AdMoolah News and Views

You may have heard Pixelotto.com, which is set to launch tomorrow. If you haven’t heard, pixelotto is the next scheme from Alex Tew, who created the Million Dollar Homepage. This time he is doing something similar. He is auctioning off a million pixels worth of ads, this time at $2.00 a pixel. The difference this time is that there is a “lotto” attached to the page. Users who click on the ads have a chance of winning 1,000,000 dollars. That’s right, once the whole $2,000,000 worth of pixels is sold, some lucky user will get $1,000,000 of it. He is also giving $100,000 to charity. Leaving himself a tidy $900,000 minus expenses. Not bad, and I think it will work too.

The warning is for people who are considering buying advertising on your site. The traffic that you get from this is going to be pure garbage. People will be click the ads and not caring at all what is on the other side of the link. None of the traffic is going to convert. This will be the equivalent of the garbage traffic that pay-to-surf programs bring. If you are running an ad program like AdSense or YPN, there is a good chance you could get banned from attracting this type of traffic. So, if you do advertise with pixellotto, make sure not to put AdSense or YPN (or any other ad network that cares about quality of traffic) on your landing page.

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On one of my sites I have been running Google Analytics and have some custom JavaScript installed to allow me to track which visitors click on the ads on my site. On this site I run a combination of AdSense and YPN ads. I have also been running some AdWords and Yahoo Search Marketing campaigns. Here is a chart showing the percentage of visitors who click on ads broken out by the major sources of traffic. Note that this isn’t a page CTR, it is the CTR of a user in the entire visit.

Not surprisingly, people who come to the site by clicking a YSM or AdWords ad have a greater tendency to click ads on the site. What did surprise me was the huge variance between the search engines. People coming from AOL are almost twice as likely to click on ads as people who use Google. MSN users are also as likely to click on ads as AOL users, while Yahoo users were similar to Google users in click behavior. I think this is because AOL andMSN users are not as Web savvy as Yahoo and Google users, and less experienced surfers tend to click more ads then experienced web surfers.

This data is important in running CPC advertising campaigns. I can easily figure out an average Revenue-Per-Visitor (RPV) for my site, but I had no idea how much more valuable visitors from pay per click campaigns were from regular surfers. I can now take into account how much more money I make from visitors from the ad campaigns to adjust my minimum bids. For example, lets say my RPC is $0.10 (it’s not). I also know that AdWords visitors are 20% more likely to click on ads then regular visitors, so I make an average of $0.12 from them. This allows me to bump up my minimum bids a little in AdWords while still being confident I am making money from them.

I’m also thinking that this type of data might be good for fine tuning ad placement. If AOL and MSN users are more likely to click on ads, why not adjust the placement and color of the ads to make them more prominent for these users? Since Google and Yahoo users are a little more ad phobic, it might make sense to make the placement and color of the ads a little more subtle.

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One things that has bothered me about YPN is that they are very slow to report the previous day’s earnings in performance reports. I often want to check my balance for the day before I turn in, which is often just after midnight Pacific Time, and it never has the figures for yesterday’s revenue at that point. Today I realized that there is an easy way to calculate the previous day’s earnings.

First, note the “pending balance”, which is equal to the previous month’s earnings plus the earnings accumulated so far this month. Then run a performance report with a date range that include the previous month up to the current day. Subtract the “Report Totals” figure from the “pending balance” and you end up with yesterday’s revenue.

For example, today is August 3rd just after midnight Pacific Time. Let’s say my pending balance shows $500.00 (not the real figure). I run a report with a date range of July 1st to August 2nd. The report does not show August 2nd’s revenue and the total shows $450.00. I now subtract $450.00 from $500.00 and I know that I have earned $50.00 for August 2nd.

Now I can go to bed satisfied that I know how much I earned from YPN the day before.

