Contextual Web Ads Exploit Weak, Poor, Desperate, and Stupid People

As an advertiser and a publisher I have ad CTR data spanning hundreds of millions of impressions and about a million ad clicks across a wide array of verticals. One of my early opinions on contextual ads and search ads was that people are far more likely to click ads if they are desperate, stupid, or ignorant. While I was flamed for my opinion, this opinion has only been confirmed from talking to friends who have much more data than I do, and Dave Morgan from AOL also confirmed it.

Seth pointed to this post by Danah Boyd, which offers a hypothesis on who is clicking ads:

Based on what I've seen qualitatively, my hypothesis would be that heavy ad clickers are:

  • More representative of lower income households than the average user.
  • Less educated than the average user (or from less-educated environments in the case of minors).
  • More likely to live outside of the major metro regions.
  • More likely to be using [social networks] to meet new people than the average user (who is more likely to be using SNSs to maintain connections).

The problem with catering to the lowest common denominator is that the people who are clicking the ads

  • have less of an ability to buy premium products
  • are less likely to do follow on marketing for you to promote your products to other
  • are a small minority of your visitors
  • are driven away from your site when they click
  • each day many ignorant users learn more about the web and click less ads
  • the new users coming on the web replacing those who are learning about it are even poorer and less socially connected than those already on the network

In the next couple years there is going to be a major shift in online ad based business models where many publishers push themselves up the value chain. The trend for profitable publishing, is going to include the following aspects

  • fewer ads
  • ads with more information
  • ads that look more like information
  • ads tighter integrated into the content
  • having a semi-porous brand which allows your free content to do your marketing for your paid content
  • in many case selling ads that include personal endorsement, and ads for white label products or house products (often via subscription)

As more premium publishers shift from ad based models to selling white labeled and house products it is going to get harder to buy ads affordably on the clean parts of the web. And the trend has already started. If you look at some of the most popular investment sites you will see that many of them provide free offers for products that lead you into buying a subscription service.

If you are going to monetize your site from a small minority of your visitors it makes sense to build relationships with them and charge recurring if you can. If your only monetize 5% of your audience would rather have $50 a month from them or 50 cents?

Published: December 20, 2007

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Comments

December 21, 2007 - 1:43am

I agree with you that ads will begin to become less profitable. My question, then, is how do non-technical sites like mine, Zen Habits, or others monetize?

December 21, 2007 - 3:19am

Hi Cory
I think the Zen Habbits ebook is priced too low, and to justify the price point it should sell it for then it probably needs to contain some content that can't be found on the site, and marketed as such.

Then occassionally write partial posts for the blog stating that an extended version of the post including x additional tips can be found inside the ebook.

BTW...ebooks are sorta losing momentum in some ways. It might even be better to create a training course on overcoming specific issues. You can make niche specific guides.

And don't forget featuring reviews of stuff you like marketed via affiliate links. I think Steve Pavlina does good with that sort of stuff.

And I so recommend having your own domain name instead of having a site at blogspot or the like.

December 21, 2007 - 5:01am

Hey Aaron,

I've been reading your stuff for a while now, and really praise many of the things you write. For someone who hasn't been online for as long as some of us, you are truely full of great new knowledge. Your videos you did for a while were great too btw!

Anyhow, I wanted to comment on this particular post because if what you are writing is true, then why is Rupert Murdoch taking the Wall Street Journal - Online Edition from a premium/subscriber base to a free model? They are apparently working against the grain if what you say in this post is accurate. Also, how about the New York Times taking away their pay/premium versions of their sites? These are examples of companies who have gone the opposite direction with their sites and decide to rely soley on ad revenues.

REF: Murdoch Says WSJ & NYT Web Sites to Drop Fees

Either I don't understand something or these are two great examples that are doing the opposite from what the web is said be doing. Maybe they know something we don't?

December 21, 2007 - 6:07am

Hi dr00t
For generalist sites like news, news is a commodity. Many of the business models for news companies rely upon regional based monopolies.

Domain names and community activity largely supplement or replace the need for much of the generalist news or syndication based business model. I used to live in State College and talked to the guy who owned StateCollege.com. The local paper was doing worse and worse every year, and with a small aggressive staff, better technology, and a great domain name is all it takes to beat them.

And the news that is worth money spreads fast OUTSIDE OF the paywall. So does WSJ want the pageviews for breaking a news story, or do they want to see the TechCrunch post about the WSJ story get those pageviews?

If you do not think news is a commodity take a look at this image. It says it all, IMHO.

