Posted March 20, 2010 8:13 am by with 15 comments

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A few weeks ago Ken Fisher wrote a popular blog post about how ad blocking software can have devastating effects to the websites that you frequently visit. Mr. Fischer describes how ad blocking software is responsible for showing false page view data to ad networks. As a result each ad is priced at a lower rate because the number of impressions are significantly smaller. The number of page views is an extremely important metric for websites that sell advertising based on a CPM price model. So it’s only understandable that Mr. Fischer and other online publishers will hold a grudge against ad blocking software.

While I can understand Mr. Fischer’s frustration I cannot sympathize. To be completely honest I use ad blocking software every day. In fact on at least one occasion add blocking software has been responsible for a pretty embarrassing moment. So you’re probably asking yourself why does someone who feels so strongly about marketing block advertisements? It’s simple really, I hate ads.

What? You hate ads? How can you write for Marketing Pilgrim and hate ads? In my opinion marketing is fundamentally organizing people around information. Interrupting people with abrupt irrelevant commands isn’t how you organize people around information. Instead speaking to them on a unique and authentic level is more effective and genuine.

Putting philosophy aside, in my opinion ads are the worst way to monetize content. Generally speaking an increase in on-page advertisements contributes to a degraded user experience. Which can lead to lower user retention levels and decreased page views. Online advertisements are also ripe with fraud and manipulation. Historically click through rates have been at around 2% for most online advertisements. All of these factors and more contribute to the extremely low return on investment.

Online ads add to a decreasing user experience by taking attention away from the site’s primary content and placing it on the ads. This is not the actions of rogue spammers, this is the fundamental method to making any substantial revenue from ads. An excellent example of this in action, is taking a look at Google’s own recommendations for ad placement in the Adsense program. Here we see Google advises users to place ads on every available white-space on the page. This is a huge contradiction for a company that was so widely praised for starting with such a clean user interface.

Most ad platforms have large potential for fraud and manipulation. This is is an issue that not many professionals in IM discuss publicly because, quite honestly, whether they are participating in the fraud or not they still stand to profit off of ad manipulation. To a great extent Google and some of the other larger ad networks have gone to great lengths to minimize the impact of this type of fraud. However, any potential for fraud creates an uneasy market place where advertisers and publishers are continually left wondering if they are being taken advantage of. Google doesn’t help matters by keeping the exact specifics of their pricing model a secret from both advertisers and publishers. What’s even more devastating about these fraud schemes is that they can manipulate entire ad markets not just the individual ads they are targeting.

We reported back in January that the average click through rate for Google Adwords is around 2%. This means that 2% of the site visitors are clicking through on the ads. Most businesses off the Internet wouldn’t be able to survive with a 2% conversion rate. The only way to make substantial revenue from ads on the Internet is to completely dominate the market and control the flow of information. *cough* Google *cough*.

Wow Joe what do you want me to do? Not make any money? Absolutely not! But I do think that more companies and content producers need to experiment with different business models that aren’t reliant on ad dollars. The mainstream media on the internet is already starting to experiment with pay walls and different premium membership options. While I generally agree with the old saying that information should be free, I do think there is substantial room to monetize parts of the web that are currently a free-for-all. For example there are many opportunities to monetize communities and forums that provide quality content and meaningful dialogue to its users. Another potential opportunity is product development. Content developers and publishers should work to create their own products aside from their content that they can offer to their regular subscribers for premium fee.

So next time you see a drop in your ad revenue don’t blame the users, blame the ads. They got you into this mess and they aren’t going to get you out!

  • True is the word, we have to rethink revenue models big time, I think the best way to shift from ads as a primary model is to get deeper into the conversations and ending them with closed deals which have mutual benefits.

  • I agree Joe. As publishers we have to adapt or die.

    One of the things that we do differently on Marketing Pilgrim is NOT sell ads on a CPM basis. We offer ads only on a flat monthly rate. That way we attract only those advertisers that understand the value of having their brand displayed to our awesome, affluent, intelligent, and down right good looking, audience! 😉

    Sure they get impressions, clicks, but they look at the bigger picture of branding. It all seems to work out and we get very few complaints from our readers–and when we do, we either pull the ads or make the advertiser adapt them.

