Speaker 1: Welcome to tech Stuff, a production of I Heart Radios
Speaker 1: How Stuff Works. Hey there, and welcome to tech Stuff.
Speaker 1: I'm your host, Jonathan Strickland, and I'm an executive producer
Speaker 1: with How Stuff Works and I heart Radio and I
Speaker 1: love all things tech and it's time for a classic
Speaker 1: episode of text Stuff. This episode, originally published on June twenty,
Speaker 1: two thousand twelve, awful close to my birthday, is called
Speaker 1: tech Stuff Clicks on Web Ads, And as the name suggests,
Speaker 1: Chris Pallette and I sit down to talk about web
Speaker 1: advertising and how web advertising works and the whole revenue
Speaker 1: model behind it. So I hope you enjoy this episode.
Speaker 1: You like stuff on the web, right? Yeah? I mean,
Speaker 1: you know, both of our careers depend heavily, uh. In fact,
Speaker 1: I would say entirely upon upon putting stuff up on
Speaker 1: the web. And the reason why we're able to do
Speaker 1: that is because we can make money by putting stuff
Speaker 1: up on the web. Yes. And the reason why we
Speaker 1: were able to make money putting stuff up on the
Speaker 1: web stems mainly from advertising, yes, And so we wanted
Speaker 1: to talk today a little bit about web advertising. We've
Speaker 1: covered the subject a little bit in previous episodes, but
Speaker 1: we really wanted to kind of dive into it. And
Speaker 1: advertising has a bad rap, and part of that is
Speaker 1: because advertisers have sometimes used very invasive, intrusive or manipulative
Speaker 1: approaches to try and get ads in front of you. Yes,
Speaker 1: and I'd like to point out that this episode is
Speaker 1: brought to you by Chocolate Nibbles now with nine essential
Speaker 1: vitamins and minerals. Yes, we got rid of that other
Speaker 1: non essential vitamin and mineral. Yes, just it was looking
Speaker 1: at us funny and we didn't like its face. But now, yeah,
Speaker 1: we're talking about web advertising and there's good points to
Speaker 1: it and bad points to it. Now, the good points
Speaker 1: are that without web advertising, you'd have to find some
Speaker 1: other way to make money putting content up on the web,
Speaker 1: or else people wouldn't do it, or at least not
Speaker 1: as many people would do it, and certainly not you
Speaker 1: wouldn't see the same level of quality across the web.
Speaker 1: There there'd be, you know, occasionally, there'd be someone who
Speaker 1: would be amazingly talented, who for altruistic reasons, wants to
Speaker 1: share what he or she has come up with on
Speaker 1: the web. And those people will be amazing and their
Speaker 1: content they create would be phenomenal, and it would all
Speaker 1: be done, you know, the effort and the time being
Speaker 1: put in would all be that one person's resources, and
Speaker 1: that would be fantastic. Chances are it wouldn't be their
Speaker 1: day job though, because they wouldn't be since you weren't
Speaker 1: making money off of it. They've got to eat somehow,
Speaker 1: so they would probably be doing something else for forty
Speaker 1: hours a week. And then you think about all the
Speaker 1: sites you regularly go to, a lot of those sites
Speaker 1: are supported through advertising, and so without the ads, those
Speaker 1: sitestone exists, which means that content that we have grown
Speaker 1: so fond of accessing would no longer be there. So
Speaker 1: in that case, advertising plays a very important role. Now,
Speaker 1: of course, you can you can make money with online
Speaker 1: through other ways besides advertising. You could have a subscription
Speaker 1: based service where people have to pay a certain amount
Speaker 1: per unit of time, usually be monthly, but it might
Speaker 1: be you know, six months or a year or whatever.
Speaker 1: You can't even do it smaller units if you really
Speaker 1: wanted to um and make money that way by saying,
Speaker 1: all right, well, you can access the content we create
Speaker 1: on this site if you pay this amount of money
Speaker 1: per this unit of time or or per article some, Um,
Speaker 1: some sites do that, you know where you have Hey,
Speaker 1: if you want to read this article, then it will
Speaker 1: be to to read this one particular story, right. And
Speaker 1: the thing is that the way the web has developed
Speaker 1: over time, people have grown to expect free access us
Speaker 1: to something if it's on the web. Yeah, it's a
Speaker 1: cultural thing. Yeah. The early days of the Internet, I
Speaker 1: mean that the people who were doing this were government
Speaker 1: institutions in the United States and higher learning you know,
Speaker 1: colleges and university so the the content online was specifically
Speaker 1: for those groups and the commercial entities really weren't involved
Speaker 1: in it in the early days. So the people who
Speaker 1: were doing that or or actually you know, some of
Speaker 1: it is from the online services UM. So if you
Speaker 1: had a modem, you could dial up to a bulletin
Speaker 1: board and you may not have to pay a fee,
Speaker 1: and you would join the community there and swap stories
Speaker 1: or you know whatever it is that they talked about. UM.