There has been a lot of talk recently about how click fraud is killing Cost-Per-Click (CPC) . Reports of bot nets generating fraudulent clicks have been appearing for a few months in places like ClickZ and JenSense . In early June, Mark Cuban expressed his opinion in a piece called Why I think ClickFraud is far greater than imagined.

More recently Outsell, Inc. published a report that click fraud is costing advertisers $1.3 Billion and that fraudulent click account for 14.6% of all clicks. This led to many mainstream news source such as The Financial Times and BusinessWeek to report these problems with click fraud and question the long term health of the CPC market.

Something else that has been seen as a sign that CPC is in trouble is that Google has recently started to experiment with CPA ads. Because of this some people concluded that Google itself worried about CPC in the future.

Are CPC programs such as AdSense and YPN really dying? Is click fraud going to kill them? Many people are predicting that CPC market will collapse the way the CPM market did several years ago. But, I think there are some important difference between the collapse of the CPM market and the current CPC market.

1. The CPM market reached its heights along with the Internet bubble. Web sites were willing to pay extraordinary amount just to get “eyeballs”. The more eyeballs they had the bigger there IPO would be. The CPC market is not in such a bubble.
2. One of the major problems with CPM advertising was that it was difficult to measure the effectiveness of it. With CPC advertising and good analytics, it is much easier to measure the exact ROI (Return on Investment) advertisers are getting for their money. If CPC ads were not working for the advertisers they would stop using them. Click fraud does happen and will continue to, but as long as the overall ROI of a CPC advertising campaign is positive, advertisers will continue to use them.
3. Google’s experiments with CPA does not automatically mean they are giving up on CPC. Google is constantly experimenting with new product and new ways of doing things. They are willing to try anything, see if it works, and when it does, they will introduce it as a full fledged product. Google generally does not introduce new products in a reaction to something, they are continually trying out new ideas.
4. There will always be advertisers that will want to use CPC instead of CPA. For example, car manufactures want people to visit their web sites and learn about their cars. They are not expecting to actually sell a car when someone clicks through to their web site. It is difficult to tie a visitor to a major car manufacturer’s web site to a specific action to charge via a CPA program.

All that being said, I do thing CPC is coming under some pressure. For certain industries, CPA ads can provide a better model for advertisers. Smart advertisers will try CPM, CPC and CPA campaigns and see which has the best ROI. Sometimes CPA will beat out CPC programs. Click fraud is another danger. If Google and Yahoo cannot keep the click fraud under control advertisers will need to drop their bid per click to maintain the same ROI. CPA ads can be harder to game than CPC ads, so they may have an advantage in this area.

I do believe that CPC ads are in there heyday right now, and prices may fall. Smart publishers will experiment with all type of advertising, CPM, CPC, CPA, Fixed price, or any other arrangement they can think of. Each niche and each website will benefit from different combinations of these types of programs, the publishers who make the most money will be the ones who maximize their revenue, regardless of the type of program used.

Yahoo has introduced some new features to publishers.

First, they replaced the old “Content Setup” tab with a “Publisher Services” tab. It is subdivided into three sub-tabs – “Drive Traffic”, “Enhance Your Site” and “Build Your Site”. Each sub-tab has forms and links for various Yahoo! offerings that might be of interest to publishers. The “Drive Traffic” sub-tab has forms for site submission, RSS feed submission and site suggestion. It also has links to Yahoo! services such as podcast and video submission pages, Yahoo! Site Explorer and Search Submit Express. The “Enhance Your Site” sub-tab aggregates many Yahoo service that you can add to your site such as search boxes, Flickr badges, and Yahoo videos. The last sub-tab “Build Your Site” includes links to Yahoo! domain registration and hosting services, and Yahoo! Small Business.

I can see why Yahoo! added the Publisher Services tab. It promotes their own services by making it easier for publisher to find out about them and use them. It will be a convenience for publisher who regularly use these features.

The next change is a new help center. Yahoo! has started creating how-to guides for setting up and managing accounts. Several FAQs are included as well.

