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Thursday, August 11, 2005

Secondary Sources of Targeted Traffic: All Part of the Game

Leslie Walker of the Washington Post homes in on what she terms web "clutter" -- sites and pages that may be little more than parked domain names with limited content and a lot of paid listings, not all of which are relevant to what the user is looking for.

The profitability of this type of advertising is what has induced holding companies like Marchex to roll up various domain name repositories. For Marchex, this is synergistic with their existing Enhance paid search platform, a second-tier PPC which, like all second-tier PPC's, can use all the legitimate keyword inventory it can get. Such sites also sign up with publisher networks from Yahoo and Google, so Marchex earns ad revenue shares from those companies as well.

Walker is sceptical of this class of sites, but the reality is, there is only ever going to be so much "top tier" online ad inventory -- Google Search, The New York Times, The Washington Post, Yahoo Search, GMail, etc. -- to go around. The secondary stuff lies somewhere in between this limited amount of prime inventory, and absolute dreck. What differentiates alternative or secondary traffic sources from utter dreck, from an advertiser standpoint, is the simple fact that it sometimes converts to a sale. If it sometimes converts to a sale, then the user isn't necessarily being led too far astray.

In our society, advertising is pervasive. Some parts of the web experience do involve interruption. All this means is that the Internet is not a special, private enclave like a university research library. Welcome to the Internet post-1994. But there is an invisible web for those who need to do serious research.

You can see the parallels in nearly every industry. Somewhere between junk bonds and Grade A corporate bonds, for example, are debt instruments of middling quality. All are priced accordingly.

I suppose, to force another analogy out of this poor keyboard for one day, without a marketplace willing to finance different schemes such as lower-cost townhomes, the ordinary person would have no place to live.

Walker's "let them eat cake" argument wishes for a simpler time when the web wasn't an advertising medium. Let's face it. The most important search and navigation companies rely heavily on ads. 97% of Google's revenues currently come from advertising; no small portion of that is through content sources and alternative traffic of middling quality. As a related post on PaidContent.org mentioned, there's no small irony in the fact that, surrounding Walker's article in the Post, there are cascades of annoying ads in various formats. Since content isn't free, sites like WashingtonPost.com show ads.

The "ad clutter" complaint has always been somewhat unrealistic as it relates to free content, although as a person who likes to read without being bombarded with highly intrusive multimedia ads, I sympathize. Remember when people thought ads in the margins of GMail would be intrusive! We're talking about a free mail service! To avoid ads, one option is not to use the service. Yahoo Mail users do have that option of removing ads by paying for an annual premium subscription.

One conspicuous place that ad-removal option does not seem to exist is on major newspapers' sites. They make content available only on a limited basis, then make you register to read more. Registration never gets rid of the ads. Maybe Walker's next open letter could be to her own company?

Another argument, put forward by insiders at companies like Google, is that the availability of ad dollars is actually providing an incentive for new producers of quality content to come onstream.

At first, the explosion of "ersatz targeted" content is messy, but longer term, advertisers will be able to apportion their dollars to the inventory that truly converts, aided by back-end data being gathered by companies like Google, Yahoo, and yes even Marchex. Crap pages don't convert, so they don't have an infinite shelf life.

Perfume.com and Credit.com are two examples of sites that are really just direct-navigation plays that would be content to serve a little bit of cheesy content to drape around advertising or product sales. But longer term, nothing says they won't grow into useful, extensive repositories of content along the lines of a Bankrate.com.

Posted by Andrew Goodman




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