Speaker 1: But they didn't they might pay a fee, a subscription
Speaker 1: fee to join the BBS or for internet access in
Speaker 1: the early days of the Internet as a commercial sense, UM,
Speaker 1: but they wouldn't be paying for the content. And so
Speaker 1: the idea came about that web advertising could potentially be
Speaker 1: far more effective than traditional forms of advertising. That was
Speaker 1: the initial thought, and the reason for that was that
Speaker 1: if you buy an ad in a magazine, or you
Speaker 1: put on a billboard, or you put in a television show,
Speaker 1: it's a in the ad breaks you have a reasonable
Speaker 1: expectation of a certain number of people that ad is
Speaker 1: going to, UH is going to connect with. Now, whether
Speaker 1: those people are paying attention to the ad, you don't
Speaker 1: know whether if whether or not they pay attention to
Speaker 1: the ad and then go forward and actually act based
Speaker 1: upon what they saw in the ad. You don't know
Speaker 1: that either, but you you what you do know is
Speaker 1: that a certain number of people, based upon the market research,
Speaker 1: are going to see that particular ad. Actually, this seems
Speaker 1: like a good time to bring up a point that
Speaker 1: there are two major types of advertising we're talking about
Speaker 1: here too. Um. Direct response is the type of advertising
Speaker 1: debt does encourage you to do something like if you
Speaker 1: were going to UH listen to the podcast and suddenly
Speaker 1: now you're craving a bowl of chocolate nibbles and let
Speaker 1: me tell you they are delicious. Um, now we got
Speaker 1: rid of the non essential vitamin mineral. Yes, you should
Speaker 1: run out and buy something. That's the point of an
Speaker 1: advertisement like that. UM. Then you have what they call branding,
Speaker 1: which is basically, you know, hey, you don't have to
Speaker 1: go run out and buy our product. Just think of
Speaker 1: us the next time you're doing something like that. And
Speaker 1: that's the kind of thing that you see like at
Speaker 1: um uh sporting events. UH. For example, the ads on
Speaker 1: the sides of hockey boards or on on the sides
Speaker 1: of race cars. They don't say by you know, such
Speaker 1: and such product. They're just showing you the brand name,
Speaker 1: so that you sort of think about them and you're
Speaker 1: you're thinking, oh, well, you know, I like these guys.
Speaker 1: They sponsor my favorite driver. Yeah. The idea might be
Speaker 1: to get that brand name in your mind so that
Speaker 1: the next time you go out to get something, you
Speaker 1: actually think about that particular brand. For example, you might think, hey,
Speaker 1: I'm thirsty, I would like a soda. I just saw
Speaker 1: that ad for coke, and maybe I wouldn't normally get
Speaker 1: a coke, but that sounds good to me right now,
Speaker 1: I'll go ahead and get a coke. UM. So it's
Speaker 1: it's one of those things where getting the brand out
Speaker 1: there is really important, and marketers will tell you how
Speaker 1: important that is that you know, you don't want to
Speaker 1: mess with your brand, You don't want to change your
Speaker 1: brand identity to drastically unless you do it in the
Speaker 1: right way so that you make it a sort of
Speaker 1: a public event where people will make that transition with you,
Speaker 1: because it's you know, this is stuff that's sticky in
Speaker 1: people's minds. Yeah, there are people who are going to
Speaker 1: walk into the store and they're going to see that
Speaker 1: brand name that they know so well, um, and they're
Speaker 1: going to choose a product from that manufacturer simply because
Speaker 1: they know the name. They might see it next to
Speaker 1: something else that they've never heard of and go, well,
Speaker 1: at least I know who these people are. So that's
Speaker 1: just basic advertising. Now, if you're talking about the web,
Speaker 1: the the the advantage, or at least the apparent advantage
Speaker 1: back in the early days, was that you could actually
Speaker 1: monitor what people were doing based upon the webs you were,
Speaker 1: the the ads you were serving up on the web. Brother,
Speaker 1: So let's say that you go and you put an
Speaker 1: ad on a really heavily traffic site in the early
Speaker 1: days of the Internet, so Yahoo. Let's say, um, you
Speaker 1: put an ad up on Yahoo. Well, you already know
Speaker 1: that a certain number of users and the millions perhaps
Speaker 1: visits Yahoo each day, so you know that that that's
Speaker 1: how many people are going to see your ad, and
Speaker 1: and the websites track their statistics so that they can
Speaker 1: report back to advertisers. Hey, if you advertise with us,
Speaker 1: you will reach at least two million people. Right, this
Speaker 1: is how many This is how many unique visitors you
Speaker 1: will see. Yes, this is how many people actually have
Speaker 1: page views. Because the two things are different. Yes, we
Speaker 1: talk about that in a minute. Yeah, so at any rate,
Speaker 1: because the early days of the web advertising, they were thinking,
Speaker 1: why is this any different from say a magazine Apart
Speaker 1: from the fact that we can actually give you more
Speaker 1: data about the people who are taking a look at
Speaker 1: this ad, um, it should be the same price, and
Speaker 1: in the beginning it was. But here's the Here a
Speaker 1: couple of problems. One is that it also let you
Speaker 1: know when people were not uh reacting to an ad,
Speaker 1: at least not actively reacting to an ad. So, in
Speaker 1: other words, if no one's clicking on the ad, or
Speaker 1: if it's a really really really small number of people
Speaker 1: who are clicking on the ad, then you question was
Speaker 1: the value of that ad right, Because if no one's
Speaker 1: going converting over and clicking through, then the advertisers say, well,
Speaker 1: why are we spending the same amount of money we
Speaker 1: would for a magazine ad or a television ad if
Speaker 1: this if only these few people are clicking through. Never
Speaker 1: mind the fact that we can't be sure how many
Speaker 1: people see the magazine add or television ad and react
Speaker 1: to it, that doesn't matter. They're saying, well, we have
Speaker 1: a proof here that not that many people are clicking through,
Speaker 1: so therefore this is overvalued. That was one problem. The
Speaker 1: other problem was that lots of websites were popping up.
Speaker 1: That meant there was a lot of landscape for advertising.
Speaker 1: So with lots and lots of websites of various degrees
Speaker 1: of popularity popping up on the web, that devalued web advertising.
