The Evolution of Online Advertising Technology

Please bear with me as I go through a brief history of basic online advertising. The evolution of targeted online advertising is interesting, because I believe the perceived harmlessness of early advertising technology and targeting tactics lulled many people into a sense of complacency or perhaps even false security.

In the beginning of targeted online advertising, there were banner ads. As many people recall, these were supposed to drive the Internet marketing industry in its infancy. Scads of publishers paid scads of money based on a CPI (cost per impression) model or simply paid huge dollars for banner ads and other targeted online advertising on well-trafficked sites.

Then something crazy happened - nothing. It turns out that the banner advertising technology on the Internet was not the magic bullet it was purported to be. The old way of making money based on providing content (the way magazines and newspapers ran advertising) just didn't seem to work in this context.

This new advertising technology was part of the reason for the collapse of the dot-bomb era. All the talk was about "eyeballs," "stickiness," "bleeding edge," "cradle to grave," and several other terms that, in retrospect, would have sounded more at home in a Wes Craven movie than in an emerging industry. Hundreds, perhaps thousands, of business models depended on a traditional marketing strategy working more or less the same as it always had when introduced into a non-traditional setting.

All the while, one company, originally called GoTo, then Overture, and finally bought by Yahoo!, actually formulated a targeted online advertising system that worked - keyword advertising. Companies could bid on a per-click basis for certain key terms, which sent valuable traffic to its website.

Obviously, the improvement in advertising technology had to do with the model itself, which was perpetuated on relevance. By only bidding on keyphrases that you wanted, you could only pay for visitors who had already shown an interest in your products or services. This targeted online advertising model was soon copied by Google, who tweaked it and made it better.

There were not many raised eyebrows at this time, in terms of privacy. After all, the user was the one entering the query, and nobody suspected at the time that search engines might one day actually create individual profiles on users. We were all just really enjoying "having the information at our fingertips" without the potential hazards of ink stains and paper cuts that traditional research required.

Google then took a similar idea a step further. Instead of just serving up targeted online advertising on its home page, the company created a content distribution network called AdSense. In this program, owners of websites could sign up to have the ads placed on their sites. Google would then use a "contextual" logic to determine which ads to place where. In other words, Google would "read" the content on a page and then serve up targeted online advertising in the area provided by the site owner that was relevant to the content.

There were a few missteps with this new advertising technology (one classic example was when the online version of the NY Post ran a story in 2004 about a murder victim whose body parts had been packed into a suitcase. Running alongside the story was an ad that Google served up for Samsonite Luggage). Yet this targeted online advertising service also caught on, with nary a cry from privacy people. After all, you don't have to visit the sites. And the site owners don't have to sign you up for the service, right?

Suddenly, Gmail was offered and that raised some eyebrows. Gmail, of course, is Google's free email-based platform. Gmail gave people an (at that time) unprecedented 1 gigabyte of email space (Yahoo!, if memory serves, offered 4 megs for free email accounts and charged people for more memory). The only caveat – Gmail would use a similar advertising technology platform as AdSense, but it would decide which ads to serve up by reading through your emails.

Well, this new approach to advertising technology creeped some people out, and privacy advocates were a bit more vocal about using targeted online advertising by parsing through people's emails. A California lawmaker tried to introduce some legislation preventing the practice. International privacy groups chimed in with their own concerns. In the end, however, the fact remained that one had to sign up for a Gmail account and everyone that did was (presumably) aware of how the service worked before they did sign up. So it was an opt-ín system – If you didn't want Google parsing through your email and serving up relevant, targeted online advertising, you didn't have to use the service.

So there we all were, happily surfing away, not a care in the world. What most of us didn't realize was that enough free cookies were being distributed to each of us to turn the otherwise docile Keebler elves into tree-dwelling Mafioso erroneously plotting a turf war.

These cookies, of course, are the ones that websites place on your computer when you visit – little packets of information that record your visit, and sometimes, your activity there. Certainly, there's a legitimate reason for this. When you return to a website, it can help if it remembers your last visit and you can pick up where you left off. Assume, for example, that you were making multiple purchases from an e-commerce site and had a bunch of stuff in your shopping cart but were forced to abandon the site before completion. It's nice to go back and pick up where you left off without having to do it all over again.

Digital advertisers, however, saw another opportuníty for targeted online advertising. They invented advertising technology that would scour through the cookies on your personal machine, figure out what you liked and disliked by looking at the types of sites you went to, and then feed up highly targeted online advertising based upon your browsing history. These companies included aQuantive, DoubleClick, ValueClick, and others. Of the companies I mentioned, only ValueClick is still independent. Google snapped up DoubleClick, while Microsoft snapped up aQuantive. Clearly, these companies believe in the future of Internet advertising technology and also believe in the long-term legality of this technology.

