Speaker 1: Brought to you by the reinvented two thousand twelve camera.
Speaker 1: It's ready. Are you get in touch with technology? With
Speaker 1: tech Stuff from how stuff flix dot com. Hello again, everyone,
Speaker 1: and welcome to tech Stuff. My name is Chris Poulett,
Speaker 1: and I'm an editor at how Stuff works dot com.
Speaker 1: Sitting across from me as always a senior writer, Jonathan Stricklin.
Speaker 1: Hey there, so, um, Chris, Yes, you like uh you
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 want
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 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: sites don't exist, which means that content that we have
Speaker 1: grown so fond of accessing would no longer be there.
Speaker 1: So 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 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
Speaker 1: um 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. And the
Speaker 1: thing is that the way the web has developed over time,
Speaker 1: people have grown to expect free access to something if
Speaker 1: it's on the web. Yeah, it's a cultural thing. Yeah.
Speaker 1: The early days of the Internet, I mean, the people
Speaker 1: who are doing this were government institutions in the United
Speaker 1: States and higher learning you know, colleges and university. So
Speaker 1: the the content online was specifically for those groups and
Speaker 1: the commercial entities really weren't involved in it the early days.
Speaker 1: So the people who were doing that or or actually,
Speaker 1: you know, some of it is from the online services UM.
Speaker 1: So if you had a modem, you could dial up
Speaker 1: to a bulletin board and you may not have to
Speaker 1: pay a fee, and you would join the community there
Speaker 1: and swap stories or you know, whatever it is that
Speaker 1: they talked about UM. But they didn't they might pay
Speaker 1: a fee, a subscription fee to join the BBS or
Speaker 1: for internet access in the early days of the Internet
Speaker 1: as a commercial sense, UM, but they wouldn't be paying
Speaker 1: for the content. And so the idea came about that
Speaker 1: web advertising could potentially be far more effective than traditional
Speaker 1: forms of advertising. That was the initial thought and the
Speaker 1: reason for that was that if you buy an ad
Speaker 1: in a magazine, or you put on a billboard, or
Speaker 1: you put in a television show, it's ah in the
Speaker 1: ad breaks, you have a reasonable expectation of a certain
Speaker 1: number of people that add is going to uh is
Speaker 1: going to connect with. Now, whether those people are paying
Speaker 1: attention to the ad, you don't know whether if whether
Speaker 1: or not they pay attention to the ad and then
Speaker 1: go forward and actually act based upon what they saw
Speaker 1: in the ad. You don't know that either, but you you,
Speaker 1: what you do know is that a certain number of people,
Speaker 1: based upon the market research, are going to see that
Speaker 1: particular ad. Actually, this seems like a good time to
Speaker 1: bring up a point that there are two major types
Speaker 1: of advertising we're talking about here too. Um. Direct response
Speaker 1: is the type of advertising that does encourage you to
Speaker 1: do something like if you were going to uh it,
Speaker 1: listened to the podcast and suddenly now you're craving a
Speaker 1: bowl of chocolate nibbles and let me tell you they
Speaker 1: are delicious. Um, now that we got rid of the
Speaker 1: non essential vitamin in mintal, yes, you should run out
Speaker 1: and buy something. That's the point of an advertisement like that. Um.
Speaker 1: Then you have what they call branding, which is basically,
Speaker 1: you know, hey, you don't have to go run out
Speaker 1: and buy our product. Just think of us the next
Speaker 1: time you're doing something like that, And that's the kind
Speaker 1: of thing that you see like at um uh sporting events. UH.
Speaker 1: For example, the ads on the sides of hockey boards
Speaker 1: or on on the sides of race cars. They don't
Speaker 1: say by you know, such and such product. They're just
Speaker 1: showing you the brand name so that you sort of
Speaker 1: think about them, and you're you're thinking, oh, well, you know,
Speaker 1: I like these guys. They sponsor my favorite driver. Yeah.
Speaker 1: The idea might be to get that brand name in
Speaker 1: your mind so that the next time you go out
Speaker 1: to get something, you actually think about that petular brand.
