Well, we’ve been on quite a roam through the world of online advertising.  We discovered how to make AdSense work, speculated on what that test means for Social Media, and spent some time running down the Relationship between Engagement and Attention.

Other than the actual test on the Lab Store, a lot of the conclusions reached throughout this trek are really speculation, because we just can’t get the information we need to do a comprehensive analysis.  However, there are an awful lot of coincidences out there, and I dare say some of this speculation (thanks for the Comments to all who participated!) will probably prove true.

Regarding the Social Media business model, the speculation surrounded the idea of “the more Engaging they make it, the less Attention people have to pay to Ads”, which leads to the widely reported problems with social media ads.  I asked how they could change this to create a more effective advertising environment.  Barring any improvements in (what participants speculated to be) very poor ad targeting mechanisms, here’s a suggestion: Do what happens when every web ad business model fails – create vertical spaces.

The web is simply not suited to be a “mass media”, the economics don’t work.  The web was born to be segmented, niched.  By creating vertical social sites, you address a lot of the context problem and the display ad model begins to function more appropriately.  Not to mention the traffic would be of higher quality relative to the ads.

More like a Topical Chat Board, don’t you know.  Ads that make sense to the context of the visitor, for a change.  Display Ads that people don’t hate or want to block.  What a concept.

Hopefully, Google-Click (the merger of Google and Double-Click) will provide some real answers.  I think they can, if they choose to.

I think it might even be likely they will, given the stroke of genius giving Analytics to ad clients was.  The more people know, the more they spend.  Transparency is king.  If the display model ever wants to deliver some weight, if it is ever going to attract the big media players, they have to make these ad networks more transparent.

I still have a lot of questions about the validity of the display ad model as it is implemented today, with opaque, untargeted networks as the rule.  But imagine the transparency Google-Click could bring to the whole equation with a unified cookie across Search and Display.

We could finally begin to understand the true incrementality of the relationship between Search and Display.  Even more so, if Google-Click would facilitate the use of Control Groups.

We could finally address the legendary view-through measurement problem that makes me shudder every time I hear view-throughs used to bolster the value of a poorly performing display campaign.  If you’re not clear on how important a common Search / Display cookie is to resolving the issue, this post by Avinash should help.

And with the kind of automation Google could bring to display, we would finally get rid of the value-destroying human overhead that cripples the display business model (placements, contracts, billing, verification, management), and then be able to price it correctly versus the value of it.  Then the agencies could spend a lot more time on what they are good at – strategy, creative – and a lot less time on paperwork.  Everybody wins with Google-Click.

That is, if they take the same path they took with AdWords / AdSense / Analytics.  Transparency, Optimization.  Display space can become PPC space – and with highly in-context spaces, vice versa.

This approach would probably bring us to a place that looks a lot more like cable network advertising does today.  100 – 200 “channels” or so of targeted, contextually-cohesive content for display to sit in.

I don’t think the web will ever be able to deliver the weight (GRP’s) of a broadcast TV network.  But a cable network?  Maybe.

It’s time to leave the broken offline “print model” used in online display ads behind.  Because the web is different.  Right?

Google-Click just might prove it.

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Your thoughts?

Do you think you would get increased value from tracking Display and Search in the same interface based on the same cookie?

Perhaps this event might even “force” a valuable unification of the Display and Search teams / agencies?

Dream On, Jim?

The next post in this series is here.

I’m a bit surprised nobody asked what kind of sites we kept during the $155 to $5 per new customer optimization of the Lab Store AdSense Campaign.  But I guess I should not be, as folks probably just assumed it was a straight ROI thing.  And it was.

But often, I think people miss out on really learning something because they just follow the numbers and never ask why.  Why does the optimization work like it does?  Because if you understand the Root Cause, then you take away learning that you can use the next time around.  This result as opposed to robotically optimizing the same stuff over and over without learning anything transferable.

For example, what is the psychology or sociology behind why certain optimization choices worked?  What conscious or unconscious mechanisms cause people to do what they do?

Many folks interested in “why” might then go to surveys, but the problem with that approach is people often find it difficult to tell you why they do what they do.  This is where a basic knowledge of Psychology and Consumer Behavior can be extremely helpful.

So which sites did we keep? 

There are 3 answers, depending on your point of view; yet all 3 answers below apply to all the sites that made the cut:

1.  Optimization – the sites with the highest ROI

2.  Consumer Behavior – the sites delivering an experience most like Pay-per-Click ads in the search engines

3.  Psychology – the sites where the audience is in a Listening Mode

Reasons 2 & 3 are why Reason 1 happened.  Reasons 2 & 3 are why chat boards and similar sites delivered the highest ROI.  Where it gets really interesting and drives a theory, is when you toss in that Social Media had the worst ROI.

I mean, what’s the difference between a Chat Board and MySpace, a difference that produces a cost per new customer of $5 versus $155?  One could argue they are similar – communities, connections, etc.  First there were online Discussion Groups, then Chat Boards, then Social Media.  Same idea, just with progressive technology improvements. 

Right?

I don’t think so.  I think there is a clear reason the results are so different.  One of the above is not like the other two, from a Behavioral and Psychological perspective.  Here’s my personal theory why in general, AdSense in Social Media sucks so much compared with AdSense on topical Chat Boards:

Discussion Groups / Chat Boards are about “how can I help you?”; Social Media is about “how can you help me?”.

Discussion Groups / Chat Boards are more about Social; Social Media is more about Media.

Discussion Groups / Chat Boards are about Learning; Social Media is about Connecting.

Therefore, Discussion Groups and Chat Boards are a much better environment for AdSense, because people engage these environments to absorb information and listen; people engage Social Media to broadcast information and speak.

And an audience that wants to listen is simply a better environment for display ads than an audience that wants to speak.

If the above is true, there are enormous implications for creating successful products, ad copy, and landing pages for these different environments.  And critical implications for entire business models.

Thoughts?  Please feel free to poke holes in the above theory, explain the same theory in a different way (perhaps using words that make more sense to you), or provide an alternative explanation!

The next post in this series is here.