Google has finally unveiled its Cost Per Action tariff model for its Adsense network. What was the exclusive domain of affiliate marketing networks is disrupted by Google's huge publisher and merchant base, and its superior system. In one move, Google becomes the biggest affiliate network in the sector.

The impact on the online advertising ecosystem will be considerable. Not only to affiliate networks, but also to the community of market makers - affiliates, which have thrived on arbitrage opportunities around CPM, CPC and CPA advertising. CPM (Costs per Thousand banner impressions), CPC (cost per click) and CPA (cost per action). The different tariff models provided enough market inefficiency for price imbalances to arise.

Over the last few years entrepreneurial affiliates have been acquiring traffic from Google's adsense at the minimum 0.01 per click, and driving it directly to an affiliate network merchant's site under the CPA tariff model, and got paid when and if the customer converted. The arbitrage actually resulted in positive margins. And many other similar arbitrage moves.

Google's offer of the CPA tariff model to advertisers adds new price transparency, as clients can now work out the ROI of all three tariff models on one simple user interface. The arbitrage opportunities will invariably dissappear.

Clear winners are advertisers; CPA tariff model pushes the onus of conversion onto the publisher. The advertising merchant only pays if the clickthrough actually makes a purchase. CPA is the solution for advertisers with click-fraud problems.

[Official Inside AdWords: Pay-per-action beta test]

Technorati Tags: affiliate+marketing , google+CPA

Posted by Paul Elosegui at 5:46 AM | Permalink: Google Enters Affiliate Marketing

Internet advertising nears £1 billion (€1500m) for the first six months of 2006. Though the figure is lower than the US $7900m for the equivalent period, UK spend is higher on a per capita basis than the US. The figure below shows online advertising revenue growth for the US

On a per capita basis, the UK leads the way with €50 per capita, followed by the US and France with around €40 per capita. Scandinavia follows with high €30 values. But online advertising has yet to reach the tipping point in southern Europe; Italy, Portugal and Spain have single digit per capita online spend values, typically €5 per capita. But growth is 30-50 percent in all countries.

The 40 percent year on year growth takes online advertising to 10.5 percent of the UK's advertising market, almost equal to the National Press' market share. UK advertising is now shared among the different medium as follows

1. TV 22.7% market share
2. National Press 11.4 %
3. Online 10.5 %
4. Outdoor 5.1%
5. Consumer magazines 4.6%
6. radio advertising 3.4%

The study by IAB and Price WaterHouse shows online advertising is split as follows

1. Paid-for search takes 57.9%
2. Online display (banners and skyscrapers) 23.5%
3. online classified advertising 17.7%
4. Interruptive formats, including 'pop ups', declined to 0.7%
5. Email marketing and others taking the remaining 0.8%

The US IAB study shows that performance based advertising, the Cost-per-Action (CPA) model is rising over the Cost-per-Click (CPC) models, as shown in the table left.

The sector ranking in online advertsing spend is as follows:

1. Recruitment and finance account for over half the spend
2. Automotive 13.8%
3. Entertainment and Media 8.9%
4. Consumer Goods, which includes FMCG, rose to 4.6%,
5. Retail increases to 3%

The trend is for adspend to even out across categories, retail increasing its share by 30% as ecommerce takes off.

Technorati Tags: iab , online+advertising

Posted by Paul Elosegui at 9:12 AM | Permalink: Online Advertising Tsunami has Arrived in the UK | Comments (1)

The adsense have released a new ad format, smaller than its current 300x300. Great addition given how difficult it is to design well balanced pages.

The 200x200 is unlikely to be a hit in terms of clickthrough, Google has published its highest performing ad sizes:

• 336x280 large rectangle
• 300x250inline rectangle
• 160x600 wide skyscraper

The graph shows the best performing locations for adsense; dark orange is the strongest performance location, while to light yellow is the weakest performance. Naturally, ad placements above the fold tend to perform better than those below the fold. Ads placed near rich content and navigational aids usually do well because users are focused on those areas of a page.

But nothing beats trial and error with web analytics of user behaviour. [Via Google's Inside AdSense: New channels page, new ad format]

Technorati Tags: adsense

Posted by Paul Salber at 9:18 AM | Permalink: New 200x200 Adsense Format

The declining impact of TV advertising is having a positive impact on politics. A billion dollar war chest will no longer guarantee you an elected office. Now you need support from social groups and communities that are hard to influence centrally.

Collaborative filtering sites, like digg.com, del.icio.us, and even Google, are the political battle grounds of the future. A political candidate will have to gain approval of communities of decentralized, diverse, and independent opinion.

