Thursday, March 31, 2011

The fourth arbitrage: retargeting traffic

JörmungandrImage via WikipediaI’m a big fan of ad exchanges, real-time bidding and demand side platforms. They’re like a dream come true. I can take two of my early favourites; search and affiliate marketing, put them together, mix them up with the previously horrible display advertising channel and get produce a thoroughly satisfying style of digital marketing.

It gets even better. Add to the mix techniques like retargeting (both search and display) and even social media and you have a powerful, effective and thrilling combination. I’m a strong advocate and because of that I also tend to look for problems, pit falls and areas to be cautious about. Recently I’ve been mulling over what an evolved form of arbitrage might look like and unfortunately the fourth arbitrage is as insidious as it is likely.

The first arbitrage: search traffic

There will be people who disagree but I’d argue the first true and done-on-any-scale arbitrage was search. The concept is simple. Sites would decorate themselves with adverts. Google made this possible for the masses. These sites would then run search campaigns to make a profit from search ads.

No longer did new webmasters have to try and convince one of the old ad networks that your site was significant enough to join their ranks – and I can remember a time when both DoubleClick and ValueClick ran pay-per-click commission deals via TradeDoubler’s affiliate network but you still had to apply for program membership and hope for the best – all they had to do was join AdSense. Joining AdSense was much, much easier. Google’s AdSense would pay those webmasters on a revenue-share-per-click basis.

Some webmasters found that if they wrote about expensive keyword topics – like insurance, some medical terms, telephony, etc – that their earnings per click were pretty good. At the time, Google’s AdSense terms and conditions prohibited them from sharing the actual analysis and details with anyone else.

Furthermore, some of these webmasters released that they could buy related but specific and long tail keywords via AdWords for less than they were being paid by Google for clicks on generic topics. Other webmasters worked out that some visitors would click on two or three ads from their site; especially if they thought it was the sort of page that helped guide their choice on which site to visit next.

Search arbitrage was born. These webmasters would buy traffic from Google as cheaply as they could and effectively sell it straight back to the search engine at a mark-up. The result was not for advertisers who, in effect, had to pay multiple times for the same visitor nor for searchers.

Google’s done a good job on the crackdown but depending on how liberally you wish to apply the arbitrage label you can still bump into situations that look similar.

The second arbitrage: display traffic

As search arbitrage became harder to do it became easier and more worthwhile for webmasters operating these ‘click recycling’ sites to venture into display advertising. Under the second arbitrage these webmasters would by CPM traffic (or perhaps land the occasional CPC deal if a network was needy) and funnel that towards sites geared up to sell that traffic straight back to the ecosystem.

The hay days of this form of arbitrage were only a few years ago and we are not far off the peak. As the economy tanked and advertising money shrank the effect was to push CPM rates down. Sure, some ad networks managed to hang onto rare, exclusive and valuable premium inventory but more broadly speaking the average CPM dropped like a stone. At the same time CPA rates, especially outside of the large ad networks and in areas like affiliate marketing and lead generation, remained largely unaffected.

An example of where this occurred was in early YouTube, even before Google bought the video site and for a while afterwards. There was a time when the big brands hadn’t heard of YouTube, agencies who did display too slow to get there and yet the impression tally was rocketing through the roof. CPM deals where a steal. A good banner could gobble up traffic (bored at work or college traffic) and pump it straight into sites ready to monetise it.

Companies have made extremely attractive amounts of money by buying on cheap CPM deals and turning that traffic into lucrative CPA successes.

The third arbitrage: social gaming

It is more controversial to suggest that this is a form of arbitrage but I’ll stick to my guns. Right now, at its high, we see a form of social arbitrage where sites, games and apps make their money by giving visitors and players a reason to engage with an ad or submit their details into a lead generation form.

Imagine a Facebook game that gives you more of its virtual currency to spend for just watching a video, or by filling in a form to get %10 off your subscription to

Imagine, also, that the same game advertises on Facebook. In this scenario the game, app or site is trying to take traffic as cheaply as possible from Facebook and then sell either that traffic or the details generated from it back to advertisers at a mark-up.

