Google revolutionized Internet advertising in 2000 when it launched AdWords and the pay-per-click (PPC) model. This program was ground-breaking not just because the small text ads that ran alongside Google search results were served up based on relevance, but also because, for the first time, marketers paid only for an action (a click on their ad) – they didn’t have to pay for the thousands of impressions that were not clicked. With AdWords, performance-based media was born.  

Once advertisers demonstrated that they were willing to pay for any click, it was a short leap to believe that they would be willing to pay even more to know exactly who it was that was clicking. Today, lead generation and pay-per-conversion models (Google calls this cost-per-action) have joined PPC as viable business models, providing even more information to marketers who are trying to reach their customers.

Lead generation and cost-per-action pricing models are already popular in the B2B world. In the IT market, for example, Web Buyer’s Guide, KnowledgeStorm and Bitpipe are providing lead generation services to the biggest technology companies, which pay anywhere from $20 to $120 per lead to reach the specific individuals that they think are most likely to buy their products.

The Internet advertising market is going to continuing to move from static advertising to performance-based media. According to the just-released IAB Internet Advertising Revenue Report, approximately 50% of 2007 second-quarter revenues were priced on a performance basis, up from 47% reported for the second quarter of 2006. Lead generation revenues accounted for 8% of the 2007 second-quarter revenues or $408 million, up from the 7% ($284 million) reported in the second quarter of 2006. Contrast those statistics with the fact that approximately 46% of 2007 second-quarter revenues were priced on a CPM or impression basis, down from 48% for the same period in 2006.

Performance-based media is the future. We have already seen the movement with traditional Web content. Blog content, podcasts and video are all moving toward incorporating PPC pricing models, as well. I think the next move for these newer content formats is lead generation and cost-per-action. Let’s take video as an example. Silicon Alley has a write up about how advertisers are starting to take video more seriously, but that CPMs are declining. There is a debate going on around how money is going to be made on video advertising – what kind of ads will be used, the length, the format, etc. Applying the move toward performance-based media, I believe that someone is going to develop a lead generation engine around online video that will provide advertisers not only with the information on what videos were watched and how many times, but by whom and what their demographics are. Web Buyer’s Guide has a product on the market that does this, and I think it’s just a matter of time until one of the major video providers offers this type of advertising package.

And looking even further down the road – what’s the next wave of performance-based media? Right now companies pay for leads, but what if in the future companies begin to pay only for customer acquisition, and after an individual makes a purchase the lead provider gets a percentage. A large percentage. Sound like the affiliate programs that are widespread in the consumer market? Sort-of. But what happens when the technology is developed for a video provider to track an individual from the first video that they watch that peaks their interest in a product, all the way to the buy, and the video provider gets a portion of the sale?

Now that’s performance-based media worth talking about.

Disclosure: I used to work for Web Buyer’s Guide.

~ Foggy Autumn ~ 

Going back to the beginning. It turns out that the first formal advertising on the Internet happened in October 1994 on Hotwired, when AT&T launched a banner campaign on the site. Actually, there were 14 clients of the first Internet advertising program offered by Hotwired – MCI, Sprint, Volvo and others joined AT&T in using the online platform for campaigns. This is reportedly the first banner ad that was run (by AT&T). It might be clumsy, but it did turn out to be accurate – people clicked.

First commercial spam. The first commercial spam e-mail message was sent over the Internet in April 1994 by Laurence Canter and Martha Siegel Legal Services. The spam was advertising a Green Card lottery (the couple that ran the firm were immigration lawyers) and was titled “Green Card Lottery- Final One?”

Google is the Internet advertising powerhouse. This week, Google’s stock price topped $600 per share for the first time and it appears that the company now controls more than 40% of online advertising. Not bad for a week’s work. Here’s a look back at when Google’s most important Internet advertising initiatives launched, according to Google’s rendition of its corporate history.

