On Facebook Advertising

Two things happened recently: Facebook’s IPO fizzled and there was a slew of articles and blog posts about how Facebook ads are ineffective. The majority of the articles follow the same song and dance: we spent $250, got some likes from random people and nothing changed. The one standout it GM dropping Facebook ads. GM’s budget was 10 million dollars, and the way I understand it, this is their equivalent of $250 for a small business.

While I personally dislike Facebook tremendously and want it to fail, I think that the FB ad-bashing articles are off base. Facebook ads are a great deal. I am not an advertising professional, but I drank with a lot of them and I think picked up a reasonable amount of knowledge about the industry. I also stayed at … hmm, can’t remember the name of the hotel, but this is a reference to the TV ads where people say “well, I’m not a [professional that has to be very smart and skilled] but I stayed at [name of the hotel]”.

There are many, many bad deals in advertising. There are big-name websites that have “respectability” plus a huge saleseforce. These guys can charge $15, $20, $30, sometimes even $50 per 1000 banner impressions. cost for 1000 impressions is called CPM: cost per M where M is the Roman numeral 100. At the higher price you get gigantic custom ads known by a variety of names: browser crashers, godzillas, superskyscrapers, page fuckers, etc. There are also “sponsorships” where dumb companies buy little badges on new sites with next to no traffic.

How do these things get sold? Well, the agency people who control how the ad budget is spent are often young and get a lot of free drinks. Also, ad sales people are very good at what they do.

Then there are cut rate ad networks that have 5-20 cents CPM. The traffic for these comes from all kind of low quality sites: lyrics websites, guitar tab sites, all kinds of web farms, dating sites, porn and near-porn sites and the like. Big sites sometimes buy traffic from these sources when they don’t have enough “inventory”, but they’ve already sold a lot of high CPM ads. These are a pretty bad deal, and I suspect much of the traffic is simulated by bots. It is cheap and there’s a lot of it though. Targeting options are pretty weak with the exception of plentyoffish.com: POF allows for very detailed targeting. If you want to target only Canadian redheads between the ages of 18-22 – you can.

Google ads are a better deal: you are targeting people that are searching for something. Google has pretty sophisticated algorithms for detecting fraud, but I suspect click fraud is still rampant. Google’s predominant model is charging per click instead of per 1K impressions, and you have to compete with other people for hot search keywords. For instance, ambulance chasers pay ridiculous money for “mesothelioma” keyword. Mesothelioma is a type of cancer caused by asbestos, and layers apparently can make crazy money suing on behalf of people who have it. A click on an ad can fetch as much as $10 or more. There are many other expensive keywords where even a single click is worth paying actual humans to click on them from time to time. There are also pity clicks and punitive clicks: sometimes people click ads to support sites that they like and to punish ones advertisers they don’t like.

Facebook ads by my estimation cost about 1/10th of Google’s, almost in the low quality network territory. The targeting is amazing though: Facebook knows a lot about what people are interested in and lets you have a sniper-like precision of putting your ad in front of them. Do you want New Yorkers who are into planted aquariums, fishing and knife sharpening? If there are 10 people like that you can reach them on Facebook for a few bucks. Unlike Google users who are searching for something, Facebookers are there for ogling hot people and playing Farmville. They tend to ignore the ads, but you can get an even better deal by buying CPC ads. Massive click fraud is difficult on Facebook, most of these clicks are real.

There are many things about advertising in general that are mysterious: starting with the “if I almost never click on ads then who does” to “do tv and magazine ads actually make me buy anything”. Are funny ads where you remember the joke but not what was advertised worth the money? Are people swayed by car commercials? How about those Coca Cola billboards? How about those ads in New York taxi cabs and ads that annoy in general – are they effective? QR codes ( http://wtfqrcodes.com/ ) – are they the advertising equivalent of “free public wifi” zombies? I have a hunch, but I don’t really know.

What I do know is that compared to other options FB advertising is a pretty good deal at current pricing.

eBay and The Michigan Deposit Scam

eBay is such a horrible hassle these days. I tried selling a few things recently, and between the horrible UI, all the hassles with payments, answering questions and shipping it turned out to be a huge waste of time.