Now some real red flags were raised. I've written about this advertising technology before, so I'm not going to go over it all again here. Suffice to say that some government regulators were pretty skeptical about this new form of advertising technology and there have been numerous suggestions for regulation. The lack of uproar from the public, however, has not really created any backlash for the companies in question. It could be because there is widespread ignorance about Internet advertising technology (and I believe there is, based on conversations with people of average Internet experience). Perhaps a part of it is also that privacy has been eroding on the Internet one incremental step at a time.

-searchspiderz

Hi-Res Google Maps Images On the Way

First Image from GeoEye Satellite Released

You may recall about a month and a half ago, it was announced that GeoEye would be launching a satellite with the highest resolution available on the market and would be lending its technology to Google Maps. Today, the first image was released from the GeoEye-1.

"We are pleased to release the first GeoEye-1 image, bringing us even closer to the start of the satellite's commercial operations and sales to our customers," says GeoEye CEO Matthew O'Connell.

The first image is of the Kutztown University campus in Pennsylvania, and was taken at noon on October 7th while the GeoEye-1 was moving north to south in a 423-mile-high orbit over the eastern seaboard of the U.S. at a speed of four-and-one-half miles per second. ReadWrite Web put together a side-by-side look at the GeoEye imagery compared to current Google Maps imagery:

That's nothing though. The satellite is capable of achieving .41 meters resolution in black and white and 1.65 meters in color, but government regulations will only allow half-meter images to the public, so those concerned about privacy can breathe a little easiser.

Financially, GeoEye is apparently right where it needs to be. "We are bringing GeoEye-1 into service within four years of our contract award with no contract cost overruns," says GeoEye COO Bill Schuster. "The entire program which includes the satellite, launch, insurance, financing and four ground stations was less than $502 million. That's the amount established and agreed to four years ago." He further noted, "GeoEye-1 is an excellent fit to meet the U.S. Government's important requirements for mapping and broad area space-based imagery collection over the next decade."

GeoEye will be selling imagery products from the GeoEye-1 later this fall.

Yahoo Web Analytics Comes To Light

It's time for data hounds to start drooling. Jerry Yang still isn't ready to toss a Google Analytics competitor to every person who asks, but this afternoon, his company did announce that some people are being given access to the new Yahoo Web Analytics.

Yahoo's work on the product dates back to its acquisition of IndexTools. About 13,000 small business customers, along with an unknown number of advertisers and developers, will be the first to see the fruits of its labor. Then, a rollout is planned to continue through next year.

As for what's on the table, a fresh homepage says that Yahoo Web Analytics "provides real-time insight into visitor behavior on your website. With powerful and flexible tools and dashboards, Yahoo! Web Analytics helps online marketers and website designers enhance the visitor experience, increase sales and reduce marketing costs."

A success here could go a ways towards bridging the gap between Yahoo and Google. On the other hand, Yahoo's investors have to be running out of patience, and every tiny screw-up further endangers the company's independence and Jerry Yang's job. The timing of this development could go take us in either direction; think "great work under pressure" versus "last gasp."

Anyway, Yahoo Web Analytics at least represents something for data-hungry sorts to anticipate, and an official FAQ and some screenshots are available in the meantime.

Google Getting Aggressive with Advertising

It's Not Just About Adwords Anymore

Google is trying to get advertising agencies to warm up to it after years of not being their favorite entity. After all, think of all the marketing dollars spent on search engine advertising (and SEO campaigns for that matter) that agencies missed out on because of a certain search giant.

Google Shows Off

Stephanie Clifford at the New York Times writes about Google invading the offices of advertising agency Leo Burnett back in July, setting up some kind of mini-carnival of sorts to show off their advertising technology. It seems that the company wants to recruit agencies to use its tools, but some of these agencies believe Google has ulterior motives.

"As Google begins trying to sell television, radio and print advertising and creates tools for buying and planning media campaigns, some advertising executives and academics say that the company is working with the agencies in order to eventually displace them," writes Clifford.

Aggressive Advertising

It's not unreasonable to suspect that Google has its own best interests in mind. Why wouldn't it? The company does seem to be working its way further into the advertising world more aggressively than ever. For example, they're talking about not even waiting for Federal approval before going forward with their ad deal with Yahoo.

That's being investigated as a possible antitrust issue. Imagine if Google was able to phase out ad agencies. I don't anticipate that happening anytime soon, however. Google is big, and it has a lot of pull, but it's not everything. It's a notion that even Google itself dismisses.

"I don’t see how we would be able to actually provide a better customer experience to an individual client than an agency can today," says Google Vice President for North American ad sales, Penry Price. "There’s no way we could actually line up behind one customer and offer the services and information that an agency can today."

