p2pnet news view | Advertising:- Yesterday, “The first internet bubble popped largely because all business models failed except for ad selling,” stated David Barrett in Quinthar, asking:

“Is it possible that the last stalwart hope is itself doomed?”

But is it?

He went on:

“TechCrunch reports that Lookery, a company specializing in selling ad inventory on social networks, is barely breaking even despite selling 3 *billion* ads per month.  And rather than raising prices to become profitable, they’re actually in the uncomfortable position of lowering prices 40% — from 12.5 cents to 7.5 CPM.  It reminds me of the (often unintentional) joke ‘We lose money on every transaction, but we make it up in volume’!

“All this has made them so gloomy about the prospects of their core business that they’re thinking of switching horses mid-stream and resurrecting that Web 1.0 favorite: selling demographic data.  I mean, it worked so well the first time, why won’t it work now?

“Ok, so you might be saying ‘Sure, social network ads are crap, but Google’s ads are solid, right?  After all, they’re set by the open market!’  I thought that too, until recently I learned that rather than that market being open, it in fact is restricted by a series of minimum bids.”

But now, “So I decided to run my own Flash ad,” Barrett says, continuing »»»

I gave it a $25/day budget and bid the $0.10 minimum. It immediately showed up, and appeared every time I refreshed for at least several hours. According to Google, it was shown 6,607 times. But here’s the interesting thing (which, frankly, completely demolishes my whole theory): it was pulled, despite it only costing me $0.40 (ie, with tons of budget remaining). Why? Because clickthrough was too low — 0.06%, to be precise.

So, he says in an update, he’s changing his theory: the reason there are so few Flash ads isn’t because Google has priced the keyword out of the market.

Rather, “it’s because it’s difficult to make an ad that achieves sufficient clickthrough on such a general term as Flash,” Barrett states in Quinthar, adding »»»

Even if you’re willing to pay the minimum, Google isn’t willing to show it unless it performs.

Whether or not that’s a problem (and I’m not sure it is), it’s entirely different than what I initially was guessing, and completely undermines my theory of Google using monopolistic pressure to sustain noncompetitive pricing.

So, “… never mind.”

. .Stumble It!

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This entry was posted on Thursday, July 24th, 2008 at 4:49 am and is filed under Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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