Sure, it’s not arbitrage in the sense that Facebook itself is buying the traffic back but it is still a system that essentially recycles people through an advertising ecosystem.

The fourth arbitrage: retargeting traffic

You will have seen a retargeting banner by now; an ad for a site that you’ve been on recently and didn’t buy from that seems to follow you around the web where it does its best to lure you back. You know this is early days yet because a far too high percentage of these ads are for sites where you did buy the product or book the holiday, but the retargeting is poorly set up and still tries to entice you back to the brand.

The sites that are showing those retargeted ads are often being paid on a per impression basis. That’s right; they don’t need to get visitors to convert or click, they just need to display the banner.

It’s quite easy for a decent blog to join an ad exchange. Once there the site owner can happily suggest a floor price that the brands (or their agencies) need to meet in order to show their treasured retargeting ad. Should there be no one willing to make that real-time bid then most ad exchanges let site owners display an alternative ad – such as a CPA or AdSense alternative.

If the easiest way to get money, though, is to earn on a per impression basis then sites should be very interested in doing what they can to qualify for the retargeting auctions.

In order to qualify for retargeting banner impressions sites need visitors who have previously visited a brand running a retargeting campaign. That’s not so hard though. It’s easy enough to link off to a site who often run retargeting campaigns, or advertise on those sites, or produce content that is likely to come up in search by people researching products likely to be the focus of a targeting campaign.

What is retargeting arbitrage? It’s simply a collection of techniques designed to ensure the visitors to a site will bring with them lucrative retargeting impressions.

Here’s the catch. I’m not so sure this is a bad thing. Other forms of arbitrage have offered very little value to advertisers or users. This form of arbitrage is kinder and perhaps more helpful. It’s about positioning content and ad placements strategically on the user journey. It’s not just about recycling. Advertisers benefit from being given a genuine second chance to win the sale and that’s a stark contrast to advertisers paying twice for the same visitor.

Or am I beating the wrong drum here? What do you think?

Friday, March 25, 2011

Wow, the ASA ad that's legal, decent, honest and truthful

The ASA have launched another campaign to raise awareness of their role as industry regulator. There will be TV coverage this time round with an animated ad for "Wow".

Brand Republic says that OMDUK is co-ordinating planning to help secure donated media space and airtime for the ads. I thought I'd donate some of my digital space and include the ad in this blog too.

I hope they do manage to drum up a decent digital campaign because we do have the ASA's brand new expansion into advertising content on websites for the first time this month. That's noted in the ad itself. They don't say that the ASA regulates websites. They say "marketing communications" on websites.

The rule of thumb is an easy one. Are you being "legal, decent, honest and truthful"? If not then there's likely to be a problem.

Monday, March 21, 2011

Google integrating Google Reader into SERPs

Google's recently picked up the pace with its search and social integration. The fact that someone you follow on Twitter has shared a URL is now fairly prominant in the search results. Your social connnection's avatar sits below the the destination URL with a link and a shared notification.

But what about your own social media preferences? Wouldn't it make sense for Google to remind you that something's already caught your interest? After all, Google already personalises results on that basis.

I noticed today that Google's started to do just that. Google Reader subscriptions are standing out in the SERPs and we can theorise that subscriptions therefore influence personalised results. This little gui tweak may also incease the CTR on these links.

The image above shows the Google Reader citation under the top Illegal Advertising result.

What do you think? New or just new to me?

Friday, March 18, 2011

Ad agencies close to worthless?

I'm a big gamer. All I lack is any time to play the games! There's been a slew of high profile releases in recent months but Portal 2 will be a big one. Portal is neither a pretend-to-be-in-the-army shooter or a pretend-to-be-a-footballer shooter but a darkly humorous puzzle solving masterpiece. A classic geek hit. There's every reason to believe that Portal 2 will be just as imaginative and intelligent.

If you're producing imaginative and intelligent creative assets like Portal 2 do you need a creative ad agency to then come along and make a TV ad for you? If you're Valve's marketing VP Doug Lombardi then the answer is no.

Valve, the producers of Portal 2, moaned about unoriginal ideas, late meetings and used the phrase "pretty close to worthless" while discussing creative agencies with trade press MVC.

