Traffick: September 04, 2005: Search Engine Enlightenment

Putting the pieces of the puzzle together, Om Malik astutely connects Google's recruiting of Internet pioneer Vint Cerf with something Malik dubs "GoogleNet." *If* Google were to offer new communications services such as unlimited free Wi-Fi connectivity, goes the scenario, they'd be able to pinpoint users' exact locations and become an even stronger force in the advertising business.

The flipside of this future vision is that Google currently cannot pinpoint users' locations as often as it would like.

Moving from a simple search engine company to a much more powerful infrastructure player who controls access points is no mean feat. It looks like Google is about halfway along that road.

Thursday, September 08, 2005

It's all well and good to speculate (as I recently did) about whether $1 or $2 is a fair minimum CPM rate for ads near online content.

But it's also interesting to benchmark going CPM rates for search, by calculating the effective CPM rates on keywords that do well in a paid search account (even though the actual payment method is "per click").

Glancing at a recent tracking report for one client, I see that one of our "go-to" keywords has an effective CPM of $77. This just emphasizes the key difference between search and nearly every other type of advertising. The market will continue to push effective CPM rates higher on the most valuable inventory.

Importantly, this inventory isn't deemed valuable by virtue of glowing adjectives or spin. The advertiser makes sufficient money from the ad that the $77 is gladly paid with an easy-to-read ROI report in hand. It's valuable not because the ad is near "trusted content" or a "flagship something-or-other," but because it has real, proven value.

When there are so many publishers now out there willing to take 25 cent CPM's or less for their advertising (in other words, admitting their inventory is virtually worthless), it makes you wonder what some publishers are selling, exactly... and why it's even considered advertising.

Now I must go raise my bid on that "go-to" keyword. We'll gladly pay $85 CPM. I'll keep the CPC confidential, though. :)

In a recent issue of Page Zero Advisor, I argued (in part) as follows on the subject of Google's new Site Targeting version of the content targeting program:

...I think two things have to happen for Site Targeting to work for us (and you): (1) Price drop. Sorry, but I'm getting below $1 CPM's on any of the content campaigns I'm running under the old program, and that's why they work. So $2 minimum means the minimum is at least double what is going to be economically feasible. At least. Many of the publishers currently participating in the program simply don't merit $2 CPM's. A very select few are worth $5, $10, or $50, but they are a tiny minority. Google should do what they did with the paid search program in 2002: listen to reason and get rid of the minimum. Drop it from $2 to something like 10 cents, just to see what happens...

Well, they just dropped the minimum CPM in this particular program from $2 to $1, which is better than a kick in the pants, though rather far from 10 cents. Then again, who ever heard of a ten cent CPM? I must be crazy like a fox to have suggested that.

Site targeting seems to have a ways to go yet as a platform that would fully satisfy advertisers. Mainly, it's about the publishers and how advertisers can gather info on them. As it stands, there is a little tool to help advertisers find appropriate sites to show their ads on. Now all Google needs is a tool to help them sign more quality publishers. :) But seriously, I think the tool is going to have to improve over the next couple of years.

Another thing I want to stress is along the lines of "Google was right." We, the advertisers, are pretty bad at choosing the pages and sites to show our ads on. Part of the problem is the limitations of the process... and the fact that not all the sites we want participate in AdSense and have available inventory. But basically, a "pure" site targeting program is up and running more as a response to advertisers who didn't like the "lack of control" as it is a really workable, effective program in its own right. If it were me, I'd want to combine that control somehow with the (widely-dissed) clever matching technology that governed and still governs the original content targeting program. That matching technology helps me as an advertiser. It helps me (and Google, and publishers) achieve scale.

For many advertisers, the main question isn't whether you have control or whether Google is matching the ad placements to the right AdWords accounts, etc. It's more about (a) transparency and disclosure of publisher info, and most of all (b) price.

Wednesday, September 07, 2005

Maybe it's an occupational hazard of having a front-row seat as a marketer helping companies test new products with targeted online campaigns, but once you get the hang of how today's consumer mind works, it's painful to observe those who still want to communicate with people (to paraphrase Godin's latest free ebook, Who's There) "like it's 1969."

(BTW, for those keeping score, there's nothing wrong with 1969. In fact it was a high-water mark of sorts, given that humans haven't walked on the moon since. But the fact that it was a good year shouldn't govern the way you think today.)

It doesn't have to be complicated. "Palm rallies on Treo smartphone sales." Give 'em what they want.

