Disclosure once again

March 25, 2007

In the recent Calacaniscast #19 beta, Jason interviewed Ted Murphy, the CEO of PayPerPost. Very interesting show, indeed, with the main topic being disclosure once again. We feel that the whole issue of disclosure needs to be addressed some more.

It’s not only a matter of putting a little button somewhere or adding a line of text in your post, the whole idea of PayPerPost is to influence the blogger so that he is willing to discuss a subject he gets compensated for. We think user-generated content should not be influenced by some other company that decides to have some topic or product discussed in blogs. The users should decide themselves what they talk about. When companies have an influence on the articles that get blogged, the whole trust in weblogs is at stake. Getting revenues for user-generated content can only work when it is assured that the blogger doesn’t get influenced in any way.

Disclosure is very important, but making sure that the blogger doesn’t get influenced is even more imortant. That’s why relying on advertising is so much better. Sponsored posts will always leave a bad taste.

Ryan Carson’s Three Point Success Plan

March 23, 2007

Ryan Carson showed three points that he finds critical for success:

– Who is it aimed at?
– Why will they use it?
– Will they pay for it?

We know the answers to points one and two, but #3 doesn’t work for us. We don’t want people to pay, we want them to earn money through us. That is a novel approach to some, but we think, a lot of people will find this rather useful, especially in the long run. So, yes, those points are good, but we would change #3 into “what’s in it for the user?”

Widgetization of the Web

March 23, 2007

A recent article on computerworld.com explains a little something about The Widgetization of the Web:

While the dot-com era focused squarely on aggregating data on the Internet, one of the most defining characteristics of Web 2.0 is the deconstruction of the Web into small, single-purpose applications called widgets or gadgets.

These small chunks of code can either run on a desktop or be inserted into Web pages. Widgets are gaining popularity among consumers because they allow virtually anyone to easily customize a Web page or social network with news, weather, podcasts, video and other content. Anytime a YouTube video, for example, is added to a non-YouTube page, it becomes a widget.

I guess the key aspect really is that consumers can put on their websites whatever chunks of content they desire. Widgets become extremely powerful when consumers decide to place stuff in widgets that they like and that they would recommend.

The recommendation engine as the new network

March 22, 2007

Jeff Jarvis wirtes about The NBC/Fox gigadeal on video and declares:

But it’s all about the recommendation engine as the new network.

Yes. Absolutely. Widgets and recommendations will change how traffic will flow across the web.

Disclosure of Compensation on Blogs

March 21, 2007

The whole disclosure issue is obviously a key factor when talking about creating an environment, where Bloggers can benefit from advertising. There are a few companies mentioned in the article WOMMA Supports Clear Disclosure of Compensation on Blogs, that take a very straight approach and offer paid blogging, thereby risking that the individual blogger loses his independence and starts blogging about topics he can earn money with. Nobody can really want that to happen. Even if it says “Sponsored Posts”, simply buying articles is the worst approach that can be taken.

There has to be some entity between blogger and the advertising dollars to ensure that the blogger can stay however biased he wants to be, without directly being influenced by an advertising campaign bringing money for his blogging efforts. A blogger should be able to generate revenues without being told what to blog, in whatever form. There should be a strict line between the advertising and the blogging, although the ads could lead to user-generated content as well. Obviously, disclosure is necessary, but since paid blogging still leads to directly influencing the blogger, it is only part of the whole aspect of how to arrange advertising for user-generated content.

Widgets and Advertising

March 19, 2007

There is an interesting debate going on about Monetizing Widgets, in which Brad Feld summarizes the following possible business models:

1. a new form of ad network: analogous to DoubleClick
2. a widget management system (WMS): analogous to CMS’s
3. a content distribution network (CDN): analogous to Akamai
4. an analytics business (Stats): analogous to pick-your-analytics package

Since our background is in advertising, model number one is most interesting to us. Brad Feld thinks, that this won’t be a big moneymaker and draws the analogy of something like Doubleclick for widgets.