Speaker 1: It's like a supply and demand thing. So, for example,
Speaker 1: imagine that you have a stretch of highway and there
Speaker 1: are three billboard signs up, and they're only three, and
Speaker 1: those three are would be a certain value to be
Speaker 1: able to advertise on them, because that that's the only
Speaker 1: three that any drivers are going to see. Well, then
Speaker 1: let's say fifteen new billboards pop up along that same
Speaker 1: stretch of highway. Well, that's just devalued the the value
Speaker 1: of the three that already existed there. Yea. And that
Speaker 1: can actually happen on a site too. It's not just
Speaker 1: across the the web. If you put up so many
Speaker 1: ads that uh, it sort of drowns out the content.
Speaker 1: People begin to tune them out, and your your message
Speaker 1: loses its power. So it's a very delicate balancing act
Speaker 1: is figuring out where the place ads, what sort of
Speaker 1: ads you use, how many do you have per page?
Speaker 1: And it's not just a balancing act of turning off
Speaker 1: readers or turning off visitors from going to your site.
Speaker 1: It's also a question of how much money does it
Speaker 1: cost to run your business and how can you offset
Speaker 1: that through advertising? If that's your chief way of generating revenue.
Speaker 1: You have to find that balance. And it's tricky because
Speaker 1: you know, you, if you're talking about the ads themselves
Speaker 1: are being devalued the more they're out there. Then you
Speaker 1: have to balance that out, like how do you take
Speaker 1: advantage of advertising in such a way that you're actually
Speaker 1: making enough money to sustain whatever your business you're in, right,
Speaker 1: and uh, and it's not easy to do well. And
Speaker 1: it it's worth pointing out I think too that um,
Speaker 1: to some degree, the web is a fairly inexpensive place
Speaker 1: to do business. Buying a domain name, arranging hosting for
Speaker 1: a year, um, you know, that's that's not terribly expensive.
Speaker 1: You start getting into, uh, some cost problems when you
Speaker 1: generate a lot of traffic to the site, because in
Speaker 1: a lot of cases, say, if you you're just a
Speaker 1: person who wants to start a blog just for the
Speaker 1: sake of starting a blog, and you promote it to
Speaker 1: your friends on Facebook, and you get a couple of
Speaker 1: gigabytes worth of bandwidth per month, that's probably not going
Speaker 1: to and that's a lot of traffic just you know,
Speaker 1: for for a person with a blog who's just having
Speaker 1: fun with it. Um, you know, you might decide to
Speaker 1: stick some ads up there. But and and that may
Speaker 1: very well offset the cost because you're web hosting provider.
Speaker 1: A lot of them these days don't charge uh for
Speaker 1: a certain amount of traffic. Now, if you're somebody like
Speaker 1: a magazine or streaming media side or something like that,
Speaker 1: that's going to generate tons and tons of traffic, and
Speaker 1: the web hosting provider is gonna say, hey, look, pal,
Speaker 1: you know, if you're taking up room on our servers,
Speaker 1: you want yeah, if you want the band with, you
Speaker 1: gotta pay. Yeah, So know, you have to pay people
Speaker 1: to run the side and maintain the side. If you're
Speaker 1: a magazine, you want to pay writers, maybe freelancers, editors.
Speaker 1: You know, you're gonna have a lot of people working there,
Speaker 1: so you have to pay for them too, and then
Speaker 1: you have to generate more revenue to offset that. So
Speaker 1: it's it's relatively inexpensive to get in, but depending on
Speaker 1: the scale of the operation, you might need serious money
Speaker 1: to keep it going right. And you know, we when
Speaker 1: we talked with Bernie Burns of Rooster Teeth, Yeah, you
Speaker 1: know he talked about back in the early days of
Speaker 1: Rooster Teeth, that was before streaming video was a thing
Speaker 1: on the web. So what people would do is they
Speaker 1: would actually download an episode of Red Versus Blue, Right,
Speaker 1: So they're downloading video files. And because it became so
Speaker 1: popular so quickly, that meant that they were having some
Speaker 1: pretty massive bandwidth issues and so that that sort of
Speaker 1: thing can come into play. And yeah, like I said,
Speaker 1: it's it's one of those things where you've got to
Speaker 1: figure out, well, we have to make a certain amount
Speaker 1: of money just to sustain our businesses. And then in
Speaker 1: order to be a successful business, you have to actually
Speaker 1: a money. So you have to determine what kind of
Speaker 1: ads you use and how much how many of them
Speaker 1: you use. So now, back back in those early days
Speaker 1: when I was talking about UM, the the days like
Speaker 1: when Yahoo was selling ads at around the same rate
Speaker 1: as what you would get for a magazine ad. That
Speaker 1: was about around sometimes thirty dollars per one thousand clicks
Speaker 1: or one thousand um impressions actually, and impressions and clicks
Speaker 1: are two different things. Impressions essentially means that if a
Speaker 1: thousand people visit that that particular website and that one
Speaker 1: ad is on that website, then the average advertiser would
Speaker 1: pay the website thirty bucks for every thousand. Well, yeah,
Speaker 1: he's just that that is not a standard necessarily a
Speaker 1: standard rate he's just using. Yes, that that was back
Speaker 1: in the early days, just web thirty, sometimes more than
Speaker 1: thirty dollars per one thousand. But as time has gone
Speaker 1: on that that price has been seriously cut down. And
Speaker 1: it all depends on what kind of website you run too.
Speaker 1: If you're running a website that's incredibly popular, then you
Speaker 1: can command higher prices than you can than a smaller
Speaker 1: website can. But in general you're now talking about a
Speaker 1: few cents per one thousand visitors if it's a uh
Speaker 1: CPM model, And we'll talk about that in a second.
Speaker 1: But before we before we get into the various models,
Speaker 1: I wanted to talk about the different formats that you
Speaker 1: find in web advertising. Yeah, probably the most popular in
Speaker 1: those early days was the banner at the banner adea.
Speaker 1: These were the ones that ran along the top of
Speaker 1: the ad of the site, sometimes along the bottom, and
Speaker 1: if it was along the side, we called them sidebars
Speaker 1: as opposed to banner ads, but the same sort of thing.