Speaker 1: For example, you might think, hey, I'm thirsty, I would
Speaker 1: like a soda. I just saw that ad for coke,
Speaker 1: and maybe I wouldn't normally get a coke, but that
Speaker 1: sounds good to me right now, I'll go ahead and
Speaker 1: get a coke. UM. So it's it's one of those
Speaker 1: things where getting the brand out there is really important,
Speaker 1: and marketers will tell you how important that is. That
Speaker 1: you know, you don't want to mess with your brand,
Speaker 1: You don't want to change your brand identity to drastically
Speaker 1: unless you do it in the way so that you
Speaker 1: make it a sort of a public event where people
Speaker 1: will make that transition with you, because it's you know,
Speaker 1: this is stuff that's sticky in people's minds. Yeah, there
Speaker 1: are people who are going to walk into the store
Speaker 1: and they're going to see that brand name that they
Speaker 1: know so well, um, and they're going to choose a
Speaker 1: product from that manufacturer simply because they know the name.
Speaker 1: They might see it next to something else that they've
Speaker 1: never heard of and go, well, at least I know
Speaker 1: who these people are. So that's just basic advertising. Now,
Speaker 1: if you're talking about the web, the the the advantage,
Speaker 1: or at least the apparent advantage back in the early days,
Speaker 1: was that you could actually monitor what people were doing
Speaker 1: based upon the webs you were the the ads you
Speaker 1: were serving up on the web. Brother, So let's say
Speaker 1: that you go and you put an ad on a
Speaker 1: really heavily traffic site in the early days of the internet,
Speaker 1: so Yahoo, say, um, you put an ad up on Yahoo. Well,
Speaker 1: you already know that a certain number of users and
Speaker 1: the millions perhaps visits Yahoo each day, so you know
Speaker 1: that that that's how many people are going to see
Speaker 1: your ad, and and the websites track their statistics so
Speaker 1: that they can report back to advertisers. Hey, if you
Speaker 1: advertise with us, you will reach at least two million people. Right,
Speaker 1: this is how many This is how many unique visitors
Speaker 1: you will see. Yes, this is how many people actually
Speaker 1: have page views. Because the two things are different. Yes,
Speaker 1: we can talk about that in a minute. Yeah, so
Speaker 1: at any rate, Because the early days of the web advertising,
Speaker 1: they were thinking, why is this any different from say,
Speaker 1: a magazine Apart from the fact that we can actually
Speaker 1: give you more data about the people who are taking
Speaker 1: a look at this ad, um it should be the
Speaker 1: same price, and in the beginning it was. But here's
Speaker 1: the here a couple of problems. One is that it
Speaker 1: also let you know when people were not uh reacting
Speaker 1: to an ad, at least not actively reacting to an ad. So,
Speaker 1: in other words, if no one's clicking on the ad,
Speaker 1: or if it's a really really really small number of
Speaker 1: people who are clicking on the ad, then you question
Speaker 1: was the value of that ad? Right? Because if no
Speaker 1: one's 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 this,
Speaker 1: if only these few people are clicking through, never mind
Speaker 1: the fact that we can't be sure how many people
Speaker 1: see the magazine add or television ad and react to it.
Speaker 1: That doesn't matter. They're saying, well, we have a proof
Speaker 1: here that not that many people are clicking through, so
Speaker 1: therefore this is overvalued. That was one problem. The other
Speaker 1: problem was that lots of websites were popping up. That
Speaker 1: meant there was a lot of landscape for advertising. So
Speaker 1: with lots and lots of websites of various degrees of
Speaker 1: 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. And that can
Speaker 1: actually happen on a site too, it's not just across
Speaker 1: the the web. If you put up so many ads
Speaker 1: that uh, it sort of drowns out the content. People
Speaker 1: begin to tune them out, and your your message loses
Speaker 1: its power. So it's a very delicate balancing act is
Speaker 1: figuring out where the place ads, what sort of ads
Speaker 1: you use, how many do you have per page? And
Speaker 1: it's not just a balancing act of turning off readers
Speaker 1: or turning off visitors from going to your site. It's
Speaker 1: also a question of how much money does it cost
Speaker 1: to run your business and how can you offset that
Speaker 1: through advertising if that's your way of generating revenue. You
Speaker 1: have to find that balance, and it's tricky because you know,
Speaker 1: you if you're telling about the ads themselves are being
Speaker 1: devalued the more they're out there. Then you have to
Speaker 1: balance that out, like how do you take advantage of
Speaker 1: advertising in such a way that you're actually making enough
Speaker 1: money to sustain whatever your business you're in, right? And uh,
Speaker 1: And it's not easy to do well, and it's it's
Speaker 1: worth pointing out I think too that um, to some degree,
Speaker 1: the web is a fairly inexpensive place to do business.
