Web X.0

Breaching Google's 'moat'

Fascinating analysis of the Quigo-AOL deal by Avner Mandelman over at The Globe & Mail.

I wasn't tracking the data, but Avner points out some interesting numbers:

• November 5th, 2007 - the Quigo/AOL deal was first announced
• November 6th, 2007 - Google shares hit their all-time high - $741
• Since then Google shares are down ~37% to $471

Coincidince? Probably for the most part yes.... there are so many big factors in play here and I doubt Quigo is the most significant one. But it's still a pretty cool coincidince nevertheless...

Finally...

Phew - crazy day... Finally a little quiet and no phone calls... Celebrating with the best possible lunch - Rajeb's Labane... ;-)

I should probably post some more soon...

Funny money

I was messing around with Compete.com (competitor of Alexa.com), and got a kick from this chart comparing the traffic on Facebook to that on the AdSonar network (that's Quigo's ad network):

Now lets see... WSJ is reporting that Facebook might be valued at $10B+, and we're practically head-to-head on traffic... Hmmmm... ;-)

Time Inc switches to Quigo

Earlier today we (=Quigo) announced together with Time Inc a broad, exclusive, 3-year agreement to use Quigo's AdSonar for auction-based text link advertising on Time Inc websites. More coverage on this on the Quigo Blog. This deal is estimated to be worth north of $100M over the next 3 years.

This deal covers all of Time's leading online properties: Time.com, CNNMoney.com, People.com, EW.com, InStyle.com, SI.com, Golf.com, FanNation.com, SouthernLiving.com, SouthernAccents.com, Sunset.com, CottageLiving.com, CoastalLiving.com, CookingLight.com, MyRecipes.com and others in the future

If the publisher has the ability to attract advertisers directly, whether by having a great brand, and/or highly targeted audience, and/or a direct sales force (and Time Inc has all 3), it makes no sense to use a black-box solution like Google's AdSense for placement of ads. As I said a while back - that would be like a classy restaurant outsourcing it's kitchen to McDonalds... ;-)

There's definitely a trend going on here where more and more premium publishers are starting to understand this:
You can either take ads that were bidded to an ad network that has a blind mix of some good sites and lots of crappy ones (spammy/fraudulent/domain parked). In these blind networks, advertisers don’t really have the ability to choose which sites they’re on or optimize their bids for the quality of your traffic. Oh, and in the process of carrying ads from a blind ad network, you'll be handing your biggest asset - 100% of your advertiser relationships - over to that network.

Or - you can assume control of your advertising asset, sell to your advertisers at the premium you deserve, and own those advertiser relationships.

That's the unique angle Quigo brings to the table - the ability to capture the full value of a your brand and build a longer-lasting, strategic asset so that you get more than just a monthly rent check.

Most publishers are still under the influence of the Google koolaid. But the smarter ones are starting to realize that the bargain Google brings to the table benefits, well, mostly Google. It's great to see folks like Time Inc have the foresight to take back control of their advertiser relationships and become a leader in this space rather than become another node in the Google network.

Links:

• If you're an advertiser and would like to bid for placement on Time Inc properties, click here. Remember - this is now the only channel for placing CPC text ads on these websites.
• Full press release is here.
• More coverage over at ClicketyClack John Battelle's blog, BizReport, MediaPost, MediaWeek, Crain's, Direct Magazine and others.
  
• Brett Tabke of WebMasterWorld posted a video interview with Quigo's CEO - Mike Yavonditte.
• [UPDATE] Scott Karp at Publishing2.0 posted some excellent commentary on the bigger picture. Highly recommended. 

 

Is OpenAds a threat to ad networks?

OpenAds is getting a ton of coverage following their recent $5M funding announced this week. OpenAds is a very popular, free, open-source ad serving system.
A lot of people are debating whether this will mark the end of the online ad networks. A particularly good post on the subject was published by Scott Karp over at Publishing2.0 - "Can Online Publishers Take Back Control From Ad Networks?"

I think, obviously, that the answer is 'no'. If anything, publisher-side exchanges like this will be very complimentary to the existing ad networks.

I posted a comment on Scott's post. It came out long enough to merit a full blog post, so here it is for you:

Hey - I’m the co-founder of Quigo. Great post, Scott.

