In Search Of: the Underlying Strategy in Mobile Advertising

Perhaps your experience is similar to mine. Recently, I've notice what seems like an increasing number ads in the apps that I use on my phone. We all understand the basic idea -- mobile use is increasing, there is strong engagement with mobile devices, so more engaged eyeballs equals conversions and results... or at the very least, a more enticing opportunity for market program dollars.

While I can understand these app platforms looking for ways to monetize the software, realistically, the only times that I've clicked on them were accidents. I know I'm not the only one who acts this way, so it makes me wonder about certain aspects of the mobile advertising market.

Online Advertising Has Always Sucked -- Well, Almost Always
Before we go further, I should note that I'm rather skeptical about many aspects of Internet advertising. In the days before Google and PPC advertising on search, Internet advertising sucked for a bunch of reasons. Of course, that didn't prevent some of our colleagues from burning marketing dollars on these crappy programs. But for many of us in those days, Internet advertising was simply a B2B scam grifting marketing budgets.

Adwords really changed everything. Adwords was different because in many ways it provided consumers a value-added experience -- when they clicked through an Adword listing, they were interested in your product and often ready to buy. Adwords also set a new benchmark for ROI on advertising dollars with pay-per-click, an ecosystem that was designed to prevent spammy advertising noise, and a focus on blocking irrelevant content.

For a time, there was no better benchmark for advertising ROI than Google Adwords. But as the market matured, we also saw the era of click-fraud and of ecosystems devoted to farming revenue from Adsense. There was money there and everyone wanted a piece. But more than anything, what Google Adwords did was prove the viability of online advertising as a sustainable revenue engine.

Online display advertising had it's own drivers. While content publishers have looked for ways to make ads more like traditional print and television ads, it's been all about narrow-casting and individual user profiles on the back end. Similar to the spyware/malware elements that pioneered some of the display ad networks, today's Internet advertising networks collect user data and use that information to shape the content that gets pushed to the user across the entire ad network. Visit a travel site and you see travel ads on all of the web pages that you go to from there.

For marketers, leveraging demographic intelligence in online advertising can improve conversions. Of course, if you follow back through to the Scamville posts about Facebook/social network game advertising, this same level of intelligence can also be applied to manipulate users or potentially take advantage of marketers.

So What About Mobile Advertising
In looking at the ecosystem, the goal is think about whether this is a viable marketing outlet or yet another way to scam dollars from a marketing budget. And, if its a viable platform, for which types of products or markets. Beyond ROI or a specific advertising network company's sales pitch, it's important to build a theoretical framework of expectations.  

Let's start with a couple of assumptions. First, let's assume that some of the people directing these advertising programs have a strategy, a plan, use metrics, and see real ROI on their mobile platform advertising. Within the system, somewhere, there are probably people getting some benefit from these mobile ad programs. So, working from the other end of the spectrum and attempting to define some personas, under what circumstances would you click through an ad on your phone (other than accidentally)?

Most mobile apps are designed around very focused, narrow use cases. Get in, use the app, get out. If the ad is supposed to provide you with a gateway to additional information, why isn't that information integrated into the core functionality of the app?

One common approach for mobile apps is to place the ad close to the area that you have to click in order to enter text. Getting ready to type in a search term? Be precise with your aim or you'll click through an ad. I suspect that this design approach is a two-fold strategy that underlies a large percentage of in-app mobile advertising.

1. Artificially inflate click-through-rates to deceptively sell advertisers on mobile ad ROI. 
2. Create a nuisance tax for consumers in order to drive the up-sell purchase of ad-free platforms. 

The second approach tends to work like television commercials, popping a splash screen or video segment before the user is taken to the content or application functionality that they are seeking. If seen this approach used prominently in games like EA's Scrabble and applications like the Epicurious recipe tool. If most people are like me, they they are probably clicking through simply to get past the ad as quickly as possible or ignoring the video clip while it runs.

Again, I suspect that the key drivers for this type of advertising are the same as above with one caveat being that many of these types of ads contain poorly written code that causes the application to lock-up. EA's Scrabble, for example, relentlessly consumes battery life and I've even heard audio from ads running in the background even as the application had moved forward.