• �
  • 1995-1997:
    Early days of Google, when it was still called “BackRub”
    
  • 1998:
    Renamed Google
    
  • September 21, 1999:
    Google comes out of Beta
    
  • August 16, 2000:
    Launched a targeted keyword ad program
    
  • October 23, 2000:
    AdWords self-service advertising program is launched
    
  • February 2002:
    AdWords gets an overhaul, including CPC pricing model
    
  • 2003:
    Google AdSense program is born 

Spending on Internet advertising continues to rise but slowed once in its history. The amount of money that has been spent on Internet advertising continues to rise and has since its inception in 1994, with the exception of a downturn from 2000 to 2002 after the Internet bubble burst.

• 1995: $37 million

• 1996: $301 million

• 1997: $650 million

• 1999: $4.6 billion

• 2000: $8.1 billion

• 2002: $6 billion

• 2004: $9.6 billion

• 2006: $16.9 billion

• 2007: Estimated $20-21 billion

~ Coming Noon ~ 

Thanks to Google AdWords, it is possible to become an Internet advertiser for the incredibly low cost of $5.05 – provided you have a Web site, that is. All you have to do is to sign up for a Google AdWords account (there is an initial registration fee of $5.00). After you select your keywords, set the minimum spend per click to $0.05. You’ll serve your first ad – and get your first click – for a grand total of $5.05. Voila! You’re an Internet advertiser.

Of course, I’m simplifying things.

 You could technically be an Internet advertiser for that cost, but the real benefits of pay-per-click (PPC) advertising come with scale and conversion. If the # of clicks x cost-per-click = less than $ earned from conversion – you’re laughing all the way to the bank. In non-math terms, the more individuals you can get to click on your ad, at the lowest cost per click, who you then convert into customers… the more money you’re making.

The recently released IAB Internet Advertising Revenue Report analyzes the Internet advertising market for the first six months of 2007 and shows that approximately 50% of second-quarter revenues were priced on a performance basis, up from 47% reported for the second quarter of 2006. Companies are increasing spend on PPC (and other forms of performance-based) advertising programs because they are measurable.

So, while Google AdWords (and its PPC sibling Yahoo Search Marketing) are a low-cost way to enter the Internet advertising market, the companies that are making a serious impact – and significant profits – from PPC advertising are those that are willing to scale and that are able to convert their visitors to customers.

(By the way, if you are looking for a play-by-play of how to set up a Google AdWords account, there is a good post at the Tech Savvy Marketer.)

~ Red Burst ~ 

 Even though the various types of Internet advertising still make up only a small percentage of the overall ad industry (about 9.5%), the growth of Internet advertising is predicted to be 85% between 2006 and 2009. 85%!!! That is a huge amount of growth.

And growth is the reason that online advertising is having such a negative impact on print. Business is always moving toward areas of growth and away from stagnant, declining markets. You can see this trend clearly if you look at IT and business magazines. Print publications in this market are shutting their doors. Business 2.0 just closed. InfoWorld announced earlier this year that it would move to online-only, saying, “Frankly, the editorial staff foresaw the demise of print from a long way off and began making preparations for that inevitable day.” 

Things are shifting and the print world is going to have to adjust, the faster the better.

~ Today’s view: http://www.flickr.com/photos/13799608@N08/1517785063/

I spent the past weekend in Baltimore with some of my friends from high school – we stayed with one of them in Arnold, MD, (which just might be the best neighborhood in the world to live in if you have kids, by the way). Saturday we went into the city to the Inner Harbor and Fells Point, which is apparently what all the tourists who go to Baltimore do, but I enjoyed it since I had never been to the city before. We ate at Amicci’s in the Little Italy section of the city, which rather oddly bills itself as a “very” casual eatery (the quote marks are the restaurant’s doing).  Baltimore has gone through some serious upgrades in recent years. About 10 years ago my friend and her husband went into the city for dinner and were robbed at gun point, but today the city has been upgraded and the various neighborhoods connected through the renovations.

