Sites such as YouTube illustrate the challenges of ad matching well. Some incredible technologies have been developed that help tremendously, behavioral targeting being one. I have always liked what behavioral targeting means for advertising. Properly employed, it means I do not have to view an ad about the content of the video – in the this case babies, and it also means I could avoid seeing an ad for something in which I have shown no interest. Unfortunately, though, the average user spends so much time on YouTube, that they end up being shown too many ads, for all to be 100% targeted. Those untargeted ads, of course, make up the remnant inventory. YouTube and similar sites (including Yahoo Mail) will sell that space for a large discount, and here is where those in the direct marketing space come in to play. They thrive in inventory situations such as these, much like infomercials, the ultimate in direct marketing, do on TV.
Those in the infomercial business care about one thing – making money by selling product. They get some branding by the volume of impressions they show, but they buy for sales and count any added brand exposure as a nice bonus. Infomercials can’t compete with the brand dollars for prime spots; those spots simply don’t generate enough sales to cover the markup. The same plays out on the web. Premium impressions can command a premium price. Everything else represents more fairly priced inventory and a chance to make money. The 10th ad impression a user sees is the online equivalent to 2:00 am on a Sunday night for television.
All of which brings us to one company’s online infomercial, an attention grabbing banner that caught my eye in the middle of watching a video. Taking a page out of the well known Orkin commercials, a fly meanders across the 728 space, fooling the eye into thinking something is on your computer. The fly and the message have nothing to do with the marketing message. It only exists to call attention to the ad and entice a click. See the fly (captured below as best as possible)?
There is no mistaking this ad for a premium ad (although given my click patterns I wouldn’t be surprised if it was a behaviorally targeted ad). What makes this ad interesting to me is not just how well it works but it’s similarity to another type of ad, a search offer, and not just any search offer but something eBay might do. While the notion of remnant gets linked to display, it applies to any piece of inventory where the intent is not as strong, the context not as strong, and/or the desirability of the space is less (as judged by the number of advertisers available). And in search, every word is a potential impression with the popular and obvious words being the premium ones. The others are the playground for the direct marketers who try to turn nothing into something. It’s not often though, that we see what is typically a search ad and experience run on the web. Why is it a search experience? Well, a click on the banner, takes you to the following:
Most direct marketing offers take the user to a landing page with a specific call to action such as filling out a form. This particular one though, sends users to a results page. It’s almost anachronistic – you don’t see Google with banners saying, click here to search for mortgage. You might have seen that from some companies… six years ago. But this is what you get when a direct marketer at heart looks to increase their business. While not what Google would do, it is exactly what Google AdSense did for Google. AdSense allowed Google to create new inventory, to show its bevy of advertisers more. Doing that required ground breaking technology, something not available to everyone.
The company here, AdKnowledge, took another approach. Their core business comes from advertisers paying per click for placement in certain categories (their keywords). They made much of their money by sending search ads – at first others and now their own – via email. Similar to Google, having only so many visitors to its site, AdKnowkedge can only get so big doing email. Their experience in email, though, tells them a lot about creating a compelling offer. Equally important, their experience in email had them comfortable with arbitrage, that is to say risk. Each name costs them money, and on average, they must make more in return than the cost. It’s not an easy business or one to do well in scale, but given that the already profitable company took in close to $50 million in private equity in March, their numbers would shock most people.
With this banner, AdKnowledge has taken their email strategy to the web. Instead of an email address, they buy impressions. If they can get enough people to click on the banner and then on one of their ads on the landing page, they can recoup the cost of media. Do this over a large amount of impressions, and they have found a way to grow their business. Looking over the Alexa rankings, we see that this particular strategy has just begun. Only time will tell if it has legs and if the quality of clicks remains high enough to offer equivalent value to those advertising in their marketplace today.
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