Speaker 1: Buying a domain name, arranging hosting for a year. Um,
Speaker 1: you know that's that's not terribly expensive. You start getting
Speaker 1: into uh, some cost problems when you generate a lot
Speaker 1: of traffic to the site because in a lot of cases, say,
Speaker 1: if you you're just a person who wants to start
Speaker 1: a blog just for the sake of starting a blog,
Speaker 1: and you promote it to your friends on Facebook and
Speaker 1: you get a couple of gigabytes worth of bandwidth per month,
Speaker 1: that's probably not going to and that's a lot of
Speaker 1: traffic just you know, for for a person with a
Speaker 1: blog who's just having fun with it. Um, you know,
Speaker 1: you might decide to stick some ads up there, but
Speaker 1: and that may very well offset the cost because you're
Speaker 1: web hosting provider. A lot of them these days don't
Speaker 1: charge uh for a certain amount of traffic. Now, if
Speaker 1: you're somebody like a magazine or streaming media side or
Speaker 1: something like that, that's going to generate tons and tons
Speaker 1: of traffic, and the web hosting providers gonna say, hey, look, pal,
Speaker 1: you know, if you're taking up room on our servers, Yeah,
Speaker 1: if you want, then you got to pay. Yeah, so
Speaker 1: and then you have to pay people to run the
Speaker 1: side and maintain the side. If you're a magazine, you
Speaker 1: want to pay writers, maybe freelancers, editors. You know, you're
Speaker 1: gonna have a lot of people working there, so you
Speaker 1: have to pay for them too, and then you have
Speaker 1: to generate more revenue to offset that. So it's it's
Speaker 1: relatively inexpensive to get in, but depending on the scale
Speaker 1: of the operation, you might need serious money to keep
Speaker 1: it going right. And you know, we when we talked
Speaker 1: with Bernie Burns of Rooster Teeth, you know, he talked
Speaker 1: about back in the early days of Rooster Teeth, that
Speaker 1: was before streaming video was a thing on the web.
Speaker 1: So what people would do is they would actually download
Speaker 1: an episode of Red Versus Blue, So they're downloading video
Speaker 1: files and because it became so popular so quickly, that
Speaker 1: meant that they were having some pretty massive bandwidth issues
Speaker 1: and so that that sort of thing can come into play.
Speaker 1: And yeah, like I said, it's it's one of those
Speaker 1: things where you've got to figure out, well, we have
Speaker 1: to make a certain amount of money just to sustain
Speaker 1: our business. And then in order to be a successful business,
Speaker 1: you have to actually make money. So you have to
Speaker 1: determine what kind of ads you use and how much
Speaker 1: how many of them you use. So now, back back
Speaker 1: in those early days when I was talking about um,
Speaker 1: the the days, like when Yahoo was selling ads at
Speaker 1: around the same rate as what you would get for
Speaker 1: a magazine ad. That was about around sometimes thirty dollars
Speaker 1: per one thousand clicks or one thousand um impressions actually,
Speaker 1: and impressions and clicks are two different things. Impressions essentially
Speaker 1: means that if a thousand people visit that that particular website,
Speaker 1: and that one ad is on that website, then the
Speaker 1: average advertiser would pay the website thirty bucks for every thousand. Yeah,
Speaker 1: he's just that that is not a standard, necessarily a
Speaker 1: standard rate. He's just us yes, that that was back
Speaker 1: in the early days, just web thirty dollars, sometimes more
Speaker 1: than thirty dollars per one thousand, But as time has
Speaker 1: gone on that that price has been seriously cut down.