Speaker 1: It's a a long, narrow band that would have an
Speaker 1: add on it for for some product or service. Usually
Speaker 1: it was a link, so that if you clicked on
Speaker 1: the banner, you would go to the website of said
Speaker 1: product or service. And uh, it was the way to
Speaker 1: advertise on the web for a really long time. UM.
Speaker 1: But again, because it's a link, it's one of those
Speaker 1: things that can be monitored and in fact, if it's
Speaker 1: a link that's coming into a company's website, they may
Speaker 1: not even need the advertising. UM. The They may not
Speaker 1: need another agency to tell them anything about the traffic,
Speaker 1: they might be able to see it on their own.
Speaker 1: But if they see that the traffic just hasn't increased significantly,
Speaker 1: or that, uh, that traffic from that ad hasn't really
Speaker 1: picked up, and that they're not really seeing a conversion
Speaker 1: into sales, then that's going to really cut down on like,
Speaker 1: why would anyone bother buying an AD if it's not working.
Speaker 1: So those were some of the earliest ones, and they're
Speaker 1: also some of the ones that are easiest for users
Speaker 1: to ignore. In fact, there's you know we talked about
Speaker 1: in the business, it's called ad blindness, where you just
Speaker 1: you just don't even register it anymore. You're used to
Speaker 1: ignoring anything that falls in certain quadrants on a website
Speaker 1: because that's where everyone puts their ads, and you just
Speaker 1: don't even notice it anymore because you're just looking for
Speaker 1: the content. Well, advertisers hate that because it negates the
Speaker 1: whole ad and you know, people are spending time and
Speaker 1: money to develop these ads, and and again they're not
Speaker 1: necessarily being evil. They're trying to reach an audience so
Speaker 1: that they can sell their products or services. Some of
Speaker 1: those products and services may be amazing, but it doesn't
Speaker 1: change the fact that people have gotten really good at
Speaker 1: ignoring those ads. So there's other kinds as well. Uh,
Speaker 1: there's the floating ads which float across your screen and
Speaker 1: you have to Yeah, I'm not a big fan of
Speaker 1: them either, but again they are hard. They they're they're
Speaker 1: impossible to ignore because they float right in front of
Speaker 1: your screen and until you close them or click on them,
Speaker 1: there they stay there. And the cousins of the pop
Speaker 1: up ad, right, pop up and pop under ads are similar.
Speaker 1: Now pop up ads become their own it's their own
Speaker 1: window that pops on top of the browser. And those
Speaker 1: were popular for a while. In fact, I remember back
Speaker 1: when you would hit certain sites like uh like like
Speaker 1: there were a few sites that I went to there
Speaker 1: were like a movie rumor sites, right because I was
Speaker 1: just interested in what was coming up in movies. And
Speaker 1: some of them would work with advertising agencies that did
Speaker 1: pop up ads, and you would get one pop up
Speaker 1: ad and as soon as you go to close that,
Speaker 1: two more pop up ads would pop up, and then
Speaker 1: you suddenly you've got you know, five or six pop
Speaker 1: up beds covering up your the content you were trying
Speaker 1: to read and then eventually you just say, why am
Speaker 1: I even bothering going to the site? I'm going to
Speaker 1: find some other place to go rather than deal with
Speaker 1: this frustration. Pop under ads are similar, except that the
Speaker 1: new window pops up under your browser, so that until
Speaker 1: you close your browser, you may not even be aware
Speaker 1: that it's there. Yeah, and some some sites used to
Speaker 1: track the length of time that the ad appeared on
Speaker 1: the screen. So let's say there's a pop under ad
Speaker 1: and it's been up and you don't even know it.
Speaker 1: So they're the site is getting to say, hey, you
Speaker 1: know so, and so we we actually have a a
Speaker 1: great rate of people having this up on their screen
Speaker 1: because there are some people here who have it up
Speaker 1: for hours and hours. Of course, if they're of course
Speaker 1: they can't see it. And of course if if not
Speaker 1: that many people are clicking on the ad, then that
Speaker 1: that's not as powerful story, right, Like, yeah, they have
Speaker 1: it up for hours, but no one actually ever bothers
Speaker 1: to click on the ad, then that falls apart. Now,
Speaker 1: see that's just in the details. And and one of
Speaker 1: the things that has made these ads less common, uh
Speaker 1: is the functionality and virtually every browser that I've seen
Speaker 1: in the last three or four years that has the
Speaker 1: pop up blocker enabled in the preferences so that you
Speaker 1: can go in turn it off before you you know,
Speaker 1: the first thing you do is you you go into
Speaker 1: the preferences and start setting it to the way you
Speaker 1: want it to work. And one of the first things
Speaker 1: I do is turn off the pop up ad, you know,
Speaker 1: and and they just completely prevent it from opening, right.
Speaker 1: And then there's some sites that use pop ups for
Speaker 1: legitimate well advertising is legitimate, but there's some sites that
Speaker 1: use it for purposes that like interact exactly, so like
Speaker 1: filling out a form. So in those cases you have
Speaker 1: to just you have to disable the pop up blocker,
Speaker 1: maybe just for that one site, but yeah, I mean
Speaker 1: that that's the things that these pop up ads and
Speaker 1: pop under ads are intrusive enough so that users really
Speaker 1: don't like them. The floating floating adds in a way
Speaker 1: can be too. They're not quite as bad in my opinion, um,
Speaker 1: but they also can be irritating if you're just trying
Speaker 1: to get to certain content. The floating adds, though, don't
Speaker 1: irritate me the way peel or expanding ads do. These
Speaker 1: are the ones where if your cursor floats over the ad,
Speaker 1: it suddenly takes up half your screen space or more,
Speaker 1: it will unroll. And we've we're just gonna be completely
Speaker 1: blunt here, all right. So, so the company we work for,
Speaker 1: how stuff Works dot com and as part of Discovery Communication,
Speaker 1: part Discovery Communications makes revenue through advertising m other things. Yes,
Speaker 1: and so we have had these these peel ads, these
Speaker 1: expanding ads on our site. Uh and I think, um,
Speaker 1: I think I'm safe to say I'm not the only
Speaker 1: one who found it frustrating when I would visit my
Speaker 1: own site and try to find a particular article only
Speaker 1: to have an uh an ad cover up half the page.
