click rates have declined by ~15%. That’s the first-ever decline since the AdWords program was launched.

Here’s another development:  heightened interest and focus on obtaining better natural search rankings by optimizing websites for content relevance.

Imagine that:  companies looking for ways to make their websites more relevant to viewers as well as search engine bots!

The heightened SEO emphasis has worked for many companies – at least up until now. Google may want to increase advertising revenues, but it also wants to ensure that its search functionality continues to deliver the most relevant and quality results so that users don’t begin to migrate to other search platforms.

But some advertisers may be wondering if the “Chinese wall” between advertising and natural search is as high or as airtight as it once was. They contend that their natural search rankings seem to perform better when they’re also actively engaged in pay-per-click advertising campaigns … and perform less well when they’re not.

Whether there’s any actual proof of this happening is mere conjecture. After all, the same company that runs AdWords is also running the search algorithms. So there’s really no way to prove this from the outside looking in.

The Free Lunch Ends on Facebook

Promoted posts on Facebook is the only way to get exposure anymore.
Promoted posts are the only way to ensure decent exposure on Facebook now.

It had to happen.  Suffering from a raft of unflattering news stories about its inability to monetize the Facebook business model and under withering criticism from investors whose post-IPO stock price has been battered, Facebook has been rolling out new policies aimed at redressing the situation.

The result?  No longer can companies or organizations utilize Facebook as a way to advance their brand “on the cheap.”

Under a program that began rolling out this summer and has snowballed in recent months, businesses must pay Facebook anywhere from a fiver to triple figures to “promote” each of their posts to the people who have “liked” their pages plus the friends of those users.

And woe to the company that doesn’t choose to play along or “pay along” … because the average percentage of fans who sees any given non-promoted post has plummeted to … just 16%, according to digital marketing intelligence firm comScore.

Facebook views this as a pretty significant play, because its research shows that Facebook friends rarely visit a brand’s Facebook page on a proactive basis. 

Instead, the vast degree of interaction with brands on Facebook comes from viewing newsfeed posts that appear on a user’s own Facebook wall.

What this means is that the effort that goes into creating a brand page on Facebook, along with a stream of compelling content, is pretty much wasted if abrand isn’t  willing to spend the bucks to “buy”exposure on other pages.

So the new situation in an ever-changing environment boils down to this:

  • Company or brand pages on Facebook are (still) free to create.  
  • To increase reach, companies undertake to juice the volume of “likes” and “fans” through coupons, sweepstakes, contests and other schemes that cost money.
  • And now, companies must spend more money to “promote” their updates on their fan’s own wall pages.  Otherwise, only a fraction of them will ever see them.

Something else seems clear as well:  The promotion dollars are becoming serious money

Even for a local or regional supplier of products or services that wishes to promote its brand to its fan base, a yearly budget of $5,000 to $10,000 is likely what’s required take to generate an meaningful degree of exposure.

Many small businesses were attracted to Facebook initially because of its free platform and potential reach to many people.  Some use Facebook as their de facto web presence and haven’t even bothered to build their own proprietary websites.

So the latest moves by Facebook come as a pretty big dash of cold water.  It’s particularly tough for smaller businesses, where a $10,000 or $20,000 advertising investment is a major budget item, not a blip on the marketing radar screen.

What’s the alternative?  Alas, pretty much all of the other important social platforms have wised up, it seems. 

For those businesses who may wish to scout around for other places in cyberspace where they can piggyback their marketing efforts on a free platform, they won’t find all that much out there anymore.  Everyone seems to be busily implementing “pay-to-play” schemes as well.

FourSquare now has “promoted updates” in which businesses pay to be listed higher in search results on its mobile app.  And LinkedIn has an entire suite of “pay-for” options for promoting companies and brands to target audiences.

It’s clearly a new world in the social sphere … but one that reverts back to the traditional advertising monetary model:  “How much money do you have to spend?”

“Corporate Speak”: Updating the Buzzword Baedeker

Corporate buzzwords
Corporate buzzwords: Meaningless blather, signifying nothing.

All of us are familiar with them: jargon words and phrases that have become so overused, they’re nothing more than meaningless noise.