Speaker 1: And it all depends on what kind of website you
Speaker 1: run too. If you're running a website that's incredibly popular,
Speaker 1: then you can command higher prices than you can't than
Speaker 1: a smaller website can. But in general, you're now talking
Speaker 1: about a few cents per one thousand visitors if it's
Speaker 1: a um CPM model. And we'll talk about then 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 ad. Yeah,
Speaker 1: These were the ones that ran along the top of
Speaker 1: the a 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 their own. But
Speaker 1: 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 talk 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 maybe amazing, but it doesn't change
Speaker 1: the fact that people have gotten really good at ignoring
Speaker 1: those ads. So there's other kinds as well. Uh, there's
Speaker 1: the floating ads which float across your screen and you
Speaker 1: have to Yeah, I'm not a big fan of them either,
Speaker 1: but again, they are hard, they're they're they're impossible to
Speaker 1: ignore because they float right in front of your screen
Speaker 1: and until you close them or click on them, there
Speaker 1: they stay there and the cousin up a right. Pop
Speaker 1: up and pop under ads are similar. Now, pop up
Speaker 1: ads become their own it's their own window that pops
Speaker 1: on top of the browser, and those were popular for
Speaker 1: a while. In fact, I remember back when you would
Speaker 1: hit certain sites like uh like like like. There were
Speaker 1: a few sites that went to There were like a
Speaker 1: movie rumor sites, right, because I was just interested in
Speaker 1: what was coming up in movies, and some of them
Speaker 1: would work with advertising agencies that did pop up ads,
Speaker 1: and you would get one pop up ad and as
Speaker 1: soon as you go to close that two or pop
Speaker 1: up beds would pop up, and then you suddenly you've
Speaker 1: got you know, five or six papa beds covering up
Speaker 1: your the content you're trying to read. And then eventually
Speaker 1: you just say, why am I even bothering going to
Speaker 1: the site. I'm going to find some other place to
Speaker 1: go rather than deal with this frustration. Pop under ads
Speaker 1: are similar, except that the new window pops up under
Speaker 1: your browser, so that until you close your browser you
Speaker 1: may not even be aware that it's there. Yeah, and
Speaker 1: some some sites used to track the length of time
Speaker 1: that the ad appeared on the screen. So let's say
Speaker 1: there's a pop under ad and it's been up and
Speaker 1: you don't even know it. So they're the site is
Speaker 1: getting to say, hey, you know so and so we
Speaker 1: we actually have a great rate of people having this
Speaker 1: up on their screen because there are some people here
Speaker 1: who have it up for hours and hours. Of course
Speaker 1: if they're course they can't see it. And of course
Speaker 1: if if not that many people are clicking on the ad,
Speaker 1: then that that's not as powerful story, right, Like, yeah,
Speaker 1: they have it up for hours, but no one actually
Speaker 1: ever bothers 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 plocker,
Speaker 1: you know, and then and they just completely prevent it
Speaker 1: from opening, right. And then there's some sites that use
Speaker 1: pop ups for legitimate well advertising is legitimate, but there's
Speaker 1: some sites that use it for purposes that like so
Speaker 1: like filling out a form. So in those cases you
Speaker 1: have 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 thing is that these pop up ads
Speaker 1: and pop under ads are intrusive enough so that users
Speaker 1: really don't like them. The floating floating adds, in a
Speaker 1: way can be two. They're not quite as bad in
Speaker 1: my opinion, um, but they also can be irritating if
Speaker 1: you're just trying to get to certain content the uh
Speaker 1: the floating ends though, don't irritate me the way peel
Speaker 1: or expanding ads do. These are the ones where if
Speaker 1: your cursor floats over the ad, it suddenly takes up
Speaker 1: half their screen space or more. It will unroll. And
Speaker 1: we've we're just gonna be completely blunt here, all right. So,
Speaker 1: so the company we work for, how stuff works dot com,
Speaker 1: it has part of Discovery Communications. Part Discovery Communications makes
Speaker 1: revenue through advertising among other things, And so we have
Speaker 1: had these these peel ads, these expanding ads on our site.
Speaker 1: Uh and I think, um, I think I'm safe to
Speaker 1: say I'm not the only one who found it frustrating
Speaker 1: when I would visit my own site and try to
Speaker 1: find a particular article only to have an uh an
Speaker 1: ad cover up half the page. Well, a lot of
Speaker 1: these things, too, were trials to see, uh, how well
Speaker 1: the public would get into it. So not only do
Speaker 1: you want to find out, hey, are people looking at these?