Speaker 1: While a lot of these things, too were trials to see, uh,
Speaker 1: how well the public would get into it. So not
Speaker 1: only do you want to find out, hey, are people
Speaker 1: looking at these? Are people clicking through to see what's
Speaker 1: on the other side of these? And how many people
Speaker 1: uh stop coming because what they you know, because when
Speaker 1: they say, you know, hey, I don't like these pop
Speaker 1: up ads, I don't like these pop up ads. I
Speaker 1: don't like these peel ads, they may stop coming to
Speaker 1: the site. As Jonathan was pointing out, and if if
Speaker 1: the the site that is running advertising notices this as
Speaker 1: a trend. They'll say, hey, you know what, this is
Speaker 1: working to the point where it's not working. Yeah, yeah,
Speaker 1: And people are seeing these and they don't like them
Speaker 1: and are leaving. Right. The goal of the advertiser is
Speaker 1: to get that ad in front of your your eyes
Speaker 1: and to have you act in some way on that
Speaker 1: ad in a in a positive way. As far as
Speaker 1: the advertiser is concerned. You don't want to turn off
Speaker 1: your potential buyers, right, So they're not trying to alienate
Speaker 1: the audience. That's not the that's not the goal at all.
Speaker 1: In fact, that's completely antithetical to their goals. So that
Speaker 1: you know, there are times where you'll see certain ads
Speaker 1: kind of fade away from popularity because advertisers have learned
Speaker 1: like this has such a negative impact on the user
Speaker 1: experience that that there that any benefit of getting that
Speaker 1: name out into the world is negated by how they
Speaker 1: are are associating that ad with their experience. So some
Speaker 1: of these ads you just don't even see that frequently anymore.
Speaker 1: There are other kinds as well, their wallpaper ads, where
Speaker 1: it will change the background of a website to to
Speaker 1: be a certain uh wallpaper, Like I've seen that for
Speaker 1: for movies, gaming times to gaming, so it's also I
Speaker 1: mean I've even seen it for things like, um like
Speaker 1: snack foods where you'll see like along the background, it'll
Speaker 1: be snacks instead of whatever the normal background would be.
Speaker 1: There their ads that can be inserted into text, so
Speaker 1: they you'll see in the content that certain words are highlighted,
Speaker 1: and it may be that those words like if you're like,
Speaker 1: oh wow, that is kind of cool, and you click
Speaker 1: on it and it goes to the uh to a
Speaker 1: site that sells something that falls into the category of
Speaker 1: whatever the text was, so it's kind of a type
Speaker 1: of contextual ad. And also there's the video ads, the
Speaker 1: ones that were made famous by Uncast, where you would
Speaker 1: go to a site and there'd be a little video
Speaker 1: ad running, usually in one of the rails, so like
Speaker 1: off to the right or something, and it would have
Speaker 1: full video and full sound, which could be very uh,
Speaker 1: very jarring if you are like me often listening to
Speaker 1: music on your headphones over your computer and you visit
Speaker 1: a website and then you suddenly hear someone talking to
Speaker 1: you and you're like, someone, what's what's going on? And
Speaker 1: you start looking around there there's no one around me.
Speaker 1: And uh, most of the ones I've seen recently that
Speaker 1: do that leave the sound off until you noticed the
Speaker 1: video is playing, and then some people will turn the
Speaker 1: video on the sound on, and some people won't. Um.
Speaker 1: Something that I just thought of that's sort of unusual.
Speaker 1: Um the music station Pandora will do. They'll do advertisement
Speaker 1: deals with companies and they'll build a special music station
Speaker 1: around the product that they're trying to do. Um. Yeah.
Speaker 1: Spotify does the same thing. Yeah yeah, which is kind
Speaker 1: of a unique thing because they'll do the wallpaper type
Speaker 1: thing too, but they'll also do uh something that other
Speaker 1: sites can't, which will have, you know, a special tie
Speaker 1: into the type of site. Um that that it works with. Guys,
Speaker 1: it's Jonathan from the Future interrupting this classic episode about
Speaker 1: web advertising so that we can listen to some advertising
Speaker 1: that helps support the We'll be back after this quick break.
Speaker 1: Formats that ads can take, and there are other ones
Speaker 1: as well. There's more than what we just covered, but
Speaker 1: those are the basic ones. There are different approaches. These
Speaker 1: ads can take two and you alluded to one of them,
Speaker 1: and one of them is being contextual or targeted. Yes,
Speaker 1: and when you're talking about a contextual or targeted AD,
Speaker 1: you're talking about designing the ad so that it will
Speaker 1: like using ads that will appeal to the same audience
Speaker 1: space as the ones that are there to consume whatever
Speaker 1: content is on that site. So, for example, if I
Speaker 1: were to go to how stuff works dot com and
Speaker 1: I'm looking at how GPS systems work or GPS works,
Speaker 1: would say GPS systems because I would want to go
Speaker 1: to my A t M machine and use my PIN number.
