I saw some very interesting research from forester today about the growth of online advertising. Unsurprisingly (as in the real world) they feel that the growth of direct response advertising like PPC will at some stage be outpaced by brand advertising, banners and so on, online. As I looked at this I can believe it but if fraud in CPA networks is an issue, click fraud (and low value clicks) in CPC networks is a bigger issue then CPM fraud and to a huge extent the fact that not all impressions are equal is a totally massive issue.
Look at it this way, I am not a fraudulent webmaster (I don't have the time ;) ) but of my sites my cocktail recipes site has a smaller level of traffic than my paper airplanes site (by about 50%), the cocktail recipes traffic is predominantly adults in the 18-35 bracket which is definitely of more value to banner advertisers than kids. I am not fraudulent but I do know some of my impressions are more valuable than others.
Right now advertisers are spoilt with CPC advertising in that it is relatively easy to pick the search engine and keyword which gives you the highest return. Even if you have no advance knowledge of the value of a keyword with enough money through a process of trial and error you will eventually reach the perfect demographic. The same definitely should be possible with CPM advertising but somehow from having once been ahead of the game in targeting CPM advertising has fallen behind since PPC became huge and is pretty spammy and untargeted for the bulk of impressions. Networks like valueclick, tribal fusion and casalemedia carry loads of smiley and hotbar type ads which certainly give them a sleazy feel to work with as a small webmaster (although I admit I still take their money).
Users unknowingly tell webmasters and ad networks a lot about themselves. A large number of environmental variables are passed to the server which is sending you a site. Operating system, referring domain, browser and version, JavaScript enabled, certain tool bars installed, what ISP they are with and so on and so forth. I am positive that someone who elects to use firefox is telling you something meaningful about themself and is in a very different demographic than someone who uses Internet explorer. That should be useful to brand advertisers and a canny brand advertiser could make a killing by targeting using these variables, in fact it should be useful for Google to expose this kind of targeting too if they could pass those details through to PPC advertisers and allow them to target on that the world would get more interesting very fast indeed.
Geotargetting is already huge (at a country level) and is the first step into more granular targeting of users. Google, Yahoo and the large banner advertising networks are aggressively moving into the local space which is really cool. There is no question someone who lives in rural Yorkshire (or Montana) has different needs to someone living in downtown London (or New York). This is powerful stuff we are only just tapping now but tv advertising and radio have been making Billions from for years. A typical way of monitoring offline ad performance is to have dark regions and light regions and then observing what happens in each region.
As a webmaster I am taking baby steps into behavioral targeting using Google channels and my adsense return by referrer test illustrated in the previous example is my very first test but I have plans to start doing some advanced channel naming so that I can test hundreds of variables at the same time and serve the ads based on that complex set of variables I have tagged the user with. Over 3months I should get enough data to have a million impressions against most of the big segments. I don't however think that many of the big money spinners in the Internet optimize in this way
Google has made a move in this direction with CPM banners into their adsense network which is of course huge but it is the nature of Google that they are thought of as a direct response solution. I am sure they want the branding big bucks (and they have said as much) but I wonder if their brand has the elasticity to stretch beyond being a highly targeted direct response advertiser. Personally I don't think so, certainly not easily so their is a space here for someone else to really nail this one to the wall... could it be Yahoo!? They have the network, they have the advertisers and they have the experience, it'd be cool to see it happen.
