ChasNote

A study by Comscore, AOL’s Tacoda and Starcom back in February 2008 showed that 50% of all clicks on banner ads were done by just 6% of Internet users. A repeat of the study, published in October 2009, shows the core group of heavy clickers (8% now) are responsible for 85% of ad clicks.

And these “natural born clickers” are not the most desirable demographic for most advertisers: They skew toward Internet users with household incomes below $40,000 who spend more time than average at gambling sites and career advice sites.

Digg’s lead scientist, Anton Kast, recently shared with me an analysis of who’s clicking on Digg Ads, the ads on Digg that give readers the option of Digging and burying them like regular Digg stories. Since advertisers buy Digg Ads on a cost-per-click basis, I was eager to see the results.

Instead of concentrated click activity by a small group of (inexplicably) click-happy individuals, clicks on Digg Ads (red line) are spread across a wide population of light clickers. In other words, the branded content items promoted by Digg Ads units is appealing to lots of people, each of whom clicks on an occasional ad. The profile of these Digg Ads clickers roughly matches Digg’s upscale demographic, unlike the “natural born clickers.”

Digg Ads (still in beta) doesn’t yet offer much targeting, so relevance can’t entirely explain these better results. Digg Ads do, however, offer advertisers an opportunity to speak to Digg readers in the “local vernacular” of Digg — blue headlines that point to content next to yellow boxes with numbers in them, and the option to Digg and bury the sponsored content just like organic content stories on the site. Kind of like the paid search ads on Google results pages, which I bet have a diversity of clickers that goes well beyond the “natural born clickers” too.

Targeting (relevance) is great. But finding ad formats that are native to content experiences may be just as important.

Patricia Hursh at SearchEngineLand reminds marketers that neglecting or attempting to avoid prospects early in the buying cycle — those kicking tires but not yet ready for the salesperson’s pitch — are “short-sighted and [this approach] ultimately leaves a lot of money on the table.” Amen.

(Thanks, Pete!)

Caught in the act by AdRants, Disney family resorts ads have been running alongside near-porn photos and content at sites such as Egotastic.

“Last Fall, some contextually placed Disney ads appeared in a webcam video of ‘Andrea’ fondling her breasts. Now, a series of banner ads are appearing on celebu-porn site Egotastic next to Keeley Hazell covering her breasts, images from a Kristen Davis ’sex tape,’ images from a Lindsay Lohan sex tape, Denise Richards displaying her crotch and more. Screenshots are here. No nudity per se but possibly NSFW. More than likely the ads appeared on Egotastic as a result of a blind buy with neither the agency nor Disney having knowledge. It’s yet another reason why blind buys are rarely a good thing for most brands, especially one so very conscious of its family-friendly image.”

As part of their “Power of Dreams” campaign, Honda has roadblocked pages of Boing Boing that are tagged innovation, environment, and safety. It lets Boing Boing do what it’s always done — create a quirky “directory of wonderful things” — while connecting the Honda brand with an authentic conversation about themes core to its identity.

Make is part of the fun, too.

That’s from JP Morgan’s Imran Khan in his Nothing But Net report (covered here by TechCrunch). Early last year, I argued that the challenge of identifying quality content and predictably delivering ads near that content continues to weigh down prices.

That’s the rumor, according to Ad Age.

New research from Yahoo and MediaVest (see Ad Age) says out-of-context ads work about as well as ads that are relevant to the adjacent content.

I forget the term for it, but there’s an old-fashioned advertising tactic (and lots of research that supports its effectiveness) where ads are designed to break outside the boundaries of the ad space. Like billboards that have objects hanging off them. The thinking is: When you are trying to interrupt people, do it loudly. Jar us into noticing.

To me, though, the question is, what’s the success metric you’re looking to drive? If you want clicks, naked women and blinking offers to win a free motorcycles work great. Interruptive ads also have a long and successful record in the pre-Tivo era. But if you want to spark up a dialog that might lead to a long-term positive customer relationship, you may want to go with polite and relevant.

From Times Online UK:

“Facebook is preparing an advertising model that would allow advertisers to target its users based on information that they reveal about themselves on the social networking website…. Facebook’s attempt to boost advertising revenues by extending information about its members to advertisers echoes moves by Google to target ads based on the browsing activity of its users.”

From WSJ:

“Facebook hopes allowing advertisers to buy customized ads online will be a less labor-intensive way to take advantage of the personal data people reveal on the site. A key part of this new plan is that Facebook would use an automated system to process transactions instead of requiring advertisers to work with a Facebook representative, people familiar with the plan say…..

