Tuesday, March 17th, 2009

The problem with AdSense

The problem with AdSense
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For as much as I make fun of them, I’m in fact a believer in online ads. They’re largely a mess right now, but this will change. In contemplating the future, three factors need to be considered: First, AdSense has completely buggered the market. Second, the death of mainstream media will create a vacuum of content. Third, this shortcoming will result in real revenue for quality content providers, regardless of delivery device.

AdSense is fucked

Some of you are put-off by my use of expletives. I apologize for this; nevertheless, such language is well warranted in this instance.

For those of you unfamiliar with AdSense, it (along with AdWords) is Google’s machine for delivering ads. It, like much of what the company does, is really quite brilliant. Using AdSense and AdWords, website owners can (with Google’s help) insert ads in their sites, and subsequently, earn revenues for doing so. Upon its arrival, it was heralded as a godsend, both for simplifying the process and allowing a simple way to connect advertisers with content creators. Since then, it has largely come to dominate online advertising.

The challenges with AdSense are many-fold. First of all, as with anything on the web, there is always a group of people who look to “game the system”. Almost overnight, a raft of “AdSense experts” were selling their own brands of snake oil, promising to help people collect their many millions through the service. Others simply created or copied content, within which they disguised ads, in order to trick viewers into clicking on them.

As a result, site visitors often find themselves duped. Additionally, for content creators unwilling to take such questionable approaches, the revenues from AdSense have become negligible at best. In short, you need to drive huge numbers in order to see any real revenue from the service. Meanwhile, this proliferation of content intent on simply driving ad impressions, lowers the value of online advertising in general.

The end of traditional media

Over the past couple of weeks, we’ve heard a great deal about the plight of traditional media. It seems as though it’s become increasingly improbable for newspapers to remain profitable, and at worst to even stay in business. As a result, even venerable publications like Seattle’s Post Intelligencer are at death’s door.

What I like to remind myself at times like this is that such changes tend to bring new opportunity. Although the delivery device is changing, content is still valuable. The question is how long it will take to see ad spending redistribute in the absence of traditional media sources.

Think of it this way: there’s great inequity for content creators today. While most bloggers make hardly a penny from their writing (outside of ancillary benefits such as good PR), a full page ad in a metro newspaper will set you back $20,000 for a single placement. With readers migrating to the web, and newspapers folding, it’s only a matter of time before those ad dollars shift to the web as well.

We’re all familiar with the obscene costs associated with television advertising at events like the Super Bowl. We accept that multinationals spend hundreds of millions advertising their brands. Heck, we even know that even the most basic regional direct-mail campaign will eat through thousands of dollars.

The fact of the matter is that since we still insist on thinking that the web should be free, advertising in this venue remains immature and undervalued. In part, the problem with this is skewed by the outmoded notion that the delivery device should dictate the cost of the placement, when in fact, it should be the value of the placement and the quality of the content that does so.

The nature of the content should define its value

Now, in order for this to happen, the nature of online advertising has to change radically. First of all, it can’t be based on “tricking” viewers as it currently is. Moreover, we have to start considering the overall value of the ad to the advertiser.

The truth is that advertising (albeit sometimes irritating) is worth something. Additionally, the value of an ad can’t strictly be measured by click-through rates. AdSense rewards those sites that generate millions of page views. As such, a site like I Can Has Cheezburger can do reasonably well from the service; but, ask yourself, do you even momentarily look at one of those ads, which watching those crazy cats? Doubtful.

Clicks are often made accidentally, as many Adwords profiteers have learned. They disguise ads as content, or interrupt the viewer for mind-share. Although this may provide measurable traffic, few would argue that this has any real value to the advertiser. On the flip-side, I’ve only once clicked on a link to the hosting company Media Temple, but their persistent advertising on creative blogs has made me well aware of the brand. This will be important when we soon re-evaluate hosting providers.

Instead of concentrating on sheer volume, we need to look at how we can best connect advertisers with interested parties. ideasonideas for example doesn’t see huge volume, given the rather specific nature of its content; nevertheless, if you need to connect with thinking designers (who are willing to read through these long-assed posts) this is probably a good place to reach them. ideasonideas numbers will never be huge; that doesn’t mean that there isn’t value in advertising to these readers.

So, here’s my suggestion for an alternative (and perhaps more sensible) approach:
1. Independent producers concentrate on creating good content
2. They then limit the number of ads on a page, showcasing only those relevant to readers
3. They sell space directly to advertisers or work collectively as small “narrow” networks

Of course, such a solution would make things far more challenging for media buyers. Still, I think we need to see such a model emerge. AdSense as it stands today really doesn’t benefit anyone. (Aside from Google, and I get the feeling they’re doing okay.)

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