A Lot of Ads in Google's Future

Don't mark the extinction of agencies yet, but there is no question that Google is getting a lot bigger in its advertising britches these days. You got YouTube ads starting to come out, RSS ads in Feedburner, and don't forget that DoubleClick aquisition. If that Yahoo! deal goes through unscathed, that's going to be one big chunk of the advertising market that's going to get even bigger.

Text Ads Get More Clicks Than Video Ads

Young favor video ads

Online video ads are not as popular as perceived with only 11 percent of consumers saying they were likely to click on video ads, according to a new study from iPerceptions.

Simple text ads were found to be the most likely to receive clicks with 25 percent of consumers doing so, followed by display ads at 20 percent and banner ads at 12 percent.

The only people who seem to be engaged by video ads are young people under the age of 25, a group that accounts for nearly one-third of the video-ad viewing audience.

"Retail groups are predicting the toughest holiday season since 1991, so marketers need to make sure every dollar spent on advertising delivers an end result," said Jonathan Levitt, vice president of marketing at iPerceptions.

"Our research shows that inexpensive banner and text ads are still preferred among web consumers. By having a direct dialog with consumers, we are able to know - with certainty - what consumers want and expect from their online experience."

The study also found that the likelihood that a person will click on an ad goes down as their income increases. On average, 40 percent of consumers are likely to click on any ad make less than $50K a year- and only 15 percent make over $150K.

The income gap is the most significant with video ads, with 49 percent of consumers likely to click video ads making less than $50K a year- and only 13 percent making over $150K.

Overall, 65 percent of consumers are likely to click on online ads and they are weekly or daily browsers, while only 15 percent are first time visitors and 6 percent are sporadic visitors.

"Our research clearly shows that media sites that offer consumers compelling content and features - encouraging repeat visits - generate much better ad clickthrough rates than less engaging sites," said Levitt.

"Marketers that want to reach high quality audiences should focus ad placement on sites that deliver the highest customer loyalty and repeat visitor traffic."

Ads Appear On Google Maps

Let the hotel hawking begin

Want to buy property in Bangalore, India? Or stay in a Dublin hotel? Google hopes so, because the search giant's latest effort in terms of monetization is tied to Google Maps, and when you search for certain cities, you'll see ads for things like these placed at the bottom of the page.

There's not much to the ads; they consist of a link, a line of text, and the words "Sponsored Link" against a blue background. There are also a couple of arrows that seem like they should lead to other ads, but we haven't yet found an instance in which they work.

As another example of things possibly going wrong, no ads appeared following Google Maps searches for major cities like Moscow and London.

This may be a test, then, but quite a few people, including Amit Agarwal in India and Dave Shaw in the UK, are starting to see the ads. So it looks like Google is going full speed ahead with the effort, and the potential problems are just due to not a lot of advertisers having been clued in.

The idea of monetizing Google Maps is clever, anyway, and if Google's third quarter report doesn't go well, the company will have at least ensured that investors have one less missed opportunity to complain about.

GM CEO Takes Message To YouTube

Let’s annoy you by understating it and call these “uncertain” economic times. While it’s unclear what a tumultuous economy means for online business—after all, there was Internet in the Great Depression—old standby General Motors saw its stock drop the lowest it’s been in half a century.

What will also be historic to watch is how twenty-something cub Facebook CEO Mark Zuckerberg handles what appears to be economic Armageddon (as Jim Cramer prognosticated a year ago in his famous meltdown—the same guy telling you take your money out of the market now). Even more historic and interesting will be to compare how Zuckerberg handles it to how GM’s CEO Rick Wagoner does.

Early developments are pretty telling. Wagoner has taken his case to YouTube. In a two minute video, he spoke of innovation and new, more economically friendly cars down the pipe. He talked about gas prices and fuel economy and asked the YouTube audience for thoughtful commentary.

After 8,000 or so views there has been no commentary, but that’s beside the point. Wagoner’s video is kinda Iacocca-ish, which is probably what he was going for.

What sort of guidance can we expect from his quarter-life dotcom hotshot counterpoint? You might call it a cautious approach. Zuckerberg is set on nailing down a business model within the next three years.

Maybe that’s when his student loans come due?

In an interview for a German news site, Zuckerberg explains revenue for Facebook isn’t as important as growth at the moment:

“I don't think social networks can be monetized in the same way that search did. But on both sites people find information valuable. I'm pretty sure that we will find an analogous business model. But we are experimenting already. One group is very focused on targeting; another part is focused on social recommendation from your friends. In three years from now we have to figure out what the optimum model is. But that is not our primary focus today.”

Maybe Microsoft would like to take that quarter-billion it plunked down and put it toward buying up a failing bank. That seems to be a pretty popular move right now.

It’s still hard to believe Zuckerberg once blew off billion-dollar negotiations with Yahoo—pre-Microsoft bid and pre-tanking-stock Yahoo. Honestly, offer me a billion dollars for something. Anything. I’ll take it.