“But Facebook’s new plan faces hurdles. It could upset Microsoft, which is itself trying to build technology to make it easier for advertisers to place targeted ads on Facebook. A Microsoft spokeswoman declined to comment on this issue.

“While Facebook plans to protect its users’ privacy and possibly give them an option to keep certain information completely private, some Facebook users might rebel against the use of their personal information for the company’s gain.”

Yesterday, Om Malik announced a new special-report mini-blog at GigaOM, The Future of Software:

“a micro site that over a period of one month will take a look at some of the major trends that are changing and influencing the software business…. [A] variety of contributors (including myself) will explore these topics. At the end of the month I will offer it to you a neatly packaged report as a PDF download. This concept is really a twist on one of my favorite sections in the old Red Herring, Briefing. It took an analytical look at one thin slice of the technology industry, say optics, from many different angles. I have sorely missed, and hopefully, this special mini-blog will fill the gap.”

Om says this will be the first of many “Future reports” on a variety of topics, underwritten by sponsors initially (but written, of course, by the editorial crew at GigaOM without any help from the sponsors!).  “The plan is to evolve these special reports into premium for-pay briefings, but for now we are going with the ad/sponorship model. Sun Microsystems is the sponsor of this inagural effort.”

Congrats, Om, and thanks for the support, Sun!

Last week’s TNS report (see Clickz) on 2006 ad spending put numbers to an obvious trend: Online advertising is the growth leader (up 17.3%), while print is mostly down and TV (minus Spanish-language) is just barely above flat.

Within online, the report also surfaced a less obvious trend, that large marketers are moving dollars to online display advertising more slowly than smaller-budget advertisers. On average, marketers in 2006 allocated 6.5% of their budgets to online while blue chip brands put only 4% against Internet ads. TNS Senior VP of Research Jon Swallen chalked up the slower adoption by the big spenders to an availability problem: “it’s hard to find inventory to spend more on.”

Huh?! Not enough online inventory? Even at top brands like Yahoo, certain large swaths of the site (Mail, My Yahoo, Groups, etc.) run house ads and cut-rate remnant deals. Ad networks don’t have anywhere near 100% fill rates for participating publishers, and the most efficient ad network of all — Google’s AdSense program — serves PSAs a fair amount of the time.

Market Inefficiency v. Lack of Inventory

Clearly there’s not an inventory problem online, but instead a quality inventory problem. There is limited inventory adjacent to high-quality content, and — maybe this is what Swallen meant — it’s still very hard to find it and sponsor it. There’s a market inefficiency problem that the ad networks and Google aren’t yet solving. The vertical publishers (think CNET’s tech sites or Jupiter Media or Nickelodeon Online) have quality, but not enough of it; the ad networks and Google have scale but can’t yet guarantee quality.

The Story of Google’s Effective Ad Rates

The two sides of Google’s money machine illustrate the point. Google takes a purely rational approach to advertising: Advertisers in a competitive-bidding situation will pay higher and higher cost-per-click rates until the costs approach the immediate revenues generated by that click. The average CPC paid by Google advertisers is around $0.50. When people use Google’s engine to search for something specific, 17% of them will click on one of these advertisers’ ads (see ChasNote). The algorithm that matches keyword advertisers with keywords entered into a search box works great for all involved. Users of Google’s search engine are seeing highly relevant ads (a perfect match 17% of the time!); marketers aren’t paying a nickel more than the value they get from each click; and Google makes about $68 for every thousand search-results pages they serve up.

But Google’s other system, the AdSense publisher network, tries to match those same key-word advertisers with prospective clickers on other sites based on content rather than key-words entered into a search box, and doesn’t work as well. That 17% click-through rate on Google’s own pages, a proxy for how well the ad-server logic delivers ads to people who want to click on those ads, drops to something closer to 1% on non-Google sites. (Consumer mindset, searching versus reading, is another factor.) Direct-response marketers may or may not care about the lower click-through rate: They’re only paying for the completed click.

Brand Marketers Demand Scale, Quality and Safety

Brand marketers, however, are paying for more than click-through performance alone, and they hold media partners to different standards. Even infrequent snafus that put their brand — and the implied endorsement by their brand — alongside homophobic rants by Ann Coulter (ask Verizon or Washington Mutual, see CNN) or on sites that promote illegal behavior (ask Microsoft or Wal-Mart, see Variety) become unacceptable PR disasters. Brand advertisers need a combination of scale, quality and safety (more on this from Battelle, see Searchblog), and the existing artificial intelligence solutions aren’t there yet. The bots get better every day, but to accelerate the migration of brand dollars to the Internet, we still need human insight to facilitate the process.