Most people might agree that pay per click advertising has revolutionized the online advertising space and the credit for the same goes to google as well for the launch of adsense and adwords. Both adsense and adwords have revolutionized the online advertising space and brought advertising to the last mile. But even though largely its perceived as a good thing it may have actually shrunk the potential of online advertising space and actually lowered revenues for multiple publishers.
Here is why I think that pay per click is a flawed model
The very fact that advertisers pay publishers for a click and not impressions means that they place zero value on the creative of the banner ad or even text ad to generate clicks. The entire responsibility of the click is placed on the publisher.
Now consider this if TV channels were paid per view of the ad how much do you think they would earn? Because a tv ad creative could be boring and people could switch channels during the ad and the creative should be responsible for the ad not being able to retain a viewers attention.
In the same way the banner or text ad in online advertising should have emphasis on creative of the ad and the same being responsible to generate clicks. I mean if your creative isn’t attractive enough no matter how many impressions I get the ad clicks would be dismal and inturn as a publisher i will suffer with low revenues.
The current model of online advertising is so flawed that there is zero responsibility on the creative. A publisher is blamed if his site doesnt get enough click throughs and there is no mention of the creative of the ad being bad.
How google self corrects this flaw via adwords?
Google has a self correcting mechanism. It shows more of those ads which get higher click throughs there by increasing theirs as well as the publishers revenue.
But what about direct ads?
Direct ads, affiliates dont have the same feature that google has. Also because google ads are so widespread now that all advertisers are demanding pay per click ad units from publishers. What this has lead to is a complete lack of accountability on the ad creative front.
Most people would laugh at my suggestion that the pay per impression model was probably the most fair model of advertising on the digital media. This is because publishers is accountable for his traffic, ad creators for his creative and the advertiser for his own website and how a user engages with it.
I would like to know your thoughts on this? Brickbats and bouquets are welcome.. more importantly if your a member of the digital media space then a real discussion is necessary on this issue.
Hi
Just wanted to know how to contact companies in India for different products/services for direct ads?
I think there are flaws in both models, Unless some better model is evolved a hybrid approach should be taken,
A minimum payout for x number of impressions and based on the CTR the charges of the publisher should decrease ie suppose we are getting a CTR of 30% for an add X that means it is attracting lot of visitors so credit should also go to the creativeness(Advertiser) of the Add,so they should be rewarded for it hence they should be charged less .
Now if another add Y has CTR of 5% then publisher should get higher charges as Advertiser( creative) may be blamed for it and should pay for it as number of impressions means time and whiteboard (website) space.
Please provide you suggestions
I think the onus falls on the creative even if it’s on a PPC model. If the ad doesn’t generate a click then business doesn’t happen for the brand that is advertising, because it doesn’t get the opportunity to perform.. getting a click itself is the definition of accountability on part of those who made the banner or the text link.. As a brand if your ads aren’t generating enough clicks/conversions they will not only look for a new publisher but also change the one’s handling their online creatives.. accountability is therefore placed at both ends
Please see http://www.mahesh.com/2008/01/15/cpc-statistics-are-not-a-true-reflection-of-performance and http://www.mahesh.com/2008/07/25/will-print-ads-in-india-become-unaffordable
I have always felt people are a little too hard on online advertising. They want a lot of accountability from online publishers but none from print/tv.
The example quoted by you about TV ad is excellent. Nobody has an answer on how to make TV/radio/print advertising more accountable.
I won’t agree that Pay per View model is the most fair model, for it doesn’t have much for the customer – the advertiser. That model may be fair only from the perspective of Publisher but for an advertiser it’s difficult to identify whether he is using the right medium to connect consumers with its brand.
Pay Per Click model needs creativity for those brands that don’t want to sell anything but connect with the consumers and increase their brand value. For e.g Axe. Their main aim in online advertising is to engage comsumer with the brand. They aren’t interested in selling the deo online. On the other hand, those advertisers who are putting ads to sell online, may not need creative ads. They need to target their ads to the people who are most willing to buy it at that point of time who may be willing to buy it irrespective of its creativity. So I will say it depends on the advertisers to determine whether they want to engage people online or want to sell. In the case of former they need to be more creative while in later they needn’t be.
So where does it leaves the publisher? If I draw 2X2 matrix with creativity & non creativity on one side and purpose – engaging, selling on the other side. I see publisher needs to worry only about the quadrant where purpose is engaging consumers and ad is non-creative. For other 3 quads he doesn’t have any issues. To mitigate the risks in this quadrant, publisher may need to identify what the purpose of the brand is in advertising online and whether they are creative enough or not and decide whether to allow that particular ad or not.
