In a session at last week’s Targeted Traffic Conference in Hollywood Florida Madison Avenue visited the Domain Investors.
The main result of this discussion between the domain industry and Madison Avenue was that both sides need to educate each other further. Big businesses are taught day in/out to create brands, not generics. They will have to learn that generic terms can work as a seal of approval for their business, bringing them the web traffic of an entire business category. Also the domain industry will have to learn how to better show the value of domains - for example by providing more examples similar to the success of hotels.com.

As you certainly noticed, a lot of traditional media has recently been focusing on click fraud. Is it as big of an issue as it is made out to be, compared to traditional advertising? Unfortunately Eytan Elbaz of Google will not answer this question with statistics, but he lets us know that Google has the problem under control.

Here are some notes based on the Click Fraud Session at the Targeted Traffic Conference in Hollywood, Florida last week.

How does traditional media provide viewer/reader metrics?

Traditional media does not really provide verifiable metrics for their viewer numbers and circulation statistics. While TV statistics are becoming more precise with the help of digital cable and bi-directional networks, circulation metrics for papers are still very much basic estimates.

Newspaper circulation is measured with the help of two main numbers: Paid and free circulation. How reliable are those numbers?

Let’s take a look at an example provided by lawyer John Berryhill: Some years ago, hotels started giving us “free” newspapers in the morning, that most of us do not read. These papers are included in the newspaper’s circulation numbers, which are used in order to calculate the advertising rates.

Since those papers in the hotels were originally free, they had to be included in the “free” circulation numbers, which of course meant less value to the advertiser than a “paid” copy.

So the hotels and paper publishers decided to include the free paper in your room price, and allow you to get a credit if you return the paper to the hotel front desk. It now was a paid copy, which could be counted towards the “paid” circulation numbers - even though the value is more likely to be comparable to the value of a “free” copy.

The traditional print media is running out of advertisers. Thus it is of course in their best interest to discredit their biggest opponent, online advertising. Could this possibly be the main explanation for the frequent coverage of the “click fraud” issues in print media?

Some advantages of Internet advertising vs. traditional media advertising

• you can tell which context the ad was viewed in (you cannot tell if the reader read a certain page of a newspaper)
• “circulation” numbers are more reliable
• conversation rates from ads can be tracked
• smart pricing for advertising, i.e. depending on conversion rates

An issue that might affect publisher payouts was brought up by Rick [of OffShoring.com]: ‘Shaving’ by advertisers, meaning the manipulation of conversion rates. Since the online advertising systems rely on the advertiser to track the ‘action/conversion’ (by adding some tracking code to their “sale complete” page), they are in a position to manipulate the number of closed sales.

Another comment brought up by Joe [of CentralNIC] was that additional transparency, (i.e. publishing click fraud numbers), could be used to counteract the perception that clickfraud is a big issue.

From an article in the National Post:

Yellow Pages said yesterday it picked up the suite of sites — including autos.ca, debts.ca, doctors.ca and RVcampgrounds.ca — from Montreal-based Emall.ca Inc. for $2.5-million. It is a tiny investment compared with the close to $4-billion Yellow Pages has spent in the past year to buy the former Telus Corp. phone book business in western Canada and a range of specialized classified publications across Canada including Auto Trader.

But Yellow Pages chief financial officer Christian Paupe said the acquired Web addresses will “become a very precious inventory. Online is the future. We don’t exactly know how this space is going to evolve, exactly. But I’m convinced this was a no-brainer for $2.5-million. Their worth over time will be very significant.”

Indeed. $6250 per category-specific domain seems like a good deal, even though it’s probably a new high for a .CA portfolio sale. But for a Yellow Pages directory provider, this is a no-brainer purchase, indeed.

Yellow Pages chief executive Marc Tellier said some of his new sites, such as attorneys.ca, may feature basic editorial content, such as advice on how to select a lawyer, as well as contact information for local advertisers.

Time to renew your .CA domains ;-) Looks like emall still got a couple of them left as well.

[Thank you Adam]

In his Feb 28th Article “Evaluating Search Syndication Partners” Andrew Beckman, president of the SearchAdNetwork, shares some interesting research from an advertising campaign in the education vertical:

With our internal tracking system, we selected the education vertical to analyze where traffic originates from, and noticed that directional navigation is 5 percent of the overall syndication of the major search engines.

[…]

Our tracking system shows, from the same education vertical, that search toolbars deliver 3 percent of the major search networks’ traffic with acceptable conversion percentages from those efforts.