Speaker 1: But if you went to UH, if you went to
Speaker 1: that and then there was an AD about a particular
Speaker 1: vendor that sells GPS units, then you'd be more likely
Speaker 1: the thought processes, you'd be more likely to click on
Speaker 1: that because you're already interested in the topic, as opposed
Speaker 1: to going to an article about how GPS units work
Speaker 1: and seeing an AD for I don't know, um, a
Speaker 1: gelatin dessert. Yeah, those two things don't really connect to
Speaker 1: one another, although there's always room for it. There's no
Speaker 1: there's no I wasn't using the brand name and then
Speaker 1: I go and user slogan, but the the Yeah, that's
Speaker 1: the that's an example. You know you wanted the contextual
Speaker 1: or targeted ads tend to have a higher degree of engagement,
Speaker 1: meaning that more people click on it than ones that
Speaker 1: have no connection to whatever the content is for the
Speaker 1: site that is in question. So one of the things
Speaker 1: that makes web advertising so appealing for advertisers is their
Speaker 1: ability to target uh this to their customers, as you
Speaker 1: were saying. And they can't do that with other media
Speaker 1: because they would need to do a serve. They would
Speaker 1: actually have to find out, hey, how how did you
Speaker 1: hear about us? With the web, they use cookies, which
Speaker 1: are little pieces of text that are downloaded to your
Speaker 1: computer and uh written to and they'll go okay. So, uh,
Speaker 1: you know, Steve visited how stuff Works dot com and
Speaker 1: he also visited uh CNN, and he also visited his
Speaker 1: local papers website, and so apparently he likes reading uh
Speaker 1: stories about what's going on. He's intellectually curious. Um, so
Speaker 1: we're gonna you know, he's interested in animals because we
Speaker 1: know he visited the Animals channel and how stuff Works
Speaker 1: dot com and read a story about a rescue dog
Speaker 1: in his local paper. So we're gonna send him and
Speaker 1: add about dog food and maybe he has a dog
Speaker 1: or maybe as a cat. We'll try a cat cat
Speaker 1: food ad on the next page. And so, if you've
Speaker 1: ever looked at a website and seen an ad targeted
Speaker 1: to you in your specifical something that you typically buy
Speaker 1: or are orientist, or are interested in, and it says, hey, um,
Speaker 1: if you're in the Dallas area and looking to buy
Speaker 1: something something, you can wait a minute, How in the
Speaker 1: world did they know I was in Dallas. Well, they're
Speaker 1: using these cookies on your computer to gather information about you. Um.
Speaker 1: Some people see it as a major privacy, privacy issue
Speaker 1: because it has information about you and they're looking at that.
Speaker 1: I would say that, yes, it's a privacy issue, but
Speaker 1: in general, they don't really want to know what kind
Speaker 1: of underwhere you prefer, and where you live. They don't
Speaker 1: even care what your name is. They really just they
Speaker 1: just think of you as potential customer. Yeah, and so
Speaker 1: this is to convert you from potential customer to actual customer.
Speaker 1: And yeah, that's a good, good progression. Because I was
Speaker 1: talking about the general ads, the contextual or targeted ads,
Speaker 1: and then personalized ads, which is what Chris's time all
Speaker 1: right here, where it's personalized based upon your experience. And
Speaker 1: there's some companies that do this better than others. Um,
Speaker 1: there's some companies that are much better at gathering information
Speaker 1: about you. It's ample Facebook. Yes, Facebook doesn't even have
Speaker 1: to bother gathering information about you because you give Facebook
Speaker 1: the information about you every time you use it. This
Speaker 1: is what makes Facebook such a valuable company. People not
Speaker 1: only opt in um to their advertising by being there,
Speaker 1: they're also providing them all sorts of context for themselves.
Speaker 1: You know, I like these bands, I like watching these
Speaker 1: movies and reading these books. I've noticed on my Facebook
Speaker 1: page when I go there, I noticed that the ads
Speaker 1: often seemed to mirror some of the stuff that's been
Speaker 1: posted on my in my news feed. So I'm reading
Speaker 1: the reading stories or whatever, and I look clients over
Speaker 1: at the advertising and like, that's kind of clever that
Speaker 1: they actually, you know, that they've taken the context of
Speaker 1: what was posted and managed to pull an ad that related,
Speaker 1: sometimes extremely tangentially to whatever the content was. It's also
Speaker 1: a little creepy, but anyway, that's Those are the three
Speaker 1: general role approaches. The general general advertising, where it doesn't
Speaker 1: have anything necessarily to do with whatever the content is.
Speaker 1: The contextual one, where it does have to relate to
Speaker 1: whatever the content the site is and then the personalized one,
Speaker 1: which relates more to the actual user than necessarily even
Speaker 1: the content. The early days of web advertising UM sort
Speaker 1: of looked like it was going the whole concept was
Speaker 1: going to be sort of a dud because at first
Speaker 1: it looked like, uh, it just didn't reach people in
Speaker 1: the way that advertisers were used to. They were used
Speaker 1: to the the old style of media. They couldn't figure
Speaker 1: out exactly the best approach. They couldn't figure out the
Speaker 1: size or the placement on the page that they wanted
Speaker 1: to use, and it looked like it was going to
Speaker 1: be more of a branding than a direct response target.
Speaker 1: And then, you know, once cookies, once they figured out
Speaker 1: how to use cookies to their advantage, they were able
Speaker 1: to do more targeted and more personalized advertising. And now
Speaker 1: it's become uh, you know, a multi multi billion dollar
Speaker 1: business and that the you know, this is what has
Speaker 1: helped UH companies like Yahoo, Facebook, Google and others to
Speaker 1: grow as as much as they have is because they're
Speaker 1: able to target advertising so precisely UM, you know, and
Speaker 1: use it in different places like Google makes Gmail free
Speaker 1: because it's able to advertise alongside UM and and we've
Speaker 1: you know, taken advantage of that. But because so many
Speaker 1: places offer us free services that are supported by advertising,
Speaker 1: so it's it's sort of a trade off that we make, um,
Speaker 1: providing this information in exchange for free web services. So
Speaker 1: let's talk a little bit about how these ads actually
Speaker 1: generate money. And there are various strategies that advertisers use.
