Sell-Side Advertising

A number of bloggers have been ruminating the future of advertising (most notably Fred Wilson, John Batelle, Seth Godin, and Adam Rifkin), mostly inspired by Ross Mayfield’s “Cost Per Influence” post from eons ago (think July – that’s, like, forever in the blogosphere). I thought it might be time to weigh in on their concept of “sell-side advertising” (closely related is Greg Linden’s discussion of “intent marketing“). The idea at the core of “sell-side advertising” is intriguing: what if advertising became less about companies and advertisers pushing out advertisements to people who didn’t care about what they’re selling, and more about allowing influencers to connect products with the people who actually want them?

From my understanding, the sell-side advertising concept is part Google AdSense and part Amazon Associates. On drugs. Batelle gives a good summary:

Instead of advertisers buying either PPC networks or specific publishers/sites, they simply release their ads to the net, perhaps on specified servers where they can easily be found, or on their own sites, and/or through seed buys on one or two exemplar sites. These ads are tagged with information supplied by the advertiser, for example, who they are attempting to reach, what kind of environments they want to be in (and environments they expressly forbid, like porn sites or affiliate sites), and how much money they are willing to spend on the ad.

It’s a great idea – let the publishers (such as bloggers) advertise to their circle of influence and get paid on performance (read: actual sales). No performance, no money! Like Amazon’s Associates, there’s little incentive for someone to create a page full of links without any value-add. Like Google AdWords, it levels the playing field, offering smaller advertisers the opportunity to reach their market without breaking the bank. Even better, it offers smaller advertisers a calculable ROI – it’s no longer a crap-shoot like it is with Google AdWords (after all, even with the best click-through rate in the industry, isn’t the click-through rate still abysmal?).

From the publisher’s point of view, this is also an especially appealing model. First and foremost, I believe the improved ability of such an advertising model to provide measurable results (in terms of actual dollars, not just “eyeballs”) would result in improved revenue for the publishers themselves – far better than per-click advertising. Heck, just compare how Amazon referral fees outweighed my author royalties!As an added bonus, such a model would put advertising control back in the hands of the publisher, thus avoiding the puzzle of Google Adwords that are totally unrelated to the content on the page.

As Seth points out, this model is already out there in the form of an offering from Commission Junction. I recall signing up for a Commission Junction account ages ago when I was exploring ways to boost my book sales – I believe Commission Junction was providing the affiliate program for Barnes & Noble. It was horrible. Bad user interface, and difficult to actually find the items I wanted to sell. Anyone know if it’s improved since last I tried it (early 2002)? Perhaps if they improved the interface and created plugins for blogging tools to streamline the process of adding affiliate links, they’d really have something.

That said, there are still some issues with such a system. For one thing, I think it’s safe to say that a large part of the blog world will be uncomfortable with the idea of the commercialization of the blogosphere. Scoble won’t even use affiliate links. And Canter (God bless him for trying stuff) probably would have been burned at the stake if he showed up at Bloggercon with his get-paid-to-blog schemes.

A shift to pure pay-for-performance advertising might have some interesting ramifications. As Hugh MacLeod loves to point out:

“But that’s always been the trouble with advertising. The money has always been in the dreck. Because the good stuff advertises itself.”

While I agree, I think the problem we’re currently facing is that there’s just too much good stuff. If the advertising market moves to a model where publishers only choose advertisements that interest their readers (if only to maintain their street cred and fend off accusations that they’re being a shill), some products’ advertisements will never see the light of day. After all, some products will never invite a religious following that will build buzz – those things are called commodities. Nobody cares enough about, for example, toothpaste to write about it (unless, of course, they screw up royally), much less participate in some Crest-sponsored affiliates program.

And that’s OK, because these products are overpriced anyway, given they have little true innovation to justify their price in light of their low input costs. But therein lies the paradox – as publishers shift towards the more lucrative world of pay-for-performance advertising, commodity producers will find it difficult to even buy themselves an audience. The question in my mind: will this drive up the price of old-world, pay-for-no-guarantee-of-performance advertisements to new heights, or will the dismal economics of these commodity products prevent them from being able to gain an audience at any price?