Community reputation in these aggregate groups is difficult to buy with money. It takes an increasing amount of money for a meritless proposition to achieve top rank in Google listings. A politician will win or lose by whether his ideas spread, by whether individuals are recommending the idea. A politician will win if his ideas are new enough, potent enough to spread like viruses. As a leading viral marketing expert explains,

An example of such a disruptive flash political efficiency is The Pirate Party (Swedish: Piratpartiet). The party has gained wide support without institutional or financial backing, with the simple remit of re-balancing the power of copyright and patent laws in favor of the community, while still maintaing appropriate incentives for companies and authors to invest in intellectual projects.

TV advertising is being replaced by viral marketing; the ability to formulate and package the idea and addressing the right communities.

Technorati Tags: politics , viral marketing

Posted by Paul Elosegui at 3:52 PM | Permalink: On the Rise of Viral Marketing and Web 2.0 in Politics | TrackBacks (1)

Google dominates with 72% of the European market; higher market share than in the US, where it has to settle for 60%.

If you can't beat them, you join them

[Via kelblog : Google premier site Internet en Europe]

Technorati Tags: europe online

Posted by Paul Elosegui at 10:22 AM | Permalink: US Dominates the European Online Media Landscape | TrackBacks (3)

Youtube, the leading video clip sharing service, is creating a lot acquisition rumors with much of the debate centered round its valuation.

Looking at reach and page view alone, with 10,000m page views a month and double digit growth rate, a billion dollar valuation range, like MySpace's, is not out of the question.

Fred Wilson offers a $150M estimate for revenues with $15 CPMs. But other opinions are much less optimistic.

The debate of Youtube revenues highlights problems with monetizing video clips. Jason Calacanis touts a low value for the likely youtube revenues, with only $20M from junk CPM advertising. Jason's estimates a $2 CPM for Youtube contextual advertising, arguing that the "dorky" video clips with very little segmentation or keyword context will not earn the higher range $15 CPM's for quality full context and full segmentation video content.

Similarly Mike Cuban sees a a dramatic decline of Youtube from major problems with copyright owners

Considering the RIAA will sue your grandma or a 12 year old at the drop of a hat, the fact that Youtube is building a traffic juggernaut around copyrighted audio and video without being sued is like.... well Napster at the beginning as the labels were trying to figure out what it meant to them

I think the biggest issue is the difficulty of using the Adsense advertising model on Videos. Given that Google's algorithm works only on text, identifying keywords from video content is ineffective, and hence advertising is no longer targeted. Categorizing videos manually is not a viable solution, when you have tens of millions of video clips.

Technorati Tags: youtube

Posted by Paul Elosegui at 10:52 AM | Permalink: Youtube: Waiting for Adsense for Videos

Monster.com has launched an Online Marketing section. A search for SEO in monster.com gives rise to 55 vacancies in the UK and ten times that many vacancies in the US. Specialized online marketing recruitment agencies are cropping up like mushrooms. Collecting quotes from around the web:

Total UK online advertising expenditure in 2005 has surpassed all initial expectations by growing 65.6% year on year to £1,366.4 million (£1.4 billion). These record breaking results have taken internet advertising’s market share to 7.8% according to the results of the Internet Advertising Bureau’s bi-annual study --- (IAB).

With the double digit growth of online advertising, staff shortages in the online marketing field are inevitable.

"The online space is exploding," says Adam Hanft, a consumer marketing consultant in New York City. "There are real shortages of online designers, information architects, online producers, and on the media side, buyers, planners and strategists."

"It's hard to find people who can increase conversions and do Web analytics," says Alan Rabinowitz, CEO of SEO Image, a New York City search-engine optimization firm that helps clients improve their positioning in Internet search results. For example, companies are snapping up link strategists and pay-per-click campaign managers, Rabinowitz says.

Computer firms are facing up to the need for dedicated marketers. "Hardware and software makers need product managers and competitive analysis people with solid marketing skill sets, versus the engineering skill set that often filled the marketing void for these companies in years past," says Andrew Fitzpatrick, principal of Cambridge Consulting Solutions in Mill Valley, California.

Signs point to a growing gap between rising demand and a stagnant supply of senior online marketers. "I currently have a VP search that's my fourth online marketing search in a year, and they get more and more difficult," says Kevin Berchelmann, president of Triangle Performance in Bellaire, Texas.

Is the online advertising tsunami finally here?