Speaker 1: Are people clicking through to see what's on the other
Speaker 1: side of these? And how many people uh stop coming
Speaker 1: because what they you know, because if they say, you know, hey,
Speaker 1: I don't like these pop up ads, I don't like
Speaker 1: these pop up your ads. I don't like these peel ads,
Speaker 1: they may stop coming to the side. As Jonathan was
Speaker 1: pointing out, and if if the the site that is
Speaker 1: running advertising notices this as a trend, they'll say, hey,
Speaker 1: you know what, this is working to the point where
Speaker 1: it's not working and people are seeing these and they
Speaker 1: don't like them, and they're leaving. Right. The goal of
Speaker 1: the advertiser is to get that ad in front of
Speaker 1: your your eyes and to have you act in some
Speaker 1: way on that ad in a in a positive way
Speaker 1: as far as the advertiser is concerned. You don't want
Speaker 1: to turn off your potential buyers, right, So they're not
Speaker 1: trying to alienate the audience. That's not the that's not
Speaker 1: the goal at all. In fact, that's completely antithetical to
Speaker 1: their goals. So the you know, there are times where
Speaker 1: you'll see certain ads kind of fade away from popularity
Speaker 1: because advertisers have learned like this has such a negative
Speaker 1: impact on the user experience, that that there that any
Speaker 1: benefit of getting that name out into the world is
Speaker 1: negated by how they are are associating that ad with
Speaker 1: their experience. So some of these ads you just don't
Speaker 1: even see that frequently anymore. There are other kinds as well.
Speaker 1: There wallpaper ads where it will change the background of
Speaker 1: a website to uh, to be a certain uh wallpaper,
Speaker 1: like I've seen that for for movies, gaming sites also,
Speaker 1: I mean I've I've even seen it for things like
Speaker 1: um like snack foods, where you'll see like along the
Speaker 1: background it'll be snacks instead of whatever the normal background
Speaker 1: would be. They're there ads that can be inserted into text,
Speaker 1: so they you'll see in the content that certain words
Speaker 1: are highlighted, and it may be that those words like
Speaker 1: like oh wow, that is kind of cool, and you
Speaker 1: click on it and it goes to the uh to
Speaker 1: a site that sells something that falls into the category
Speaker 1: of whatever the text was. So it's kind of a
Speaker 1: type of contextual ad. And also there's the video ads,
Speaker 1: the ones that were made famous by Uncast, where you
Speaker 1: would go to a site and there'd be a little
Speaker 1: video ad running, usually in one of the rails, so
Speaker 1: like off to the right or something, and it would
Speaker 1: have 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 you,
Speaker 1: and you're like, is 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 sort of unusual. Um.
Speaker 1: The music station Pandora will do they'll do um 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 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,
Speaker 1: which kind of brings me to So we talked about
Speaker 1: the different formats that ads can take, and there are
Speaker 1: other ones as well. There's more than what we just covered,
Speaker 1: but those are the basic ones and the predominant ones.
Speaker 1: There are different approaches. These ads can take two and
Speaker 1: you alluded to one of them, and one of them
Speaker 1: is being contextual or targeted. Yes, And when you're talking
Speaker 1: about a contextual or targeted AD, you're talking about designing
Speaker 1: the ad so that it will like using ads that
Speaker 1: will appeal to the same audience space as the ones
Speaker 1: that are there to consume what content is on that site. So,
Speaker 1: for example, if I were to go to how stuff
Speaker 1: works dot com and I'm looking at how GPS systems
Speaker 1: work or GPS works, I wouldn't say GPS systems because
Speaker 1: I would want to go to my a t M
Speaker 1: machine and use my pen number. But if you went
Speaker 1: to UH, if you went to that and then there
Speaker 1: was an ad about a particular vendor that sells GPS units,
Speaker 1: then you'd be more likely the thought processes, you'd be
Speaker 1: more likely to click on that because you're already interested
Speaker 1: in the topic, as opposed to going to an article
Speaker 1: about how GPS units work and seeing an ad for
Speaker 1: I don't know, um a gelatin dessert. Those two things
Speaker 1: don't really connect to one another, although there's always room
Speaker 1: for it. There's no there's no I wasn't using the
Speaker 1: brand name and then I go and user slogan, but
Speaker 1: the the yeah, that's the that's an example, you know
Speaker 1: you want. The contextual or targeted ads tend to have
Speaker 1: a higher degree of engagement, meaning that more people click
Speaker 1: on it than ones that have no connection to whatever
Speaker 1: the content is for the site that is in question.
