Sponsored terrorism links by Times of India

One of the common monetization strategies used by content providers on internet is what is knows as "contextual advertising". The phrase is self-explanatory enough, it refers to a technology where ads are served based on the context of the page (Google's "Adsense for content" is the most popular product to use this technology). It works best when the content of the page is somewhat suggestive of the commercial intent of the user; for example someone reading a review of digital cameras is most likely interested in buying one. But it blows on your face when this contextual ads start appearing against sensitive topics; such as accidents, wars or terrorism.

Now here is a good example of when not to use contextual advertising. Today, I was reading an article about Pune blast in Times of India's website. Just when I was about to leave the page, my eyes went to the ads on the right hand side of the page - First there were ads on Jobs in Pune, Houses in Pune, Brides/ Grooms in Pune. Ok, so now that there is a terrorist attack in Pune, it suddenly becomes very lucrative to buy properties there? And wait, does that make you want to marry a Pune boy/ girl even more?

Now this was not the worse part. As I scrolled down the page, I came across a section called "Sponsored Links" (another term for ads). The sponsored links were - Terrorism, Terrorism and Islam, Counter Terrorism BS, Counterterrorism, FT Hood Terrorism.

Wait, it doesn't end here. If you follow any of the links, you'll see ads on life insurance, "is Jesus really God" (don't ask) and even an ad on how to plan your second wedding if you are divorced or widowed.

Thanks for being so sensitive TOI. This is exactly what we expect from our leading national newspaper. Here are the screen-shots:

TechCrunch is losing it

Don’t get me wrong. I love TechCrunch. It’s a great place to get your daily dose of tech updates. But when it comes to reading an “expert” opinion on a topic; Techcrunch, more often than not, falls way short of my expectations..

For example, see this posting about the change in Yahoo search marketing (YSM) reserve price. The conclusion drawn by the writer was so ridiculous that it prompted me to come out of my hibernation and challenge his views.

Just to give you some background – when advertisers bid for keywords in YSM, they have to specify a bid amount higher than the reserve price (or minimum bid) mentioned by Yahoo. Until last week, this minimum bid was a fixed amount of 10 cents for all keywords. But as per the recent update made by Yahoo, this minimum amount will be more dynamic and would depend on two things – a) advertiser’s ad quality and b) the keyword’s worth determined by Yahoo.

That sounds like a nice initiative, doesn’t it? Apparently TechCrunch’s expert bloggers have a problem with it. Here is what they infer from this move – “What is curious about this move is that it suggests that many keywords on Yahoo get bought at the minimum price, without any real competitive bidding going on. After all, if at least two advertisers are bidding for a keyword that means the minimum bid is no longer an issue. So it makes you wonder how effective Yahoo ad auction system is as a market. For a market to exist, there needs to be at least two bidders……..

Conversely, the advertisers with the highest click through rates will now be in a position to buy up keywords below the point where lesser advertisers even hit their minimum bid. And that is not really a market either.”

Wow! Someone who has even spent 5 mins in search advertising can point out several flaws in these few lines. Let’s see how many you can get before reading further.

To start with, “minimum bid” is a very well known concept in Google adwords, which is the number one search marketing marketplace. And even Google calculates it dynamically for each keyword and advertiser. So as per TechCrunch, Google’s keywords must be getting bought at the minimum bid and there is no market for Google keywords?

(I'm not suggesting that everything Google does is right. Wanted to point out the flaw in "there is no market" argument)

Forget Google or Yahoo, very rarely would you get a chance to participate in an auction that doesn’t specify a minimum bid. Be it bidding for those stupid items on your Kingfisher flight, or buying items in eBay or even bidding for cricketers in IPL. So are all these markets non-existent?

Another point to note is both Google and Yahoo for a long time have been taking into account advertiser’s “quality score” in the ranking; which means an advertiser with high quality score can bid low and still get a top rank. The recent change by Yahoo is in the same spirit and it gives advertisers with high quality score more flexibility on their minimum bid. So the point about good advertisers beating the lesser ones is nothing new. Google has been doing it for a long time. Yahoo implemented it during panama launch. Other search marketing networks have implemented it long time back as well. But as per TechCrunch “this is not a market either”.

