Online advertising is a $65 billion worldwide business, and growing again after the past year’s economic lull. But while television ads might be Superbowl-worthy or amusingly worthy of ridicule, online ads can be downright annoying. Marketers try all sorts of novelty to make sure ads get noticed and clicked on, but, many will argue that there are more than a handful of types that go too far: eventually eye candy becomes an eyesore. Here are YieldBuild’s candidates for the most obnoxious online ad formats:

1. The Pop-Up

More of an annoyance 5-6 years ago before pop-up blockers got really good, the occasional ones manages to slip through every now and then, leaving us to play whack-the-mole with the close window button. Leave-behinds (that entreat you to return to the site when you’ve made it clear you want to go) and pop-unders are equally annoying cousins. Netflix, while I love its service, is a notoriously pervasive pop-up advertiser.

2. Autoplay audio and video

There is nothing quite as infuriating as opening a page and wondering why it’s screaming “helloooo?” to you. Chances are it’s an ad peddling high-res emoticons. Autoplay music is something tweeners might have become accustomed to because of MySpace, but the rest of us typically hit the close-window or back button as quickly as possible.
Autoplay video is something even the IAB is trying to step in and squelch, before advertisers overeager to replicate television-style ads turn off Web visitors for years. Often incorporating sound as well, a simple page load forces you to download and sit through noise and visual distraction unless you can be bothered to click the tiny control button to pause it.

3. Deceptive system-message ads

A favorite among malware promoters, this variant of a popup looks deceptively like a Windows or antivirus window, down to the blue control bar on top and Windows system font. They typically use confusing language, like “Do you not want to leave your computer vulnerable to viruses?” and leave you afraid to even click the red-X close-window button.

4. Disgusting pictures

Yes, we understand the acai berry is chock full of antioxidants, but do you really need to show someone’s distended gut to make your point? And will saffron-yellow teeth scare you into buying teeth whiteners online? When I read an innocuous news article, I’m not sure I want to see the inside of a zombie’s mouth in the periphery. Who really clicks on these things?

5. Cheesy animations

Popular among mortgage lenders, who have cut all sorts of unsavory deals over the years, have found a bizarre form of ad that is totally unrelated to their product offering: videos of women or silhouettes dancing. They’ve faded in popularity recently, although that might not be too surprising; one look at these animations and your first thought is “subprime.”

6. Imperfect targeting

Behavioral, geo or demographic targeting that only goes part of the way ends up defeating the purpose of targeting altogether. If you live in San Francisco, for example, geotargeting that suggests you live in Hayward is not a compliment. Demographic targeting based on a geo/IP mapping may serve up the wrong types of ads when there are huge income disparities in a region. And lots of people don’t like to be reminded of discreet searches following them for weeks afterwards in the form of ads that creepily know just a little too much about you.

7. Prerolls on video clips

Video advertising makes sense for high-quality longer-form video. A total of 3 minutes of advertising on an hour-long TV show on Hulu seems more than reasonable to me (even if many of them seem to be PSAs). But a 30-second commercial before seeing an under-minute clip? You’ve got to be kidding me. As much as I love Comedy Central, I’d rather watch grainy bootleg than sit through so many prerolls ahead of their Reno 911 clips.

8. Page Takeovers

These Flash-based ads that run aground the page you’re trying to view can sometimes be intriguing, but usually they’re pretty annoying. And while most have a “close” button, good luck sometimes finding it. They’re hidden in a way that makes you sit through a 10-second video as your pointer dances around the ad looking for a way to close it.

9. Expandables

I don’t know if this the right term for it, but these ads are the ones that look like simple image ads that flood into the rest of the frame, often occluding content you’re trying to look at, if you accidentally run a mouse across them. They often load video, so while you’re waiting for that clip to download, you’re staring at a blank box that’s covering the article you want to read. Finding the close/minimize button can often be tougher than finding Waldo.

10. The Stalker

The Stalker is what I call that “helpful” animated person that appears at a bottom corner of your screen and begins talking to you unsolicited. I’m not sure why the news of the Microsoft Office Paperclip pest’s demise wasn’t relayed to the creators of this ad type. And, unlike their real-world counterpart, the car salesman, the Stalker will ignore you when you curtly say, “I’m just looking.”