I’m at Logan Airport in Boston, heading out on a weekend trip to visit my friends in Baltimore, and I just ran across the final issue of Business 2.0 and had to buy it. Reading the final issue of this magazine is going to be like saying good-bye to an old friend for me. I can’t say that I read every issue since the magazine launched almost a decade ago, but I was a subscriber for years, particularly during my time at executive editor of Publish magazine when I would read every issue from cover-to-cover and stick post-it notes to its pages when an article gave me inspiration for a story. (That happened often!) During those days, Business 2.0 and The Industry Standard were the print publications to beat. The boom was, well, booming and marketing dollars were flowing toward both of these publications – it was not uncommon for a single issue to have up to 600 pages. At the time, if even the shadow of Business 2.0 fell upon you, you were blessed. So we transitioned the audience of Publish magazine from “graphic designers” to “Internet communication professionals” to try to share a tiny bit of the space. The magazine continued to inspire media ventures through its years, including Michael Arrington’s, who writes, “The story style and content was a big inspiration for starting TechCrunch, even though we are a poor imitation and rarely do it justice.” I could not have put it better. I have a tremendous amount of respect for that publication and really fond memories of those days before I moved full time to the Internet. So long, Business 2.0. I’m sad to see you go.

(As an aside, I just visited the old Web site for The Industry Standard, and on that site there’s a note that says “Coming back…The Industry Standard”)

I was reminded of the power of a graphic to prove a point and motivate people to action when my team in the Breast Cancer fundraising walk this past weekend was trying to hit our goal of $5,000. In the final week leading up to the walk, I found myself going online just about every day to see the stream of red ink creeping up the thermometer toward our goal. It was incredibly motivational for me, but I suspected that I was the lone person to feel this way until my mom mentioned that she had been doing the same thing. When our team hit our goal the day before the walk, I showed my mom the little graphic, now animated and celebratory, on my iPhone. Her over-the-head arm pump and huge smile were more enthusiastic than the little sparkling graphic, but not by much.

·         Political fundraising relies heavily on online donations. News today is that Ron Paul, the long-shot obstetrician presidential candidate from Texas, raised $5 million in the third quarter, and according to those close to the campaign “as much as 80% of the campaign’s donations are received online.” From the reports I’ve read, 80% sounds like a higher percentage than most candidates are receiving online, but all the presidential hopefuls – particularly the democrats– are raising significant money online. ActBlue an online fundraising tool that supports democratic candidates in their efforts to raise money online reports that “for the first six months of 2007, ActBlue has channeled $6.5 million in online funds to Democratic candidates from nearly 62,000 donors with an average contribution size of $108.”

·         The percentage of money that is raised online continues to increase. According to a January 26, 2005, article about the money raised for Tsunami relief, the American Red Cross reported collecting $236.2 million total, $84 million online for 36% of its contributions via online giving. Just a few months later, reports from Katrina fundraising show a marked increase in online giving. By September 2005, the American Red Cross had raised 53% of its money for Katrina relief via online donations. “Of the $503 million raised to date for Hurricane Katrina, $265.1 million has been raised through online donations.”

·         Where is the money going? These statistics aren’t for online-only, but I thought it was interesting to see where charitable gifts are going. According to a report from The Association of Fundraising Professionals, the charitable giving in the United States for 2006 shapes up this way:

§  Religious organizations: $96.82 billion (32.8% of total giving)

§  Educational organizations: $40.98 billion (13.9% of total giving)

§  Human service organizations: $29.56 billion (10% of total giving)

§  Foundations: $29.50 billion (10% of total giving)

§  Public-society benefit organizations: $21.41 billion (7.3% of total giving)

§  Health organizations: $20.22 billion (6.9% of total giving)

§  Arts, culture and humanities organizations: $12.51 billion (4.2% of total giving)

§  International affairs $11.34 billion (3.8% of total giving

§  Environment and animal organizations: $6.60 billion (2.2% of total giving)

·         And the winner is….The 2007 International ePhilanthropy Awards were given out in September in New York City and featured the following winners based on their online non-profit activities:

§  Best Community Building/Volunteerism or Activism Campaign: Peace x Peace, whose mission is to connect individuals and Circles of women everywhere in the world, through the Internet, for spirited conversation and mutual support. They also have a (often disturbing) blog at Week X Week.

§  Best Integrated Online and Offline Campaign:  The American Friends Service Committee (AFSC) won this award with their Friends for Peace campaign, which encourages you to upload your “peace” sign, or make your own at their Web site.