Now, let’s get into a slightly more subtle point in this search marketing bidding models (you would expect any professional blogger in this domain to know this though). As an advertiser you don’t pay your actual bid value per click; the amount you pay is different from the bid amount and depends on what the next guy is bidding and your relative quality score. See this Google help page for more details. So if one guy is bidding really low (presumably the guy with high quality score), this would affect the price paid by all other advertisers for the same keyword (because the 2nd guy would bid low knowing that he wont get the top rank anyway, which would mean the 1st guy have to pay low .. you get the drift). Having a minimum bid prevents this cycle from getting worse.

Finally, some advice to TechCrunch - do bit more research on the topics you are writing about (unless, of course, you just copy paste the news from the official blogs; which in any case is exactly what you do most of the time). For this topic I’ll suggest read a bit more on auction theory, reserve price, check out how Google’s adwords, the more popular and dominant bidding model, works. Stop criticizing Yahoo! Just for the heck of it, being number 2 in a lucrative industry like search marketing is not bad at all.

Carbon footprint of a banner ad? What the heck?

If somebody walks up to you in this holiday season and asks this question “How would you calculate the carbon footprint of a banner ad”; you should immediately check what he has been drinking. And if you are one of those adventurous types, order one of that for yourself. Because it has to be some really strong stuff that makes ones mind wander in such directions.

But this is precisely what Don Carli of Sustainable Advertising Partnership is trying to figure out. Carbon footprint, as most of you would be aware, is a measure of the impact of human activities on the environment. Don’s organization is trying to bring the advertisers and the supply chain (for all kinds of media, such as print, online, TV) together to come up with best practices for advertising; best practices that would address the challenges of sustainability and make the ads more “green”, so to speak.

Don has been involved in such initiatives for over four years now (at least, that’s what his LinkedIn profile tells me) and since it’s highly unlikely that he has been constantly inebriated all these years, you have to take his question a bit more seriously. Personally, I don’t think it’s important. If I’ve to make a list of all the stuff for which we need to reduce the carbon footprint, “banner ads” perhaps won’t figure among the first hundred billion entries in the list. But Don apparently belongs to the group of folks who believe in the age old saying that ‘every bit saved makes it a bit more’ (or words to that effect). So let’s give this question a shot.

To calculate the carbon footprint of a banner ad, we have to measure the energy consumed at each stage of the supply chain for creating, storing and serving the ad. So what exactly is the “supply chain” for serving the banner ads? Lets see who are the players involved:
1. The Advertiser
2. The creative agency (these folks design and develop the “creatives” or display ads)
3. The Ad agency (they work as the intermediary between the advertisers and publishers/ ad network)
4. The Ad network (someone like Yahoo or Double Click, who has got a pool of publishers)
5. The Publisher
6. The Content delivery network (someone like Akamai, who stores these creative closer to the end users location)
7. The ISP (and the entire internet infrastructure that brings the data to you)
8. The end user

Wow! It’s kind of mind boggling to think of all the systems that are used to serve the ad. For example, take the case of only one of the players in the supply chain, the ad network. It should have systems that help advertisers manage campaigns, book ads, view reports. Additionally, it should have systems to forecast traffic, run pricing models, log events and software to rotate banner ads, if required. All these applications, would most probably, be running on their separate servers (sometimes multiple servers for one application). So how exactly we track the energy consumed by one ad through all these systems.

But hang on a minute. We can make our task much simpler. The end objective is to see if we can reduce the carbon footprint of the banner ad by some optimization in the creative i.e. either by reducing the size of the ad or by optimizing the way it’s served. So we should only consider the systems that are affected by the type or size of the ad. For example, the pricing server would be unaffected by the size of the ad and so would a lot of other systems in the entire supply chain.

