Why the Outrage over Google’s Prop 8 Ads is Wrong

For the people of California, Arizona, Arkansas and Florida, November 4th was marked by both the election of Barack Obama, and by ballet measures banning gay marriage. In California, the controversial Prop 8 vote was particularly close and the end result came as a surprise to many. Exit polls have since revealed that it was a coalition of Catholics and Mormons who played a prominent role in helping to pass the resolution. The San Francisco Chronicle reported that 84% of those who voted to ban gay marriage attended church weekly, and that Catholics accounted for 30% of people who voted yes on the proposition. For the Mormon Church, they accounted for 40% of donations made to the Yes on 8’s $30 million campaign. With both sides of the vote holding strong and vocal coalitions, it’s no wonder why the vote was so close.

With the proposition set to be tied up in the California courts for the immediate future, there have been a lot of accusations with regards to foul play and media manipulation on both sides. At the forefront of the controversy have been Google and their popular ad platform Adsense. The controversy began a few days before the election when Yes on Prop 8 ads started appearing all over the Internet, including on gay friendly sites. While some were able to modify their Adsense accounts to remove the ads, a majority could do nothing. It’s certainly understandable why someone would be upset about displaying opposition ads on their site, yet the reality is that Google and the Yes on Prop 8 coalition did nothing wrong. Adsense, which works off a key word bidding system, ultimately functioned as it should have in going to the highest bidder. To blame Google in this case, is not only wrong, but comes off sounding like sour grapes rather than a legitimate complaint.

On Spock, we noticed the Prop 8 ads showing up not only on marriage, and education related key words, but on celebrity and professional pages as well. We noticed a similar, but far less severe trend when John McCain purchased key words such as President, election, and even Democrat in August and September. By diversifying their ad spend to cover some of the less popular, but still relevant searches; the Prop 8 supporters maximized their coverage. For those incensed about ads showing up their site, the reality is that ads in general are not necessarily a reflection of a sites content or beliefs, and even if a Prop 8 ad did show up on an unlikely site like gaywheels.com, the probability of someone clicking on such an ad is even lower than normal. Google even came out and made corporate stance in support of gay marriage, which is above and beyond typical company protocol. Looking beyond the issue of gay marriage, the guerilla marketing tactic is fascinating for several reasons including how it may affect future political campaigns, and what it says about online advertising.

From an advertising standpoint, it was noticeable that the No on Prop 8 contingency emphasized heavily on television and print. For the Prop 8 Supporters, they seemed to have focused their energy on ramping up advertising a few days before the election, thereby capitalizing on any undecided and swing voters. In optimizing for key words and overall Internet spend, unlike a TV ad which can be muted or changed, the Prop 8 ads appeared everywhere and could not necessarily be ignored. The fact that they decided to focus so heavily on online ads may be a strong indicator that political campaigns will be shifting more and more funds towards online ad spend. In terms of attainable audience, it makes perfect sense due to the Internets ability to reach people relatively cheaply. If the Prop 8 campaign is any indicator of what a massive push can look like, I wouldn’t be surprised to see other candidates try similar tactics.

Job Search Tips for a Difficult Job Market

Alison Doyle of About.com questions Jay Bhatti on advice on finding a job in this difficult environment.

What can you do to expedite your job search in a difficult job market? Do you need help or do you have to tips to share?

Here’s advice on how to ensure your job search is effective in challenging times and here’s how to include your job search tips on the list.

Click Here to read more

The Future of Online Advertising is Performance

For most of the past 10 years, online advertising has been dictated by the publisher or ad network (the website that is displaying the ad). Advertisers were willing to pay significant money and while receiving little in return with regards to performance, conversions, or measurable results. The Internet was the wild west of 21st century advertising, and no advertiser wanted to be left out.

In the late 1990’s, publishers charged on a CPM (cost per 1000 impressions) basis for display ads (the “punch the monkey” type banner ads). It did not matter if the user clicked on an ad or even looked at the ad, as long as the publisher loaded the banner on their webpage, you were charged. Initially display ads were the main revenue stream for companies like Yahoo, as advertisers ended up paying $20 CPMs for “brand awareness.” On average CPM display ads have a click trough rate of less than .20%, which comes out to an average of $20 for a total of 2 clicks. In addition to a low click through rate, an advertiser would have to face the reality of an even lower probability of a sale once someone landed on their site. Display ads charged on a CPM basis were thus considered “brand” spend. For marketing managers the idea of “Brand Awareness” would likely end up being their main motive and justification for spending so much for such little user engagement.

