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MadisonBot: Will Pay-Per-Lead Join CPM, Quality Vs. Quantity?

If advertisers get picky, then the whole business model for Web ads could get ugly or simply bot. Just when you think the Web has fused old media and new, perhaps the general consensus is not on target in a medium full of targets but few arrows.

Here's the logic: How many times when you're driving down the highway and see a billboard do you actually pull off, locate the store, buy an item, and then resume your journey? Rarely, if ever. Most stops are biological (food, rest stops) and not suggestive.

That's exactly what Web advertising--driven by Madison Avenue's backward way of thinking--is doing. Most banner ads beg you to "click here," which takes you 100% away from the site you're visiting in the first place into an unknown detour, where more than likely you're asked to do nothing more than gaze at another ad.

Recall 1994 and zero Web ads--nobody knew how to, what to, where to. Tabula rasa and the gurus that brought us three iguanas and frogs on TV selling beer during the Super Bowl have fizzled flat when it comes to Internet media.

A Web-based way of doing ads and marketing is needed, not a Madison Avenue afterthought based on your grandfather's billboard-crazed road system.

Implications, if this theory of PPL comes into play, are that Web advertising is still small, and I think CPMs, many which are north of $50 for general content sites, could drop if advertisers start demanding pay-per-lead (PPL) or bounties paid for actual paying customers in addition to ads.

Instead of calling this phenomenon "one-to-one" or personalized, let's forget the guru bestseller of the day or minute book title (which often read like hackneyed watered down versions of The Road Ahead anyway) and call this ultradirect or "invisible" marketing, what we think could be the main revenue stream for Internet media firms (turned commerce) in the future. PPL is the buzz word for market speakers; "invisible" marketing is the end user experience.

This ultradirect marketing combines a user profile--or more appropriately, one aspect of a user, since knowing a person 100% is impossible in analog or digital form--and takes that aspect and matches it with goods and services that that person may need or want. It is not a banner floating on a PC screen begging for clickthrough. It's smart software instead.

This could mean commerce deals such as with Cybermeals and others will probably be much more important, more so if ads soften up in a new PPL environment. Short-term ad revenue may suffer as a result of a transition to this more efficient way of marketing.

Translation: If PPL comes on strong instead of CPM, you may get a few quarters of less-than-expected or less-than-great advertising revenue at the "Web networks" Yahoo! (NASDAQ:YHOO), Excite (NASDAQ:XCIT), Lycos (NASDAQ:LCOS), and Infoseek (NASDAQ:SEEK).

But they have access to capital and cash to shift gears. They can arbitrage the change of the gap between CPM and PPL, playing both methods as revenue sources.

Longer-term windfall in a more "aware" marketing environment, PPL could be much more valuable to Web networks and others who rely on just banner ads.

Say, for example, Auto-By-Tel sells a Honda Passport through a promotion tied to your Web site. Retail: $30,000 for the auto. In this scenario the Web site that led to the sale could (should) get the bounty, a sales commission along the lines of 5%. No sale, no dollar, or just reduced CPM. Sell more vehicles and reap the rewards, bounty to CPM ratio changes.

This interaction is mediated by software profiles. For lack of a better term, bots. Bots become your new salesman--scout and bargain finder all in one.

That leads to software robots scouring the Web for deals based on your profile. And guess who gets the commissions? The bot, or the company that "owns" the bot that it's "rented" to you. Rent a car-buying bot. A travel-finding bot. Homes, mortgages, people finder bots.

Own a bot, an alter ego that roams the Web in your stead, the almost inevitable result of infobog, more news than any one mind can assimilate.

If you think the Web is big with 75 million global users, how about 400 million within 10 years? In fact, these agents may very well make hunting and pecking for everything on the Web by humans passé. Bots could do all the research for students in a particular course of study and turn the results into a course book for that class alone.

PPL to invisible marketing all done by the bot, fuse the commerce with content and interests and see in two years if banner ads alone, or those betting the ranch on them, are still the only game in town.



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