
A massive misallocation of online advertising dollars  - prakash
http://cdixon.org/2010/02/19/a-massive-misallocation-of-online-advertising-dollars/
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johnrob
Another counter argument: When you target earlier in the funnel, you're less
sure of winning that user.

Example: you buy a banner ad promoting a digital camera. The user sees it, and
decides it's time to buy one. Now he does research, and ends up buying a
competitor. While you were successful in creating demand, you ended up sending
a customer to a competitor.

That is why display ads are worth less - you aren't guaranteed to extract the
value they create.

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ntoshev
I thought the same. However some content would be better for you and some
content would be better for your competitors, and the advertising budgets
should be allocated according to the generated sales.

Suppose the content in question is an article on high speed photography, and
some cameras are better at this than others. Surely an efficient market would
reward the article with proportionally more advertising dollars from high
speed camera sellers.

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vinhboy
This is why Amazon is great. When people from the internetz click through to
Amazon, they get all the reviews/research they need. They are also presented
with other great items they didn't even intend to buy. So that means profit
for content creators. But I think the biggest winners are deal sites like
slickdeals.

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patio11
_But I think the biggest winners are deal sites like slickdeals._

The biggest winner by FAR in "last click wins" is Google. Brand queries
outconvert just about everything else, because they frequently happen late in
the sales cycle after the customer has picked out what they want to buy and
now just need navigation to the merchant. All those little yellow boxes -- the
ones many Google searchers think mark the extra quality results (no joke!) --
mean Google gets paid money to parasite off the brand query. Unsophisticated
stats monkeys might look at that and say "Dang, Google CPC ads for the win
_again_!"

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ntoshev
_All those little yellow boxes -- the ones many Google searchers think mark
the extra quality results (no joke!)_

Citation needed.

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IgorPartola
This is very interesting. I have always viewed content sites (especially
blogs) as a sort of parasite. Here's the manufacturer/seller that is trying to
sell me something that I want and in the way there are numerous blogs that
take away the seller's money onto advertising, therefore raising my cost. This
of course only applies to the sites I don't read. There are legitimate ones,
ones that do the research, publish their results, etc. Edmunds.com falls under
this category.

On the other hand, there is a metric ton of travel sites and it's just a huge
waste of my time. Every time I want to travel I have to check 5-6 sites to see
if I'm getting a good deal or not. Why can't I go to the source and get data
directly from the airlines?

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johnrob
If brand advertising on content sites is under valued, isn't that a big
opportunity for brands to buy valuable ad space on the cheap? The author
doesn't explain why the market is wrong (I'm of course skeptical, because
markets aren't wrong very often).

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lmkg
The issue is availability of information. The further from the point of
purchase you get, the more difficult it is to properly credit parts of the
funnel with driving purchase intent. Most analytics tools don't do a good job
of crediting multiple parts of the funnel for the purchase attempt. Google
Analytics, for example, can only credit one campaign per conversion event,
which by default is the most recent one (it can be configured to the first
one, within a time window). Engagements earlier in the funnel that drive
purchase intent aren't properly credited, so they look like a less efficient
place to allocate funds than the really are. The result is that resources are
being allocated correctly based on the information, but the information is
wrong, so as a whole the market is inefficient. Ad allocation tends to be
relentlessly data-driven in optimizing, but also rather heads-down: people
trust the data too much, without necessarily recognizing the flaws of the
tools.

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aresant
My counter argument:

Since the beggining of time consumers have undergone the same process when
making a buying decision.

In the past you might drive to the convenient local Circuit City to check out
a TV you read in consumer reports was quality, and then order the thing from
Sears catalog because you were discount shopping.

I agree that it's a shame we can't all split a few pennies of advertising
dollars on the research side, but I look at the REAL opportunity here as
helping people create BETTER websites & CRM to shorten the sales cycle and
capture those dollars for themselves.

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minouye
I'd agree with this and add that merchants/affiliate networks should further
encourage better publisher sites by measuring and paying out on metrics around
the lifetime value of a customer. A better customer experience on an affiliate
site will drive repeat purchases and ultimately the lifetime value of the
customer will be greater than the margins on the initial sale. It would be
great if quality publishers could be compensated for "better" customers,
because it would reward valuable affilates and cut down on a lot of the thin
landing pages that currently plague Google on long-tail keyword searches.

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qeorge
If you have high-quality traffic which generates a lot of sales, you actually
can negotiate better rates with affiliate networks. Their published payouts
are just a starting point for the negotiation.