Technorati Tags: online+advertising

Posted by Paul Salber at 4:52 PM | Permalink: Rising Demand for Online Marketing Staff | Comments (1)

Google has confirmed that it will soon launch a Pay-per-Action (CPA) variation of its Adsense. Adding CPA capability to its existing Cost-Per-Click (CPC) advertising products is an easy move. The CPA option will detract from its current Adsense revenues, but the total revenue from advertisers will likely increase.

Details of Google's announcement were reported by John Battelle, who reports on Google.

As with all of Google's developments, it is good news for some and bad news for others. The good news is for advertisers. The "Cost per Action" mode will be much welcome by advertisers as it will improve the efficiency and the return on investment of their online ad spend. Also, the Cost-per-Action practically eliminates click fraud, as fictitious clicks will not longer be a cost to the advertisers.

Cost-per-Action means more pressure for publishers, advertising netwoks. The current CPA advertising providers are the affiliate marketing networks which are:

• tradedoubler.co.uk - Tradedoubler Affiliate Network
• affiliatefuture.co.uk - Affiliate Future Affiliate Network
• dgm-uk.com - DGM Affiliate Network
• affiliatewindow.com - Affiliate Window Network
• buy.at - Buy.at affiliate Network
• paidonresults.com - Paid on Results Affiliate Network
• webgains.com - Web Gains Affiliate Network
• LinkShare
• ClickBank
• Value Click's Commission Junction

With Google's entry into the game, both advertisers and publishers acquire the option to use Google's CPA-Adsense network. Google becomes a one-stop shop for all modes of advertising, ads based on page views (CPM), ads based clicks (CPC), and ads based on conversions, purchases or acquisitions (CPA).

Google will translate the performance of all these ads into “effective CPMs� in its campaign management panel, allowing publishers to compare and optimize for whichever type of ad produces maximum revenue. WIth Google's dominant client and distributor base, it is bad news for the above affiliate networks.

Publishers will no doubt come under pressure with the CPA model. The pressure of conversion to a sale will be now be also on the publishers. Un-qualified traffic, like those generated by DNP (Domain Name Parking) publishers, will no longer generate good revenue.

The recent move to make Google Base Froogle's Data Feed may be a precursor for the CPA-Adsense to use Google Base as its product feed. The importance of generating a product feed for advertisers may be about to increase

Online advertising is about to get even more efficient, accountable and transpare

Technorati Tags: advertising , cost-per-click , CPC , google+CPA

Posted by Paul Salber at 11:34 PM | Permalink: Google Enters Affiliate Marketing

Jonathan Wall, Marketing Director at the top online electronics store in the UK dabs.com, explained at Internet World 2006 that his marketing team is now composed principally of web analytics experts who are constantly trading on the screens for the best prices and return on investment for their advertising spending.

With revenues in excess of €300m and an online marketing budget rumoured to in excess of €25m, can Jonathan's web analytics team be the future of marketing teams?

Jonathan's vision could not be more different from the traditional marketing department, with its one-stop-shopping of TV upfront and the big-media lunch circuit. Compared to the accountability forced onto internet marketing, the TV advertising industry is wasteful, untargeted, irrelevant, and ultimately damned irritating to your customers.

The change has similarities with the modernisation of financial market trading. Traditional buying and selling of financial assets was based on open outcry system. The prices at which customers were able to sell their assets depended on a chain of human interaction which ended in the open outcry buying and selling trading pit.

The open outcry system was plagued by inefficiencies, trader cartels which pre-arranged price and articificially increased price spreads and margins for the traders and banks. As a result the price spread, difference between the buy and sell price for the clients and suppliers was large. Talented traders could read their fellow traders and manipulate larger spreads for themselves.

Most of these human intermediaries have been taken out of modern financial trading. Open outcry trading has become mostly extinct, replaced by electronic trading. The buy sell spreads, and the cost of trading have dropped dramatically. The inefficiencies and huge cost of face to face trading has been replaced by zero overhead direct screen trading. The client has real-time access to real prices and can trades directly with suppliers.

Google Adwords bidding is a copy of financial screen trading. Though the spread, the margin retained by Google is still a large inefficiency, that will come down as other online advertising networks, like Yahoo Search Marketing start to compete on more level basis.

The world of advertising is heading towards a big change. Gone are the days of inefficiency and un-accountable media channels. The new advertising buy is electronic, transparent, and completely accountable.

Technorati Tags: advertising , adwords , electronic+trading , google , webanalytics

Posted by Paul Elosegui at 7:26 AM | Permalink: Is Electronic Trading the Future of Advertising Buy ? | TrackBacks (1)