Speaker 1: So one of the things that makes web advertising so
Speaker 1: appealing for advertisers is their ability to target UH this
Speaker 1: to their customers, as you were saying, And they can't
Speaker 1: do that with other media because they would need to
Speaker 1: do a survey. They would actually have to find out, Hey,
Speaker 1: how how did you hear about us? With the web?
Speaker 1: They use cookies, which are little pieces of text that
Speaker 1: are downloaded to your computer and uh written to and
Speaker 1: they'll go okay, So, uh, you know, Steve visited how
Speaker 1: stuff Works dot com and he also visited uh CNN,
Speaker 1: and he also visited his local papers website, and so
Speaker 1: apparently he likes reading uh stories about what's going on.
Speaker 1: He's intellectually curious. Um, so we're gonna you know, he's
Speaker 1: interested in animals, because we know he visited the Animals
Speaker 1: channel and how stuff Works dot com and and read
Speaker 1: a story about a rescue dog in his local paper.
Speaker 1: So we're gonna send him an add about dog food
Speaker 1: and maybe he has a dog, or maybe as a cat.
Speaker 1: We'll try a cat cat food ad on the next page.
Speaker 1: And so, if you've ever looked at a website and
Speaker 1: seen an ad targeted to you in your specific like
Speaker 1: something that you typically buy or are orientisty, or are
Speaker 1: interested in, and it says, hey, um, if you're in
Speaker 1: the Dallas area and looking to buy something something, you
Speaker 1: can wait a minute, how in the world did they
Speaker 1: know I was in Dallas? Well, they're using these cookies
Speaker 1: on your computer to gather information about you. Um, some
Speaker 1: people see it as a major privacy, privacy issue because
Speaker 1: 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 underwear you prefer, and where they don't even care
Speaker 1: what your name is really just they just think of
Speaker 1: you as potential customer. And so this is to convert
Speaker 1: you from potential customer to actual customer. And yeah, that's
Speaker 1: a good, a good progression because I was talking about
Speaker 1: the general ads that contextual or targeted ads, and then
Speaker 1: personalized ads, which is what Chris is talking about right here,
Speaker 1: where it's personalized based upon your experience. And there's some
Speaker 1: companies that do this better than others. Um, there's some
Speaker 1: companies that are much better at gathering information about you.
Speaker 1: For example, Facebook, Facebook doesn't even have to bother gathering
Speaker 1: information about you because you give Facebook the information about
Speaker 1: you every time you use it. This is what makes
Speaker 1: Facebook such a valuable company. People not only opt in
Speaker 1: um to their advertising by being there, they're also providing
Speaker 1: them all sorts of context for themselves. You know, I
Speaker 1: like these bands, I like watching these movies and reading
Speaker 1: these books. I've noticed on my Facebook page when I
Speaker 1: go there, I noticed that the ads often seem to
Speaker 1: mirror some of the stuff that's been posted on my
Speaker 1: in my new news feed. So I'm reading the reading
Speaker 1: stories or whatever, and I glance over at the advertising,
Speaker 1: and my, that's kind of clever that they actually, you know,
Speaker 1: that they've taken the context of what was posted and
Speaker 1: managed to pull an ad that related, sometimes extremely tangentially
Speaker 1: to whatever the content was. It's also a little creepy,
Speaker 1: but anyway that those are the three general approaches. The
Speaker 1: general general advertising, where it doesn't have anything necessarily to
Speaker 1: do with whatever the content is, the contextual one, where
Speaker 1: it does have to relate to whatever the content the
Speaker 1: site is. And then the personalized one, which relates more
Speaker 1: to the actual user than necessarily even the content. The
Speaker 1: early days of web advertising um sort of looked like
Speaker 1: it was going the whole concept was going to be
Speaker 1: sort of a dud because at first it looked like, uh,
Speaker 1: it just didn't reach people in the way that advertisers
Speaker 1: were used to. They were used to the the old
Speaker 1: style of media. They couldn't figure out exactly the best approach.
