Traffick: October 31, 2004: Search Engine Enlightenment

PaidContent.org, by Rafat Ali, is one of the most informative and exhaustive blogs covering the online content industry. I highly recommend it. However, it is such a chore to read due to the site's perplexing layout and navigation. Please, Rafat, give your excellent site a much-needed face lift soon!

Wednesday, November 03, 2004

Charlene Li weighs in with an excellent post about the significance of Google's acquisition of Keyhole. Geography is quite often a proxy for income and other demographic characteristics, so deeper use of such technology could help online advertisers target better without necessarily gathering extensive info on users.

Li points out:

What if Google could overlay Claritas PRIZM segments against users IP addresses – and allow advertisers to adjust their bids up if certain households searched on specific terms? For example, if a search user was identified to be in the “Landed Gentry” segment, the advertiser may be more willing to pay more for this person’s attention.

Although such targeting would only be a rough guide in some cases, in specific sub-sectors, such as the so-called "country squires" subsegment of the Claritas profiling, IP targeting would map very closely to the target demographic.

In the Greater Toronto Area where I live, the very large, newly built homes in certain areas around the suburb of Aurora, for example, rest on large lots. In certain neighbourhoods, you'd have to travel a fair distance before you bled into a non-affluent one. And certain "exurbs" such as parts of North Oakville, Georgetown, and Caledon not only harbor large lots with large homes, but in some cases, brand new schools, brand new office parks, etc.

Unraveling the mysteries of urban, suburban, and exurban geography is a matter for anthropologists and marketers alike. Those marketers who do a better job of it will clean up, as they so often have.

In Mississauga, an established but still-expanding suburb west of Toronto, there are clusters of brand-new buildings which employ thousands of knowledge workers for larger companies such as Microsoft. Depending on IP address one could begin targeting these "business users," confident in the knowledge that they're more likely to mean certain things when typing certain keyword searches.

As it stands, Google AdWords offers a sort of "do-it-yourself" version of IP targeting, whereby one could theoretically target various slivers of the urban/suburban/exurban geography.

But until companies like Google build "prefabricated" versions of this to help their advertisers achieve substantive goals without having to become amateur demographers and geographers, advertiser adoption may be slow.

Depending on how affluent or how business-oriented certain subsectors are, the bidding wars on certain keywords could become ferocious once advertisers became more certain about the characteristics of those viewing their ads.

It's clear that as things currently stand, keyword bidding is quite primitive. On Google AdWords, niche or B2B advertisers find it difficult to exclude mass-market searchers on certain terms, because meanings overlap. The result is that the CTR drops too low, and these advertisers' ads get disabled... so they're stuck advertising on extremely narrow terms and hoping that someday they'll show enough ads to their target audience to make a difference.

Being able to experiment with different response rates for different IP-mapped "user profiles," for example allowing one to sell to known business users and home users living in certain areas, would offer greater predictability, and would result in higher CTR's. Search (and paid listings) would become more relevant, and highly focused advertisers wouldn't be punished or disabled based on the popularity of certain keywords in the mass market.

Imagine if you sold riding mowers and wanted to be absolutely sure to grab the attention of people with "lawns" that are roughly between 1 and 5 acres. You probably already know how to send direct-mail pitches to lawn-care companies. But what about those who own their own mower? Do you run a multi-million-dollar TV campaign telling everybody in America that nothing runs like a Deere? Or do you launch a new premium product with advanced features that will get people talking over the fence, and crank up bids really high on certain keywords, showing these only to the group of viewers searching from neighborhoods with "those" types of homes, to aim more squarely at a much smaller segment of the market? Once you've made a quick inroad into that market, putting your latest toy into the hands of a decent number of sneezers, you should be able to sell them related stuff as well. If you even make that stuff, or have the capacity to retail it, that is.

Maybe the mowing example is a rotten one. Those suckers don't seem to break down often enough to warrant replacing a perfectly good one. But maybe Toyota could make a Prius Mower or something for those wanting the ultimate compromise between landed comfort and "look at me" social conscience.

This is only an example. The principles aren't entirely new, but advancing technology combined with the advent of keyword bidding adds plenty of new wrinkles and will open up new opportunities. This is merely a hypothetical view of what should become possible online in the next 18-24 months. Void where prohibited. Wear safety boots while mowing. Do not stick your hand underneath mower, even when shut off.

Yours truly,

Lord Goodman

Monday, November 01, 2004

Today's news that online ad serving company DoubleClick may be mulling a sale comes on the heels of a lukewarm forecast for fourth-quarter earnings and a downgrade to "underperform" by Piper Jaffray analyst Safa Rashtchy. (Or "Sara" Rashtchy as newratings.com referred to "her," although Safa's photo would seem to indicate otherwise.) Once the carrier of the torch for the entire online advertising industry, Doubleclick now limps along with slight profitability on anemic revenues of around $75 million a quarter. That's small potatoes when you've spent most of your life thinking and acting like a "big" company.

Meanwhile, Fastclick, a growing startup in the online ad serving space, has closed a $75 million round of Series A financing. Bob Davis, a partner in Highland Capital Partners and former CEO of Lycos, is one of the heavy hitters behind this financing. Let's hope one of the tough questions asked of Fastclick was "how will your life cycle be any different from Doubleclick's?" Then again, from a VC standpoint, any life cycle that includes going public and trading for above a split-adjusted $100 per share for the better part of a year, as Doubleclick did, has to be considered a "win."