Today Google announced the launch of its DoubleClick Ad Exchange, which will open up both advertiser and publisher inventory and allow market dynamic-driven pricing and greater scalability with respect to audience reach for advertisers and access to a wider swathe of advertisers for publishers.

Or so goes the pitch. But this is Google, and if there’s one thing it knows and dominates, it’s online advertising.

Getting a sizeable exchange going can often present a chicken-and-egg problem, but Google’s reach among publishers and advertisers (DoubleClick for the head, AdSense/AdWords for the long tail) is already impressive, at 76% of the US and 73% of the global online audiences.

Exchanges, on the other hand, comprise about 10-15% of the display ad business (Yahoo’s Right Media Exchange is the largest). Google will shave off a relatively small fee through the exchange, but what it will gain is access to inventory sources if the exchange grows and dominates. If it can maintain higher efficiency than its competitors, Google will grow its share of a market that it will host and develop.

An PDF explaining the Ad Exchange is here. The DoubleClick blog also has more details.

I, along with millions of other Twitter users, received a friendly email from Twitter co-founder Biz Stone this morning sharing the popular service’s new terms of service (TOS). In the basic terms area, they add (italics mine):

The Services may include advertisements, which may be targeted to the Content or information on the Services, queries made through the Services, or other information. The types and extent of advertising by Twitter on the Services are subject to change. In consideration for Twitter granting you access to and use of the Services, you agree that Twitter and its third party providers and partners may place such advertising on the Services or in connection with the display of Content or information from the Services whether submitted by you or others.

Before you scramble to your Twitter page to see what these ads look like, they add:

We’re leaving the door open for exploration in this area but we don’t have anything to announce.

Not only are ads going to be a distinctly probable possibility, but contextual and behavioral targeting are also being hinted at, too. It’s been a few years since Google raised hackles by announcing they’d serve up contextual advertising on Gmail (the furor has died down), but behavioral targeting moves beyond simple content matching on the page/tweet and might additionally look at patterns of searching and browsing behavior over time and potentially across sites and services. Since it’s been less than a year since Oprah gave Twitter a green light, it’s safe to say that Mr Stone and the rest of the management will move cautiously, especially since Congress is currently drafting a bill that would tackle behavioral targeting’s privacy issues.

The big news out of the Google camp yesterday is they have opened the doors for ad networks to bid on AdSense inventory.  By logging into your AdSense account and going to AdSense Setup -> Ad Review Center you can see a list of ad networks that are bidding on your inventory.  From there, you control which networks have access.   In the YieldBuild account, I can see seven ad networks.

I read through all the emails I received on this announcement and will give my take.

Why would Google do this? At the end of the day this is about data and making the decision about the ad that gets served which gives them the ability to insert themselves on impressions they think are valuable on more inventory.  They must feel that this will help the existing AdSense business and that the fees they can take from the ad networks will more than make up for lost AdSense revenues, or it will drive up bid prices for AdWords advertisers.

Will other big players play with Google? I think the large independent ad networks will try it out.  In our list of ad networks in the Google Exchange, we already see Specific Media – I’m not sure if everyone sees the same ad networks.  Others (I won’t call them out) that have resisted working with exchanges in the past because they believe it severely devalues their service will remain on the sideline unless they have no choice.  I’d expect Microsoft and Yahoo to compete with Google, either by continuing to operate independently, or by joining forces.  I’d put players like Fox and AOL on the fence.  Fox and AOL are both working on their own exchanges and RTB (real time bidding) platforms, but there are limited numbers of large publishers which makes maintaining and keeping them potentially expensive for the smaller standalone exchanges.  At the heart of success for smaller exchanges is liquidity.  Google certainly has a leg up on this and it can be potentially a killer for others trying to get traction without having a huge set of suppliers and demand.