Speaker 1: One is called CPM, which is a cost per mille
Speaker 1: or thousand, yes not a million for my fellow Americans
Speaker 1: who would possibly think such a thing, but cost per
Speaker 1: thousand impressions, and an impression is a essentially you're looking
Speaker 1: at it. Yeah, there's a there's a there's a set
Speaker 1: of eyes that are on that that website. Um, so
Speaker 1: for every one thousand times someone views that website, uh,
Speaker 1: the average advertiser would would give a certain amount of
Speaker 1: money to the site itself. And again it's probably on
Speaker 1: a the order of a few cents, so let's say
Speaker 1: a nickel. So every time, uh, that counter hits one
Speaker 1: thousand for that site, the advertiser gives a nickel over
Speaker 1: to the site. So you have to get lots and
Speaker 1: lots and lots of eyes on that site for it
Speaker 1: to actually be worthwhile for the website, you know, so
Speaker 1: they get that's the idea is that it gives an
Speaker 1: incentive to the website to create really awesome content that's
Speaker 1: going to pull lots of people there, and in web terms,
Speaker 1: that's called sticky. You want people to go there and
Speaker 1: stay there. Yeah. Yeah, if if people just go and
Speaker 1: then and then bail, well then once the advertiser starts
Speaker 1: looking at the figures, they're gonna say, well, this person
Speaker 1: was here so briefly that they probably didn't even see
Speaker 1: my ad So there's no point in paying you a
Speaker 1: higher amount of money per thousand eyeballs when or pairs
Speaker 1: of eyeballs when when people aren't even bothering looking at stuff.
Speaker 1: So yeah, it's it's more than just the fact that
Speaker 1: a thousand people got there. And sometimes this gets knocked
Speaker 1: down to um a CPV, which is a click per visitor,
Speaker 1: which again is different than an impression, because an impression
Speaker 1: could be that you go to a website, you click
Speaker 1: to a different page on the website, you go back
Speaker 1: to the home page. Well, your two visits to that
Speaker 1: homepage may each count as an impression, even though it's
Speaker 1: the same person looking at it. You have seen that
Speaker 1: same page twice, so you've seen the same ad twice.
Speaker 1: A CPM maybe UH may count both of those visits.
Speaker 1: A CPV is to different. That's count. That's clicks per
Speaker 1: or sorry, not clicks, but cost per visitor. So the
Speaker 1: idea being that every unique visitor counts towards that AD.
Speaker 1: But if you were to keep refreshing the page or
Speaker 1: click around and keep coming back to that homepage, those
Speaker 1: additional visits would not count. It's only the unique visitor
Speaker 1: that counts, and usually that's on a per day basis,
Speaker 1: so for every twenty four hours. So if you came
Speaker 1: back to that page the next day, sure it would
Speaker 1: count then, but it doesn't count during your visit when
Speaker 1: you're at that page um or that website. I should say,
Speaker 1: Chris and I have a bit more to say about
Speaker 1: web ads, but before we get into the final segment,
Speaker 1: let's take another quick break to thank our sponsor. Then
Speaker 1: you've got uh CPC, which is cost per click. Now
Speaker 1: this is a little more challenging in that you have
Speaker 1: to create really good ads that will get people excited
Speaker 1: to click on it, to actually click on an AD,
Speaker 1: because for a lot of us that feels like the
Speaker 1: last thing in the world you want to do. You know,
Speaker 1: you just want to look at the content. You don't
Speaker 1: want to click on an ad. But clicking on the ads,
Speaker 1: you know, that helps pay for the site. And also
Speaker 1: there may very well be stuff that the ads are
Speaker 1: are advertising that you're interested interested in. So as uh
Speaker 1: cpc UM means that every time someone actually clicks on
Speaker 1: the ad, the advert advertiser will give a certain amount
Speaker 1: of money to the website. And that money, you know,
Speaker 1: it may be every several every thousand clicks in that case,
Speaker 1: but it tends to be a much higher rate than
Speaker 1: the impressions because now you've gone from people just looking
Speaker 1: in an ad to people actually reacting to an ad. Uh.
Speaker 1: And then the other big one is c p A,
Speaker 1: which is cost per acquisition or cost per action and
Speaker 1: this is an affiliate program. This is when a company
Speaker 1: offers up an affiliate program where um the they have
Speaker 1: an agreement. For example, we we've done this in the past.
Speaker 1: Tech stuff has done this because we did and we
Speaker 1: did audible ads audible dot com. And the way that
Speaker 1: that one but who are as far as I know,
Speaker 1: are not are not sponsoring this particular episode. But the
Speaker 1: way those those agreements tend to work is that the
Speaker 1: vendor works with the site or service. So for example,
Speaker 1: we'll stick with audible dot Com. They come to us
Speaker 1: and say, we would like to make a partnership with
Speaker 1: you if you you need to run an ad in
Speaker 1: your podcast. When you run that ad, you tell people
Speaker 1: to go to audible dot com and use this particular
Speaker 1: UM password or or code when they go, and then
Speaker 1: they will get UM. They'll they'll be able to join
Speaker 1: for a discounted rate, and every user that does that,
Speaker 1: we will we will pay you a certain amount of money.
Speaker 1: And it all depends on the advertiser and the service.
