Go Big or Go Home

Heard about the Affiliate Summit Gambler Contest? It's a great opportunity for affiliates to show what they're made of. In addition to an all expenses paid trip to Affiliate Summit in January, you get some cash. How much is the part that has me salivating!

You can put $1,000 in your pocket and walk away happy. Or, you can get $2,000 to show what you're made of. Thanks to my favorite CPA network, you can double your cash if you've got the guts to throw it all down on the table on a single hand of blackjack or one spin of the roulette wheel. Take option #2 and you've got just under a 50% chance of walking away with $4,000 ($5,000 on blackjack) or nothing at all.

Sounds like the spirit of affiliate marketing, doesn't it? Throw caution to the win and take the big chance that you can double what you're doing. Well, only if you are setting your sights too low.

Should I win the contest, I'll ask for a slight exception to the rules. I don't want to bet red/black. Trying for $4,000 in free money doesn't qualify as reaching for the stars -- but holding your breath and going for $72,000 would certainly make for a noteworthy trip, don't you think? I'd want to put it all down on lucky 13, taking that 2.7% chance that I'd have that nice stack of $5,000 chips in my pocket making it look like I was happy to see you.

You see, that's really the key to success in affiliate marketing. You've got to think big and then strive to get there. This is an industry that's only a decade old, and even then only really took off in the past four or five years. Yet, we boast a boatload of millionaires who work out of the spare bedroom and companies far from Wall Street's view with 9-figure revenues. You don't get there by playing it safe and aspiring for an extra thousand or two. You get there by having big a vision, working harder and being more creative than the next guy (who sometimes has a chip stack 100 times the size of yours), and daring to take big risks. Doesn't matter where you start; it's where you finish that counts.

I'm not some pussy who's going to spend all week holding a blog poll asking a bunch of Beavises whether I should put it on red or black. And if you can't stick around at a $1,000/hand blackjack table long enough for your drink to arrive, then what's the friggin' point? Go big or go home. One spin - lucky #13. Give me the $2,000 and I'll show you how it's done!

Mess You Made: Four Ways to Get a Great Logo on the Cheap

Mess You Made: Four Ways to Get a Great Logo on the Cheap

Four Ways to Get a Great Logo on the Cheap

As I launch more and more Web sites, I'm starting to care a bit about making them look nice. Since my artistic skills are about on par with those of my two year old, I've started to enlist professional help. Upon learning that some of the designers I know start at $5,000 for these projects, I knew it was time to get creative.

Here are the best resources that I found:

LogoMaker is a neat online service that gives you tools to do it yourself. Much easier and higher quality than, say, Microsoft Clip Art, but obviously tough to come up with something that's completely original looking. Still, it's fast, you can play with it for free, and if you like your creation, it's yours for only $49.

Rent-a-Coder is hands-down the most effective marketplace for small, outsourced projects. I absolutely love it and have gotten to the point I'll post projects that take 30 minutes and cost five bucks. The key to success with RAC is that you need to be crystal clear in communicating what you want, and follow up regularly. Even though your coder may be half a world away, you still need to manage them as you would any other contractor. Rates will probably be between $10 and $100, depending upon the quality that you are looking for and you can get something workable in as little as two days.

Digital Point is a huge and generally good quality forum for Web marketers. The Contest directory is a fantastic and fun place to solicit designs from multiple designers. Again, you need to be clear about what you want and provide feedback as the designs come in to help guide direction. Prize money of $100 usually draws a good number of entrants, and I find that a $10 consolation prize really gets boosts participation. One caveat: since the designers don't know if they will get paid, it can be challenging to manage them once you get down to those detailed refinements.

LogoWorks leads the pack in terms of professionalism. They are all about logos (and other designs) and structure their process in the same way that an advertising agency does. Very best tools for management and feedback available online, which are really critical if you are going for a higher quailty design. They tap 2 or more designers to provide unique comps to you, then you pick the one you like and work with its designer on revisions. LogoWorks is the priciest of the bunch, starting at $250 and climbing from there as you include more designers and design optoins.

Alexa is Just Silly

Surely you've been to www.bamming.com, right? According to Alexa, it just cracked the ranks of the top 1 million sites, ranking 977,794. You'll probably see it on the Movers and Shakers list sometime soon.

Thing is, Bamming has precisely one visitor: me. One more small piece of evidence about how unreliable Alexa rankings are.

StumbleUpon is Falling Down

Don’t get me wrong – I’ve had fun whittling away time playing with StumbleUpon and I’ve met at least one CEO who credits them with spring-boarding her company to the big time. I don’t hate them; I just think their business modeled is doomed. And besides, haven’t we already tried this before?

Here are five reasons why StumbleUpon is doomed to fail:

1. The traffic they send is pretty worthless. We’ve gotten over 32,000 visitors from StumbleUpon in the past six months to a variety of sites. Zero ad clicks, Zero sales, Zero dollars. These lookie loos don’t even browse around, as just 0.64% click to a second page!
   