Mobile Advertising Strategy In Sum
At this point, I have a hard time conceptualizing a market or a product that would be a good candidate for mobile advertising. If I were directing an ad spend, I would keep my dollars out of mobile. Consider, even for the poorly implemented ads that caused problems with application hangs, I don't even know remember enough about the specific advertisers or products to be angry at them -- for a variety of reasons, the ads didn't even work on that level.

I definitely would not believe anything I was being sold when it came to mobile CPC. In my mind, if there is a case for mobile, it's probably a CPM placement, and even then, I have to think that there are better channels.

An Amusing Look at Unusual Resumes

I've written about unusual resumes on several occasions. Here's a post with some amusingly unusual resume examples. It's probably worth noting that most of these are creative people seeking creative jobs... marketing is creative, right?

http://www.businessinsider.com/insanely-creative-resumes-2011-6?op=1

Amazon, Sales Tax, and The Internet vs Brick and Mortar

On a recent Friday, I was in the car driving down from San Francisco and KQED radio's Forum program featured an hour-long segment on California sales tax and Amazon.com. Here's the synopsis from the KQED page:

Online retailer Amazon is fighting back against a recent California law that taxes Internet purchases from out-of-state companies. State officials say the law will generate up to $200 million a year in unpaid taxes. In response, Amazon officials are launching a petition drive to overturn the law. 

As with many of these Forum programs (like many national talk radio programs), the show wandered between frustratingly oversimplified background info and useless PR demagoguery. And while they pushed me to the point that I almost called in, I opted to focus on driving and save my energy for another blog post on this topic.

First, a couple of foundational points:

• California needs money to fund it's government.
• Sales tax is one of the methods used by the state to take in money

Various associated groups will frame this issue of sales tax nexus around two themes, the Internet versus Brick and Mortar, and the moral responsibility for businesses that sell things in the state to pay for stuff in the state. The Forum program rode both of these themes pretty hard through their hour long segment.

The Internet versus Brick and Mortar is an easy story to play for an emotional response. It's essentially a replay of You've Got Mail. In this episode, you get a small, local bookstore owner getting their head handed to them by the giant Internet Goliath. Of course, it has nothing to do with selection, convenience, reviews and value-adds, or base price (typically half that of retail) -- it's the 10% discount that customers get by avoiding sales tax. Don't worry, the arguement sounds better when it comes from Meg Ryan.

As for the moral responsibility for businesses, the reality is that businesses are driven by costs and profits. As much as we might wish for a moral component to business, many of the same "moral" forces that drive business also drive consumers -- namely cost. I can't tell you how many times I have been hanging out in my local bike shop when someone came by, looking for sales support, information, or a tangible product experience -- only to leave and purchase the same products over the Internet. Or, the other classically similar event -- purchasing a "low cost" bicycle over the Internet, being overwhelmed by the challenge of assembling the bike, then taking their Internet bike to the LBS for assembly. For these consumers, where is their moral commitment to their local community? And they live there.

That's not to say that people and businesses shouldn't act with a morally ethical perspective. Rather, simply expecting tax and revenue from the philanthropic morality of businesses or individuals is unrealistic.

The Real Issue with Sales Tax
Ultimately, the real issue here is whether sales tax is a viable way of collecting revenue in the age of the Internet. It's not just Amazon Affiliates and location. If you buy software for your computer and then download it, that's not subject to sales tax. On the other hand, if you buy the same software on a CD, it's taxable.

Using affiliate location to define nexus is a new arbitrary interpretation that California (and other states that have tried to use this technique) have rolled out in an effort to strong-arm companies like Amazon for some money. Suppose you publish a blog or a web site and your server is located in Texas -- is your sales tax nexus in California or Texas? In the old days of brick and mortar, it would be difficult to stretch your store across state lines -- now, you can find yourself in the middle of complex interstate commerce questions with a credit card and a few clicks of the mouse.