Most of the systems in the supply chain would only have a reference to the creative. The actual creative is perhaps used by only a handful of systems. So let’s see in what all systems the creative actually “consumes energy”
1. Systems used by creative agency to create the ads
2. Datacenters by content delivery network that stores the ads
3. Network bandwidth for serving the ads
4. Processing power consumed on users machine when the ad is displayed.

So if we know the average carbon footprint per processing power of the machine, we can allocate some of that to the banner ad depending on how much processing power it takes or how much bandwidth it consumes. In other words

Carbon footprint of banner ad = (Carbon footprint of the server or pc) * (processing power or bandwidth consumed by the banner ad)/ (processing power of the server or pc).

Calculate this for all the systems mentioned above and feel free to use the expression 'Voila' once you get there.

And here comes a disclaimer. Those who have read about cost accounting methods would quickly point out that the “allocation” method described above is perhaps not the optimal way to measure something. But looking at the abstract nature of the problem, this is the best I could think of.

Bubble 2.0?

It is now for quite some time that a few industry experts are predicting another dot com bubble. So it was very interesting to come across this optimistic piece “What Bubble?” by Harry Gold.

Harry looks at the positive growth trend of internet ad revenue and concludes that there is actually no bubble. To quote Harry, “Wow! If that doesn't say it all and validate the hot air we've been blowing all year, I don't know what does….Just look at this growth trend:.”

It’s refreshing to see such a positive outlook, but why I’m still a bit skeptical about his conclusion. Let’s reproduce the image from his article:




-- Source: Interactive Advertising Bureau, 2007 –

Harry seems to have got it right, isn’t it? There is indeed a very significant positive growth trend for past few quarters. But before we start jumping in joy, let’s take a quick look at the Ad revenue growth trend in 2000. Do you remember when exactly the first dot-com bubble burst? It was March 13, 2000 i.e. 1st quarter of 2000. What was the Ad revenue trend before that? Well, again a very significant upward trend. Although, it’s difficult to get the numbers from the graph, the slope looks much steeper in 1999 than it is now. In fact the Ad revenue spends didn’t go down till 3rd quarter of 2000. So the downward trend in the ad spent is actually an aftermath of the bubble not the cause. Harry seems to have got the causality reversed in his equation. Perhaps he would have written a similar article in 2000 saying “What Bubble?”.

Another source for Harry’s positive outlook is an eMarketer report predicting the Ad revenue for future. We, of course, need to take such predictions with a pinch of salt. One of the methods commonly used in such predictions is the use of historical data, and as I’ve mentioned above it’s difficult to predict some drastic event just by looking at the history. One wonders why these folks were not able to predict the first bubble burst.

So what is my view on this? I feel the industry is again heading towards a major shake up. The major players like Google, Yahoo would definitely make it through; but some of the new players might find it difficult to survive. The warning signs are no where more evident than the social networking space. MySpace was valued $15bn in 2006. Facebook is similarly valued at $15bn by Microsoft recently (Yeah, I know the common argument that it was not a valuation, but strategic investment. Although I’m not sure what kind of strategy it was to flush money down the drain). Again we are going back to the days where firms are valued just by page views or user base. On last count there were around 137 million social networking sites (give or take a few); all of them relying on “network externality” effect to win the space. One wonders how many of them are going to make it through.

And by the way when we are on this subject, look at Harry’s article again to see the optimistic predictions by the eMarketer about this space. “Social-networking advertising numbers, currently being revised by eMarketer, are expected to increase from $900 million in 2007 to $2.5 billion in 2011.”. So $2.5bn annual revenue to be shared between all these players; some of them are valued at $15bn.. hmmn.. interesting.

Having said all that, I hope Harry is right and I’m wrong. I was not part of the industry when the first bubble burst (If memory serves one right, I was learning to write “hello world” programs in Java). But this time I earn my bread and butter here. So nobody will be happier if Harry’s optimistic views turn out to be right.

The curious case of Infusion Pumps & Human Resource Jobs

For some reason, Google is extremely keen on selling me pumps; and not just any ordinary pump, they want me to buy syringe pumps, infusion pumps, grinder pumps and dosing pumps. Honestly, I’ve very little idea about what to do with those.