Reviewing Fastclick's product benefits, it looks promising insofar as advertisers would have the ability to control ad delivery based on predetermined metrics like cost per lead, cost per click, cost per order, etc., and to carefully track post-click behavior. Ultimately, though, the achilles heel of the business model is the same one that faced Doubleclick (and which is now awaiting the likes of Google and Overture): publisher-driven disintermediation. Those who control the traffic can squeeze third party ad technology middlemen. Advertiser demand is clearly there, but Fastclick's, or any other intermediary's, ability to deliver big online reach to make the advanced ad serving and tracking worthwhile, is in serious doubt and can change from year to year.

Online advertising is dead. Long live online advertising.

I've been greatly enjoying the gradually-improving My Yahoo! functionality. However, there are certain things about the experience that continue to be needlessly irritating. Not all of this is Yahoo's fault, but they share the blame.

The Wall Street Journal headline modules seem to be divvied into two types: articles for paid subscribers only, denoted by a [$$$], and the free ones. Unfortunately, in practice, there is no difference. Most of the time I click on one of these headlines, I'm asked to become a WSJ subscriber in order to view the content. Some might indeed want to do this, but a lot of the headlines in question are just garden-variety stories also available through major newswires, and easily accessed with a couple of mouse clicks through Google News.

Another irritant is the use of unreliable third-party data feeds for easily available information, such as a real-time update of the PGA Tour money list. At this time of year, I usually look at the bottom of the list to get the answers to morbid questions like "did Paul Azinger finish 127th on the list?" Yahoo's partner for this info, Golfserv, takes two days longer to update this information than the PGATour.com site itself, thus necessitating a trip to, well, PGATour.com. The PGATour.com site, and several other sites, also seems to update real-time tournament scoring info about 60 minutes sooner than Yahoo's Golfserv feed.

We can send a man to the moon, but we still can't... etc.

Very soon we'll vote for a new president.
Or we'll keep the current edition.
This race has come down to the wire.
Every vote must count this time out.

Forget what the polls say.
Only you matter on Tuesday,
Republican or Democrat.

Kerry or Bush,
Everything comes down to this.
Remember to vote!
Remember to vote!
Your vote is your voice.

;-)

Sunday, October 31, 2004

Recently, Nate Elliott of Jupiter Research released a study indicating that three-quarters of search marketers -- primarily in-house marketing managers of small to mid-sized companies -- are "unsophisticated." Some indignation made the rounds of the forums as those with poor reading comprehension believed Elliott was engaging in snooty name-calling. Really, all he was doing was original survey research that divided marketers into two camps based on levels of experience. One might quibble with his assumptions about what makes a marketer more or less sophisticated -- buying a large number of keywords, for example, can be a security blanket covering other weaknesses in campaign strategy, and is hardly a "sophisticate's" tactic as it stems from the problems inherent in GoTo's original lack of matching options (now rectified in Overture's contemporary offering) -- but there is no question most online marketing professionals remain somewhere in the early phase of the learning curve.

A group even more likely to be tagged with the stereotypes the media reserve for "unsophisticated marketers" are eBay sellers. But this is rapidly changing as they adopt the same kinds of tools that we see other online marketers using. Because eBay sellers' pages are uploaded by them (and thus controlled by them), it's not a huge stretch to insert code in those pages that facilitates some forms of user tracking.

eBay sellers are learning what many webmasters learned years ago -- you can't run a competitive business with just a hitcounter. At the very least, you need to know what kinds of searches are generating the most sales.

One company offering an eBay traffic analysis tool is Sellathon, a Kentucky-based company run by former Trafficology editor Wayne Yeager. We also know Yeager as the individual who founded a service called UnclaimedDomains.com, selling it to Internet.com in April 2000.

Sellathon isn't the only entrant into the eBay tracking tool business. I recently met someone at an industry lunch who was close with the founder of an early entrant into the same field. It also seems like there are eBay-specific constraints which limit one to certain types of interesting data... the data provided by Sellathon, as far as I can tell, wouldn't measure up to powerful "conversion tracking" tools like ConversionRuler, because, after all, a lot of the activity is taking place on eBay's site, not the seller's site.

But it's an idea whose time has come, and Sellathon's solution is being adopted quickly by a mix of small and large companies.

Here again, it must be emphasized that the market is at an immature stage. Those who operate in the "eBay support industry" have done a great deal to help, but sometimes the focus of all the "help" seems misplaced. Why are we not doing more to help sellers with basic web analytics?

Scanning through the 100 items in the O'Reilly book eBay Hacks, for example, I see a number of highly sophisticated tricks for sellers to try, but nothing like what Sellathon's offering.

In the Hacks book, you get tricks like offering a 360-degree view of your item with a photo album and some Javascript code. Neat stuff. I love that when I go to the infiniti.com site. But the fact that sellers are going to so much effort without tracking that effort seems odd.

It's as if cavemen had been bestowed with major motion picture studios to help them make commercials ... before learning to count.

The days of "unsophisticated" marketers comprising a majority of search engine marketers or eBay sellers will soon be over. In the meantime, those who currently do fall into the unsophisticated category should spend less time feeling indignant about the label, and more time doing something about adopting the tracking, bidding, and analysis techniques that will help them compete.

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