These are the so-called “descriptive” terms that are meant to add flavor and emphasis to a particular subject, but are more likely to make you want to roll your eyes – or maybe even reach for the nearest comfort bag.

Traditionally, the worst offenders have been high technology companies and other B-to-B firms when it comes buzzwords. But we’ve been seeing the phenomenon leech into consumer categories as well, such as automobiles and healthcare services.

Even worse, we’re now seeing a new generation of buzzwords coming to light, joining the veteran terms that have been plaguing us for years now.

Some of the old standbys are still overused today, unfortunately.  They include terms like:

  • Cutting-edge
  • Flexible
  • Next generation (or the too-cute variation NextGen)
  • Out-of-the-box
  • Partnering
  • Robust
  • Seamless
  • Solutions provider
  • Synergies
  • Toolbox
  • Turnkey
  • Value-added
  • World-class

Today, one may be more likely to encounter a crop of more contemporary-sounding – but equally obnoxious – phrases such as these:

  • Best-of-breed
  • Best practices
  • Core competency
  • Groundbreaking
  • Integrated
  • Mission-critical
  • Scalable
  • Thought leader

Much as we’d like for these buzzwords to just go away quietly, that’s hardly likely. And there’ll be plenty more new ones to come along in the future.

In fact, marketing strategist David Meerman Scott and others are already taking a stab at predicting tomorrow’s new buzz terms. You can view one such prediction here.

Unfortunately, there aren’t any buzz-cuts in the offing when it comes to lowering the level of “corporate noise” out there, however welcome that might be …

So if you can’t beat ’em … join ’em.  Are there any particularly irritating buzz terms you encounber that aren’t noted above?  Post a comment and let’s see what we can add to the list.

Consumer buying behaviors: The power of choice … or not?

Toothpaste Aisle -- too many choicesIf you were to poll consumers, most would probably tell you that they love to be given many choices or options when it comes to merchandise and services.

And why not? Everyone recalls hearing about the “bad old days” of the Soviet Union and Communist China, when people had the choice of one type of bread or one color of clothing.

In the United States and other Western economies, we’ve long provided consumers a vast array of selection — sometimes with very little actual differentiation.  And those choices have proliferated all the more in recent years. 

[Take a walk up the toothpaste aisle at your local retail store and you’ll see “product choice, circa 2012″  in action – and on steroids.]

From the mundane to the important in goods and services, we have more choices today than ever before. But how well are we coping with having all of these options?

Not well at all, according to Barry Schwartz, the author of an important book on the topic. His book, The Paradox of Choice: Why More is Less, was published back in 2005 but is still quite timely today – perhaps even more when considering what’s happened in the ensuing years to things like the latest range of satellite television viewing package offerings from DirecTV.

Dr. Schwartz, who is a professor of social theory at Swarthmore College, posits that people are often overwhelmed by everyday decisions that have become increasingly complex due to the burgeoning number of available choices and options.

This over-abundance of choice happens not merely in the realm of toothpaste, but also in big decision areas such as selecting a healthcare provider, making investment decisions, deciding whether to move to a new city or state, or selecting a college or other educational program.

According to Dr. Schwartz, this is what often happens when confronted by so many choices:

 People question their decisions before they even make them

 The myriad of choices can set up unrealistically high expectations

 Depending on the importance of the decision to be made, too many choices can actually lead to decision-making paralysis

At what point the lines of “too few choices à la Havana” and “too many choices à la Atlanta” cross, differs depending on the situation: What might be a beautiful array of options for one person may induce an unacceptable degree of stress for another.

Dr. Schwartz lays out a number of suggestions for people who find that the bevy of choices produces too much stress, too much anxiety, or simply too much “busyness” in their lives. In turn, Harvard Business Review bloggers Anna Bird, Karen Freeman and Patrick Spenner help by coming at it from the other side.

This trio of business writers tells marketers, “If customers ask for more choice, don’t listen.” Their advice, as paraphrased by search marketing über-specialist Gord Hotchkiss, is this:

“The harder consumers find it to make purchase decisions, the more likely they are to overthink the decision and repeatedly change their minds or give up on the purchase altogether. In fact, regression analysis points to decision complexity and resulting cognitive overload as the single biggest barrier to purchase.