[via DMNews]

According to a report at Excite Money & Investing (based on a study by WebSideStory) a conversion to a sale is more likely when the user comes to a site from a search. It seems that the study differentiates between searches (including targeted PPC), banner ads, shopping search sites and direct navigation/type-in.
Search Sites Better At Getting Shoppers To Buy: Study

• Direct Navigation/Bookmarks 4.23%
• Search Engines (incl. PPC) 2.30%
• Banner Ads/Content related ads (Other) 0.96%

The study, by researchers at WebSideStory Inc. (WSSI), found that search sites produce more than twice the conversion rate of many other Internet marketing efforts. The study defines conversion rate as the percentage of visitors to a site who view an ad or clicking on a search result and purchase a product or service. […]

According to the research, search sites had a conversion rate of 2.3%, meaning that for every 100 consumers clicking on a search result or advertisement, 2.3 people made a purchase. Online banner ads, shopping search sites and other online marketing efforts had a conversion rate of 0.96%, the study found. […]

Consumers who went directly to a company’ site without using a search engine - perhaps because they set a bookmark - had a much higher conversion rate of 4.23% .

I’d love to see a more detailed breakdown showing the difference in the conversion ration between “search” by direct navigation and search engine. I am quite surprised that shopping/price search engines (is this the same?) are not doing that well. It also looks like they placed banner ads and content related ads in one category. It is not surprising that direct navigation ranks the highest in the conversion charts - after all the user most likely wanted to visit this merchant’s site for a reason.

[Thanks Wayne]

Danny Sullivan wrote up a summary on the current ‘ads on parked domains’ discussions, which were started off by ‘research’ (MS Research: Typo-Squatters Are Gaming Google) published by Microsoft (I am still wondering if this means that they are not going to try to get into this market with their Adcenter offering.).

I was planning on a summary, but his article give me a good starting point - while I don’t necessarily share his opinion:

Search Engines Making Millions Off Type-In Traffic From Domains

It’s not that domain traffic is necessarily bad nor that domainers are necessarily doing anything wrong. But there’s a difference between the person who did a keyword search as opposed to someone who did a navigational guess (a type in) versus someone who sees ads placed contextually on pages. Advertisers deserve the transparency of doing these as separate buys.

For a while I thought about this the same way, but is there really a difference? A lot of users seem to use domain names as a replacement for search queries. A generic domain that is typed in by the user would probably be the most likely to convert. Someone else follows a link that points to a domain that has been grabbed in a domain drop, will it convert? If they type a domain name of a brand wrong, they might end up on a PPC page. Will they find the brand name they were looking for in an ad on that page?

It would be great if someone (maybe one of the aggregators?) could provide data that shows that domains do work well for the advertiser. I am convinced that there are numerous examples out there. I would just love to see some research - it could teach us a lot. Maybe it even makes sense to split the traffic, based on it’s origin. And of course we also need to make improvements on the other end, after the click on the ad. Bad conversion rates can also be related to a bad and non-targeted landing page.

For the advertisers this is really about the quality of traffic, or even more specific, the likelihood of conversion. Which mindset is the end user in? Which part of the sales cycle is he in? There are many more questions that need to be answered so we can ensure that all the parties are treated fairly in the process. How and where should conversions be tracked, and how much higher would the payout be for a click that converts? What if the conversion takes place 6 months after the click?

Even if a space is very non-public up to a certain point, it’s always a good idea to try to steer how and where this topic will appear publicly, especially if you have a suspicion that there is a strong chance for a negative twist. Now it’s now important to control the damage, which can be a long and painful process.

Some more posts/discussions about this topic:

http://www.searchenginejournal.com/index.php?p=2694
http://www.circleid.com/posts/whats_wrong_with_domain_names/

In the end, I believe that the short term outcome might be that advertisers will be able to pick between content syndication, search and domain advertising. This will have a negative effect for a lot of domainers, at least in the short term. Long term it might lead to a tiered structure where the payout depends on different factors (a combination of of pay per unique, lead, action, click etc).

According to a press release by the Interactive Advertising Bureau and PricewaterhouseCoopers, the Internet advertising revenue for Q3 of 2005 has surpassed $3 billion USD.

New York, NY (November 21, 2005) – The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) today announced that Internet advertising revenues totaled a record $3.1 billion for the third quarter of 2005, making this the highest quarter reported and the first time that quarterly revenues surpassed $3 billion. The 2005 third-quarter revenues represent a 33.9 percent increase over 2004 third-quarter total of $2.3 billion and a 4.7percent increase over the 2005 second-quarter total of $2.9 billion. Based on historical data, the annual revenue run rate for 2005 could exceed $12 billion, well above last year’s record total of $9.6 billion.