Tag Archives: advertising

Are you wasting your AdWords budget on in-app ads?

2 out of the last 3 AdWords campaigns I have looked at for consulting customers were spending substantial amounts of money on worthless in-app ads, without even realising it. Feast your eyes on the following:

in-app placement ads $1,071.04 spent on clicks from a single game app, that resulted in 0 trials of the software product being advertised. Hardly surprising given that it was a B2B app that cost around $1000. On further investigation this company was spending a substantial percentage of its AdWords budget on completely useless clicks from in-app ads. Ouch.

And this is from a different AdWords account for another B2B software company:

in-app display ads

Many of the apps in the iOS and Android app stores are now funded by in-app advertising. The creator of the infamous Flappy Bird game claimed to be making tens of thousands of dollars per day like this.

Flappy Bird In-App ads

(Note that the ad shown in the screenshot is not related to either of the two companies I mentioned above).

At least the ad is well away from the ‘play’ button. Some, less scrupulous, app makers place the ad in such a way that it is easy to accidentally click on it.

Who would want to pay for in-app ads, knowing that most of the traffic will be accidental clicks from frustrated gamers (many of them children) just trying to get to the next screen? If you run ads on the Google display (content) network, it might be YOU. Google started showing display ads in apps some time ago and it seems that all existing display campaigns were automatically opted in. Worse still, the apps they are advertising in appear to have no relevance at all to your content campaign keywords.

App makers get some money, the public gets free apps and Google makes mega bucks. The advertiser is financing the whole thing and getting (in many cases) nothing in return. But don’t feel too smug. If you have a display campaign that you aren’t carefully monitoring, you might also be throwing away money. To find out:

Log in adwords.google.com.
Click on All online campaigns.
Choose a sensible time frame, e.g. the last 6 months.
Click on the Display network tab.
Click on Placements.
Click on the Cost column to order from highest to lowest cost.
Look down the Placement column for entries that start with Mobile App.

Adwords display placements report

While you are there, it is also worth checking the relevance to your product of the other sites you are running display ads on.

Hopefully no horror story awaits you. If it does, you can exclude the offending placements to stop your ads appearing there again.

exclude AdWords placement

But this is a bit like playing whack-a-mole, as you will be continually excluding new apps (I haven’t found a way to opt out of in-app ads wholesale). Alternatively, just pause your display campaigns. Personally I gave up on display ads some time ago. The conversion ratios were so miserable (much lower than search ads) that I could never make any money on them.

If you have been stung for hundreds or thousands of dollars, it may be worth complaining to Google, to see if you can get any money back on the grounds:

You never explicitly opted in to in-app ads.
The apps your ads appear in bear no relationship to the search terms in your content campaign.

I have no idea if that will be successful, but it might be worth a try.

Google are continually changing the rules of the AdWords game and you would be naive to assume they are doing so with your best interests at heart. If you are running an AdWords campaign you must monitor it continuously or bad things will happen.

Amazon PPC Ads

The ever-expanding Amazon empire is now offering their own Pay Per Click ads.

Amazon Product Ads is an advertising programme designed to provide Amazon.co.uk customers seamless access to products available on external Web sites. As a seller, you simply upload your catalogue of products you wish to advertise and set your cost-per-click bids and budget. Amazon will then display your ads to Amazon.co.uk customers when they shop for your product or related products. Customers who are interested in buying your product can click through to your Web site and purchase the product directly from you.

As with Google Adwords, you bid for clicks. Minimum bid prices depend on the category of goods you want your ad to appear in. On amazon.co.uk the categories and minimum bid prices are currently:

There doesn’t seem to be any restrictions on advertising downloadable software. So it might be worth trying if you software fits into any of the above categories and has a relatively high ticket price (given that typical conversion rates are 1% there is no point paying £0.10 per click for software that you sell for £10). For example, if your software is related to music, you could advertise it alongside musical instruments. I would consider advertising my table planner software alongside books or DVDs related to wedding or event planning. Unfortunately that isn’t an option at present.

I could try advertising my software in categories such as Kitchen&Home›wedding favours. But people looking for wedding favours aren’t explicitly searching for table planners, so the click to sale conversion ratio is likely to be well under 1%. Also the minimum bid price in this category is £0.15 and I am guessing that my ads wouldn’t even show if I bid the minimum. Paying >£0.15 per click with a <1% conversion rate for software priced at £19.95 doesn’t make sense. So I haven’t signed up.