Speaker 1: I mean, it's all this is all negotiable stuff, right
Speaker 1: and frankly, I am not privy to that. I have
Speaker 1: no idea what it is because that's not my part
Speaker 1: of the business. I create content. So, uh, every time
Speaker 1: someone actually goes and signs up for these services using
Speaker 1: the ad the promotional code that the website or podcast
Speaker 1: whatever gives out, then money goes to that site from
Speaker 1: the advertiser, from the vendor. And again this is much
Speaker 1: more valuable because now you have people not just clicking
Speaker 1: on something but actually enrolling in some sort of product
Speaker 1: or service, and so that's considered much more valuable than
Speaker 1: a typical impression would be. Now those are your major types.
Speaker 1: There are lots of other variations of this, but those
Speaker 1: were what I would say are the dominant ones in
Speaker 1: online advertising. Okay, and uh, and again all three of these,
Speaker 1: none of these are. None of these are on their
Speaker 1: own good or bad. It's all on how they are
Speaker 1: used and whether or not they are part of the
Speaker 1: experience in a way that's not intrusive, or if they
Speaker 1: in fact get in your way and irritate you. Yeah, yeah,
Speaker 1: and then and that makes tracking all that much more
Speaker 1: valuable for the advertiser and for the sites. Um, because
Speaker 1: you know, as tastes change as to how the effectiveness
Speaker 1: of of web advertising is measured. Um, you know, they've
Speaker 1: they've gone from these through these different models, and sometimes
Speaker 1: they shift toward one and conventional wisdom says that's the
Speaker 1: best way to do it, and they'll change their mind
Speaker 1: and shift back. So they track all of that information, um,
Speaker 1: just so that they have an idea of who they're
Speaker 1: reaching and how so, UM, you know that that's why
Speaker 1: they do a lot that. So Chris, you're you're probably
Speaker 1: gonna know the answer to this question, but I'm going
Speaker 1: to ask it and see if you see in fact,
Speaker 1: see if in fact you do know the answer. There
Speaker 1: is one company out there on the Internet that is
Speaker 1: dominant as far as the web advertising business goes. As in,
Speaker 1: this is the company that provides the outlet for web advertising.
Speaker 1: It's not itself necessarily an advertiser. Do you know what
Speaker 1: that company is? I would have assumed it was a
Speaker 1: company that rhymes with Schmoogle. In fact, you are corrected,
Speaker 1: is Google, which according to at least some figures, has
Speaker 1: about almost seventy of the online advertising market. That's very impressive. Yeah,
Speaker 1: you think about that, Think about all the different advertising
Speaker 1: companies that could be out there on the web, and
Speaker 1: for one to have nearly sevent of the market share,
Speaker 1: and you're talking billions of dollars of revenues going through
Speaker 1: this this whole industry, that is amazing and scary. You know.
Speaker 1: That's that's funny too, because that's the one type of
Speaker 1: ad we didn't mention ad sense text text advertising. Well
Speaker 1: I did mention it briefly because I thought about the
Speaker 1: little bit and you know, but yes, but yeah, they
Speaker 1: don't do the you know, the banner ads or or
Speaker 1: sidebar ads, or or pop ups or pop unders. It's
Speaker 1: all done with text. They'll have sponsored results that kind
Speaker 1: of thing, exactly. It's it's just kind of funny that
Speaker 1: that much of the ad industry is dominated by something
Speaker 1: that doesn't actually use it whiches yeah and we you know, yeah,
Speaker 1: so it's I mean, it's it's big business stuff. It's
Speaker 1: still even today, despite the fact that the web has
Speaker 1: been around for more than two decades now, um, we're
Speaker 1: really still trying to find the right balance between the
Speaker 1: value of advertising and um and and how it impacts
Speaker 1: the user. Because if the value you have advertising keeps
Speaker 1: falling as a result of users being alienated by ads,
Speaker 1: then web content creators have to find new ways to
Speaker 1: make money. And without finding new ways to make money,
Speaker 1: we're not going to have nearly as much content on
Speaker 1: the web, and so it could turn out to be
Speaker 1: a bad thing for users in the long run. Now
Speaker 1: that doesn't mean that users should just sit there and
Speaker 1: say I love ads and click on everything. But if
Speaker 1: there are ads that are effective, then users probably shouldn't
Speaker 1: um complain about them too much, because again, the alternative
Speaker 1: is that we lose all that content. In the long run,
Speaker 1: It's definitely something that you have to be willing to
Speaker 1: make the trade off for. Yeah, it's and it is tricky.
Speaker 1: I mean I as a consumer, I can tell you
Speaker 1: that a bad ad really ruins my mood when I'm
Speaker 1: on a on a website, even if I love the website.
Speaker 1: If it's a really bad ad, then my first reaction
Speaker 1: is I think, you know what, I'll just come back
Speaker 1: some other time. The different advertising campaign is running on
Speaker 1: this site, and that wraps up this discussion about web ads. Obviously,
Speaker 1: things have continued to evolve since two thousand twelve, and
Speaker 1: I've talked about web advertising and advertising on the Internet
Speaker 1: in general in a few other episodes, So you can
Speaker 1: always go through the archive and look at those topics.
Speaker 1: If you are interested in learning more. To do that,
Speaker 1: head on over to text stuff podcast dot com. That's
Speaker 1: our website where we have the archive, plus background information
Speaker 1: on me, links to our presence on social networking sites,
Speaker 1: and a link to our online store. And every purchase
Speaker 1: you make goes to help the show. If you have
Speaker 1: any suggestions for future topics I should cover on this show,
Speaker 1: you can email me at tech Stuff at how Stuff
Speaker 1: works dot com and I'll talk to you again really soon.
Speaker 1: Text Stuff is a production of My heart Radios How
Speaker 1: stuff Works. For more podcasts from I heart Radio, visit
Speaker 1: the i heart Radio app, Apple Podcasts, or wherever you
Speaker 1: listen to your favorite shows. H