May 13th, 2007

How To Make $10 Billion In Ad Revenue Without Measuring Unique Vistors Or Page Views


Can you name an online media company that has billions in ad revenue but has never had to bother with measuring unique visitors or pages views — those antiquated measures that keep the dynamic web locked into antiquated ad sales processes and ruin the online advertising economics of most media companies?

Ok, so that was a loaded question. The answer, of course, is Google.

Scoble revisits the perennial hand-wringing by website owners over the inaccuracies of panel-based online traffic measurement and asks:

What stats do you think are the most important? What’s the most accurate way to measure your sites’ visitors? What will advertisers insist on seeing in the future?

The answer is right in front of everyone’s face. Google never had to worry about old fashioned audience metrics because Google figure out how to optimize the delivery of ads based on what people DO, and more importantly, based on what’s on their minds — their intentions they reveal every time they type words into a search box. Google also optimized ad delivery based on text-based context for any web page ( i.e. AdSense), which isn’t as efficient as search keywords, but its worked pretty darn well.

The secret is that advertisers don’t really need head counts — they need to get into people’s heads.

Dan Mitchell had a piece in the NYT about online ads vs. privacy, which looked at the privacy-related downside of get-inside-your-head advertising, but for Google, the upside of getting inside people’s heads is clear.

And it may turn out to be Google that rescues every other website from the tyranny of the headcount — beyond sharing in some pay-per-click AdSense revenue — if Google (with DoubleClick in tow) succeeds at creating the universal ad platform.

  • Derek,

    There's an important distinction between being obsessed with the wrong stats and being obsessed with ROI. Advertising has had struggled forever with figuring out its dollars and cents. Google is by no means perfect, but it's a meaningful leap forward towards obsessing over stats that get closer to what matters, i.e. ROI for the advertiser's business.

  • I think this is very much in the hands of the measurement services. I work in an industry that is now big enough to be reasonably measured by these services (IT/Business Technology). I've seen page views and uniques swing wildly from month to month with both NNR and Comscore. Not just f0r the sites I work with but for entire competitive sets.

    As long as the measurement is sample based, this will be an issue. Samples that work somewhat well for one industry/demo may not work well for others.

    The result? In my industry, I see so many advertisers abandon or significantly reduce their reliance on syndicated audience research. The focus on results are replacing reach/composition analysis.

    I think this could still change. The currency for ad supported sites is currently page views. As content and platforms allow for more content on a single page view the importance on audience will likely increase. AJAX, Video (especially longer videos,) and other times of experiences will demand this if an advertiser is to pay the premium to make this work for the publishers.

    I wouldn't be surprised if Google's move into the display advertising space and the proposed acquisition of DoubleClick got the industry there more rapidly.

  • I'd do pay for performance ANY/EVERY time over any other option (even outright, no strings attached sponsorship). That's either as the buyer OR the seller. EVERY time!

  • Scott,

    You're right about the pageview's obstruction to innovation. As far as I can tell, Google has mastered direct-response and pull advertising. But it hasn't made much headway in brand or push advertising, which is morphing, to be sure, but still very important. DoubleClick will change some of this in the online space.

    The bottom line: Advertisers are looking for predictability and accountability in their media investments, and the ability to tie that predictability to sales. If publishers could learn to partner with advertiser clients and achieve business results -- versus sell paid, distracted eyeballs -- then publishers could begin to move away from the pageview model. For one, it will take a new selling approach; those ad sales people will need to become consultants. Second, data analysis and integration will become more important, to seek more clarity in inputs versus results.
    - Max

  • I wish I shared your optimism about a liberation from the tyranny of the headcount, but I just don't see it, especially not from Google.

    Google is creating a new generation of stats-obsessed advertisers, buying ads like playing the stock market, always looking for the next dip in auction prices.

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