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Friday, November 28, 2008

Do Dumb Ads Hurt Your Brand?

Searching for a definition for the word "sluice," I naturally turned to my trusty friend, Google.

A not unfamiliar sight appeared in the right rail: one of those irrelevant AdWords ads that just shows up out of the blue because I've typed a word that appears in a dictionary.

Sluice

Sale on Sluice!
Compare Sluice prices.
www.Shopping.com

Sounds yummy. And we know why the ads appear. Either it is pure arbitrage, in that the comparison shopping engine shows ads on their site or expects to otherwise induce enough revenue-generating clicks from each such ad, that it is a net gain on average if they can get those clicks below x cents on AdWords;...

or it is seen as a nice little brand booster -- dirt cheap clicks.

That's less feasible in the States, where Quality Scores are tuned to price those kinds of low quality ads higher, even in empty keyword categories. But in other markets the arbitrage (or cheap branding) game is still playable.

But it makes me wonder. If it's about building the brand, isn't it really doing the opposite?

At trade shows and in professional industry publications, the differentiators among all these comparison shopping tools are explored in detail. One has a better catalog; the other shuns ads; etc.

But all the consumer sees, over a several year period, is all these stupid annoying ads for Donkey, Angst, Holocaust, Sluice, Rhinoceros, and Mausoleum. Instead of being portrayed as rational shopping engines, these companies come across as used car salesman or trinket hawkers (or perhaps more accurately, robot trinket hawkers from a bad sci-fi movie, where we haven't trained the robots to be either respectful, contextually relevant, or persuasive), something search engine users came to Google to avoid.

Have years of these silly ads actually been a negative for the brands of eBay and Shopping.com and the like? There's no question in my mind. Instead of describing a benefit offered by these sites, they spew nonsense and do more harm than good. Unless pure arbitrage (milking what's left of these sites' equity) really is the goal.

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Posted by Andrew Goodman




Saturday, November 15, 2008

Click Arbitrage Hits the Mainstream (If Only in Hindsight)

Under the guise of the weekly personal financial profile called "Me and My Money" in the Globe and Mail, reporter Tony Martin teases out an interesting local tech story from investor Will Ashworth that refers directly to Geosign's click-arbitrage-oriented business model. Holy moly!

For those just beginning to score at home, Geosign's properties included a site called TrueLocal, along with several thousand other websites that showed sponsored links, largely in partnership with Yahoo. Traffic was driven to those sites by SEO and low-priced clicks obtained by "lowball bidding" on Google AdWords. Google's Quality Scoring system, including the period where low Quality Scores were associated with high minimum bids per click (as high as $5.00 or $10.00), was largely motivated by top management's desire to squelch most of the arbitrage-based ads in the system.

The key excerpt from the article, "Writer pens an ode to small-cap stocks":

"Forget Nortel. Freelance writer Will Ashworth calls the 2007 collapse of Guelph-based Geosign -- where he worked for six months up to its demise, just weeks after it received $160 million in venture capital -- the biggest tech wreck. It was trying to make money from online arbitrage, but crashed when Google changed its policies. 'It certainly teaches you that in investing, things aren't always what they appear.'"

And, one supposes, in business generally.

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Posted by Andrew Goodman




Wednesday, April 23, 2008

ItsStillPureArbitrage.com


Rumors of the death of TrueLocal and their ilk in the arbitrage space may be greatly exaggerated.

Former click arbitrageurs, seemingly shut down by Google's newly aggressive site quality guidelines, continue to power away in "less mature markets."

In places like Canada, where many big brands still fail to show up and be counted in paid search results, the ad space still allows reinvented arbitrage players like Moxy Media to bid on click inventory on commercial terms, sending them to "modified but still arbitragey" sites like the one pictured above.

Where legitimate advertisers continue to struggle with unfairly-applied quality score penalties, it's doubly disturbing to see 365offerz.com, prefabricatedsheds201.com, and morearbitrage.allthesitesyoudontwant.com still sitting in the right rail.

As for us, we'll continue to fight for our legitimate ecommerce and media clients as they attempt to buy clicks for a reasonable CPC.