We think this is the wrong approach. We don’t think a new kind of Doubleclick will emerge, trying to put ads around widgets and thereby trying to monetize the widgetspace. To monitize the widgetspace, a different path has to be taken. A path that involves the user more than the advertiser. A path that works well around The Long Tail and has less to do with campaigns as we know it.

Advertising performance in social networks

March 19, 2007

In a recently article on Valleywag, the performance of advertising in social networks was discussed. Facebook ‘consistently the worst performing site’ – but this doesn’t come as a surprise at all.

Why would you click on a simple banner in a social network? A banner leaves behind what makes a social network so powerful: the social relationship. The banner just sits there, it might target the right audience, but it doesn’t have anything to do with the social interaction of people within a social network.

So, why not make the ads social to some extend? Then suddenly you move from an advertising to a recommendation, which should be of more value, both to the users and the advertiser. Instead of bulk advertising you would get mouth-to-mouth advertising, and we think both users and advertisers would be happier with that.

On Online Advertising Economics and the value of a PageImpression

March 17, 2007

Scott Karp is discussing Why Online Advertising Economics Are So Messed Up and refers to a recent article in the NYT about Popularity Might Not Be Enough. The discussion is pretty much summing up our considerations when we decided to start our venture called Revso.

Online advertising is based on the PageImpression and rewards portals that let people click, the more PageImpression they generate, the better it is for the portal, usually. But the overall value of a PageImpression goes down, if we just continue simply counting them. We have to acknowledge that not all sites are alike and therefore not all PageImpressions have the same meaning. When looking at blogs, you can easily see that the ratio User/PageImpression differs a lot from “normal” portals.

So, when we look at the good old fullbanner, we see that the prices have been going down steadily. The reasons are obvious. Too much traffic is generated and the attention of the user is rarely focused on the banner, which results on few clicks. Therefore the value of an AdImpression is not too good. Tim O’Reilly has some numbers showing how many PageImpressions are necessary to run a $50 mio business just based on advertising. According to his numbers, a site needs 4 billion PageImpressions a month based on a 1$ CPM. That’s a whole lot. But on the other hand, PageImpressions are dying and more and more sites are being built without generating just PageImpressions in mind. This will surely effect online advertising and the online advertising economics as a whole.

If we look past blogs and take on Social Networks, how much is PageImpression worth there, let’s say at MySpace or Facebook? How can an advertiser get the attention of a typical Myspace-user? Will they click? Will their clicks convert?

The model of online advertising is changing at a rapid pace. Revso will make sure that the user participates.

Advertising in Blogs

March 17, 2007

Clearly, blogs often offer great content, but usually not enough traffic for professional advertising campaigns. Blogger then turn to affiliate networks, which are usually based on CPO, CPR or CPL and typically do not work to well for the blogger. For instance, a simple Amazon-button may look interesting at first, but it doesn’t really generate revenue for the blogger. The other option include text-based ads and most bloggers resort to Google Adsense. Adsense works well, but if a weblog has to many different topics, the ads tend to be not too related to the article and this often results in a bad clickrate.

So what can be done to increase revenues for bloggers? Popups, interstitials or layer ads are not very popular among the blogger crowd, for obvious reasons. Instead, advertising should be not annoying, but interesting, maybe even helpful and targeted at the blogger and its audience.

Let’s assume that a blogger can pick the content of an ad, the size, the type of display and the position on the blog, shouldn’t that improve the peformance of the ad on the blog? We certainly think so.

User-generated Content revisited

March 16, 2007

When we think about the term user-generated content, that recently re-emerged and now gets its moments of fame, we first and foremost think about how easy it has become for users to publish content. Then, we think about the quality of content and how to find it, how to use it, mash it up, etc., but very seldom we think about what the user gets in return for the published content.

Is it just fame? Karma? funny little points that can be exchanged into something the user might need?

We believe that users should be able to monitarize their content, just like what used to be called the professionals. Revso is about generating  revenues for those users who desire something in return for their content that is more than just some virtual glass perls. Advertising is involved, so is money, and of course user-generated content.