2. Traffic is too expensive. Campaigns start a nickel per visitor, which equates to a $50 CPM. For a penny or two more, you can get much more highly targeted visitors (who actually convert) via paid search. There are plenty of other sources that will deliver the same quality of traffic for 80% - 90% less, too.
   
3. Ad buys have a very looooong tail. Two weeks ago, we bought a $50 test campaign from StumbleUpon, which was supposed to send 250 visitors per day our way over a four day period. During the course of that campaign, over 30 of those paid visitors gave us thumbs up. Because of that, we’re now receiving an average of 350 organic visitors per day since the campaign ended. Paid StumbleUpon campaigns seem to be a good way to prime the pump, but there is no reason to keep spending once the site has been rated.
   
4. Cheating is easy. People are openly trading stumbles on DigitalPoint, which may actually even be within StumbleUpon’s terms of service. Meanwhile, organized cheat sites like StumbleXchange are growing like crazy.
5. They lack polish. No credit cards accepted, no ability to generate meaningful reports, no conversion tracking and an opaque and confusing ad approval process. They fall way short of the minimum acceptable functionaility that advertisers expect.

There may be another method for StumbleUpon to monetize its popularity (interstitials?), but their current business strategy seems doomed to fail.

Mortgage Buble Bursts, Ad Market Goes BOOM

Very few people realize how closely intertwined the housing/mortgage bubble is with online advertising. The frenzy in lending is the primary driver of the skyrocketing growth of ad spending.

There were 44,000 mortgage brokers in the United States in 2002. That number increased a whopping 20% to 53,000 brokers in 2004 (source), who accounted for 68% of total lending. (Direct lenders account for the remainder.)

Mortgage lenders are now amongst the biggest spenders for online advertising, specifically for search and lead generation programs. Of course, the high value of a mortgage origination means that these marketers can pay a high price per lead and still have a stellar ROI, but the intense competition has fueled skyrocketing prices for limited inventory that has spilled over to most other categories as well. In addition, with insatiable appetite for online leads, ‘stellar’ and ‘ROI’ aren’t used together too often anymore by this crowd. Most of the brokers I’ve met recently don’t even know how to calculate their ROI.

The mortgage business is tremendously cyclical, as anyone (like me) who was involved in it through the 90s can tell you. Changes in interest rates and market dynamics whipsaw this industry like no other. In case you haven’t been paying attention, rates on 30 year fixed loans are up 54 basis points over the past year, while the far more popular 1 year ARM has climbed by an eyebrow raising 120 basis points, according to Bankrate.com. With Treasuries finally starting to catch up to the Fed’s moves (and with the Fed signaling more increases in the months ahead), the current re-fi party looks pretty close to over. Throw in growing concern over the foundation of the underlying housing boom (“frothy” markets), and it looks like a good bet that many of those 9,000 new mortgage brokers won’t be around for the long term.

Competition for online leads should grow more intense before the great flameout begins, though Fathom Online’s sketchy monthly keyword tracking report shows pricing for mortgage-related keywords down 15% from the year ago level. Total online ad spending by mortgage companies is the more important metric to watch. Experienced lenders are bracing for a very tough 2006, and the firms reliant upon their ad dollars would be wise to brace for the same.

LOST Opportunity?

The otherwise unremarkable Steven Spielberg Film A.I. will long be remembered for spawning the first tremendously popular Alternative Reality Game. Typing an odd credit from the film’s poster into Google lead users to a Web site which served as the gateway to a far flung virtual murder mystery that refused to ever admit it was actually just a game. Players banded together to trade information gleaned from a vast network of real and fictional Web sites, emails from characters and even chilling phone messages warning players off of the case. With absolutely no advertising, tens of thousands of people immersed themselves in the game, building tremendous buzz and interest for the film in the weeks leading up to its release.

Fans of the hit ABC show Lost seemed poised to embark on a similar quest. Web sites for two prominent entities in the drama’s intricate mystery, Oceanic Airlines and The Hanso Foundation, reveal lightly hidden secrets to fans who take the time to explore them. But excitement began to mushroom in early October when discussion board postings noted that by accessing the secure URL of the potentially nefarious Hanso Foundation (adding an ‘s’ to the beginning of the URL to form https://) you would find the simple yet enticing message, “bigspaceship1.com.”

The bigspaceship1 Web site was a fan’s delight, with an array of Morse coded messages, bizarre imagery from the show’s mythology that would reveal hidden messages with some Photoshop wizardry, and even a unique version of the Giligan’s Island them song, set to the tune of “Stairway to Heaven.” Clues lead to a burgeoning list of other Web sites, each with their own secrets to discover, including ones for key plot drivers such as the Dharma Initiative and Mr. Clucks’ Chicken Shack.