Lombardi said;

“We’ve had many creative kick-off meetings with agencies over the years, and you’d be shocked by the treatments that have come back. Copycat treatments. Cliché treatments. Treatments that reveal the agency wasn’t listening in the initial meeting.

“With the Portal 2 ad, we playtested it and were able to make changes during production. With an agency, those types of tests are too often left to a post-mortem – at which point, the value of those realisations is pretty close to worthless.”

The TV ad is out an on YouTube so you can check it out for yourself.

Portal 2 will be pushed out by EA who know a thing or two about game promotion. Aside from the creative aspect of the ad I imagine there's a whole business of planning and buying to get through which either Valve or EA might well have brought an agency on to handle. With my digital agency hat on; I hope to see some good digital marketing for the game such as some video distribution and a real effort to encourage gamers to pre-order.

Are Valve right?

I think so.

It's hard to imagine anyone other than Valve producing the style of TV ad that we see above - and it would surely have been redundant for a creative agency just to copy their style.

Valve's almost unique though. Most companies will need creative support from agencies. This doesn't mean there's no future in creative agencies it just means, sadly, that the chances of we agency folk getting to work with Valve are diminished.

Thursday, March 17, 2011

Meet the world's greatest extra

This chap is the extra equivalent of a Wilhelm scream. He appears in so many TV shows and movies. I don't think it's a hoax either as he seems to be aging naturally and surely there are extra agencies who are tapped again and again by production teams.

I have to wonder how advancing technology will help unearth gems like this. Could we have a Google TV feature that lets us search through a huge database of movies or TV shows that feature a face we've drawn around on the touchscreen? I think so!

Monday, March 14, 2011

Happy π-Day

If you have the tenancy to put the month before the day while writing down dates then today is 3.14 2011. That's right. It's π-Day.

Lots of bloggers (if not the search engines) are doing something clever for today.

I'm not. I'm going to show someone do something clever with π instead. This video should wrack up a few impressions before midnight tonight.

Happy speed pie, pi, π, everyone!

Friday, March 11, 2011

VeriFone's assult on Jack Dorsey's Square

One of the powerhouses of credit card transactions has launched a social media style campaign against Twitter creator Jack Dorsey's latest company. Square is a small device that turns any smartphone into a credit card reader. The goal is to make credit card transactions easy enough for SMEs to do and afford.

VeriFone have created a microsite to spearhead their campaign against this start up competitor and they've gone for the throat. They claim that Square is flawed by design, that it's not secure and therfore it simply represents a cheap and easy way for criminals to rip off your credit card details.

Here's their vid:

Does this argument hold any water though? I think it depends on exactly what details or access criminals are able to get from skimming the card. If they're not able to get any more details than, say, simply looking at the card then their tactics may be flawed.

The ex-lead of Gmail's design team and current Mozilla Lab design lead, Kevin Fox, seems to think so.

Fox has posted this YouTube to illustrate why VeriFone's arguments aren't worth listening too.

Square have also posted a response. In it they say;

Any technology—an encrypted card reader, phone camera, or plain old pen and paper—can be used to “skim” or copy numbers from a credit card. The waiter you hand your credit card to at a restaurant, for example, could easily steal your card details if he wanted to—no technology required. If you provide your credit card to someone who intends to steal from you, they already have everything they need: the information on the front of your card.

Time will tell how this pans out. It's certainly true that privacy and identity theft are front of many people's minds. They are both real concerns. However, we're also looking at a future that might require pop-ups in order to gain permission before the drop of a cookie, and if that's a usability nightmare then imagine what extra steps and hoops to a credit card purchase will be like.

Saturday, March 05, 2011

Google Sloppy

It's a little strange but Google Sloppy is designed to make us think.

Created by Yuin Chien and David Chawei Su, Google Sloppy challenges us with the notion that interfaces could have their own consciousness, senses and gestures, that the textfield might type keywords for you but be lazy and that buttons are operators who help you submit requests.

It was created through HTML 5, the Google Search API and jQuery. The following is a short video demo.

The Search Operators from Yuin Chien on Vimeo.