December 21, 2007 - 6:07pm

Interesting. Great response. Thanks for getting back to me.

December 22, 2007 - 2:19am

Aaron you said:

"Contextual Web Ads Exploit Weak, Poor, Desperate, and Stupid People"

I am a writer, and sometime when I wish to get people to think I put these blaring type headlines or copy. I am not good at grammar or spelling and have trouble constructing sentences.

Rene Descarte called the people the Rabble.
Freud had names for common people
Karl Marx had names for the public

I purchased your book, and thought to myself, I hope he (you) appreciated this good will gesture. Most techie or web people on the internet know they can get all this type of information for free, I can more or less steal it off the net.

There are times where you float between Marketing advice and SEO specific advice, not sure there is a difference, but I know web people have trouble using the word salesmen or women to describe themselves.

I travel the planet, and 99.9 percent of people crap when tempted, buy when tempted, and sleep when they are tired. They only go to work when forced. To work on the internet a person has to work without being told, and this is the number one reason people fail. 60 percent of all small business will fail in the first three years and 85 percent in the next 7 and about 95 percent in 10 years, very few people will be on the internet 10 years from now. The people writing newsletters on making site are different than 10 years ago.

Content is King and selling products that are durable is king, a good product sold to a genius or an idiot is a good product. The pride of giving good advice is that an idiot can use or a genius can use.

The economy of the world functions and runs on selling products of no value. My frined Bob in Bangkok, he has traveled for 5 years and me for 11 said,
"Malls place full of things nobody needs."

I know this, as I cannot go in Malls, I travel and live on the road, presently in Bangkok and soon to West Africa or the Stan Brothers of Russia.

I am willing to bet you know that only 1 in 500 of your readers makes over 1-5 dollars per day on the internet and never will make more. I make around 100 US per day and hope to climb to 20 times that soon.

Techies and Web people enjoy thinking they are special and not part of the group that is exploited. In a way, I would encourage them to accept the buy stupid daily and probably have Foxfire on their computer because they believe this makes them special.

Large amounts of Organic search traffic and I am impressed.
Large numbers of subscribers
When I go to Internic.net and learn the site has bee there for 10 years.

Contextual Ads are the windfall that has taken the internet from a joke to a profitable venture. I am 100 percent positive Google will continually remove the rabble who put up get rich quick websites. I on the other hand know, if a person did not sell to the "Weak, Poor, Desperate, and Stupid People" which I believe includes 99.99 percent of your readers, we would not have anyone to sell to.

The stupid will remain stupid, the smart will pretend the are smart and Descarte, Freud, and Marx undestood this is the normal people of the planet.

Andy of HoboTraveler.com in Bangkok, on Highspeed for a change. Note, a very smart person would make a million dollars and only work two hours per day, or use the computer two hours per day.

December 22, 2007 - 2:43am

I am sure most readers make more than $1-5 a day on the internet and those that don't soon will if they tried. To say not even 1 in 500 does is ridiculous.

Also to say a smart person would only work 2 hours a day is wrong. It may come as a surprise to you but some people actually enjoy what they do.

December 22, 2007 - 2:38am

The economy of the world functions and runs on selling products of no value. My frined Bob in Bangkok, he has traveled for 5 years and me for 11 said,
"Malls place full of things nobody needs."

True.

I am willing to bet you know that only 1 in 500 of your readers makes over 1-5 dollars per day on the internet and never will make more.

Given the demographic skew of the site, with New York City, London, and Los Angeles being three of the four most popular reader locations, I can not imagine that to be true.

Anyone in this field probably is doing well above average because they are already technologically enabled, and are participants in a market with huge arbitrage opportunities.

I make around 100 US per day and hope to climb to 20 times that soon.

Congrats on your success thusfar and I wish you more in the future.

Techies and Web people enjoy thinking they are special and not part of the group that is exploited. In a way, I would encourage them to accept the buy stupid daily and probably have Foxfire on their computer because they believe this makes them special.

Everyone gets exploited at one point or another. The point of this post is not that you should exploit people, but that if you work harder to package value and sell it at a fair price you can deliver more value to the people who are really going to get value out of it.

December 23, 2007 - 10:27pm

I disagree with Danah Boyd for anecdotal reasons. I'm personally reasonably well educated (in university at the moment) and click on ads because I find they show me relevant stuff to what I'm interested in. Helps me with comparison shopping and learning.

December 23, 2007 - 11:29pm

Hi Bookworm SEO
I sometimes click the ads too, but based on my ad data, there is an obvious skew to the types of queries that get clicks and the types of people associated with certain queries.

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