Blogs, discussion boards and water-cooler chats exploded with enthusiastic tales of each new clue and expanding theories on the show’s complex and closely guarded mythology.

Then all of the sudden it stopped.

New content ceased without any explanation, and many of the sites now redirect elsewhere. A few WHOIS detectives noticed that none of the new domain names were registered by Disney or ABC. Though the Mouse has not issued any statements, it is likely that the aspiring game producers found Disney’s legal department to be far scarier than the murderous Others who also inhabit our favorite uncharted island.

Fan buzz has quickly turned to despair that the game they were so excited to embark on is so quickly over, while more than a few feel duped by the whole experience. Still, many are making an open plea to the show’s talented creators to take over the reigns and keep the game afoot.

Will ABC capitalize on fans’ strong appetite for an officially sanctioned alternative reality game? Stay tuned!

100 Pixel Adventure

So, an interesting and tremendously ephemeral business model that's emerged is the million pixel ad site. Basically, you (and anyone can) put up a Web site with 10,000 100-squre pixel blocks, which are each about the same size as a pencil eraser. You then try to sell the squares for anywhere from a penny to a dollar per pixel, or up to $100 per little square. With no skill, capital or infrastructure required, one guy's neat idea quickly spawned about a thousand copycats (as tracked here).

The most successful imitator is Million Quarter Web Page which somehow managed to temporarily leap high on Alexa's rankings by serving up 30 million pages per day.

Taking a $25.00 risk, I dove in and bought a square for BasicLingo, my little advertising science project. (It's the tiny blue and pink arrow in the bottom-left quadrant.) Tale of the tape: 29 click throughs and somewhere between zero and $7.18 in revenue after 8 days.

I'll soon get a better cost-per-click rate than I do with search, but will wind up in the red with this untargeted traffic. I'm a little surprised that the click rate is so low, but the bigger ads are definitely a lot more prominent. Don't think I'm willing to risk real money, like a hunert or two, to test that hypothesis, though.

The Online Advertising Multiplier Effect

Here's my really big thought: What if online ad spending STILL hasn't passed the 2000 high watermark of $8.0 billion?

That's crazy, you idiot! We already did $9.6 billion in '04, and are zooming past it this year (all IAB numbers). True enough, but my contention is that spending by actual end-use advertisers still isn't where it was way back when. The reason is what I'll term the Online Advertising Multiplier Effect.

Back in the good ol' days of the last century, most publishers did some form of direct ad sales, nearly all of it on a CPM (or similar) basis. Hit up some newly funded (or IPO'd) company for a good chunk of capital and then try to find a way to actually live up to the promises that you made. Yes, there were some networks (DoubleClick ruled the roost) but they were fewer and smaller, and some actually only booked their commission on the topline. It's a very different world in 2005. Performance-based is the majority of the market now, and because of that, it is cheap, easy and necessary to have partners try to move as much inventory for you as they can. As a result, many parties touch most ads, and that same dollar of actualy spending winds up being recorded twice, thrice or even more often. Proof points:

• In Q3, Google had $530 million in Traffic Acquisition Costs, which it defines as "the portion of revenues shared with Google’s partners." That's $530 million that OTHER companies are reporting as top line revenue. Google reported its own sales -- which do not net out traffic costs -- were just shy of $1.6 billion during the same period. Add these together, and you've got a market impact of $2.1 billion.
• Shopping.com shows that the multiplier is often a lot bigger. In its Q2 10Q (final independent filing), the company revelas that $12 million of its $28 million in revenue (43%) came from Google ads placed on its site. At the sametime, Shopping.com spent nearly $13 million on search advertising to bring in its own traffic! (Questionably categorized as Marketing Expense, rather than COGS where it really belongs.) You could certainly make the argumement that these sums represent in $25 million in spending (bartering) that pretty much nets out to zero.
• The coregistration churners like Adteractive and Azoogle add even more hands to the pot. Each company claims to be doing about $100 million in revenue this year, and needs to spend about half that amount on search and other partners to drive the traffic they need. But wait, there's more! To manage these massive search campaigns they need to turn to big SEOs like Efficient Frontier, who take their own 10% cut. All of a sudden, each dollar in 'true' ad spending is now delivering a buck-fifty-five to all of these players, and that's before factoring in the cut taken by the agencies on the front end.

Net net, is the industry really growing? Yeah, absolutely. Many thousands of real companies pushing real products are putting more and more of their ad spend online. But this revenue merry-go-round is making everyone a lot more euphoric than they ought to be. Plus, as the game gets bigger and goes faster, it's only a matter of time before the fine folks on FASB take a hard look at everything, asking questions that are going to open the trap door under the industry once again.

Look at me, I'm a blogger!

Been meaning to write down some rants and raves for quite a while, but today's the day I finally got to it. Blogger said it would only take five minutes to get started, but I clocked it at eleven, by the way.