It is inevitable that the bid price will inflate over time. So, if you want to try it, now is probably a good time. Amazon.co.uk are also offering £50 in free clicks if you sign up now. You can find out more on the Amazon Product Ads FAQ.

Have you tried Amazon PPC ads? If so, do you have to bid significantly above the minimum bid prices and how do the conversion rates compare with other PPC ads (such as Adwords)?

Selling software vs selling eyeballs

Lets say I’ve written some downloadable software and I want to make some money from it (‘monetize it’ in the ghastly common parlance). Should I charge people for using the software or should I give them the software for free and make my money from ads?

Lets look at some numbers.

The typical conversion rate for downloadable software is around 1%. That means that about 1% of the people that visit your site will typically buy your software. So, for each $1 of your sale price you will make around $0.01 per unique visit. Downloadable software is often priced around $30, so lets say $0.30 per unique visitor. Some software sells for less than $30, and some for a lot more. Also I haven’t taken account of the lifetime value of a customer (e.g. upgrades) – which will increase the value per customer; or payment processing and advertising costs – which will reduce the value per customer. It is just a ball park figure.

How much money could I make from advertising if I give the software away instead? I have been doing some research for a while on this. Based on various data I have gleaned from the BOS forum and blogs, advertisers typically pay per $1-$2 per 1000 impressions (CPM). Some data points:

A well known ad network offered me a $2 CPM (-19% commission) to put ads on this blog.
Dating site plentyoffish.com reported making $10k/day from Adsense off 200 million pages per month in 2006, which is a CPM of $1.5
A sample of 8 Facebook app developers were averaging less than $1 CPM.
“If a site like Stack Overflow, which does almost a million pageviews a day, can’t make enough to cover even one person at half time using Google AdSense, how does anyone make a living with AdSense? Does it even work?” (Stackoverflow blog)
“Charging your end user isn’t the only way of pricing software. You can choose to give it away for free and then make money by, for example, charging for consulting, installation and training; or selling advertising. The latter, although a common model for web sites, is extremely hard to make work. CPM – the cost per thousand impressions – can be as low as a dollar. In other words, to generate one thousand dollars of revenue you might need to serve up as many as a million pages. To generate enough revenue to support a team of three or four people, that means having ten million page views per month. Most web applications simply aren’t going to attract that sort of traffic.” (p57 of “Don’t just roll the dice”)

So, taking a ballpark CPM of $1.5, I would be making $0.0015 per page impression.

Obviously I am comparing apples (unique visitors) and pears (impressions) here. How many impressions does 1 unique visitors equal? My own table planning software averages around 2 impressions per unique visitor (many visitors bounce out after reading 1 page, even those that buy might only visit the home, download and purchase pages). So, assuming this is typical, the product based site described above should be making around $0.15 per page impression. Based on these (admittedly rough) numbers an ad driven site needs approximately 100 times as many page impressions per day to make the same money as a product driven site. To make around $100k per year the product site would need about 900 visitors/1,800 impressions per day. To make the same amount the ad driven site would need around 90,000 visitors/180,000 impressions per day. But it is worse than that because the ad driven site is going to have significant hosting fees and potentially many more users to provide support for. I know which business model I prefer.

So why not get the best of both worlds – sell the software AND put ads on the site? Because then you are sending out all sorts of bad vibes (“this software isn’t good enough that they can make a living off it”) for a measly 1% extra income from the ads. I’m confident the presence of ads will lose you >1% in product sales.

An ad supported model is only viable when you have lots of traffic. Most downloadable software (or web apps) won’t be able to generate that sort of traffic, even if it is good and you give it away for free. If you really want to run an ad supported business, you are probably better off basing it around forums and user generated content than free software.

In the final analysis if you are creating software I think it makes more sense to create something of value, grow some balls and charge for it. Rather than giving it away and selling eyeballs in the hope that someone else will take their money and throw you some scraps. Think balls, not eyeballs.

Is it worth advertising Mac software on Google Adwords?

I learnt a long time ago that people will happily click on totally irrelevant pay per click ads. For example, if you bid on “seating plan” I can assure you that a significant percentage of people searching for “boeing 747 seating plan” will happily click on your ad titled “wedding seating plan”. They won’t buy anything, as they aren’t interested in wedding seating plans, but you still have to pay for each click. You can stop your ad showing to these searchers by adding “boeing” and “747” as negative keywords. Problem solved.