§  Best Special Event Registration and/or Membership Campaign: Gulu Walk, which is focused on supporting the abandoned children of northern Uganda, coordinated 30,000 people to walk in 2006. The organization’s 2007 walk is coming up on October 20^th.

§  Best Online Donations/Fundraising Campaign: Mama Cash, a Netherlands-based organization with a women’s fund that finances projects conceived by women, won the award for Campaign 88 Days, an effort to convert young, affluent women into donors and advocates for women’s rights. During the 88 days, the campaign raised more than $200,000.

~Today’s view: http://www.flickr.com/photos/13799608@N08/1483742145/

This story about Facebook.fr on TechCrunch gets to the heart of why you need to start preparing for globalization immediately. Registering the top-level domains in all of your relevant countries is essential or else someone may swoop in behind you and register them instead. You’ll likely eventually be able to win the dispute that arises, but you don’t want the aggravation – or the legal bills.

I am a raving fan, and CustomInk.com is the object of my affection. I recently used their services to make t-shirts for a charity walk that I organized. Going into it, I had a few issues to overcome with the t-shirts:

1)      I had a deadline of less than 2 weeks to get the t-shirts printed and delivered

2)      I am not a designer and had to design the t-shirts

3)      I was trying to create something that would appeal to men, women and children

4)      I wanted to be able to get input from someone else on my team to help me make the final decision, but we don’t live in the same city

I did a search on Google for “t-shirt design” and customink.com was the first listing. (Another testimony to the power and importance of SEO, but I’ll save that discussion for another blog post.)

So there are a lot of reasons that I love this company. The first thing I discovered is that they are able to rush-deliver an order in less than 7 days. Perfect! Second, their online tool is really user-friendly and fun to use. You pick the item to design (they have shirts, pants, hats, etc.) and the color. Then you head to the “design online lab.” The tool starts you off with a blank t-shirt and then lets you add text, graphics (you can upload your own or choose from their clip art library), change colors, layouts, put effects on the text…there are wide range of options. Then, to top it all off, you can save the design, email it to people to get their opinions and then start again with a new design if you aren’t totally satisfied. This tool managed to help me overcome all four of the issues that I was having with designing these t-shirts. That was enough to make me love the service.

But there was more. I placed my order, got my final proofs, talked to someone at the company to answer a few questions that they had about tricky parts of the design. Great. Everyone was pleasant, I felt a high degree of confidence that my t-shirts would be done on-time and that they would look great. Then came the kicker. I got the following email:

Hi Melissa,I noticed that you have designed shirts that could possibly be for a charity event. If that’s the case, CustomInk would love to donate to your team or to the charity itself on your behalf! Please let me know if your order is for one of these events. If you  would like us to pitch in and support your cause, please include information about your charity event, a link if you have one or the organization’s name if there is no link to a team web page.Warmest Regards,
Lori Mayfield
CustomInk.com

I immediately sent them a note back with the instructions about how to donate with a comment like “wow, I really love you” or something hero-worshipping like that. To which, Lori, my personal, human contact, sends me this delightful note back:

Thank you for the information, the link worked perfectly!

We try to donate to every charity event that our customers hold close to their hearts, so we are delighted to help with this event. Of course, we wish we could offer a large sponsorship, but because we do so many, I’m limited to small donations ($30). I just want to make sure you know that, even though we know every bit counts.

This is outstanding customer service and a fantastic policy for retention. Plus, it’s just really smart. I spent more than $500 with this company. The likelihood of me doing so again is high. I ordered 33 t-shirts – this means that I will tell all 33 of the people who are getting the t-shirts the story about this company (and I did!) because the company donated to our common cause. And finally, they know that they are reaching someone who has influence – the person who is in charge of the t-shirt ordering is likely someone who is making decisions for a large group of people and probably has other areas of responsibility and influence. This is really smart business. This article from Dosh Dosh talks about 9 great ways to dominate your niche, such as focusing on your reputation and developing retention equity, and CustomInk.com is doing all of these things.

See? I have become a raving fan.

~Today’s view:  http://www.flickr.com/photos/13799608@N08/1471632095/