Google Devaluing DMOZ and Yahoo! Links?

Removes Webmaster Guidelines

Google is no longer suggesting that you should be listed in relevant directories. In fact, they've even removed the suggestion from their webmaster guidelines, as Brian Ussery noticed. The page used to have bullet points for:

- Have other relevant sites link to yours.

- Submit your site to relevant directories such as the Open Directory Project and Yahoo!, as well as to other industry-specific expert sites.

Those points are now gone in what would appear to be a slap in the face of directories, but SEO folks are the ones really irritated. Google doesn't appear to see it as a slap in the face so much, but more of simply a non-needed guideline.

Barry Schwartz points to a quote from Google's John Mueller in a Google Groups thread:

"I wouldn't necessarily assume that we're devaluing Yahoo's links, I just think it's not one of the things we really need to recommend," said Mueller. "If people think that a directory is going to bring them lots of visitors (I had a visitor from the DMOZ once), then it's obviously fine to get listed there. It's not something that people have to do though :-)."

Mueller also asks for feedback, "What do you think - does it make sense? :-) What else should we change / add / remove?"

Regardless of what guidelines are on the page, a relevant link is a relevant link. There are still directories like our own eBusiness Directory that don't offer paid links, and keep the listings quality without getting flooded by spammy and irrelevant ones by using a strict human-edited approval process (call it a shameless plug if you want, but it's the truth).

There is going to be a lot of outrage over this, but is it really necessary? Perhaps too much focus has been put on directories like DMOZ anyway.

-searchspiderz

Google Calls the Internet a - "Cesspool"

Google CEO Eric Schmidt called the Internet a "Cesspool" Wednesday in reference to the quality of content and the amount of false information residing on it. This according to AdAge is a subject he spoke about with an audience of magazine executives at Google's campus, where an annual industry conference was taking place.

Schmidt stressed that "Brands are the solution, not the problem...Brands are how you sort out the Cesspool."

I couldn't agree more.

In response to an inquiry for advice about appearing more popular on Google, Schmidt told the magazine publishers, "We don't actually want you to be successful...the fundamental way to increase your rank is to increase your relevance."

Branding and relevance. Hmm. Could it be that proving your content to be relevant could increase the credibility of your brand, or "the authority" perhaps? Would it be safe to say that reader engagement is a reflection of relevancy as well? If more people become involved in a discussion, is that not a sign that it is more relevant? This sounds familiar.

OK, I'll come right out and say it (yes, I'm going to bring up Bankaholic yet again). Take Bankaholic, the financial blog that was just sold to Bankrate for $15 million. Part of the reason Bankrate bought it was because it ranked well in search engines for hot key words the company was going after.

Johns Wu, the guy that sold the blog has acknowledged that user engagement was a huge factor in its success. It's obviously relevant if it's creating a good amount of discussion. And it's ranking well. The name Bankaholic works as a pretty solid brand as well (some have speculated that this was also another factor of the purchase).


Schmidt is absolutely right. The Internet is a Cesspool of garbage, and relevancy and brands are the way to filter out what's good. It's no different than it's ever been. Think about classic print publications. You've got trusted magazines and sleazy tabloids. You were always taught not to believe everything you read. The same principle applies online, it's just that the amount of content is much greater (on both sides of the spectrum).

When discussion is taking place, relevancy is easier to pick out, and brands represent authority. Authority and engagement. Those are the keys to success, and that is the reason why new media is still a legitimate source of information despite people gaming the system to try and take advantage of it in unethical ways.

It Doesn't Stop with Content Sites

Let's look at the concept from a broader business standpoint, because these principles don't only apply to content sites. They also apply to eCommerce businesses or even the web portion of traditional brick and mortar businesses. I don't care if your site leads to selling products on eBay or Amazon. You need to have ways of showing your authority, which establishes trust. A blog or even expert articles that give tips and advice can be a good way to do this. The more a customer sees the people running a site know what they're talking about, the more likely they are to purchase products from that site.

When it comes to getting users involved, blogs are again an obvious choice, but you can also integrate web 2.0-type apps. Look at what Best Buy is doing now. They're launching an "enterprise-Twitter"-style application called Mix. While presently, this is more intended for employees, it still represents an authoritative way of conducting business, and you could just as well open up a similar tool to customers. Anything that can help you develop a dialogue with your potential customers is going to help inspire trust. At that point, customers can see that there are real people behind your business, and when they can humanize who they're buying from, they'll feel a lot more comfortable in trusting you with they're money.

A recent survey found that 81% of consumers don't trust small online businesses. Authority and engagement are ways to overcome this. For more on earning customer trust online, see my seven steps for small businesses. How do you earn trust from your customers? What methods do employ to engage users? How do you show your authority in your niche? Share your ideas with the rest of us. Engage.

-searchspiderz