But what do you do if you are selling software that only runs on Mac OS X? The vast majority of searchers are running Windows. Indiscriminate clicks by them could quickly turn your Adwords ROI negative. In your Adwords campaign settings you can choose to only show ads on desktop computers and laptops. But you can’t choose the operating system.

As discussed above, putting “Mac” in the title is unlikely to be enough. You can’t use negative keywords, because the vast majority of Windows users searching for, say, backup software will type “backup software” not “Windows backup software”. You can just bid on searches containing keywords “Mac”, “Apple” or “OS X”, but will this be enough? My general advice to Mac only software vendors was to avoid Adwords, unless the ticket price of their software was in the hundreds of dollars. But, as my software runs on both Windows and Mac, I didn’t have any data to back this up.

Recently I got some data on Adwords clickthrough rates for a Mac only app (www.puzzlemakermac.com) by Hokua Software. They have kindly allowed me to share the data.

Initially they bid on generic keywords, such as “crossword maker” and ran ads such as the following with “Mac” displayed prominently in the title:

The results from analytics: 60% of the people clicking on the ads were on Windows and 40% on Mac.

Then Google banned them from the word “Mac” in their ads (it is possible to get this reversed with the express permission of Apple, but I don’t know how likely they are to grant this). So they switched to “OS X” in the ad, which hasn’t been blocked (yet).

The results from analytics: 73% of the people clicking on the ads were on Windows and 27% on Mac.

Then they restricted their bids to Mac targeted keywords such as “mac crossword maker”.

The results from analytics: 23% of the people clicking on the ads were on Windows and 73% on Mac. But there was a big drop in the number of impressions.

I think it is going to be almost impossible for anyone to get a return from Adwords when the majority of their clicks have no chance of generating a sale. So only bidding on Mac specific keywords seems to be the way to go. But there will still be a significant number of wasted clicks from Windows users. Also any Mac users who don’t use the appropriate keywords won’t see your ad. Consequently the return on time and money invested is likely to be a lot lower than Windows, cross-platform and web developers can expect. If you have a Mac only product with: a high ticket price product, well-defined keywords and limited competition, it might be worth trying Adwords. But otherwise it is probably better to wait and see if Google release OS targeting.

Of course, you could always use one of the free Adwords vouchers that Google are handing out like confetti (I get one every month in my PC Pro magazine) and try for yourself. This is how Hokua software got the results above. If you do, I would be interested to know how your results compare.

A small experiment with LinkedIn ads

LinkedIn.com (the B2B equivalent of Facebook) supports Google style pay per click ads. So I decided to run some ads for my seating planner software as an experiment. Here is a brief summary of my (very brief) experiences.

The good news

LinkedIn ads can be laser targeted. You can specify who you want to see your ad based on their job function, company, gender, age group, country and (best of all) the LinkedIn groups they belong to. I targeted 10,102 LinkedIn members who live in wealthy English speaking countries, belong to various LinkedIn groups related to event planning and have appropriate job titles. The campaign was quite painless to set up. It probably took me less than 10 minutes in total and I started getting impressions within an hour or so.

The bad news

The minimum allowed CPC (cost per click) was $2. Ouch. I know from extensive experience with Google Adwords that there is no way I can get a return on that.

The minimum allow CPM (cost per thousand impressions) was $3. If the CTR (click through rate) is around 1% (about what you might expect from Google search ads) this is $0.30 per click. Possibly profitable. If the CTR is around 0.1% (about what you might expect from Facebook ads) this is $3 per click. No better than the CPC bidding. Given that LinkedIn is more similar to Facebook than Google search, I expected the latter. I decided to spend a few dollars to find out. The results are below (click to enlarge):

So, with an average 0.17% CTR, I ended up spending $1.76 per click. Given my average transaction value and a realistic conversion rate I know that I can’t make any return on this. Also the CTR is likely to drop the more often people see the ad. So I stopped the experiment after less than 24 hours, before I wasted any more time or money. As far as I can tell (based on my own cookie tracking – LinkedIn ads don’t have their own conversion tracking) I didn’t make any sales. But that is hardly surprising given the small number of clicks.

Summary

Obviously $19.38 is a tiny amount to spend, but I think it told me what I needed to know about LinkedIn ads. Unless they reduce their CPC or CPM bid prices by an order of magnitude there is no way I can make a return. Of course, if you are selling a product where the average lifetime value of a customer is hundreds or thousands of dollars, the numbers might work out quite differently for you.