Also I will like to add that online buying is not at all impulsive unlike your visit to the retail mall. In malls they need to attract you for impulsive buying and therefore have creativity all around.
Nice arguement rohit.. but my point simply is.. how can a publisher be penalized revenue loss for an ad creative he has no control over? And isnt clicks purely a function of ad creative?.. What are the other factors for high click throughs?
There is a company by name NetworkPlay.in – Remember Rajiv?
I completely agree with you Rajiv, The onus of pre click targeting(IP, Gender etc) is on the publisher and post click on the advertiser. A user will click on the ad only if he is convinced with the message or for curiosity generated by the creative. Also the click is dependent on the Brand being advertised, so creative and brand perception play the major role in influencing a user to click an ad. Why should a publisher be held responsible for the click and other post click activities.
@Rammohan – Yes I know you are doing good work in this space.. But we need many networkplays and not just one
@ Rajiv,
Fully agree with your views. Online Display ads work way better than print/TV/radio even for Reach campaigns as India’s prime TG is ONLINE. The remote ensues I zap the moment a TV ad break comes. Print ads work better as fish wrap. The biggest problem in the digital industry is that Publishers put Google Ads everywhere on their site and completely devalue their OWN inventory. Advertisers don’t want to pay CPM for a publisher which has “ads by google” everywhere as they feel they can buy it on low cost CPC via Google. Wonder when publishers will realize that Google is not in their best interest.
your main question is
“how can a publisher be penalized revenue loss for an ad creative he has no control over? And isnt clicks purely a function of ad creative?.. What are the other factors for high click throughs?”
Lack of revenues by lower CTR thru less creative Ad:
Now you want to blame lack of creativity for lower CTR’s but what about the case where higher CTR’s is achieved through goood creative work…like shooting (flash based) game in Ad….
There also no benchmark rate for CTR so you can’t say that you are loosing revenues due to lack in creativity…bcos no matter what u achieve you would always be below 100 % CTR rate….
Why should an online advertisers care unless he is promoting an offline product:
Higher creativity leads to higher overhead costs…..why would a portal spend big time money on highly creative ads when in turn they stands to loose money thru higher clicks and higher bounce rates.
flock towards engagement ads:
The problem with engagement ads is its hard to track its uses….So the payment is very hard to calculate….
What are the other factors for high click throughs?
CTR’s are suffering cos publishers are utilizing every nook and corner of their online property for ads…making the user ad blind….
The calculation of CTR itself is worthless as it calculates total pageviews now suppose out of hundred visitors:
30 users stay for 20 seconds
40 users stay for 50 seconds
30 users stay for 180 seconds approx.
netting a CTR of 10%
Now why should CTR be calculated including the first category of users who hardly wait till the site loads and closes it down…..so no fault of Creativity of ad as user has hardly seen the ad….so if you where to exclude those visitors who didn’t get a chance to even see the complete web page your CTR would see a remarkable jump to 20%
Through above illustration I wanted to point out that The calculation of CTR itself is not very accurate….
Nice numbers raghav – Proud that you blog on watblog.. This comment could have been a post itself
Its very important one needs to understand an ad network is a fair model as it helps to create a market place situation for advertisers and publishers the Many to Many situation which exist on internet is not there or faced by tv media planners. For instance if as a planner was to choose between 4500 tv channels to put advertiser campaign spots on wont he also try to standardize them on some sort of performance metric. Also its unfair to say on other media optimization of media doesnt exist where for instance recently meet an advertiser from category who was optimizing even print spot selection across media by using metrics like increase in call rate at call centre, on offer coupons used or a TV advertiser who was advertising ad spots again on similar interactive ways.
In a recent pitch at an agency upcoming TV channel had come up with metrics even guaranteeing X no call through rate to call centers to push ad spots.
You are right at raising issue that agencies should be responsible for communication but for that marketplace dynamics tend to ensure they too perform. Eg publisher who might be getting optimized or being blamed by no performance reaching out to direct advertiser or performance metric not being meet even as per execution plan as projected by agency etc.
Optimization via marketplace is best measure and believe in power of ad networks which can help the long tail publishers take advantage of accessing variety of campaigns which even employing direct sales team would guarantee. Though if you have scale > 5 Million impressions per month then you can look at non ad network model to monetize your inventory if not satisfied by eCPM rates being garnerd and you feel your property can be sold on audience to which it exposes message to.
