Zach Coelius

BW has chimed in about click fraud here

I may be a little biased but as I said before this is getting to be a huge problem for Google’s AdSense progrem.

I have a post here on the Triggit blog.

The big thing that I feel no one understands is that click fraud doesn’t steal from Google or the Advertisers. Advertisers have a simple equation. A sale is worth Y dollars, Z clicks = a sale, Z clicks is worth at most Y dollars. When click fraud happens it takes more clicks per sale and the value of each click decreases. Advertisers adjust the price they bid for each click accordingly. Google doesn’t give a shit, they might even make more given that some advertisers are not sophisticated enough to realize the relationship between a click and the real value of an additional sale. But the person that really gets screwed is the publisher.

A click does not have a constant value across the system. Each click has a different value. When a click results in a sale that click created the value of sale. But the way Google prices their clicks is that they all have the same cost. The value created by the click that resulted in a sale is spread across the rest of the clicks that result in no sales. If this was just happening on one site it would be no big deal. The problem is that it is spread out across a whole network of sites. That means that those sites whose clicks result in a lot of sales are sharing the value they create with the sites who clicks result in no sales. When the differential between the conversion rates of these sites is relatively minimal this is less of a problem. But when click fraud enters the system it becomes a big deal. By adding a huge number of clicks that return no sales into the system a great deal of created value is effectively siphoned from those sites whose clicks result in sales. Those that create good audiences are being stolen from. Shame on Google.

For some reason the powers that be in Triggit have decided one of my job duties is to go out and make friends with the Silicon Valley folk. Tonight I went to SF Tech event that Niall Kennedy put on. Zimbra, Joyent and Kerio were presenting their ajax mail and calendar clients. Cool stuff. I had seen both Zimbra and Joyent wow the crowd when I crashed the Web 2.0 conference last fall (shhhh! Don’t tell John or Tim, they don’t know I crashed their shindig). But I thought this might be a good opportunity to meet some new people and pay close attention to presentation styles. But no sooner had I sat down then my mind started racing about all the stuff I have to do for Triggit tonight.

Every time I do this startup thing I am always impressed with how my life becomes completely overwhelmed. Every waking moment seems to become devoted to thinking about the startup and all the things needing to be done. What I find even more interesting is the way my thoughts and feelings evolve and develop during that process.

In the beginning everything is simply great. A new intoxicating idea appears and all I can do is think about it, the ramifications and how it might be applied. I have ideas like this all the time. Most don’t last a day. Yet every now and then an idea will grow and develop in a way that gets me more and more excited. This is the fun part.

Then the work begins. But this is still fun work (reading about new stuff is cool), as we research the background assumptions and see if this can actually fly. At this point I am pretty much thinking about it 24/7 (yep even dreaming). Most ideas that make it past the first week die here as the research shows I didn’t know what the hell I was talking about.

But if for some reason the idea makes it past the initial research phase then the real gut check happens. Now we have to decide if we are going to leap into this or let it chill. Tough choice. This is Sue’s and my fourth startup but some of them require more of a leap of faith then others. Assuming we make the leap then the real work begins. We begin the transition into 24/7 startup mode.

Startup mode is where we start cashing in all the chips we have been building up over the years. Calls go out. An executive summary gets written. Meetings are set. The goal here is to see if this is something that has the capacity to get other people as excited as we are. We have not had one that flopped here yet, but I am sure one of these days a crazy idea will be received with the look of bemusement it deserves. Either way this is a huge test. If we can’t get other people excited about our idea its time to bail and cut our loses. This part of the process can be quite short or extended depending upon how many of the people we need to contact are already in our network. VFS took about six months to take off. Triggit started getting traction almost immediately.

Concurrently with our outreach effort are the days of the million tasks. More things than I can every keep track of have to be done yesterday. It seems like every moment has a to do list ten times bigger than can be accomplish. Something has to be created out of nothing. I love it.
At some point during this process of trying to get traction and creating something out of nothing is a moment I have never identified but always felt. Stress. In the beginning it is all fun and games. A voyage into whimsy as we fantasize about what might be. Then it is the ultimate challenge as we shape a castle out of twigs and try to convince people it is real. If it all collapses it is to be expected since we are trying to accomplish the impossible, no big loss. But at some point it becomes real. Usually its when someone gives up a good job to join the team, an investor trusts us with their money or a customer gives us a contract. Suddenly there are people depending on us to execute. It is still an awesome experience but of a very different nature. In a lot of ways it is a lot like the transition from messing around in the terrain park on the ski hill to dropping down a narrow chute with jagged rocks on both sides, messing up is going to hurt a lot more.

Tonight as I sat and watched Zimbra do their demo, I could see Dave- the CEO of their competitor Joyent-sitting in the corner, his face clearly showing the strain. As I sat there with the million things I need to do for Triggit tumbling through my head I could empathize.

Jason Roberts from Preezo (online powerpoint like tool with ajax) just sent me a link to the meebo story that he reworked their blog to create. Very interesting. It lets you read the Meebo story (they are a cool little startup that allows you to connect all your IM clients on a web page) from start to finish with Jason’s comments to highlight the path. Be warned, its very geeky with lots of talk about software development.

Tom Evslin has a great post on Fractals of Change where he talks about his experience self-publishing his book. Good stuff if you are interested in the actually steps and battles that must be fought to change the rules of book publishing. I think many people forget that while technology enable us to disrupt the status quo, someone has to then go and fight with all those who want to protect their rice bowl or nothing will ever change. The problem is that the protectors of the establishment as just that, “established” and tough to rout. Bravo to Tom and his efforts to lead the charge for change.

I have to admit that even I have had doubts as to the staying power of blogs as a tool to subplant traditional media.   Those doubts are starting to ebb really fast.  I think I may be turning into one of those true believers.  Kinda scary.

Technorati has a very good post called "State of the Blogoshere" , if your at all interested in blogs this is worth a read. 

Jeff has a post about rocketboom’s ad auction where he claims that advertisers are "Chickenshit".  This is a pretty frequent thread for Jeff, he sees traditional marketers as scared to jump off their cozy cruise ship and come play in the messy surf with us by advertising heavily online. To a large extent he is right as usual. There is a rather irrational unwillingness by major advertisers to accept the fact that the internet will replace (yep, bye bye trad media) TV, Print and Radio as the locus of people’s attention.  And as this change happens marketers really ought to be in the thick of it learning about this new media and developing new skills (their piddling little investments shepherded by junior associates do not count as a serious effort)

This change is not a simple translation with all the same rules carrying over.  New game. New rules.  And any marketer who thinks they can wait until the new game is in full force to start playing is going to get punished when they show up at the field and find that all their old skills are obsolete.  Silly people.

The problem is that major marketers who have the power of the purse right now are there for one reason; to sell products.  And as their traditional marketing skills don’t work so well in the online world they find that their efforts don’t return a lot of results.  Big surprise. In a lot of ways they are like early TV advertisers who tried to apply the skills they had mastered with radio to infant TV.  Those ads were a big flop and so many marketers missed the TV boat for a long time. Then the soap people came along, kicked everyone’s asses and the rest was history.   The same thing is happening on the internet.  Segment by segment innovative marketers are mastering online advertising and kicking their competitors asses.  And at some point in the near future the “Chasm” as Mr. Moore calls it will be cross and the whole advertising world will come rushing to the internet willy-nilly.  That is going to be fun to watch from this side of the river.   

The TRIGGIT blog has started.  Feel free to check it out here

I know I am turning into a big nerd when things like this start seeming really cool.  "This" is a great looking into the development for firefox.  Worth a read