It's been less than a month that the story came out about the engineer who modified his Prius to get 250 mpg (using more electricity, to be sure), and the Toyota spin-meisters who want us to think that this kind of tinkering is of interest to only a tiny minority of consumers. (True - we don't want to modify our own engines. We want you to build a better one.)

Top-down marketing (or "constellation" marketing, as Jeffrey J. Fox puts it) gathers all the rational reasons why people want what they want. It revels in focus groups, meetings, production cycles. It tells people what they want. But in Godin's underestimated book Survival is Not Enough, we learn that zooming companies don't plan that way. They get into the marketplace and just find out what customers want, and adapt to that. Then they adapt again.

As a car buyer, there are many things I want, and can't have, just to continue with the automotive example. Why do cars come in so few colors, for example? Why do we have to pay an extra $650 for a color that isn't crappy?

Now that the price of gasoline has shot up 30-40% even from our conversation of three weeks ago, I'm thinking that 250 mpg hybrid would be even more attractive to my wallet. Millions of consumers agree. The reason people aren't buying the 250mpg car is not because they don't want it... it's because they can't get it!

Now from the environmentalist and anti-consumption side of the ledger, you have pundits and puritans asking the whole population to give up their fascination with SUV's. Here again, it isn't going to happen. People know what they want. An SUV is irrational for many. You buy it because you think in your mind it's your ticket to freedom. And there you sit, stuck in gridlock. Granted, it was pretty funny to see the Ford Escape sitting next to me at a dead stop next to me on Lake Shore Blvd. yesterday. But that doesn't mean you don't buy it. Irrational, but you want it. That's how markets work. Amazing that in this day and age, big companies (and the no-logo crowd) try to tell people to be "rational" and to start wanting the stuff they "should" want.

I'm like anyone else. I want both. I want it all. I want the 250 mpg hybrid. I want the 2008, moon-walking, avant-garde concept SUV being planned by Toyota. And I want one in burnt orange and the other in metallic silver with a hint of blue.

The car companies will tell me I really don't want a crazily modified electric car, when actually, I do. Anti-consumers will tell me I'm a freak for wanting a giant truck thing that looks like it could collect moon rocks (when in fact I'd just be acting like an 8-year-old boy, and what's so wrong with that?).

Sure, we can overcome our wants and think better of certain anti-social decisions, or just adjust to whatever is available. But increasingly, consumers will have the power to ignore or circumvent those old limitations. I can listen to a million songs at the touch of a button, and that's not supposed to affect the way I think about other things I want?

The era of mass customization, instant gratification, open communications, and relentless marketplace feedback is upon us. For companies to survive this... well, Seth said it. Survival is not enough.

So what's going to happen? First, the typically comic reaction as large companies hold back the pace of change for their own convenience. And the endless, puritanical, economically incoherent, freedom-hating, missing-the-point diatribes against consumption in anti-consumer mags and such will carry on in their quixotic quest to tell me the metallic silver-blue 2o07 Moon Walker is something I don't really want.

Then, the dams will finally burst. People will start getting what they want. It always happens.

One type of want isn't mutually exclusive to another. Krispy Kreme - got huge fast. Whole Foods Markets - same deal. When it comes to analyzing such trends, why fancy it up? It's called freedom of choice.

In a couple of years, we're going to see something very predictable (it's starting already). People will want both the hybrid and the cool moonwalker thing, so they'll clamor for vehicles that incorporate both. The current crop of hybrid SUV's gets crummy mileage and is far from cool enough to satisfy either urge. You'd be better off with either an old Jeep or an old Honda Civic. (Or walking more.) But eventually, the power of those demands will be enough to force the big automakers, kicking and screaming and five years late, to come out with products that are both incredibly cool and incredibly energy-conscious.

That delay is what interests me now. That holding back aspect. The tragedy and the comedy of these attempts to ignore consumer demands for new products, and then, the opportunity that awaits startups and nimbler companies who simply accept those demands at face value and serve them.

That, in a nutshell, will be the subject of my next book, whose working title is one of:

Demand: Or, How I Learned to Stop Worrying and Love Markets

OR

Peanut Butter that Won't Kill You: Harrowing Tales of Actual Consumer Demand

I guess that's what happens when your first book finally hits the shelves. You start planning the next. I'm looking for a publisher. And maybe an agent. :) But I plan to take a good six months away from writing and another six planning that next project. After all, just ask the folks at Toyota. There's no hurry.

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