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:
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.
I was curious how our CPM per minute on a site we own and operate called HubPages compares to TV. I created a formula to calculate our revenue per 1000 visitors and divided that by the number of minutes spent on the site per visitor. The calculation yields about $5.15 CPM for each visitor per minute.
I was curious how this compares to TV. There are about 16 minutes of commercials per hour on TV, and most commercials are thirty seconds long. That means one person sees about 32 commercials per hour. I used an estimated CPM of $10.25 for TV. If a person watches sixty minutes of TV, that’s an effective CPM of $328 per viewer. If you divide that by sixty minutes, that’s $5.47 CPM per minute for a viewer.
By this analysis, HubPages has a CPM per minute 6% lower than broadcast TV. The next thing you know TV is going to be clamoring for online ad budgets! I was a bit surprised to see the CPM per minute be so close, given the rough industry numbers are 20% of media consumption by time is online, but only 10% of the ad spend is.
HubPages is largely monetized by AdSense, which leads me to believe that search must be a much higher effective CPM per minute than TV (a relatively passive medium for transmitting advertising messaging). Certain content sites that are effective at selling brand ads must be better monetized per minute than TV. But there must be segments that are way underperforming. From the data we see, social networking sites have much lower than average CPMs and much higher average visitor sessions, so they are underperforming, but social networking is only 10-15% of total time spent online. Other categories like instant messaging must be underperforming as well.
What’s your CPM for visitors per minute?
YieldBuild will be exhibiting at, sponsoring, and attending a number of upcoming events. Please contact us if you’d like to set up an appointment to meet.
Affiliate Summit – New York CityPaul Edmondson (CEO) – Fawntia Fowler (HubPages)
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Search Engine Strategies (SES) – San JoseJason Menayan (YieldBuild) – Ryan Hupfer (HubPages)
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AdMonsters Publisher Forum US XXI – PortlandPaul Edmondson (CEO)
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BlogWorld and New Media Expo – Las VegasJason Menayan (YieldBuild) – Ryan Hupfer (HubPages)
Q2 estimates are in from the big four online advertisers (AOL/Platform-A, Google, Yahoo and Microsoft) and the big news is that the ad market is no longer dropping. Holding steady at about $7.9 billion among the four, the stasis in the growth trend is being heralded on TechCrunch as the new trough in the market, from which we can likely expect growth.
Is there cause for optimism? Although the data from the past decade isn’t granular at the quarter level, the last retraction saw its nadir in 2002, from which a new growth trend was reset. The IAB reported $1.46 billion in Internet ad revenue in Q2 2002, and $1.47 billion in Q3, a similarly flat Q/Q change, and then grew from that point on ($1.5 billion in Q4, $1.63 billion in Q1 2003, and so on).
The unabating focus on performance, ever-increasing publisher inventory, combined with improved efficiency, will probably continue to exert downward pressures on overall spend, but if you’re as “guardedly optimistic” as Obama is about the overall economy, then maybe this would be a good time to call Dave Winer out on his doomsaying.
Online research and advisory outfit Outsell estimates that advertisers will have moved $65 billion in 2009 to online marketing, but we’re not talking about advertising. That enormous figure, about equal to total US spend on television and cable advertising, includes spending on SEO and their own destination sites. So, in addition to buying traffic, advertisers are investing in their own mousetraps, hoping the growing online audience will beat a path to their door.
Is this bad news for the online advertising ecosystem? No. It is a reflection of advertisers’ growing sophistication and understanding of the online marketing universe, which we all know extends beyond advertising. Online traffic isn’t necessarily always bought–online properties can be groomed to receive traffic through search or through cross-channel investments (which can be surprisingly effective). However, advertisers needing scale or granular targeting will always have to reach outside their zone of control and buy. Unless they get too aggressive, budgets dedicated to online advertising will probably continue to be well spent as long as the gap between time spent online and online advertising spend continues to yawn.
At YieldBuild, we have long known that the color of links influences the click through rates of links. Google did a recent experiment with GMail that was covered by GigaOm on the click through rates of links by altering the link color.
But there’s also the fact that Google is stuffed full of people who just love to experiment on its users. For instance, Google Mail uses a very slightly different blue for links than the main search page. Its engineers wondered: would that change the ratio of click throughs? Is there an “ideal” blue that encourages clicks? To find out, incoming users were randomly assigned between 40 different shades of links – from blue-with-green-ish to blue-with-blue-ish. It turned out blue-ness encouraged clicks more than green-ness. Who would have guessed? And who would have cared? Google, of course, which wants to get people clicking around the net.
While contrast is important, it’s largely dependent on the surrounding ecosystem of link colors. For example, in many tests we ran, placing AdSense ads on sites with mostly dark red links, changing the link color to blue of the text ads didn’t increase the clickthrough rate. However, we were able to increase the CTR in some cases by lightening the surrounding font colors around the ads without changing the link colors at all.