I am sitting on a small fortune of items I would like to get rid of, but I don’t want to deal with strangers on Craigslist or going through the eBay rigomarole. An ideal solution would have been an eBay drop-off shop, but it seems that these went the way of the Dodo.

eBay drop-off store is an idea that many have tried, but it turned out mostly like Seinfeld’s Michigan deposit scam.

In one episode Newman keeps trying to find a way to make a scheme that would bring New York cans and bottles to Michigan, which has a 10 cent deposit instead of New York’s 5 cent one. Kramer keeps telling him that it would not work due to the transportation overhead, but finally Newman figures out a way to get a postal truck for free.

It seems that the time overhead is so high on running an eBay store is so high, that most of the bigger ones that tried it went out of business.

In reality the Michigan deposit scam is against the law, but it actully costs the state 14 million a year in lost revenues. It’s doable.

eBay is showing Twitter-like incompetence in serving its customers. While Google gives its customers huge amounts of storage, email, and software for free, eBay can’t seem to provide free image galleries and other useful services, selling out its customers to an unsavory bunch of third party providers. Image storage is not a very difficult technical problem, and neither is url shortening, but eBay and Twitter are still in the dark about it.

Instead of making selling on eBay easy, developing drop off stores, and making its service better eBay seems to be focused on buying and selling unrelated busenesses for billions of dollars (and losing money on it).

The Gift of PR

When you are working with true professionals, one of the best things to do is to ask them to choose for you. Japanese have a special word for it – “omakase“. When you say “omakase onegaishimasu” in a sushi bar, the chef will create a custom meal for you, based on the freshest and the best ingredients available at the moment.

If you ever give your money to Warren Buffet, your hair to Jonathan Antin, your floundering computer maker to Steve Jobs, the choice of where and what to eat to Tony Burdain — they’ll do a good job. Doing the same with any stock broker (is likely to churn your investments or worse ), the Supercuts barber (might style you ala Gates) , Carly Fiorina (might make poor H and P spin in their graves some more) is a capitally bad idea.

For a while I’ve been running Amazon’s “omakaseTM” ads on my blog, and I’ve got to tell ya, they stink. I, personally, would fire the business dev suit running (or rather running into the ground) Amazon’s Associates program. This person is never going to be fired, because by it’s nature, Amazon Associates is an amazing thing, one of the best business ideas that Amazon ever implemented. It’s like an Abrams M1 tank – even a drunk moron can drive it around and do a lot of very impressive damage, but it takes a highly trained soldier to really unleash it’s true destructive capabilities.

I am very disappointed in Amazon Associates products, especially omakase, and because of that I am building my own Amazon Associates ad server in my spare time. Lately I haven’t had much spare time, so the project is moving rather slowly. I’ll be pulling omakase ads off though, and meanwhile I’ll replace it with a holiday gift for my readers.

I will replace the ads on my website with promos for some blogs and websites of my readers (as well as some of my favorites). Do you you have a site you’d like to promote? Comment here or send me an email. Suggest as many as you want. If you have some “creative” – that’ll help. And if you won’t suggest anything (as it usually happens when I ask for suggestions) and make me feel very sad, instead of promoting your sites, I’ll do the same with all the splogs that sometimes spam me. At least they take the time to leave a comment.

New Billboard Day Effect : How to Advertise More Effectively on Your Blog

Advertising. “The Engine of Commerce”. Ideally, it should work like it does in the Simpsons episode 2F12 “Homer the Clown”:

“In the middle of driving down the highway, Homer skids to a halt in front of a billboard.

Homer: [gasps] It must be the first of the month: new billboard day!

Homer: [reading] “This year, give her English muffins.” Whatever you say, Mr. Billboard! [skids off]
[stops suddenly at another billboard for barbeque sauce]
[cars collide behind him and explode]

Homer: [reading] “Best in the West.” Heh heh heh, that rhymes!
[looking at the next one] “Clown college”? You can’t eat that.