    • Another important aspect that I forgot to mention is the need to diversify your revenue stream. Andy you are an excellent example of this in action. I won’t name all of your ventures here, but I think its safe to say that the Beal Empire doesn’t have all its eggs in one basket!

      • LOL @ “the Beal Empire”

        I remember the sleepless nights trying to figure out what my golden egg would be, then I realize that just like my stock portfolio, I needed to diversify. I now sleep better. 😉

  • Insightful post. You know what you are talking about.

    Ad fraud is rife, whether it is adwords or display banner advertising. The incentive is huge. And yes a huge chunk of display inventory pushes scammy offers, services, and products. A great example are CPA networks pushing busllshit bizzops, Acai, Colon Clens, ringtones, teeth whitening and other nasty forced rebill offers.

    As a direct marketer myself it’s extremely difficult for me to walk away from pushing these types of offers because the earnings values on these offers are extremely high. But I do, not because I am an angel or anything, but because these type of misleading offers piss me off and I would hate to think of one of my family or friends getting ripped off by them.

    But after saying all that, direct advertising such as text ads, banners, contextual banners etc are still an excellent to get targeted and immediate results. I still read content sites that have banners,. As a user of the internet I understand on some level that I pay for the free content by allowing myself to be advertised to. I think everyone knows this at some basic level and that’s why they don’t really mind.

    The last point I want to make is that I agree with your analysis of trends toward paid forums, premium content, etc. This year is going to see more of these type of models become more popular.
    .-= Wynne´s last blog ..Detailed Free Keyword Research Method =-.

    By the way your comment system rocks. I use DISQUS. Just wondering which system you use?

  • Are you changing your mind or kissing ass in a moment of regret?

    Posting-Tantrum Syndrome followed by Posting-Regret Syndrome.

    You have written a professional opinion based piece with merit then you rewrite your article in the comment field after the criticized party directly responds.

    Are changing your mind or what?

    Remember this bold initial quote – “In my opinion marketing is fundamentally organizing people around information. So next time you (Ken Fisher) see a drop in your ad revenue don’t blame the users, blame the ads. They got you into this mess and they aren’t going to get you out! – Joe Hall”

    Write it then stick to your guns.
    Don’t rewrite it unless your changing your opinion and definiately don’t rewrite in the comments.

    Stella Poppovich
    Stella Pop

    PS – I have made so many mistakes in life but the one thing I have learned is changing my mind is OK and expected. Just make sure to tell your trusting and adoring audience directly.
    .-= Stella Poppovich´s last blog ..Are You Wave Willing To Catch The Wave? Google’s Wave. =-.

    • Hi Stella,

      No, I am not changing my mind, where do you see that happening? And who is the criticizing party? I don’t see that either.

      Joe Hall

  • Wait a minute here…Are you saying it is better to have good useful content without any advertisements what-so-ever? Does this mean we should blog and develop content and free products for all our viewers without some type of reciprocal monetary gain?

    I am trying my best NOT to sound facetious here but…isn’t that what we all should be doing?

    .-= Paul´s last blog ..Simple adsense money making secrets =-.

  • Users not only dislike pop-ups, they transfer their dislike to the advertisers behind the ad and to the website that exposed them to it. In a survey of 18,808 users, more than 50% reported that a pop-up ad affected their opinion of the advertiser very negatively and nearly 40% reported that it affected their opinion of the website very negatively.

  • Hey Joe,

    I loved the “I hate ads”. Same for me, as our free Mozilla Firefox block the most of the nasty pop-ups, the banners on the pages remain. I sometimes accidentaly click on those from time to time thinking that they might be part of the site content but no – i get directed to pages what i don’t have any intrest in.
    I don’t use ad blocking software and i usually don’t mind the ads but if this scenario happens or the page loading times get really long then i really want to curse.


  • Dean

    As a cheap bastard I will tolerate ads if it means not paying for the content. I firmly believe there is an army of cheap bastards like me that feel the same way. I don’t think the the problem is ads more so than content providers making sure the ads target the site visitors.

    Your posts are good Joe, but I ain’t gonna pay for em 😉

    • Dean, there are a lot of different ways to monetize content with out ads or paywalls. And yes I think if we started charging for the Cup of Joe series I might be writing for no one! LOL

    • I can vouch for the fact that Dean is a cheap b@stard. 😛

      • Dean

        @ Andy – I wasn’t looking for someone to vouch for me 😛