Speaker 1: They couldn't figure out the size or the placement on
Speaker 1: the page that they wanted to use, and it looked
Speaker 1: like it was going to be more of a branding
Speaker 1: than a direct response target. And then, you know, once cookies,
Speaker 1: once they figured out how to use cookies to their advantage,
Speaker 1: they were able to do more targeted and more personalized advertising.
Speaker 1: And now it's become uh, you know, a multi multi
Speaker 1: billion dollar business. And that the you know, this is
Speaker 1: what has helped UH companies like Yahoo, Facebook, Google and
Speaker 1: others to grow as as much as they have is
Speaker 1: because they're able to target advertising so precisely UM, you know,
Speaker 1: and and use it in different places like Google makes
Speaker 1: Gmail free because it's able to advertise alongside UM and
Speaker 1: and we've you know, taken advantage of that. But because
Speaker 1: so many places offer us free services that are supported
Speaker 1: by advertising, so it's it's sort of a trade off
Speaker 1: that we make UM providing this information in exchange for
Speaker 1: free web services. So let's talk a little bit about
Speaker 1: how these ads actually generate money. And there are various
Speaker 1: strategies that the advertisers use. One is called CPM, which
Speaker 1: is a cost per mille or thousand. It's not a
Speaker 1: million for my fellow Americans would possibly think such a thing,
Speaker 1: but cost per thousand impressions, and an impression is essentially
Speaker 1: looking at it. Yeah, there's a there's a there's a
Speaker 1: set of eyes that are on that that website. Um,
Speaker 1: so 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. Yea, And in
Speaker 1: web terms, that's called sticky. You want people to go
Speaker 1: there and stay there. Yeah. Yeah. If people just go
Speaker 1: and then and then bail, well, then once the advertiser
Speaker 1: starts looking at the figures, they're gonna say, well, this
Speaker 1: person was here so briefly that they probably didn't even
Speaker 1: see my AD. So there's no point in paying you
Speaker 1: a higher amount of money per thousand eyeballs when or
Speaker 1: pairs of eyeballs when when people aren't even bothering looking
Speaker 1: at stuff. So yeah, it's it's more than just the
Speaker 1: fact that a thousand people got there. And sometimes this
Speaker 1: gets knocked down to um A CPV, which is a
Speaker 1: click per visitor, which again is different than an impression,
Speaker 1: because an impression could be the you go to a website,
Speaker 1: you click to a different page on the website, you
Speaker 1: go back to the home page. Well, your two visits
Speaker 1: to that homepage may each count as an impression, even
Speaker 1: though it's the same person looking at it. You have
Speaker 1: seen that same page twice, so you've seen the same
Speaker 1: ad twice. A CPM, maybe uh, may count both of
Speaker 1: those visits. A CPV is different. That's count that's clicks
Speaker 1: per or sorry, not clicks but cost per visitor. So
Speaker 1: the idea being that every unique visitor counts towards that AD.
Speaker 1: But if you were to keep refreshing the page or
Speaker 1: a click around and keep coming back to that homepage,
Speaker 1: those additional visits would not count. It's only the unique
Speaker 1: visitor 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: then you've got uh CPC, which has cost per click.
Speaker 1: Now this is a little more challenging in that you
Speaker 1: have to create really good ads that will get people
Speaker 1: excited 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. Yeah. 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 an affiliate program where UM the they
Speaker 1: have an agreement. For example, we we've done this in
Speaker 1: the past. Tech stuff has done this because we did
Speaker 1: and we did audible ads audible dot com. And the
Speaker 1: way that that one but who are as far as
Speaker 1: I know, are not are not sponsoring this particular episode.