At the power plant, Homer piles his purchases (including MSG, “Best in the West”, and English muffins) at his work station. “Well, I got everything I was supposed to get. I’m not going to enroll in that clown college, though…that advertisement had absolutely no effect on me whatsoever. In his daydream, he imagines himself sleeping and dreaming of himself eating a sandwich. The billboard for the clown college batters its way into his thoughts. The Krustys on the billboard start dancing to circus music.”

Of course, Homer enrolls in the clown college. Having never enrolled in a clown college because an ad told us to, we all go on thinking: “advertisement had absolutely no effect on me whatsoever.” It can’t possibly be true: bajillion dollar industries, such as advertising don’t simply exist if they are not effective.

During the dot com bubble even large companies mostly failed to earn much from banner ads. Even the heaviest online ad campaigns did not seem very effective and suffered horrible clickthrogh rates. Online ad companies escalated the war for clickthroughs by inventing obnoxious popunder, popover and floater ads. The more the ad was like a flash-bang grenade mistakenly used by NYPD on an elderly woman, the better. For instance, many sites started using larger sizes of vertical banners known as “Skyscraper.” That was not enough though – extreme, flash-driven skyscraper ads with movies and sound, capable of crashing browsers and known as “Godzilla” and “Pagekiller” started to appear.

The founders of Google decided to address this issue, and as a result, made bazillions of dollars. As a former googler remembered:

” Besides, Larry and Sergey hated these kinds of advertising. In fact they hated most kinds of advertising as inefficient, dishonest and a total waste of people’s (meaning their) precious time.”

We all know that AdWords and AdSense, Google’s advertising programs managed to earn so much money through unobtrusive, mostly text ads. The winning strategy was “relevancy”. Google’s server would read in the page where the ad were to appear, and serve up a relevant ad.

For instance, after parsing pages on chupaqueso.com, a site dedicated to a cheese snack invented by web cartoonist Howard Tayler, in theory shows ads about cheese. And after reading about chupaqueso’s cheesy goodness, I might indeed be in the mood to buy some cheese online.

On the other hand, the AdSense algorithm is not too efficient. On some pages in the abovementioned site it serves ads like this:

Yes, indeed, amongst Howard Tayler’s readers there are a lot of computer geeks. I know I am not a typical web user, but I am a pretty typical web developer. And I have zero desire to “Boost XML app performance.” I also have all the “ODBC drivers” that I need.

Many of you, my readers, are bloggers or have regular web sites with AdSense ads. Look at them. How many you’d say are “inefficient, dishonest and a total waste of people’s … precious time”?

I say – about 99.5%. And clickthrough ratios are pretty horrible. People try to tweak them by playing around with ad types, look and feel, positioning and excluding advertisers, but it’s all rather ineffective.

Google’s ads only pay if people click on them. In the TV, billboard, magazine and the type of advertising that people tattoo on their bodies there’s no such things as clicks. You get paid depending on how many people see the ad. It works really well if you need to make people remember your company’s name or logo.

Side Note:
When I was little, in Odessa ( Ukraine, Not Texas) somebody scribbled in almost every public phone booth “[Some girl’s full name] is a whore.” In a city of about a million people this worked like a charm. The mindshare that that advertisement delivered must have been off the charts.

These 99.5% of unclickable ads can be divided into two categories: a) ad campaigns that build brand’s awareness almost for free and b) those that indeed waste everyone’s time and money.

I don’t think I ever clicked on any Vonage ads, even though I’ve seen thousands of them. They worked without any clicks — if I did not also know that their customer service sucks and reliability is horrible, I’d have their VOIP service now.

The ads that nobody ever cares about still do get some clicks. When people come by a useful and interesting site, they tend to click on random ads so that the site owner would get some revenue. This is the untraceable portion of a much scarier phenomenon called click fraud. I am not even going to address this here.

In short, I feel that even though Google’s ads are a step in the right direction, AdSense sucks, especially for a blog with a smallish audience, such as mine. The useless, stupid ads that clog AdSense are a waste, even though they might generate a few “pity clicks.” Only half of my ad revenue for the site came from AdSense last year. The rest came from my experiment that I think will be of great interest to everyone.

My thinking went like this: I want to serve ads that are extremely relevant to my blog posts and interesting to my audience. Even more importantly, they must be selling something that I would be interested in. Ads I’d click on.