How do the economics work? One of the questions that publishers have asked is, Should I turn Specific Media off since they have access to my inventory through Google?  At this point, it’s not clear how much each ad network is paying (can’t see it in AdSense reporting), and what percent Google is keeping from the ad networks (Google has never been transparent with publishers about the bid rate and the actual payout of AdSense).  Our advice to publishers is to keep running ad networks independently for now.  The program is just starting and hasn’t been ramped up.  Then, we’ll need to run tests by turning off ad networks and gauging overall fill rate and CPMs.

What does this mean for the future of ad networks? This is an interesting question to conjecture.  We have believed that the number of ad networks will continue to grow into the many thousands.  Super large ad networks will prefer to have direct relationships with publishers, but will go to exchanges for some inventory.  Medium and small ad networks will ultimately focus on selling ads and servicing advertisers over managing publishers.  Most of the inventory they sell will come through exchanges as long as they can get the targeting options they need for their niche.  However, especially small network growth may be slowed if the minimum fees on the exchanges are too expensive.  If that’s the case, I suspect a sub-market will emerge of platform providers that aggregate small networks to get them onto the exchanges with less fees.

How does this impact publishers? Depending on the segment of publisher you are in this means different things.  At the lowest level, if you are a niche AdSense only site, this will probably help your revenue over time.  If you are a medium- or large-sized publisher without a direct sales force, it has the potential to help, but it becomes increasingly worrisome for one entity to have full control over the value of your inventory if they do become the one-stop shop.  For medium-sized and large publishers that sell their own inventory, they will want to make sure that the exchange network is blind so they don’t run into channel conflict. I also suspect that when Google is at full scale with certified ad networks that publishers will hold back inventory in the hopes at preventing the field from becoming completely tilted in Google’s favor.  Similarly to SEMs, publishers want competition.

What does it mean for Ad Network Optimizers like YieldBuild?  For YieldBuild, we view it as a good thing that Google is creating more demand for AdSense inventory.  I have personally felt that this would be the trend for a few years and that we will ultimately end up with two or three major exchanges for remnant inventory, but it’s likely to take a few more years still before this is a reality.  My hope for the industry is that it remains competitive for distribution and there will be continued demand for optimization services, and consolidated reporting with analytics that publishers value.  This may lead to a reduction of ad networks that publishers need to manage, but there will be more than one player

Google AdWords chief economist, Hal Varian, says this about the same ad appearing in different positions in search results or in an ad location.

We have used a statistical model to account for these effects and found that, on average, there is very little variation in conversion rates by position for the same ad. For example, for pages where 11 ads are shown the conversion rate varies by less than 5% across positions. In other words, an ad that had a 1.0% conversion rate in the best position, would have about a 0.95% conversion rate in the worst position, on average. Ads above the search results have a conversion rate within ±2% of right-hand side positions.

As Publishers, our job is to prime the pump of the conversion funnel by sending clicks.  A well placed block of ads may have many more clicks than an ad tucked in the right hand bottom location of a page.  It’s good data to have that the clicks on these ads are likely to convert at the same rate or better as a block of ads in a low click through area.  If this holds true, publishers should see the revenue per click hold steady as they place ads in places with better click through rates since the amount AdSense pays out is based on the auction of the ads and the quality of the traffic (how well it converts).

This week, AdSense announced some improvements to their ability to match ads to content will be rolling out.  As they say, the proof is in the pudding.   Since Monday, we’ve seen a 15% increase in CPMs that has been consistent across a sampling of our publishers.

While it’s not uncommon for AdSense earnings to fluctuate, we hope that the correlation between this announcement and improved earnings is here to stay.

Last week, at SES San Jose (a popular convention for the SEO crowd), I participated on a panel called, “Don’t Call It a Comeback: Semantic Technology and Search.” Three of us gave presentations: Nova Spivack from Twine, Lane Soelberg representing Wolfram Alpha, and I spoke about some tests in semantic SEO that we ran on HubPages. Rounding out the panel were Othar Hansson from Google, Hope Hackett from Ask, Kevin Haas from Yahoo, and Mark Johnson from Bing, who also wrote a terrific recap of the panel on his blog. Dana Todd from Newsforce and SEMPO was the moderator.

Most of the discussion revolved around the impact of semantic knowledge aggregation would have on search engine results and the balance of search traffic. During Q&A at the end, though, Dana asked about the impact of semantic technology on advertising.