Anyone who has set up (or considered setting up) an e-commerce system (particularly in the early days) understands the challenge and complexities of location, nexus and sales tax. What makes it even more challenging is the constantly shifting landscape of local sales taxes. Even for a "morally responsible" small business, attempting to navigate the landscape or maintain an infrastructure that worked with it can be problematic. Meanwhile, what if you sell something to someone on eBay? Do you have to collect sales tax? How do you know? Are you certain that you are in compliance with all of the local laws that affect the affect your purchaser?

Of course, this doesn't really solve the problem of how to address revenues that have traditionally been collected through sales tax. Clearly, as a society, we need to find a way to reinterpret this system and make adjustments to make it fair. Unfortunately, simply having the state make an arbitrary revenue land grab is not the way.

Branding Case Study: Paris Hilton vs Kim Kardasian

While celebrities and celebrity culture is a topic usually best left for the tabloids, gossip blogs, and SEO link-bait, sometimes celebrities and their media entourage provide good case studies in modern media communications and PR. For example, I still hold some sense of shock and amazement over learning that Kim Kardasian was using Twitter for sponsored tweets as $10K a tweet.

Setting the Stage for a Branding Case Study
Apparently, Paris Hilton appeared on Good Morning America recently and was asked (more or less), "aren't your 15 minutes up?" She walked off the set. Keeping in mind that both Paris Hilton and Kim Kardasian launched their brand at a similar time and through a similar path, it's an interesting comparative analysis between the two celebs and their brands:

• Why is one still viable while the other has jumped the shark? 
• Are there differences in programs and practices that have driven the success of one or the failure of the other? 
• Are there specific PR or branding blunders that stand out? 

Anyway, that's enough celebrity culture for me...

Techcrunch Redesign: Yet Another Reason Why Some People Think All Marketing Is BS

So I was running through my Twitter feed, scanning for potentially interesting reading. I happened across a Techcrunch post on their site redesign, so I thought I might dive in and see if I could get more of an explanation.

Based on the content from this post, Redesigning TechCrunch: We Picked This Logo Just to Piss You Off by Dave Feldman, this redesign was largely dictated by AOL's office of consumer experience. Really.

Check out a couple of these quotes from his post:

TechCrunch is bold. It’s raw. It’s fast-paced.

I’ve seen a lot of comparisons to the recent Gawker redesign — mostly fear that we’d follow their lead. I think we’re all too hard on Gawker: they saw shortcomings in the traditional blog format and decided to try something new, something app-like. They got a lot of things wrong. But the core idea is an intriguing one, and I applaud them for taking the risk. That said, the Gawker approach wasn’t right for TechCrunch. If they ran away from the blog format we doubled down, addressing those same shortcomings by refining and extending it.

The overall look & feel reflects the bold, sometimes irreverent nature of TechCrunch. It doesn’t hold tea parties in the backyard or hang out with the black turtleneck crowd at the hippest art galleries. It’s a design that breaks more news than its competitors, that loves the code junkies working 22-hour days to build world-changing products.

It's a good thing he sold me on the lifestyle connection to the look and feel, otherwise I might have just gone with my gut reaction that it sucks. Instead we get an Arty Fufkin / Social Network mash-up explanation of how craptacular design is the new black -- or something.

The New Techcrunch Site Layout is Awful

Over the past couple of weeks, I've been busy with a couple of big projects, so I haven't had much time for online reading. As a result, I'm not sure about the exact date when they rolled it out, but -- in case you might have missed it -- Techcrunch has redesigned their site. As my old friends in the south might say, it's godawful.

There are so many aspects of this design that Fail. While I can appreciate the hipster sensibilities that bring us retro 8-bit icons and imagery, design is closely coupled with functionality. In this case, Techcrunch has gone from a site design that made news and content very accessible to one that has become virtually unreadable. If I didn't know better, I might suspect that the real driver behind the redesign was a desire to sabotage the property and the AOL portfolio. Unless, of course, the design originated from within the AOL group, which one also might suspect of being capable of something so bad.

Seriously though, when I first started reading it, I first thought that the site problems might be a result of using an old version of Firefox and html 5. Sadly, all of the modern-standard upgrades couldn't rescue it from the craptacularly awful. You really have to ask yourself, does this signal the death of tech blogs and online media as the go-to news source?