When you have limited advertising space, the problem with AdSense is that it often tries to sell things that your readers don’t want. What you want to do is advertise things that people aready want. As an example of such salesmanship, let me direct you to a post on the very popular waiterrant.net, where The Waiter describes selling dessert to calorie-conscious women:

“”Ladies,” I say sweetly, “We have some excellent desserts tonight.”

“Oh, nothing for me,” Bubbly Blonde replies.
“No dessert,” Severe Brunette says, holding up her hand.
“Me neither,” Lawyer Babe says firmly.

The fourth woman, a Soccer Mom type, looks at her companions and sighs. She wants dessert.

I see the longing for chocolate in Soccer Mom’s eyes. She’s my weak link. My in.

“Would anyone like some coffee?” I ask. Suggesting coffee is the first stage in selling dessert to calorie resistant ladies.”

“The ladies pay the bill, tip well, and leave. As I watch them go I think about how I got them to order dessert. To be a good salesman you have to have a seductive quality about you. Don’t believe me? Look at pharmaceutical reps.”

That’s what I want to do! This means that I need to find something that will be the equivalent of selling chocolate dessert to Soccer Mom types.

I believe that my 1000 readers are a lot like myself. And what do I spend a huge amount of money on every year? Books, movies, cds and gadgets. Also I purchase some rather esoteric items on eBay too, but the majority of my spending happens squarely at Amazon.com. My wishlist there is humongous, and in fact, I spent my advertising revenue there.

Luckily, Amazon has a pretty generous associate program. You can link to any of the products they sell and get a cut of the sale price, if the sale happens as a result of your clickthrough. In fact, you get a cut of the entire shopping cart amount (I am not sure, this could be only the items that were added after the click). In any case, it’s decent money, and most importantly, a great selection of new and even used items to sell.

What to sell, of course depends on your audience. I found some success selling items that tempt me. In fact, many times it’s the items that I am planning to buy or already bought.

In some cases, relevancy is important. My article with pictures from Fog Creek’s party sold 4 or 5 of Joel’s books. It was a combination of a very desirable in this particular audience product with a closely related article. Interestingly enough, I tried to sell the toy that you can see in the picture as well, but none sold. As I own both books and don’t own the toy, this seems logical.

I might have tried selling flat panel monitors and Aeron chars (WOW, Amazon sells them too! ) ,that make Joel’s office so nice (in fact, at home I have the same exact dual monitor setup, an Aeron chair and a window with a view, and I had id before Joel wrote about his bionic office). These are big ticket items though, and the likelihood of someone buying them on a whim is lower. But then again, so are rewards.

The relevancy does not matter as much as I thought, though. For instance, I advertised “Make” magazine subscriptions and Shure E2c headphones, and sold a few.

In fact, I think that the approach to selecting products should be somewhat similar to the one that Kevin Kelly uses for selecting items on his website Cool Tools:

“Cool tools really work. A cool tool can be any book, gadget, software, video, map, hardware, material, or website that is tried and true. I am chiefly interested in stuff that is extraordinary, better than similar products, little-known, and reliably useful for an individual or small group.”

In short, advertising video iPods is good, advertising “The world’s greatest 3D IM” is not!

Side Note:
My former co-worker won a $300 gift certificate for a certain gadget catalog in a contest. Now, he’s a guy who spends a lot of money on gadgets, like the uber geek that he is. I mean, he owns planetofthegeeks.com domain. But despite that, he had a lot of trouble picking something to spend $300 of free money on in that catalog! Not only was everything overpriced, but there were very few things he’d be interested in owning!

The great thing about selling items from Amazon is that you know that the prices there are very Wal-Mart-like, and most of your readers already shop there. Some people prefer not to patronize Amazon because of software patents or other issues, but there are “organic” alternatives, like for example Think Geek (in fact they sell through Amazon too).

The one gripe that I have with Amazon is the difficulty in creating the links. The tools that they provide want you to use iFrames to create image wrapped links, which of course do not work well in RSS Readers. This brings me to my final point, the specifics of blog advertisement.

