Supernatural Agency: Online business tales » monetization

The beginning of the end for affiliate marketing?

martin — Fri, 30 May 2008 20:35:31 +0000

We’ve had three major brands for whom we are affiliates end their relationships with us because we are located in NY State. Never mind the fact that our servers are somewhere on the West Coast and that these retailers have no brick and mortar presence in NY. Our totally dysfunctional and short-sighted state government decided that out of state e-commerce companies selling on the web in NY should pay our insane (8.5%) sales tax even though the law for mail order companies states that they don’t have to charge the tax as long as they have no physical presence in the state.

Apparently a website that does not even sell the products and does not physicaly exist here is now a cause for ordering merchants to pay sales tax. So, what about the millions of paper mail order catalogs sent into our mailboxes from out of state companies- aren’t they a physical presence? And since when are online media that advertise services on a commission basis (very common in print, radio and broadcast) a cause for claiming a physical presence?

I do not think this will hold up in the courts as it is a poorly though-out law filled with loopholes. In the meantime don’t plan on building an affiliate marketing business in NY.

Update: Two more merchants have sent notices specifically detailing that the NY law was the reason they were removing us, hopefully temporarily (as they said). Interestingly, Linkshare followed with a generic notice saying we had been removed for unstated reasons- I think they’re worried about losing a lot of other merchants if they get wind of this.

So, if Google has PayPerAction (PPA) programs in which they get paid when a conversion takes place should they be paying taxes? They have a big physical presence in NY.

This is the lid coming off a big can of worms…

The value of a view

martin — Fri, 23 May 2008 20:43:17 +0000

Running the numbers on a developed site can be a little confusing but understanding how they work can really help you value a site and determine where to spend your time and money.

We track Adsense on quite a few sites. Here’s how I parse the data:

Make sure you set up channels for each site and ad unit. This is absolutely essential.
Look at your thirty day totals by channel/site to determine highest performing site(s)
Remember that Google measures by impression not page view. Three units per page (the max they allow) means 3 impressions per page view
Google eCPM rate is your earnings per 1000 impressions. If you have three units per page then you have to triple that number to get your average revenue per page view

An example: We have a top performing site that, using the tools above, returns 4.8 cents per page view or $48 per 1000 page views. This was surprising to me but the knowledge meant that we needed to focus a lot more attention on driving traffic to this site since even a slight daily bump adds up really fast.

The same site averages 2.9 page views per visit so a visit is worth an average of $.14. A thousand visits a day is worth around $140 so spending anything up to that amount daily to drive traffic is worth it, remembering that sites generating $50,000 in annual revenues (which is about what those 1000 visits per day gets you) are worth a multiple of those revenues to a buyer, probably at least $300k. You could argue that spending far more to drive traffic makes sense because you’re losing in the short term (aka, investing) but building equity in the long term.

Know your numbers- you can easily set up a spreadsheet to track them.

BTW, the site I’m using as an example is in an enormous, information-hungry consumer market involving a lot of spending. I’ve also left affiliate revenue out of the equation to simplify things.

Valuing a top Google ranking

martin — Sun, 04 May 2008 18:43:45 +0000

Aaron Wall has done it again with a very detailed analysis of the value of a top ranking in both organic and paid Google search results. This is a long read but should be required for anyone working to drive traffic and conversions via search

When the ad loads but the content doesn’t

martin — Thu, 01 May 2008 14:05:00 +0000

You’ve got a problem.

I go to the Washington Post daily but lately I’ve been skipping it. One of my favorite blogs is VC Fred Wilson’s A VC but until recently I had stopped reading it regularly. Why? Because the ads and widgets on these sites would load but clog things up so much that the actual content I was there for wouldn’t load.

Fred recently removed most of his widgets (he loves them because they are from companies he invests in- I think if I were him this would raise a red flag) because he was getting slow-loading complaints from his readers. The site now loads fine. The Post isn’t doing so well. This morning I attempted to get to a page I read daily but all that loaded was an animated banner ad which irritatingly kept animating while the site stayed empty with 49 of 50 items downloaded. I guess the 50th item was the actual news.

This makes me wonder how often site owners test loading times, including ads, in conditions similar to an average user. Some sites, like Engadget, load really fast even with a plethora of ads. I suspect this is because they, being techies, actually care about loading times and require their ad servers to achieve certain levels of performance.

The big problem here is obvious. It looks like ads are more important to publishers than the user-experience. That insults me and keeps me away, especially because it looks like they just don’t care or are not paying attention. As a publisher my concerns are acquiring and keeping loyal readers, i.e. traffic. We won’t serve up irrelevant ads or ads that are intrusive including pop-ups, intermediary pages, ads with audio on by default or ads with so much animation they clog up the pipes. I don’t want to lose one loyal visitor because of these things because repeat traffic is where you make the money.

Washington Post…hello? Are you paying attention? It doesn’t look like it.

BTW, the NYTimes.com does not have this issue so it is not a universal problem.