Ad networks normally take a 30-40% cut of the revenue and pass the bigger part to the publisher. The question is whether we deliver more value than we cut, and I believe the answer in most cases is *absolutely yes*.

Here are a few ways we add value that would be very difficult for any single publisher to do on their own:

1) Appeal to large advertisers and agencies - I agree 100% with what Zach Coelius said above - it’s usually very difficult for any single publisher to attract large advertisers and agencies. The ad network facilitates larger ad buys for those and all participating publishers benefit in a way they could never do on their own.

2) Yield optimization algorithms - On auction-based networks (like Quigo and Google), the highest bidded ad in most cases is *not* the ad that would yield the most $$’s for the publisher. To find the highest yielding ads you need to crunch a lot of data and test ads on a massive scale. 99% of the publishers in the world do not have the scale necessary to make yield optimization algorithms efficient. Without this network value, the publisher will be rotating low yielding ads and would effectively be leaving a lot of money on the table.

3) Account management & expertise - Remember that online advertising is very very different from traditional advertising. For one, it needs to perform well for the advertisers… Most publishers do not have the expertise in-house to help advertisers with setting up bidding, optimizing for ROI, managing their budgets, etc, etc. This is a huge component of what we bring to the table as a network.

4) Vibrant marketplace - One of the big values auction-based ad networks bring to the table is a vibrant bidding marketplace. For that, again, there is huge value in aggregating many advertisers bidding each other upwards. A single publisher would find it extremely difficult to attract even say 100 advertisers to bid each other up.

5) Etc, etc.

I’m rooting for OpenAds and I think they are a great solution for mid-tier, well-defined special interest niche sites, operated by highly technical folks. Those are sites that could benefit from hand-picking the few advertisers that would work best for them and their audience. Boing Boing or Slashdot are good examples. The ads on Boing Boing are perfect for their audience and no ad network would be able to pick better ones.

But for all other publishers I think the ad networks add a ton more value than they take off the table.

At Quigo we’re focused on getting our publishers the best of both worlds: The advantages the ad network brings to the table, combined with the advantages of selling to advertisers directly, under the publishers’ brands and owning those relationships with advertisers. This is very different from “black box” type ad networks like Google & Co which are the absolute opposite from a platform like OpenAds.

Thanks again for writing this interesting post.

Google, Quigo and ad transparency

A couple of months ago The New York Times published a story about Quigo (disclosure: a company I co-founded). A couple of highlights:

What Quigo offers is transparency and control in what can often be an opaque business: advertisers pay Yahoo and Google for contextual ad placement on a wide variety of Web pages, but get little say over where those ads run or even a list of sites where they do appear...

...In response to further questions about Quigo, though, Google said it was prepared to make changes to its AdSense service that mimicked Quigo’s approach, an unusual step for a company accustomed to mapping the terrain in every aspect of its business.

Looks like the NYT nailed it. Today Google started following Quigo's lead on becoming a more transparent network. More about this by John Battelle, Barry Schwartz, SEW, and Mashable.

From what I can tell, the Google implementation is more lip service than a real way for advertisers to buy placements on specific publishers. That is to be expected. AdSense would not be successful if it weren't fundamentally a blind network. Google takes a small number of loss leader sites like Ask.com and AOL on which it makes little or no money. Those are thrown into the blind mix to keep the overall blended-average quality of traffic reasonable. But Google makes its real AdSense money on the very long tail of crappy/fraudulent/parked-domain/self-clicking/link-farm/etc websites. Those are the sites that advertisers would never ever bid for if they had the choice. Those are also the sites that Google can take whatever % of the revenue they see fit (which I estimate at 50% at least) because they never tell long tail publishers how much they pay out.

That's where Google's true money pot is, and if they remove their network's opacity and truly allow advertisers to bid transparently for specific sites - all that revenue will go away.

This new report is definitely a welcome change for Google advertisers. Even lip service is a form of service, I guess... But don't hold your breath for any genuine effort from Google on making its network truly transparent as long as it makes so much money by having advertisers bid blindly on sites they'd never want to be placed on. For true transparency your only choice is still Quigo's AdSonar.

Seth gets it right, almost...

Seth Godin (a WebX.0 favorite!) responds to the NY Times piece on Quigo today with all fair points:

If you're running a pay per click ad designed to support a cost-per-acquisition strategy, (Google AdWords, et.al.) then does it matter where your ad runs?