“Provide them with fewer choices, and make them as relevant and compelling as possible. Ease the burden of risk by providing information that reassures.”

Hotchkiss offers a few additional words of wisdom as well:

“Realize that one of the components of risk is the degree of bias in the information we’re given. If that information reeks of marketing hyperbole, it will be discounted immediately.”

So the bottom line for marketers could be this:  Simplifying product and service offerings may deliver just what consumers actually need (as opposed to what they say) … while also making employees’ lives in the product management department a whole lot easier.

Twitter Followers: Fake, Faux or Farcical?

Fake followers:  They're all over Twitter
Fake followers: They’re all over Twitter.

I’ve blogged before about the nagging suspicions many people have about the true level of engagement on Twitter. Some have referred to Twitter accounts as “digital Potemkin Villages” and other (unprintable) characterizations.

And now we have the latest indications that Twitter’s “blue smoke and mirrors” extends to the most important global brands.

Status People, a purveyor of social media management platforms, has develop an analytical tool it calls the “Fake Follower Checker” that evaluates the characteristics of brand followers to determine to what extent they are “real people” as opposed to fakers.

According to Status People, up to half of the followers of the 20 most important global brands are either complete fakes, or inactive.

Of course, it is possible that some brand followers do nothing but follow … and rarely if ever post tweets of their own. But it’s also easy to surmise that the value of an inactive follower isn’t nearly as high as one who engages on the Twitter platform.

Details on how Status People conducts its Twitter follower analysis can be found here. In a nutshell, Status People sampled up to 1,000 records and assessed activity against a number of spam criteria. Those criteria included the degree to which Twitter accounts have few or no followers and few or no tweets … but that follow many other Twitter accounts.

For the record, here are the proportion of major brand followers on Twitter that Status People deems are “good” versus “inactive” or “fake,” ranked from highest to lowest percentage score:

  • Gillette: 64% “good” followers
  • GE: 61%
  • Oracle: 60%
  • Toyota: 60%
  • Cisco: 54%
  • IBM: 53%
  • Mercedes: 53%
  • H-P: 52%
  • Disney: 51%
  • McDonalds: 51%
  • Coca-Cola: 50%
  • Honda: 50%
  • Louis Vuitton: 50%
  • Samsung: 46%
  • Intel: 44%
  • BMW: 43%
  • Microsoft: 42%
  • Nokia: 37%
  • Google: 27%

And what about one of the biggest U.S. brands out there right now:  Brand Obama?  Of the President’s nearly 19 million followers on Twitter, the reports are that nearly three-fourths of them are fake, too. 

Some have questioned why Status People has gone to all of this effort shine a light on Twitter fakery. “What harm is done?” these folks seem to be asking.

In response, Status People contends that fake Twitter accounts exist to build status and power beyond what is legitimate, and that those behind them are gaming the system in an effort to burnish brand credentials unfairly.

But I think it’s actually worse than that.  Twitter fakers run the risk of turning the entire Twitter enterprise into one big farce. I know too many people who have completely turned away from Twitter in the past year, becoming convinced that the entire platform is simply an elaborate façade masking a “whole lot of nothing.”

This can’t be what the folks at Twitter want people to think of their own brand!

Online display advertising’s clickthrough performance: Now it’s just embarrassing.

poor online display ad clickthrough ratesRecently, several executives at the Advertising Research Foundation, the online analytics firm Moat and media buying company Accordant Media created six completely blank online display ads – no copy and no images – in three standard sizes and two colors.

The idea was to test the veracity of information being collected on clickthroutgh rates in online advertising and the algorithms that drive automated ad buying and selling — ads being automatically served where they will generate the most clicks.

Once the ads had been created, the crack team had them served via a demand-side ad platform, using both run-of-exchanges as well as being trafficked to publishers that would accept unaudited copy.

The idea was to see what sort of clickthrough rate would be garnered by these “faux” ads.

It’s common knowledge that clickthrough rates for online display advertising are abysmally low. But what transpired in the ARF-led team’s “nothing-doing” ad campaign was startling, to say the least.