I think the comment that Google made about blue vs green links is true. That in general, sites with blue links have a higher link CTR than sites with green, or any other color but blue for that matter. If you’re thinking of starting a site to place text ads on, I’d suggest using light blue for your main link color.
Have we turned a corner? The ability to accurately predict the nadir of a recession is not something anyone has been able to do consistently, but analysts and advertisers are nevertheless sussing out signals that a recovery is imminent. This interactive infographic on the NYT says leading economic indicators (final slide) are suggesting the worst is behind us. A report by Publicis Groupe’s ZenithOptimedia contends the bottom of the worldwide advertising market is in Q3 2009.
Does a general economic recovery portend a rebound for online advertising? According to a recent forecast by Pricewaterhouse Coopers (highlights), yes, but when you dig a bit deeper, the answer is yes-and-no. First, the bad news. Display is expected to drop: from $4.8 billion (2008) to $4.4 billion (2013) in the US, and from $5.1 billion to $4.8 billion in EMEA. The final couple of years of the forecast period will see a modest recovery for display, but not enough to offset the drop from the previous years.
Overall spend is expected to grow through the forecast period (through 2013), so where is that expected to come from? Search. Performance-based advertising will earn a growing share of online ad spend as advertisers look to maximize ROI through search’s greater accountability, as well as take advantage of the search terms they’re targeting elsewhere (read: contextual advertising, widget/microsites, apps, etc.).
Assuming PwC’s projections are accurate, the question is what it will take for display to stop falling and resume the growth other formats will continue to enjoy. Accountability and targeting will probably be the two buzzwords on most inventory sellers’ lips, as advertisers’ expectations to understand what their spend is giving them begins to be heard.
An interesting opinion piece on Minsiders, authored by Accord Media president Marta Wohrle, dovetails off a panel discussion whether behavioral targeting and bigger ads—two buzzwords that have captivated online advertising punditry ever since the market drifted into the doldrums—were the answer to lift online advertising growth. I thought this was an interesting insight:
When I think about old media, it strikes me that it has been very good at relationships with advertisers and rather poor at cultivating relationships with its consumers. The thing about digital media is that it has gone way too far the other way. Audiences are center and front of successful Web sites and, of course, the whole kit and caboodle when it comes to social media. Advertising, on the other hand, has been commoditized.
While it’s true that technology has created some failures in the way it’s been implemented, I don’t think a focus on targeting and exploiting technology is the root of the problem, although I fully agree that publishers’ focus on them at the exclusion of what makes successful advertising work presents an interesting opportunity. But publishers differ.
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The large portal sites, the ESPNs, Dictionary.coms and Hulus of the online world, stitch together large, agglomerated audiences. Browsing behavior can be aggregated and analyzed to paint a picture of broad interests, but since these sites rely much more on casual browsing than active searching, granular information on what purchasing decisions lie within the realm of possibility of their viewers is generally impossible to come by.
Television’s advertising model has proven broad interests and large audiences rely on novelty, creativity and humor to make the message penetrate viewers’ skulls. With the Web you have the possibility of interactivity, although without exceptional novelty, there usually isn’t the incentive to engage. Non-interactive ads need to inject the interactivity of gaming (like Innovid does) to make it compelling. And any novelty that becomes a hit will not last that way for long–today’s hot is tomorrow’s boring. Effective advertising for large publishers will always be a moving target. In this case, IAB’s call for the unleashing of the creative spirit and the OPA’s new large-format ads, are attempts by these bodies for their large publisher members to stay a step ahead of the game.
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Although not strictly exclusive of the largest publishers (think About.com and the well-SEOed New York Times) the SMEs of the online world are often less equipped at amassing large audiences as they are at delivering content to a large number of individual searchers. Instead of a huge audience of people you know share a love of football but you don’t know much else about them, search publishers identify 1,000 microaudiences with niche interests and deliver each of them a piece of content that provides advertisers with precise information about what they want to buy and maybe even when.
With the lack of scale at delivering jaw-dropping creative for people interested in hummingbird feeders, publishers have relied on contextual advertising’s ability to mate niche advertisers with niche content. What’s been missing here is not necessarily more engaging advertising (although that can’t hurt), but better targeting. When niche publishers identify visitors with an intense interest in gas masks, then serving up ads for Halloween masks represents a huge missed opportunity. Likewise, it’s a failure of behavioral targeting to not know that someone looking at an article on interest rates after spending several months reading about cars online is probably a pretty good candidate to close a deal with.
So where does that leave the agencies and ad networks? What do they have to focus on: targeting technology or creativity? Depending on the breadth of publishers they’re hoping to work with, advertisers are going to learn quickly that they shouldn’t be picking one.
