Zach Coelius

Did a bit of good reading last night and some random thoughts emerged in the process.

Sometime people are right and sometime they are wrong.   When I look at the landscape of the advertising world right now I see a lot of people who could be both.  There is a chasm growing very quickly between those who say advertising is dead, and those who point out it has been said before.  Moreover in the internet ad world there is a rather disturbing sense of déjà vu as people are once again starting to think that the rules have changed.  The old is dead…  Long live the new!   Gone is the thirty-second spot.  Now is the time of the thirty character text ad.   Gone is the brand.  Now is the time of direct marketing of quality products.   And best of all, the New York Times has once again felt it safe to write a business front page article that an internet company is going to change the world as we know it.     Hmmm.  I get the feeling we have been here before.

For those of you who have slogged through most of my drivel you know I am a firm believer the internet is going to drastically change the world as we know it.   But I am also a pragmatist.  As John Kennedy used to say I am a realist who believes we can change the world (excuse the paraphrase).  So the questions I might most interesting are how we can make those realistic steps that change the world while operating in a paradigm based on the past (it’s a strange reality that the world we create with our minds is optimized to solve the problems we just lived through, rather then the ones we will soon face.  As J Hume points out we can only understand the world through yesterday).   When I think about advertising this problem becomes potent.  How are we to understand that massive edifice of creativity, hype, power and unadulterated money that is the modern advertising agency?   How can we understand it in this new medium?   Will it be a revolutionary change as Google intends or are facing just one more cycle of evolution?

We live in a world saturated with advertising.  It stupefies us with its constant drone.  It makes us numb and dumb to its message.  Every day we are targeted by thousands of ads.  To be successful advertising must get us to want to pay attention to it.  Google’s adwords works because they provide relevant solutions the problems we face.  They are useful.   How can other forms of advertising also be functional?

I was back at the VC poker game again last night (it would have been bad form not to give them a chance to win their money back).   It turned into a second round of funding.  Those guys keep amazing me with their generosity to my company.  So I am happy to report our relationship with our VCs remains strong.

The day also went well for other reasons I can’t get into now, but it was good.  You have to love the joys of a start.

More thoughts on Google click fraud.  First, fraud is really bad for all involved.  But it reveals the weakness in the Google model.  Because advertisers do not have control over where their ads go it becomes possible for fake sites to be set up that farm adsense links.  No matter how good Google claims to be at stamping out click fraud, the model they have right now will fail as long as there is no oversight on each and every site that hosts adsense ads (an impossibility in Google’s model right now).  And since Google is making a fortune off of all this they have no incentive changes their model or even to shut down these fake sites.

Here is how the click fraud works.   First they (the bad people) scrape wikis or blogs out there for content, basically an automated cut and paste.  That content is used to make a new page or blog that is that optimized to the top of the Google results by creating link farms that give the new page a high page rank (why not get as many free clicks as you can and make your site look legit).  Once that happens it becomes possible for the fraudsters to either use a bot to increase the number of clicks or hire a bunch of people in China to click away on thousands of these different sites.  The next big innovation here is that these click farms then share their clicks.  So there is now a network of farms all over the world clicking on each other’s adsense links.  Add to this all the zombie or infected computers out there controlled by hackers and you can see that it is possible for these clicks to come from all over the place and defeat Google’s defenses.   

Google is complicit in this fraud because they are writing checks to these sites and I don’t see them doing anything to stop it other then denying that click fraud is even a problem.  I love Google, and adwords is brilliant, but adsense sucks.  So whether it is my team or someone else (we have a great solution but who knows someone may come up with a better one), there will be a better product that emerges that solves click fraud.   Add to that all the work that needs to be done with relevancy, creative control, pricing fairness and increasing innovation in advertising-all things Google fails in now-an you can see that there is lots of room for improvement.  As Paul Graham says “one of the best things you can do as an entrepreneur is find something that really sucks and make it better”.  I think we have found that suckage.  Now we are trying to make it better. 

<a href="http://technorati.com/tag/Advertising" rel="tag">Advertising</a>

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Joel has a great post on google adsense click fraud today.  And even though google tries keep a straight face when they say this is not a problem, it is.  With fraud, cheating, lying, stealing, etc it is not as important how much of it happens as the perception that it happens at all that is a problem.  Google right now has a serious perception problem when it comes to click fraud.  And it is clearly growing.  As long as money is to be made on things like this, those that game the system are going to keep doing it, and more are going to join.  This issue is a huge opportunity for us in that our system solves click fraud.  I can’t wait to roll out.

Advertising

I am pleased to announce that "the company" is not only alive and well but getting very exciting.  When I can’t sleep at night because I keep thinking of all the things we need to do it is a good sign.   For those of you who are new to this blog we are building a system that will bring the power back to the blogger/site developer for the ads on the side of their pages.  We let you pick the ads for your site and then get paid for them.  Word of blog that pays.   In in time where blogs/sites are as much a labor of love as a commercial vehicle the time has come to let people have control over the ads on the side of their pages.   