Google changed standard online advertising when they came out with CPC (Cost per click) text ads. Though Overture was technically the first to charge for ad performance, Google is attributed with mass implementation of charging only if someone actually clicked on something. Advertisers were then able to measure their cost and return on an investment more accurately. An entire industry popped up overnight, each claiming to better manage and convert clicks to sales. Since Google made an emphasis on preventing click fraud (even today, 30% of all ad clicks are the result of click fraud), they became the only reliable place for advertisers to spend their money and be able to actually turn a profit.

From 2005 to September of 2008, the online ad industry grew exponentially. It seemed as though a new ad network was popping up every day as brand advertisers were willing to pay an arm and a leg for display ads on quality sites. Similar to CPM ads, even if a CPC ad never resulted in a sale, the idea of branding still appealed to advertisers. Since their ads were actually measurable and generating sales for advertisers, Google grew faster than their competitors. Even with Google’s growth, smaller ad companies found success.

However, the ad industry took a major hit this past September. When the financial meltdown happened, many display advertisers like Ford and Tiffany’s decided to cut their display ad spend. It did not make sense for advertisers to spend on branding for something where results could not be easily calculated. Within 15 days of the crisis, CPM display ad spending dropped by 20% across the web. In relying heavily on display ad revenue, the meltdown was a major reason why Yahoo had such a disappointing quarter.

Most people thought that Google would not have the same issues as other companies since they do focus on CPC opposed to CPM. Yet data is starting to show that even they are feeling the impact of the economy.

What made Google initially attractive was its ability to generate a high sales rate. If I sell a product for $10, and it costs me 10 cents for every click that Google sends, then I only need to have a 1% conversion rate in order to break even. This model has allowed thousands of advertisers to spend billions of dollars on Google and feel confident that they can turn a profit or at the very least break even.

However, with consumer online spending taking a significant dive, people are less likely than ever to spend online. Thus, while Google is still charging me 10 cents per click, the users who do come are much less likely to use their credit card. If all of a sudden I’m losing money on Google ads, then I’d naturally cut my ad spend, something many advertisers have already done. With advertisers dropping out, Google has in turn lowered its bid price on keywords for remaining advertisers.

So, if Yahoo and Google are both dependent on the economy at large and are feeling the pinch, is there an online advertising model that is recession proof? The answer is yes!

One area that has remained strong in online spend is performance based advertising. Commonly known as CPA (Cost per Action). In CPA ads, an advertiser only pays if someone comes from a publisher and actually purchases a product or performs some other function on your site. Netflix is a company that almost exclusively uses CPA campaigns. Offering a fee to an ad network for every lead generated, Netflix makes a profit on nearly every signup. With a guaranteed profit, Netflix can use an unlimited ad spend. Thus, with a CPA model, everyone wins. For a CPA Network, they in turn are able to make a decent profit by allocating funds to publishers that generate a leads. The CPA approach is the only advertising model on the web that is not subject to click or page impression fraud and gives the potential for high payouts for everyone involved. With fewer concerns as to legitimacy of a lead, it’s no surprise that ad dollars are being taken out of CPM and CPC ad networks (like Yahoo and Google) and going to CPA Networks.

Going forward I see the future of online advertising favoring a performance based model. In order to not be left behind, key players such as Google and Microsoft have already taken the appropriate steps for this transition. Google recently launched a service called the Google Affiliate Network, their version of a CPA Ad Network, while Microsoft has made a big push to get advertisers like eTrade onto their platform by promoting a CPA model. It’s very likely that Yahoo will follow suit.

That’s not to say that all advertising will switch to CPA. While I expect to see CPM ad spend continue to fall, there’s still a place for CPC or a combination of CPC/CPA model advertising. At Spock, we realized CPM display ads were not right for us. Switching to a combination of CPC text ads and CPA campaigns for signups, we were able to successfully direct better targeted traffic.

On the publishing side, being a search engine, our utilization of CPC and CPA enables us to make direct deals with advertisers to either pay per click, or pay based on their own sales. This has made getting advertisers on Spock significantly easier. Similar to the early days of Google, by offering a targeted search experience to users, advertisers can feel confident that they can once again at the very least break even. In most cases, since a user is already looking for people, Spock can target accordingly. Thus even with less traffic than other sites, the ads on Spock will actually outperform ads on places like Yahoo or Microsoft. While Spock may be unique as a search engine, other sites such as blogs or shopping sites could easily emulate a similar formula.

Even with a slumping economy, online ad sales still has a bright future. While it won’t quite be the same as the early days of few sites and thousands of advertisers, there should end up being a better balance between advertisers and publishers. What this means is that advertisers will not only have more choice on where to advertise, but also more choices on specialization. Though this will inevitably lead to missed opportunities, much like any other type of advertising medium, results will ultimately decide who and what succeeds.