I think problem is with the number of online advertisements. In India you get advertisements only from Travel Portal, Matrimonial Portals, Real Estate portals, Job Portals etc. We need to increase the number of online advertisers from areas like Household appliances, FMCG products, Kitchen Appliances etc. Once there are more online advertisers, revenve model will change. And it will help both publishers as well as advertisers.When TV came it affets the advertisement model of Newspaper. Similarly Internet will change the advertisement model of TV.
@Rajeev – I agree with you the demand front but then again.. If digital is a 500 cr industry in advertising that by no means is a small base. Its still early days.. I personally feel a publisher consortium lead by the likes of Yahoo, Rediff has to be formed to establish rates and processes with regards to online advertising. My simple funda is that if publishers aren’t paid well they wont invest in content.. If they dont invest in content the quality of the web wont grow.. and if that doesn’t grow I wont be surprised if there is slow or even negative growth in internet users.
Just because advertising was all about pay per view does not make it a fair model. It had the inherent drawback of having to guess how many people you are going to reach with your ad, and estimating a value for the display ads. The PPC model corrects this flaw.
And it is not that the advertiser ceases to be creative with his ad. His job is not done with just putting an ad on the site. He has to ultimately sell to make money, and so the creativity part is taken care of therein. It is just that now, there is more accountability on part of the advertiser and the publisher to get more people see the ads.
@Rajiv
I agree with you regarding renumeration to publishers. I think it’s high time to think about online advertisements from publishers as well as advertisers point of view. We (Publishers) need a body to interact with advertisers to increase the base and also developing some sort of framework between publishers and advertisers. I don’t know who will initiate this process.
after a very long time someone sees sense and wants to say that “treat online advertising as advertising and a communication of your message medium and not as a complete ROI stuff”
Love this article. I guess agencies have dug their wo graves and publishers have acted as the cataylsts here, by devaluing their own core competencies
The onus needs to lie with all parties concerned , but the chain in itself is flawed. For publishers dealing with agencies or clients directly , there is a considerable emphasis place on the creatives – not only on how good they are ( Which incidentally is subjective) but down to how many sizes are required , type of banners etc…. plus publishes in this realm know what they are getting into – irrespective of the creative , if a Yahoo picks up a deal for 10,000 clicks in 10 days – they know they will be able to deliver it.
Ad networks can be a problem. With bulk buys and inventory lying unused , networks are not concerned with the creative aspect of it. Yes they will demand that a respectable number of sizes are given but thats about it , i have worked on enough clients where standard sizes such as a 728 X 90 , or a 300 X 250 were never given , the campaign still taken live and ended with disastrous results sometimes.
Having said that there needs to be accountability on the publisher end as well -dont pick up something you cant deliver – if you dont like the creative say it – agencies are open as well as clients to developing alternate banners as well – ask for text links , ask for inline ads , suggest an innovation – there is a lot of stuff which publishers can do to not only add that extra element of creativeness or simply push a banner which does not stand out…
Rajiv,
Being on the publisher side for most of my online life, you have reiterated the philosophy we have been trying to convince our clients with in the last 4 years. My major arguments in support of CPM from the point of view of publisher is –
1) We are a niche site and by putting up your banner ad you are not just generating leads through clicks but by publishing them on CPM basis you are able to create a brand for yourself in this highly competitive space. No wonder after 4 years, we have a huge set of happy repeat clients.
2)If your creative sucks, we will advise you, we will suggest you to make it better so that you get better response because we understand our users better. We are bullish about separating content from advertising on our site and users clearly know what is for consumption and what is advertising. I am sure you must have seen enough examples where the home page of websites is full of advertorials. That is not a ethical practice but that’s what you have to do when you get bad VC’s
What I would like to say is that, it is also the responsibility of publishers to make your site purposeful. Take a look at this – http://mbauniverse.com/ . I am amazed at the “dynamism” of the site and if I am a client, it will take a lot of convincing to sell these banners to me on CPM basis. There has to be some standard where major %age of the page is dedicated to solving the purpose of the site and a bit of it can be used for advertising. If you can offer the clients exclusivity in terms of niche as well as in providing space on a page, selling it on CPM basis is easier than what is believed to be.
As for agencies, I think they should rather focus first on having user interaction experts in their team and then move on to creatives. And as far as India is concerned, I am yet to hear of a worldclass UI expert.
The TV example was naice!
Cheers,
Rohit
I would totally agree with you Rajiv. I have always believed in the CPM model, but a few things have changed the industry looks at a pay per view model. No idea who is to blame for this . a CPM model would stop fraud, generate valid and true leads, take care of branding, payout fair prices to publishers, generate good revenues for the advertiser. Its a win win all through.