Speaker 1: But the way those those agreements tend to work is
Speaker 1: that the vendor works with the site or service. And
Speaker 1: so for example, we'll stick with audible dot Com. They
Speaker 1: come to us and say, we would like to make
Speaker 1: a partnership with you if you you need to run
Speaker 1: an AD in your podcast. When you run that ad,
Speaker 1: you tell people to go to audible dot com and
Speaker 1: use this particular UM password or or code when they go,
Speaker 1: and then they will get UM. They'll they'll be able
Speaker 1: to join for a discounted rate, and every user that
Speaker 1: does that, we will we will pay you a certain
Speaker 1: amount of money and it all depends on the advertiser
Speaker 1: and the service. I mean, it's all this is all
Speaker 1: negotiable stuff, right, and frankly, I am not privy to that.
Speaker 1: I have no idea what it is because that's not
Speaker 1: my part of the business. I create content. So, Uh,
Speaker 1: every time someone actually goes and signs up for these
Speaker 1: services using the ad the promotional code that the website
Speaker 1: or podcast or whatever gives out, then money goes to
Speaker 1: that site from the advertiser or from the vendor. And again,
Speaker 1: this is much more valuable because now you have people
Speaker 1: not just clicking on something, but actually enrolling in some
Speaker 1: sort of product or service, and so that's considered much
Speaker 1: more valuable than a to tpical impression would be. Now
Speaker 1: those are your major types. There are lots of other
Speaker 1: variations of this, but those were what I would say
Speaker 1: are the dominant ones in online advertising. Okay, and uh,
Speaker 1: and again all three of these, none of these are.
Speaker 1: None of these are on their own good or bad.
Speaker 1: It's all on how they are used and whether or
Speaker 1: not they are part of the experience in a way
Speaker 1: that's not intrusive, or if they in fact get in
Speaker 1: your way and irritate you. Yeah, yeah, And then and
Speaker 1: that makes tracking all that much more valuable for the
Speaker 1: advertiser and for the sites. Um, because you know, as
Speaker 1: tastes change as to how the effectiveness of of web
Speaker 1: advertising is measured. UM, you know, they've they've gone from
Speaker 1: these through these different models, and sometimes they shift toward
Speaker 1: one and conventional wisdom says that's the best way to
Speaker 1: do it, and they'll change their mind and shift back.
Speaker 1: So they track all of that information, um, just so
Speaker 1: that they have an idea of who they're reaching and
Speaker 1: how so. UM, you know that that's why they do
Speaker 1: a lot of that. So Chris, you're you're probably gonna
Speaker 1: know the answer to this question, but I'm going to
Speaker 1: ask it and see if you see in fact, see
Speaker 1: if in fact you do know the answer. There is
Speaker 1: one company out there on the Internet that is dominant
Speaker 1: 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 shmoogle. 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 of the market share, and
Speaker 1: you're talking billions of dollars of revenues going through this
Speaker 1: 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 tex text advertising. Well,
Speaker 1: I did mention it briefly because I felt about the
Speaker 1: little bit and you know, but yes, yeah, they don't
Speaker 1: do the you know, the banner ads or or sidebar
Speaker 1: ads or or pop ups or pop unders. It's all
Speaker 1: done with text. They'll have sponsored results that kind of thing.
Speaker 1: So it's it's just kind of funny that that much
Speaker 1: of the ad industry is dominated by something that doesn't
Speaker 1: actually use it, which is 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 betwe ween
Speaker 1: the value of advertising and UM and and how it
Speaker 1: impacts the user because if the value of 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. And 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 when a different advertising campaign is running
Speaker 1: on this site. Which that's terrible news. It's a terrible thing.
Speaker 1: It's a very human thing to do. But for the
Speaker 1: website owner and for the advertiser, that's bad news. They hate. Yeah,
Speaker 1: they want people who are engaged and happy and who
Speaker 1: are willing to actually act on that advertising um because
Speaker 1: otherwise it wouldn't exist. So anyway, that kind of wraps
Speaker 1: up our discussion on web advertising and the sticky situation
Speaker 1: that it's in. I see. And we will conclude this
Speaker 1: by saying, if you guys have any suggestions for topics
Speaker 1: that we should cover in future episode, you can let
Speaker 1: us know through email or address. Is tech stuff at
Speaker 1: Discovery dot com or let us know on Facebook or
Speaker 1: Twitter are handled there is text stuff. H. S W
Speaker 1: and Chris and I will talk to you again really
Speaker 1: soon for more on this and thousands of other topics.
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