Click Forensics just released some data on the rise of click fraud on the internet. The value of pay-per-click traffic is stiffly eroded by these measures since most advertisers will factor in the losses when quoting pay-out options. This has many effects. Firstly, it discourages publishers from scrubbing their clicks as is - since they know that the pricing scheme is adjusted. This results in advertisers placing click scrubbers on their ads which has two countervailing outcomes of decreased trust between advertisers and publishers and a huge asymmetry in the power relationship between the two.
I know I’m not alone when I say that traditional models of advertising and the mechanisms by which advertising transactions are handled are simply not sustainable. They invest more in technological engineering and “smart” advertising platforms rather than investing in smart advertising strategies.
The era of aggregated advertising distribution, where anonymous publishers and anonymous advertisers are brokered by an aggregation agency such as Google is cheap, sure, and relatively low-risk. However, cheap advertising isn’t the same as good advertising and the return seen no Google ads is routinely VERY LOW. Google ignores a very important property of commerce - similarity usually means competition.
Partnerships between complementing groups is what Google HOPES to accomplish. Since publishers and advertisers are, if they obey their categorical limitations, complementors. The more one reads about a given thing, especially material written by experts and enthusiasts, the more likely they are to buy that thing.
An example of dumb advertising - Nikon paying into Google AdWords to have their new D-SLR on virtually every photography related website. The smart move, which they also did, construct a website made FOR Nikon Cameras feature demos of the new product, videos of people using, how-to guides (especially ones that show off SLR-only features and demonstrate the superiority of the camera). The smartest move? Take an existing photography publication and pay them to generate guides and content on how to use the new camera, send them a some models to use and give them access to resources to product high quality content.
Everybody wins, the publisher gets to produce high quality content on a cutting-edge camera, Nikon gets lengthy relationship-building advertising that generates enthusiasm for their product and the customer gets improved content from their existing publisher OR finds a new publisher with whom to establish a relationship. SEO companies get more work and online marketing people can establish a higher quality network of a smaller size by handling quality, relationship building transactions instead of throwaway contracts that last a month or two and cost a few thousand dollars.
It’s odd how the same principle in different contexts can be misunderstood. Marketing people understand the power over the customer things like celebrity endorsement has or using scantily-clad models to display unrelated products (like beer or shampoo). Whereas establishing relationships with customers by endorsing content providers they use and encouraging growth of the market-place by empowering publishers to produce high quality stuff comes across as naive or stupid. “What stops a customer from buying a Canon camera after watching our expensively produced videos on how to take good shots with exposure settings?” Mis-attribution of arousal, that’s what.
Instead we get leaderboards and skyscrapers yelling at us from the margins of Facebook, MySpace or Google - being clicked on by a tiny fraction of users, a tiny un-profitable fraction.