Amazon Cuts Affiliate Programs As California Enacts Stupid Anti-Affiliate Internet Tax Law

Last week I received an email from Amazon notifying me that they would be ending their affiliate programs for any publisher that resides in California. If you haven't been following this issue, you might be surprised by the news surrounding this story. For me, the biggest surprise is that the State of California, home of Silicon Valley and the heart of Internet innovation, could find itself going down such an idiotic path.

What's Behind the Anti-Affiliate Tax Law
In theory, sales tax rules are supposed to be pretty simple -- if you buy something from someone, then the state gets the merchant to collect a percentage based on that sale. Of course, the actual laws are much more nuanced than that, but that's the principle in a nutshell. When it comes to buying stuff on the Internet companies like Amazon have essentially said, "we don't have any operations in the state, so we're not going to collect sales tax on sales that get shipped to states that we don't have operations in." In that way, Amazon and many Internet businesses have used operational location and sales tax to strategically eek out some competitive pricing advantages.

As states like California find themselves sinking deeper into a revenue hole, victims of the crappy economy and the economic catastrophe macro forces, they're scrambling around looking for any sort of revenue life raft that they can cling to and might float politically. It's worth noting that this whole situation is exacerbated by the anti-tax Republicans and their jihad against government -- they've taken the ship of state hostage and will blow it up unless we all fly to anti-tax fantasy land.

The Challenge of Taxing Internet Sales
Over the past ten years, more and more people buy stuff over the Internet. Often, people will go to brick and mortar retailers, look at products, then price-shop to find the lowest price and order it online. That includes no sales tax and free shipping. It's unfair to local merchants and it's just one of the reasons why we've watched local specialty retailers become an endangered species. But the problem isn't Amazon or the Internet, it's that as the world grows flat, interstate and international commerce lines become incentive zones.

The problem isn't the Internet. The problem is that now, for many items that you purchase, the point of sale approach to tax has undergone the same transformation as local newspaper classified ads. In short, it doesn't make sense as an instrument of revenue generation. Instead, it becomes a disincentive for businesses to attempt to compete in brick and mortar businesses in local markets unless there is an inescapable local component to the product or transaction. This legislation is like trying to tax Craig's List in order to subsidize the world's local newspapers.

Since businesses like Amazon don't have operations in the state, the state decided to change it's tax code to consider Affiliate marketers to be "operations" any money paid out as a sales commission, as though, by publishing links to Amazon products for sale, we bloggers and web site publishers are suddenly different from publications that run print advertising. Consider, what's the difference between a print advertisement and an affiliate advertisement except compensation at a Pay Per Click level instead of what's basically a PPM advertising model in the print world?

By attempting to use affiliate marketing as the lever into online transactions, California closed the books on the Amazon affiliate program -- and anyone in California who received income from this (and payed corresponding state income tax based on this revenue). Essentially, they just killed some number of Internet-based jobs. And they knew that it wouldn't work. Prior to California signing this into law, Amazon has actually shut down the Associates program in Illinois, Hawaii, Connecticut and North Carolina because of similar legislation.

The Heart of the Problem
While the anti-tax Republicans might want to look at this and wave it as a "taxes are job killers" bloody shirt, the real root of the problem goes back to this Republican anti-tax anti-government jihad. California has been in this budgetary hole for many years. From the state's education system to our social infrastructure, we watched as so many of the institutions that were the gold standard for the US and the world deteriorate under the influence of the greed-heads that only want to ask, "why should I have to pay for that?"

In this case, it didn't matter that the law doesn't work because California state government can't discuss possible solutions that might work. They can't negotiate raising revenue with the anti-tax terrorists. Instead, this budget driven law was more like Maxwell Smart trying to balance the budget and stop the impending explosion with yet another attempt to push out the problem a bit longer. "Would you believe several hundred million dollars in tax revenue from internet sales tax on Amazon? Would you believe several million Farmville bucks? How about a couple of free items in World of Warcraft?"