The average clickthrough rate on these ads, across 1 million+ impressions served, was 0.08%

That clickthrough rate rivaled the better results achieved by online branding campaigns … and isn’t very far off the average performance for a direct response effort!

The team noted that the modest cost of this research effort (less than $500) was a “pretty good deal for a diagnostic check-up on a $100 billion machine.”

And what are those results telling us? A couple things, I think:

  • If you believe these clickthroughs are legitimate, there’s not much difference between someone clicking on an ad by mistake and the degree of intentional interaction with actual online branding campaigns.
  • If you believe that these clickthroughs might be happening to generate click rates that someone can roll up into an ROI calculation … you might be correct, too.

But ARF’s Ted McConnell reported that a follow-up screen appearing once an ad was clicked asked why the person who clicked did so — out of curiousity or by mistake. 

Here’s what McConnell reported:  “We detected no click fraud in the data we counted.  Half the clickers told us they were curious; the other half admitted to a mistaken click.”

McConnell noted that the team went beyond the follow-up query in its investigation.  “To obtain further insights, we tracked hovers, interactions, mouse-downs, heat maps — everything.  (Heat maps detect click fraud because bots tend to click on the same spot every time.)”

So, what’s the major takeaway finding from this experiment? 

If it’s that online brand advertising campaigns are going to deliver abysmal engagement, you already knew that. 

But if you think achieving a clickthrough rate of 0.04% or 0.05% for an online brand advertising campaign is an indication of anything in particular, you’re probably off by miles, too.

Was this “nothing-doing” research worthwhile, seeing as how it didn’t test “real” ads? 

I think it was … because the findings are telling us that below some threshold level, what we’re really experiencing is just noise. That’s not exactly what the online display advertising advocates want to hear …

Advertising that’s really on a roll.

Toilet Paper Roll Advertising
Here’s advertising that’s really on a roll — in more ways than one.

One definition of good advertising is how effectively it reaches the most people and engages its audience for longer periods of time.

According to that definition, placing advertisements on toilet paper rolls is a brilliant move that should “wipe away” competing promotional tactics, correct?

[On the other hand, you might think this advertising idea “stinks.”] 

But it’s just what two young entrepreneurial brothers are up to. They’ve formed a business – Star Toilet Paper – that supplies toilet paper to public bathrooms.  And the TP features advertisements printed right on the roll.

According to brothers Bryan and Jordan Silverman, Star’s toilet paper is made from environmentally friendly materials, with coupons and ads printed on them using a soy-based ink.

Their company sells space on the rolls for a half-penny per ad.  Coupons printed on the TP can be redeemed through the company’s own website.

Reportedly, some big-name advertisers like Ben & Jerry’s ice cream have signed on … as have some smaller businesses like physicians offices.  (No word on whether the doctors specialize in gastroenterological medicine.)

How are the Silverman brothers enticing restaurants, bars and other venues to stock their toilet paper? They’re providing the ad-filled rolls to these establishments at no charge.

Not surprisingly, this idea came to the brothers while they were students in college.

After patenting the concept in 2010, they’ve since formed their company, developed a business plan, and have already lined up approximately 50 advertisers.

How successful is the endeavor so far? No official word on whether the brothers are “cleaning up” in the business and “flush” with cash yet.

But Jordan Silverman notes that bathroom stall visitors are the very definition of a captive audience. “It’s an unmatched active audience. A person looks at the average advertisement for two to five seconds. People will look at ours for a lot longer,” he notes.

One of the customer segments considered to be highly lucrative for the company is movie theaters.

Come to think of it, this newfangled TP would be perfectly suited for the next Star Trek movie.

… You know, the one where the Starship Enterprise circles Uranus and wipes out the Klingons …

B-to-B e-mail marketing: From sleepy to creepy?

Unwanted e-mails from businesses and brandsThe amount of information that companies know about the behavior of their customers has been growing, thanks to the “digital footprints” people leave all over the place when interacting with companies and brands via web surfing, e-mail and e-commerce.

Still, up until now, there’s been a polite dance wherein the companies don’t acknowledge the degree of that knowledge. Call it a sort of digital politeness.