I’m of course talking about the Ads Google shows me; not in the search result page, but in Gmail. Google uses its Adsense product’s “analytical ability” to serve “contextual ads” in Gmail pages. Note the use of quotes in my previous sentence; because after observing these ads for a few days I’m seriously beginning to doubt Google’s ability to analyze the context of the page.

To be fair to Google, it’s extremely difficult to separate noise from the actual content in an email message. In fact this is one of the three main reasons why most of the other email service providers have decided not to show contextual ads along with email messages (the other two being the misplaced privacy concerns and the lack of commercial intent of users while reading an email). My initial thought was that Google was showing me some random ads (“run-of-network” ads, as they are affectionately called) in messages for which it can’t extract the context.

Unfortunately, a few hours of careful observation revealed that this is not the case. Google shows me these ads for pumps whenever I open a particular mail. It’s a forward from one of my friends, with the subject “When your colleague is on leave”. It has an attachment showing images of the pranks you can play on your colleagues. The mail is not a great one for people who hate practical jokes, but it has its positive sides; viz. it doesn’t have any reference to pumps. But Google apparently thinks that the best way to spend your time, when your colleague is on leave, is to go on a shopping frenzy and buy as many pumps as you can. Similarly, whenever I open a mail that has pictures of my nephew, Google quickly interprets that I’m a suitable candidate for “Human Resource Jobs”. I’m clearly missing the link here, but definitely these are not random ads. These ads are tied to the email message by some weird logic that Adsense uses.

As a matter of fact, even in the cases where the context of the mail is pretty obvious, Google does an extremely poor job of showing relevant Ads. Just because a friend is asking me the contact number of someone in Andhra Bank, doesn’t imply that I’m interested in ICICI Bank Jobs or, say, the weather forecast in Hyderabad. Not sure what kind of CTR Google gets for these Ads, but my guess is it would be very negligible.

So what should Google do to monetize Gmail? They, of course, insist on projecting a user friendly image (they should do something about the loading time of Gmail though), which means the usual banners ads are ruled out. This is where you wonder, when Google is actually going to aggregate all the data it has been collecting about the users across various applications. I had an Orkut account (note the past tense). So they know where I live, which should tell them that I would be more interested in Bangalore weather. They have all my search trends, my web history; they know what kind of blogs I’ve subscribed to in my Google reader. So why insist on showing contextual ads in Gmail that doesn’t make any sense.

When exactly are they going to use all this information to deliver highly targeted ads to me? If they want to start serving such ads, Gmail (or Orkut) should be an ideal place to start. That’s because a user considers his Inbox or his profile page as his own little private space and most probably wouldn’t mind seeing individually targeted ads there. At least these ads would be more relevant to me than the ones about pumps.

An Ad Exchnage?

It's interesting to observe the evolution of online advertising industry.

Bill Gross was one of the first men to come up with the concept of paid advertising.. he started the ball rolling with goto.com... the company became public in 1999 and two years later was renamed Overture Services. In 2004 it was acquired by Yahoo!

Next big step came from Google's Adwords and its bidding system... The system is based on a very sound algorithm which calculates your cost for click based on several factors such as the CTR history, your "quality score" and your bid amount.. In a typical Google fashion, it makes the auction more "user friendly" by making it a second-price bidding system...(Well, my auction theory Prof might disagree that it's a second-price bidding system, as you pay slightly higher than the next best bidder. But we can live with this small glitches for the time being)

In my opinion, the third most important step of the industry is the introduction of the "Ad exchange". Rightmedia is one of the companies to introduce this concept and recentlty there is again some movement in this field, with the introduction of ADSDAQ
It's again an advertising exchange and works very similar to your stock exchanges. (follow the link for more details)

Only time will tell if it is actually going to be a paradigm shift for the entire industry or it is just one of those fads (like paying users for the clicks) that dies quickly. I believe (and hope) it's the former.