If your interest in the history of the idea check out the posts by John Battelle, Ross Mayfield and Fred Wilson.  We stand on their shoulders.

We need more help.   If you have lamp stack experience and are interested in getting involved drop me a email at zachcoelius-yahoo or a leave a comment 

Advertising

Interesting article today in the times that discusses consumer blogs about the brands they use.  It is clear that brands no longer belong solely to the companies that create them.  The question is what all this means from an advertising perspective.  I think the public relations lessons for companies are rather clear, IE, openness, constant communication, listening carefully to their customers… the usual stuff coming out these days.  But when it comes to advertising, the creation of demand, this is a little tougher.  Gonna have to keep thinking on this.      

This is not new thought, lots of people have thought and written about it, but the more I think about it the more I am convinced that it is really important.  How do we understand advertising in a world where the consumer has infinite amounts of information (though there is a good question as to if they use it) and is highly empowered?  There is a good possibility that we are looking at advertising as an effective tool through a context dependent on a twentieth century model whereby information was in short supply and advertisements could be an effective source of information.  Take for instance car commercials.  They are still used as a vehicle to provide price information even though many if not most consumers today will go online and quickly develop a much more complete understanding of the market conditions and industry pricing.   Moreover if we look at things from a generational perspective then its not many, or most but all of my peers who do this for virtually any shopping choice we make that has any size.  We simply know more and are very comfortable looking for information we don’t know.   Think, there was once a day when we were taught how to research in school.  Now as soon as we know how to read we learn how to search.  It is a sea change in the way my generation interacts with information.  We have become comfortable with the idea that there is more information out then we could ever know and we access it on a need basis.  In the past the norm was to be “educated” and then once you know everything or a lot you would be able to do things.   Take one look at some of the things that kids are “doing” these days (amazing non-profits, amazing for profits, inventing new technologies, etc) and you will see that they simple go out and acquire the information they need in order to achieve their objectives.  What that means for advertisers and consumers relationships with products is hard to know.  What is clear, and has been commented on by many people, is it going to be impossible for a company to control or even heavily influence what consumers know about a product.   This is a dramatic idea when it comes to advertising which is all about creating ideas and shaping the way people relate to products.

When we flip the equation and think about how consumers interact with products we can see that there are certainly bonds.  What do those mean?  How can we understand marketing from a perspective where the ability to insert information into a persons skull is constrained?  What is the purpose of market in a permission sense where the person is already captured to a degree?  Why not simply use the money spent on advertising to lower prices and improve quality and let consumers spread your message (that’s it, advertising is less about spreading ideas and more about spreading awareness.

Google has come out with a seven-fold increase in profits for their search advertising and the valley is doing its pointing and murmuring thing.  Eyes go wide and the flush of jealously becomes a little apparent.  They have become seen as so good, so big, that they have become overwhelming.   To think about entering the internet advertising space or considering that there might be other ways to advertise then search and text ads is hard for some to imagine.  Wake up guys.  The US total advertising spend is $278 billion dollars.  Online right now  its around $11 billion.  We have a lot of change ahead of us as those dollars keep flowing to the internet and our medium learns how advertise effectively. 

Just to get a sense of how young internet advertising is go to a bookstore and take a look at all the books about how to advertise on television.  Then look at the books on how to advertise online.  The body of knowledge for internet advertising is nothing.  We have a long way to go.

I have been playing with this idea for a while and I have to admit it still intrigues me.  What would happen if you did an open source company?  By that I mean a company that was directed towards solving a problem of a community (say for instance the problem of how to monetize blogs with advertising) where members of the community could all join in the development of the company.  A stock pool could be created to be distributed to people who helped with the build in an open source, distributed, self-directed manner.  There could be hundreds or thousands of owners of the company, kind of a publicly held, private company.  I realize from talking to the lawyers that there are legal issues but none that I see as deal killing.

Right off the bat there is that pesky little problem that as a startup with open source and open ideas there is the possibility of others will just mine the community for ideas and then build a private company to monetize them.   But if the ideas were good enough to be mined then wouldn’t that mean that the community would have to be pretty robust?   And if that was the case then a robust and innovative community working together ought to be able to be able to kill a privately held company every time.  Right?   

The real questions I see relate to what open source type builds are good for and where they fall down.  Moreover there is the question of why can’t these types of builds be done by a non-profit. 

My cents…

I am pleased to announce that we are now venture funded.  Well sort of.   Tonight I headed down to Canaan Partners for the weekly vc poker game, a tournament with about 20+ players this week, and the vcs were nice enough to let me win and take thier money.   And then to ice the cake they let me do quite well in the cash game that followed.  Very nice of them.  If all of our work with the venture folks goes this well I think it will be a great relationship.