But that seems to be changing, as the stakes have grown higher for engaging with customers via online, social and e-mail communications rather than traditional advertising.

Take Pitney Bowes in the B-to-B world, for example. In recent months, its marketing staff has sent out e-mail communiqués to their opt-in customers containing messages like, “We notice it’s been a while since you opened an email from us.”

That creepy little missive is as impertinent as it is likely false. Considering the wide swath of people who use the Microsoft Outlook e-mail platform – and many of those use preview panes and have set their default preferences to block images – in reality Pitney Bowes doesn’t actually know if its customers have been reading its e-mail messages or not.

It’s also unclear whether Pitney Bowes really wants its opt-in recipients to go away rather than just browbeating people into engaging with their e-mails more.

This has manifested itself in e-mail messages sent asking if customers are still interested in receiving e-mails so they can “continue receiving the latest from PB.” But despite this implicit threat to be dropped from Pitney Bowes’ e-mail database, ignoring those e-mails doesn’t seem to result in that actually happening.

Rather, it’s just a continuation of more borderline-creepy e-mails with messages chiding the recipient for potentially missing out on “valuable information about supplies, offers, discounts, new products and thought leadership pieces.”

Thought leadership pieces? The leaders of Pitney Bowes may think quite highly about their company and its “vaunted” position in industry … but self-describing itself as being the fount of industry-leading knowledge is a surefire way to get laughed out of town.

Just like the obnoxious teacher’s pet in school or the crashing bore at a cocktail party, no one enjoys interacting with a know-it-all who just can’t wait to corner you and tell you all about his or her latest feats of accomplishment.

In a world where most businesses are spending more effort than ever trying to collect e-mail addresses for ongoing engagement with customers and prospects, here’s a little reminder to them: Try disseminating content that is actually of value to people … which is what will get them to engage with you.

More often than not, that content won’t be about their products and services.

Tower of Babble: Four billion e-mail addresses and counting.

Billions of e-mail addressesDavid Baker, a global vice president at marketing technologies firm Acxiom and e-mail expert extraordinaire, wrote recently that when speaking with an employee at one of the major online database aggregators, he was informed that this company had a grand total of 4 billion e-mail addresses on file.

And of these, ~2 billion had names and addresses associated with them.

These numbers are dramatically higher than the worldwide estimate of e-mail addresses published by the Pingdom blog in its Internet 2011 in Numbers report.

Think about this for a moment. Considering that the total population of the United States is a little over 310 million, how many e-mail addresses per person are floating around out there?

Strip away the very young … plus teens and ‘tweens who don’t engage nearly so much in e-mail … and we’re left with the realization that among the core adult audience of Boomers and GenXers, there’s really no such thing as a single e-mail address that can be tied to one individual.

Even if we ourselves don’t maintain multiple e-mail accounts for different purposes, surely we know people who do. One person I know is juggling no fewer than 20 separate e-mail addresses; he claims to be keeping them all straight.

This notion of multiplicity is at cross-purposes with how marketers have traditionally viewed prospecting. We’ve been conditioned to think about an individual as being tied to one physical address and one e-mail address – in the same manner as a discrete mobile phone number or a unique social security number.

In theory, all of these are vehicles of monetization, with e-mail being particularly attractive because of the low cost associated with reaching prospects in that manner.

But in actuality, there’s a great deal of complexity:

  • Which e-mails are associated with opt-in permission?
  • Which e-mail addresses are primary (highly active) versus secondary (relatively inactive)?
  • Which e-mails are valid, but lying dormant?

Because e-mail addresses are “cheap/free,” they’re ephemeral. They aren’t “linear” in the same sense as the data on a residence, a business address or even a mobile phone number can deliver.

Mr. Baker concludes that, far from becoming easier, “the ability to engage a customer through e-mail across a portfolio of communications is becoming more costly and complex.”

With 4 billion e-mail addresses sloshing around in the digital space, there’s no doubt e-mail marketing will continue to be a major force in marketing. Even if half of them are cyber-zombies, digital Potemkin villages or what-have-you.

The challenge is in sorting it all out.

I think the e-mail specialists are going to be at this for a good long time to come.