My favorite change is a new column on the reports – Revenue Per Click. This shows total revenue divided by number of clicks. I’m not sure why Yahoo! or AdSense have not included this column on their reports before. I’m sure its something that most publishers calculate on a regular basis.

The final change is bulk URL Reporting upload. Instead of adding reporting URLs one at a time, you can now cut and past up to 100 URLs into the form at once. The maximum number of active reporting URLs allowed is still 100.

It’s good to see Yahoo! adding features and helping to raise the bar. Now I hope AdSense follows suite and adds a Revenue-Per-Click column into their reports!

Good news for YPN Publisher, they have just added direct deposit. I found this in my email this morning:

We’ve just made receiving your Yahoo! Publisher Network earnings quicker and easier than ever, with the introduction of a Direct Deposit option for all publisher accounts.

As with our pay-by-check option, you’ll still need to accrue at least $100 in earnings before payment is made. However, if you’re signed up for direct deposit, we will credit your bank account on the 26th of each month, rather than by the 10th of the following month, meaning that you’ll receive your earnings approximately 15 days sooner!

Getting paid on the 26th of the month is great.

In a strange coincidence, both YPN and AdSense are doing maintenance tonight and will be offline briefly. AdSense is going down at 20:00 PST and will be down for “a few hours”, and YPN is “performing a routine update to our system that may limit access to the YPN portal between 7:00 PM and 9:00 PM PST. This update will not impact your account or the serving of ads on your site.” People who have a stats addiction may be going through withdrawal.

It will be interesting to see if any significant changes are made.

Yahoo sent an email today letting publishers know that they had updated the terms and conditions on the weekend. Unfortunately they didn’t let anyone know what the changes were and left everyone scratching their heads, until JenSense did her usual magic and detailed the changes.

The changes were not anything most publishers have to worry about. A “no spyware or adware” clause was added, along with a bit specifying that employees of Yahoo! Search Marketing are not welcome in the program.

John Battelle thinks that it will be at least a year until MSN builds a syndicated ad network to compete with YPN and AdSense. John knows this space very well and he guess is probably as good as anyone’s. I am a little disappointed with this, I was hoping MSN would bring some more competition to YPN and AdSense sooner rather than later.

Update: The Blog Herald wonders if MSN has given up completely on an AdSense alternative.

Search Engine Journal has published an article outlining YPN’s growth plans for the spring. I will go through the main points made in the article and comment on each one.

1. Improvements in Relevance : The ads that are shown by YPN are based upon what Yahoo calls its ‘matching expert’s. These ‘experts’ will be expanded to include :
* Contextual Engine : Targeting based upon the content of the page
* Ad Targeting : Publishers can “tag” their own site by defining their ad targeting category in the YPN admin
* User Data : Behavioral targeting or profiling (geographic & demographic)

This sounds exciting. Tagging sites is something AdSense users have been asking about for a long time. Premium AdSense publishers are allowed to do this currently.

The behavioral targeting or profiling is something that MSN has plans to do with its AdCenter. It will be interesting to see how well this works and if Google will eventually use this is well.

2. Wire Service : Offering publishers payment via direct deposit this Spring

This is good news and is something that AdSense currently offers. It will be nice to get the payments into the bank faster.

3. Expanding Invitations : Continuing on reviewing and approving thousands of high quality web publishers

4. International Rollout : Global expansion beyond the United States to English and non-English speaking countries

Publisher who have been waiting will be happy with this.

5. Yahoo Search Box : Publishers can add Yahoo Search to their site which will pay publishers a percentage of sponsored search revenue

Again, something that AdSense already has and YPN will be adding. Good to see.

6. Integration into Yahoo Answers : Yahoo may be offering its registered users the ability to earn revenue or points for contributing to Yahoo Answers and other user generated content offerings.

This is a fairly innovative step. JenSense has a good post on this.

Overall its good to see that YPN is moving forward with rolling out new features. With AdSense, YPN and AdCenter all competing, things should keep getting better for publishers.