Paul Needham's Blog

Helping publishers sell their ad space

Step by step we are opening up our network, creating new connections between advertisers and the bloggers/publishers they are supporting.

Today we announced the new Publisher Profile Page, which publishers and bloggers can customize to better present their advertising opportunities.

The Publisher Profile Page is what advertisers see when they click on the "Advertise Here" link below the BidClix ads.  It includes the blog/website name, description, URL and the price that blogger/publisher wants to charge for their ad space.

Here are some examples of what publishers have  done already: Tickle, Homes.com, Paltalk.com

Publishers list their ad space in the marketplace, describing their advertising opportunities, and naming their own price. Then Advertisers can target their ads directly to specific websites.

I'm very interested to hear your ideas for how we can go further, how we can do a better job of connecting great advertisers with great content.

Not a Leak. Just a lot of Hissing.

Nicholas Carr (in "Is the ad bubble leaking?") correctly observes that auctions, when run well, drive up prices such that buyers' margins get squeezed.

Clearly that's one reason for Google's spectacular profit margins: they've successfully extracted value from the buyers (advertisers) by causing them to outbid each other in a scramble for access to their inventory. The value hasn't disappeared: it has just shifted from buyers to sellers.

And, as we've seen, prices for keywords have indeed climbed to such levels that many advertisers are starting to pause. The game is getting too rich for them. Many will drop out, or just stop raising their bid prices.

He writes:

"For any given ad, the per-click price will hit an economic ceiling, and advertisers will then stop bidding the price higher. The ability of advertisers to precisely measure the value of a click makes search ads attractive. But it also ensures that, in the end, the price will come to rest at a rational level."

And John Battelle voices similar concerns in his post on FTD.

"Search marketing may be on its way toward a slowdown, if not a plateau."

But I think it's a mistake to conclude that self-serve, bid-for-placement advertising models must also be approaching a peak or plateau. There's something else going on here. 

True, prices will come to rest at some "rational" level for any given advertiser. But, what's a rational price for one advertiser is different than what's a rational price for another. That is, new advertisers, and better, more efficient advertisers will continue to emerge and drive prices up.  Indeed, some advertisers have been grumbling about getting outbid since the dawn of bid-for-placement models.

In 2006, as the mix of advertisers continues to change, we can expect to hear more grumbling and hissing.

Moreover rational price for any given advertiser changes over time, as that business is forced to examine its own cost structure, better understand its customers, improve its targeting, optimization, merchandising, etc.  As an advertiser makes those improvements, it's able to justify paying higher prices.

What's magical about first generation advertising marketplaces (like Google's) is that they force advertisers to become more efficient, smarter. That's a good thing.

The next generation of advertising marketplaces need to go a step further and better engage publishers, providing feedback so they do what they can to improve the quality and quantity of what they provide into the mix: customers.

That's going to be a major driver of growth in online advertising, and self-serve advertising in particular.

See also: Technorati Profile

The Devil's in the Details

An excellent post by Ari Paparo, co-founder of Blink.com, an early social bookmarking site - minus the "social".

Ari opens up in a confessional tone:

Now a little part of me is cringing as I write this. Having founded a bookmarking company in 1999 with pretty much the exact same vision as the new crop of services, I’ve got to feel, well, a little stupid. (or angry, or depressed, or whatever). Maybe writing about it will make me feel better and maybe even help me make a point or two about product development.

Ari goes on to identify a handful of reasons why he thinks Blink failed where del.icio.us has succeeded. The biggest reason seems to have been their decision to use folders and categories instead of tags. That decision had dire implications for other aspects of the product. They painted themselves into a corner.

In summary, he writes:

Some simple innovations like using tags instead of folders, making public the default, building better discovery features, etc made the difference between being an also-ran and a hot acquisition target.

When social bookmarking really works, it's because it's because it is equal parts "social" and "bookmarking". Blink ended up being too much of the latter and not enough of the former. Ditto for Backflip.

A big thank you to Ari for these insights.

Tags: tagging del.icio.us technology