A blog is a two-sided entity: it generates page views from people who don’t use RSS aggregators and those who come in from search engine referrals. And then there are the views from within RSS aggregators, in case you are serving up the entire text of the article in the feed. Some blogs don’t do this, serving up only the title or a title and a teaser. The thinking is, readers will click through to the page where they will see ads and thusly generate revenue. Some do this because they don’t serve ads and want to limit their traffic, and yet some do it because they use a default setting in their blogging software and don’t know better.

The great thing about my advertising scheme is that you can serve ads in-feed. A New York blog Gothamist, for example serves atrociously uninteresting ads that repeat. At some point they had a long run of a flashing ad for something that made me unsubscribe from the feed. If they started selling interesting items, they could greatly increase their advertising revenue.

Advertising my way does not detract from regular content and isn’t cheesy. It is clearly marked, unlike those fake editorials in magazines and newspapers. Advertisement can be entertaining in itself! Since the early years of Sears, Roebuck and Co. catalog, people look through catalogs like Levenger, Victoria’s Secret Penzeys Spices and Think Geek for fun! My wife has a lot of gardening catalogs that she looks through now and then. After finishing an interesting post, readers would not mind learning about an interesting gadget or book they might want. In fact, they might already be in the mood to buy it! There is no reason to serve partial RSS feeds with this type or advertising.

P.S. I turned off comments to this article because for some reason it attracts a ridiculous number of spam comments. If you would like to contact me, see about the author section. I also changed to a different way of displaying Amazon’s related items.

Jeff-O

Jeff Bezos from Greznte, Slovakia has a scary Amazon wishlist featuring “Special Forces Guerrilla Warfare Manual”, “Total Resistance”, “150 Questions For A Guerrilla”, “On Guerrilla Warfare” and “Everyman’s Talmud”. Please don’t buy him anything. He’s probably up to no good.

Jeff Bezos from Seattle, WA who works at Amazon.com, is known for his laugh and Austin Powers costume likes Aunt Lizzie’s Zero Carb Cheese Straw Bites so much that “[his] mouth is watering as [he writes] this”. I bought a box of them too, and Jeff did not lie. They are pretty damn good. I wonder, if I’ll buy him something from his wishlist, will he send me a “thank you” email? Then again, he must have a better discount than I do…

Also sometimes he time-travels.

The Mystery of Obidos

Whoa, caught amazon.com while it was down.
They are showing a page with Rufus, the Amazon dog.

By the way, I was meaning to write about that for some time now. Did you ever notice enigmatic word “obidos” in Amazon url?

Some theories from usenet:

  • Castle near Lisbon
  • OBI (Wan Kenobi) + DOS (Disk Operating System)
  • ‘OBI’ = Object Broker Interface

    This seems to be the correct answer though: Obidos is is a major port on the Amazon river.

    [update]
    Livejournal user hallerlake had this to add:

    “I worked at Amazon for a couple of years, and can mostly answer that.

    Obidos is the area where the Amazon is “concentrated” – it narrows to a point about a mile wide and a couple hundred feet deep. It’s the chokepoint of the Amazon. A wry sense of humor turned that to the naming scheme.

    The Amazon Marketplace (auctions+zshops+third party) code was called Varzea for similar reasons – it’s the delta point of the amazon river, where the river fans out.

    Amazon wrote their own web serving environment because the selection of scripting/webcontrol languages when they got started was so lousy. They had to call it something, so obidos it was. :) ”


    Obidos is huge, it might be over a gig by now. I don’t think it’s that bad, though. I haven’t been at Amazon for a few years. For a long time Amazon ran on the Netscape web server environment, then eventually moved to a specially tuned Apache. But yeah, the webservers had a lot of RAM in them so that we could fork a bunch of different processes… and a garbage collector got added to take care of some of the memory leaks. Even still we had a service that killed and restarted processes every hundred accesses or so. It wasn’t pretty.

    I don’t know who came up with the name… I’d bet on Shel Kaphan or possibly Joel Spiegel. Shel set the direction for the company’s software development and architecture, including standardization on C (instead of C++) due to easier debugging. Certainly for the first few years he was The Guy for software architecture; these days I would imagine Al Vermeulen has that task.