I offered my opinion that semantic ad targeting has been and will continue to evolve as a refinement of contextual advertising. Semantic technology’s strength is identifying what something really means, what the real meaning behind symbols and words. For example, a simple contextual match on a page about how to clear your browser cookies might serve up ads for Mrs Field’s. Semantic technology would notice the preponderance of tangentially-related terms on the page, such as browser, Web, program and the like, and probably result in an ad for Google Chrome instead.

Semantic technology should also sense the mood of a page, and know, for example, if serving up ads for Microsoft is appropriate on a site that could be potentially bashing them (not a good idea when most savvy Web users know contextual ads are often priced by click!).

Beyond text, the big opportunity is with display ads that, without proper and extensive tagging, usually are clumsy or impossible to contextually target. Making sense of metadata, tags and even copy and design elements within the creative grants ad networks the ability to make the most of their display inventory.

What technologies exist in this space? I already wrote about Peer39 and adpepper’s iSense last year. Here are a few companies that have developed semantic matching technologies in the online advertising space:

• Semantic Match (Peer39)
• iSense (ad pepper)
• Personifi (Collective Media)
• Apricot (4AdNetworks)
• ContextIn
• myLOBster Media Corpus (CID)

The field is being rapidly littered with failures, like Clikkit’s SemSense, Aduna, and Dapper’s MashupAds, so the technology is still in development and its full potential not yet achieved.

UPDATE:  We are glad to hear that Dapper’s MashupAds is alive and kicking … and has been renamed to Dapper Ads.

Rob Norman has a take on where advertisers should be reinvesting their recession dividend.

In the delivery business brand owners have received a recession dividend in reduced costs per thousand. The smartest ones will re-invest the delivery dividend in the assets and processes required to win in discovery.

For many companies, what seems like a cost savings in CPMs, it often chewed up in lower margins and reduced sales.  At the same time, ad rates have adjusted to performance levels that have a greater ROI in categories where supply continues to grow or where there has been attrition in advertisers.  This opportunity may be small on a market by market basis, but is significant as long as more inventory can be identified.

Developing a discovery strategy is the real heart of the emerging marketing practices of search and social media.  It involves asset creation, optimization and distribution and is, in a general sense, a far more atomized approach than advertising with a far higher failure rate.

I think the assertion of search and social media as the foundation to discovery is key and true, but the issues of scale and efficiency remains.  Identifying fragments of well performing inventory can certainly be largely automated and will deliver a disproportionate amount of value impression by impression, but at what cost.  From what we have seen, the efficiency play of  buying lots of impressions at a lower cost and running them like a shotgun blast picks off the valuable segment at a lower total cost of reach.

For advertisers to invest in more efficient buys through better identification of inventory and creative the results of the optimization function must change.  The cost of the mass buy must be less efficient than the targeted buy.  If advertisers see this coming.  Now is a good time to invest in the processes and technology, but if supply continues to outstip demand, I suspect we will continue to see depressed CPMs.  Until then, we hope the recession dividend will be reinvested in larger buys than removed from the market in its entirety.

Advertisers picking placements in traditional media, such as magazines and television, often have a lot of control over where their ads are placed. They typically have access to the editorial calendar or a synopsis of the episode to be aired, and also often know who (some of) the other advertisers are.

In contrast, advertising online usually affords advertisers relatively little control and transparency into the environment their ads are being placed in. Although they can often cherry-pick the sites where their ads appear, they can’t usually pick what content is running adjacent to their ads. Transaction-oriented advertisers might not really care, but this is the sort of thing that drives big brand advertisers and agencies nuts.

Social media ad network BuzzLogic has launched what it calls its “Conversational Advertising Dashboard” to allay exactly these types of anxieties. Information about the type and tone of the ad-adjacent content, the scope and nature of the conversations, author credibility, content freshness and ad performance by conversation are provided, across the 3,000+ “influential” blogs in its publisher base. Along with insight comes control: advertisers can yank placements if they don’t like what they see.