Remember, the point of the ad is to get someone to click (that's what you're charged for...  the click) and then the goal of the site is to convert that click into permission and eventually a customer.

So, does it matter where the ad runs if it works?

From the marketer's perspective, I agree 100% with Seth on this point - if (and that's a huge IF... [1]) the campaign works, and the ROI is good, it's insignificant where the traffic came from. But while advertisers may not care where they get their clicks from them, they certainly do adjust their bids to account for the mix of high-quality clicks and spam/fraud/foreign/etc clicks.

What happens in essence, is that the premium publishers in this mix are getting lower bids than they should have, while the low quality traffic sites get higher bids than they would have had they sold to advertisers directly [2].

Now, while Quigo caters to both marketers and publishers, we view our platform primarily as a publisher solution. We offer it as a private label to publishers, and let them acquire and manage their advertisers through it. It's the publishers who we see benefiting most from the AdSonar solution, with marketers benefiting as a result of our insistence on catering only to the highest quality publishers in the country.

The TV network example is not applicable to our space... Unlike any advertising medium in the past, we don't (nor do our publishers) determine the pricing of the media sold. That is determined by the marketers, and therefore it generally reflects the value the marketers get from the media they're bidding for. The fact of the matter is, that marketers are willing to bid higher for a site with quality, US-based, non-fraudulent, non-spam, non-accidental-traffic traffic than they are willing to bid for that same site combined with 100,000 other lesser quality sites.

And that, publishers really care about.

 

[1] The Big Co's mix into their traffic a bunch of awful sources (misspelled domain names, spam blogs, etc, etc). They can get away with this to some extent because the junk traffic is mixed and diluted with the quality traffic on their network and search destinations...

[2] Google's SmartPricing does mitigate this issue a little, but it certainly does not come close to solving this issue. When junk sites are part of the mix, and they're getting paid something, someone is bearing that cost and that's the marketers...

Quigo named #1 by AlwaysOn Media

Quigo was just named the #1 private digital media company in the US by AlwaysOn Media. We'll be receiving the award later this month at the AO Media Summit at the Mandarin Oriental Hotel in NYC.

I posted about this in more detail over at Quigo's blog. Cool!

Yahoo, Newspapers and Quigo

Finally some good news for Yahoo... Today it announced a partnership with 176 newspapers. Coverage on TechCrunch, NY Times, PaidContent, and others.

From the NY Times:

A consortium of seven newspaper chains representing 176 daily papers across the country is announcing a broad partnership with Yahoo to share content, advertising and technology...

This sounds to me a little like the beginning of the "Switzerland Inc." that Tom Mohr (ex-President of Knight Ridder) described in his manifesto a few months ago (this very important doc is behind a password on Editor&Publisher... urrggghhh! No link love here!... see Greg Sterling's blog for some snippets).

From it:

To win, industry leaders must adopt a Marshall Plan embodying two key objectives: the migration to common platforms, and the acquisition of the ability to sell top-quality online product to our advertisers. To fulfill these objectives, the independent companies of a proud industry must aggregate into an industry-wide network. In this network, each company must cede some control over its digital future into a “Switzerland” organization that manages the network.

Seems like Yahoo is now tackling some of the pieces of the first part - offering common technology platforms for classifieds, maps, etc.

On the second part, Quigo (full disclosure: which I founded, and am employed at) is the undisputed leader. As the NAA recently pointed out in a research called "Online Newspapers' Response to Google":

"...Quigo easily took the category, having affiliations with half the respondents."

With Yahoo handling the classifieds/syndication/maps areas, and Quigo handling the performance-based advertising, it seems like the newspapers are starting to put together those building blocks for creating a Switzerland Inc. that will survive (and hopefully thrive!) through the Google storm.

YPN exodus?

According to PaidContent, two top execs at Yahoo's YPN are leaving the company:

Yahoo has confirmed that Bill Demas, SVP-Yahoo Publishing Network Group, is leaving at the end of November....
...Also confirmed by Yahoo—Will Johnson, VP and GM, YPN, is leaving as well.

I wonder if the recent Quigo-ESPN deal has anything to do with these departures?... Hmmm...

Anyhow - All you YPN'ers - if you're interested in joining the fastest growing text advertising network in the country, drop me an email with your resume at:
galai at quigo dot com