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Posted by Andrew Goodman




Wednesday, October 03, 2007

Equal Time: The Pro-Arbitrage Position

Followup to my recent article on Google AdWords' website quality policies. Although the majority of rank and file advertisers I chatted with favor Google's stances against, for example, "arbitrage sites that are designed for the sole purpose of showing ads," not all go along with the Google take on things.

One respondent, CEO of a midsized technology company, missed my deadline but took the trouble to call and leave a detailed voice message. His position explores the case for being "pro-arbitrage," on several counts:
  • It's worrisome that our rights as advertisers to try different business models can shrink not because Google cares about users, but because Google is acting anti-competitively. What can be an official curb on "sites that are designed for the sole purpose of showing ads" today could in future bleed into banning "sites that show ads that Google just doesn't like, or competes with."
  • So-called arbitrage sites are at the leading edge of user testing. Often, they convert better to a sale than so-called high quality sites, albeit requiring an extra click. In essence, arbitrage sites are the purest form of exploiting inefficiencies in the worth of media exposure. Remove this from the equation, and only less efficient forms of exploitation remain in the mix. This potentially weakens the rest of the herd as it is now being helped by enforcement as opposed to economic superiority.
  • Google directly benefits from the ads showing on things like parked domains, many of whom show nothing but ad links. So Google listens to user complaints about being directed to such sites from a paid ad, but then again, they aren't above directly earning revenue from such sites through partnerships (DomainSense). It's a question of mixed messages, and also a holier-than-thou message in the sense that companies other than Google, who like Google profit from sites that pretty much just show ad links, will be hurt by the negative rhetoric surrounding "arbitrage" while Google, in fact, continues to earn revenue from stumble-in traffic to sites that look just like the ones they are supposedly protecting us from.
The solution proposed by the observer taking the pro-arbitrage position? I'm not sure. It seems like more of a general reminder that Google's positions can be one-sided, and that they only selectively protect users from negative experiences.

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Posted by Andrew Goodman




Monday, May 07, 2007

Welcome to the Hype Zone

Google, you do realize you zoned and built this neighborhood, don't you?

What you get when you search for "Google AdSense" -- (ok minus the spray paint):

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Posted by Andrew Goodman




Friday, April 13, 2007

Admitted: "We Do Arbitrage"

At Search Engine Strategies New York this week I had the opportunity to model a panel on the latest with buying contextual ads with particular focus on the top contextual programs through Google, Yahoo, IndustryBrains, and a couple of others.

One of the most fascinating was by a major cable television network that uses low-cost, broadly-based terms to drive traffic keying on all kinds of current pop culture related content. It's an actively managed campaign that requires constant innovation to stay ahead of the curve. What's so interesting about it is how cost-effective this is as a way of generating buzz, if you get the tone right. It's basically using online media to deflect user attention back into the media vortex, in a subtle manner.

The two main economic benefits stated by the panelist were:

* Low-cost awareness-building for their flagship hit programs;

* Traffic arbitrage, sometimes breaking even or better on the ad inventory they show on their own sites.

Let me repeat that again. In a world where we've suddenly been conditioned to believe that PPC arbitrage is wrong, this marketing executive unabashedly admitting to doing it.

This paralleled my own presentation the same week, on how Google currently measures site and landing page quality. In short, I wanted to make clear that you could technically call a lot of the media companies advertising on Google "arbitragers," because they know the rough CPC's and effective CPM's on their ad campaign with Google, and they know the rough payback on an impression basis from their already sold inventory. So in fact the distinction is not a literal one, where you point a finger at someone making a profit on a media buy/sell and call it evil; rather, Google's quality scoring formula aims to disincentivize certain advertisers from offering deceptive or particularly annoying user experiences as defined by user input and user behavior. In an upcoming column I'll look more at the distinctions between "arbitrage," "nearbitrage," and "garbitrage."

In short, to have an exec admitting to arbitrage is not scandalous. If they have advertising on their site, and are buying ads to drive to that site, anyone could have figured it out anyway. That's what they're doing. As a bonus, they get cheap promotion for their TV lineup. And some publishers get paid too. Win-win-win.

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Posted by Andrew Goodman




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