BuzzLogic’s dashboard is an addition to its Conversational Advertising platform, which it launched last year. The network reaches 33.3 million unique monthly visitors and serves approximately 2 billion impressions in concert with networks such as AdSense, BlogAds and Adify.

Ren and I are attending WordCamp in San Francisco, the Automattic-sponsored one-day event dedicated to WordPress, the popular blogging platform (and the one we use here at YieldBuild). This is the fourth anniversary of the SF-based WordCamp—the event has spread to more than a couple dozen around the world in 2009.

Forgive the choppy style – I’m semi-liveblogging. It’s also a bit geekier than your usual YieldBuild blog post, but hey, this is a blog platform conference.

Highlights so far:

• 730 registered attendees, and 2900 blogs (double the number of attendees in 2008)
• Tim Ferriss offered tips on blogging: how long posts should be (both long- and short-form can work), how much time you should spend on a post (as much time as you enjoy) and how to outsource your dating (can have bugs–beware!)
• Google’s Matt Cutts offered his SEO advice: modifying your default and specific blog entry URLs, doing some decent keyword research (esp via the Google keyword tool), using Google Webmaster tools, writing backlink-worthy posts, whether you should post videos or podcasts (HotOrNot score <6? Podcast) etc.
• Social media PR whiz Tara Hunt, doing a conference junket for her book The Whuffie Factor, talked about social capital. (see slides here) Establish connections and build reputation/credibiity. #1. Turn the bullhorn around (listen instead of shout to your customers). Direct2Dell example. #2. become part of the community you serve. #3. create amazing customer experiences (”automagicness”-seamless experience; “throwing sheep”-fun social frivolousness that makes customers comfortable to do more; “lighten up” – defuses business seriousness) #4. embrace the chaos (benefits of openness, transparency and daring) #5. find your higher purpose (gift-giving to build social capital)
• WordPress creator Matt Mullenweg – about 3.5 million WordPress blogs, 11 million downloads, 22 billion pageviews, 4.9 billion spam comments killed by Akismet; history of WordPress from its b2 beginnings, through the various versions and updates. Announced GPL-compliant Theme Developers Page. GPL-compliant business models – Alex King founder Crowd Favorite. Ajaxy Twitter-like P2. Facebook-like BuddyPress. New cool plugin overview. 42% WordPress downloads outside the US – dotSUB for subtitling WordPress.tv videos. Localization/translation of plugins. Blackberry application coming, along with an iPhone app update. Announced that WPMU and WordPress.org code bases are merging. WordPress.org profiles coming (integrating BuddyPress functionality), including WordPress service provider marketplace.

I’ve got to say, by the way, that the WordCamp organizers are really spoiling us with the grub and swag. Omnivores enjoyed barbecue, while we veggies got grilled veggies, collards and mashed potatoes and cornbread. Got great swag, including a blue WordCamp American Apparel t-shirt, buttons, pens and decals galore, and a temporary tattoo. Keep in mind the conference registration cost $20!

Q&A with Matt:

• glotpress.org – open-source translation framework, better porting into plugins and themes
• Blogger import feature does exist to pull in Blogger blogs into WordPress (at least for the content)
• which Ajax library are you using? Started with Prototype and Scriptaculous; now using JQuery, very happy with it.
• anti-plagiarism: plugins to detect? Not yet (but report to WordPress and Google to take down or remove from index)
• plugins for WordPress.com blogs: plugin integration across 5 million blogs tricky. WP team does try to develop towards parity between the .org and .com platforms. Some plugins developed for VIP clients like CNN.com might be released to the .com blogs as options.
• Intense Debate: how do you decide what goes into core? Answer: What is fast, secure and what can we commit to update forever?
• PHP5 over 80% now (~20% remaining PHP4, still supported)
• using WP as a CMS for larger purposes: probably won’t scale up to the level of functionality like Drupal or Joomla because want to keep the code base light. Possibly spin off to CMSPress?
• improving search functionality. Sphinx-based technology might be a solution; in the meantime, Google search is even used on Matt’s blog.
• Revision post & versioning: can customize this via config file. Possible future improvement might be more efficient storage, even though text-heavy revision storage is fairly trivial nowadays