Advertising your software on Facebook (=Fail)

Facebook previously didn’t allow the advertising of downloadable software. Someone told me that they had relaxed this policy, so I checked their guidelines. Sure enough they have removed the offending line in their guidelines that used to say:

No ad is permitted to contain or link, whether directly or indirectly, to a site that contains software downloads, freeware, or shareware.

It says in their guidelines that downloadable software that does naughty things such as “sneaks onto a user’s system and performs activities hidden to the user” is not allowed, which is fair enough (see section 14 of their ad guidelines for the details).

Woohoo! As part of my ongoing project to try every legitimate form of promotion known to man, I can try advertising my seating planner software to, for example:

I ran 5 different ads over a couple of weeks. For example:

Trying to fit an attention grabbing and informative ad into the very limited strapline and image size was challenging. But I didn’t spend too long agonizing over the ‘creative’ (image and text), as this was just a feasibility study. The biggest problem was the minimum bid prices. Facebook was recommending I bid at least £0.40 per click. Given that the majority of my customers buy a single licence for £19.95 and typical conversion rates for clicks are around 1%, I would be likely to lose money if I bid £0.20 or more (especially when you consider ecommerce fees and support). I bid £0.10, but got no impressions at all. I bid £0.20 as an experiment and got a reasonable number of impressions. As soon as I dropped the bid to £0.15 the impressions slowed to a trickle.

Here are the stats from my experiments, as reported by Facebook:

Impressions:	357,366
Clicks:	310
Click through rate:	0.087%
Total cost:	£46.60
Average cost per click:	£0.15
Average cost per 1000 impressions:	£0.13

Any of you who are used to Google Adwords might be surprised how low the CTR is. But apparently this is quite a reasonable CTR for Facebook. This isn’t too surprising when you consider that people are on Facebook to socialise, rather than to search for stuff.

Of course, the most important metric is the profit. So how many licences did I sell? According to my own cookie tracking: zero. Zilch, nada, nothing, not one. Cookie tracking isn’t 100% reliable, but it seems that a 1% conversion rate might be highly optimistic for a facebook ad. Advertising a £19.95 product on Facebook to people who might be planning to get married obviously wasn’t going to be profitable given my price point, the minimum bid prices and low conversion rate. So I created a new ad to try to target a more focussed demographic, who might convert better and perhaps buy one of the more expensive versions of my product. Ad number 6 was disallowed one minute after it had been approved.

Eh? This ad was very similar to the previous 5 approved ads and for the same product. Their email said:

The content advertised by this ad is restricted per section 5 of Facebook’s Advertising Guidelines. Restricted content includes, but is not limited to: 1. Downloadable products that may affect the user’s computer or browser performance in unexpected or undesirable ways; 2. Get rich quick and other money making opportunities that offer compensation for little or no investment, including “work from home” opportunities positioned as alternatives to part-time or full-time employment or promises of monetary gain with no strings attached. 3. “Free” offers that require users to complete several hidden steps or make additional purchases in order to receive the promised product. We reserve the right to determine what advertising we accept, and will not allow the creation of any further Facebook Ads of this type. Ads for this product, service or site should not be resubmitted.

I didn’t feel my ad/product violated any of those criteria. It was clear in the ad that only the trial was free (not the product) and it doesn’t do anything nasty or sneaky. I emailed them for clarification. Here is the response:

Hi Andy,

Thanks for your email. Please note that we don’t accept ads for downloadable products through our self-service advertising channel. We reserve the right to determine what advertising we accept, and will not allow the creation of any further Facebook Ads for this product.

In order to maintain legitimacy of the products and services promoted on Facebook, ads for downloadable or installable products are only permitted through a direct sales partnership with Facebook. At this time, we’re only able to provide this service to a small set of qualified advertisers.

We’re committed to providing high-quality support for all of our advertisers, and we’ll keep you and your business in mind for the future growth of our ads product. In the meantime, please continue to email us here with any questions you may have and we’ll be happy to answer them for you.

If you have any further questions about why your ad was disapproved for Restricted Content, please refer to our Help Center about downloads at:

http://www.facebook.com/help/?faq=18665

Thanks,

Gloria

Online Sales Operations

Facebook

So apparently, they still don’t accept advertising for downloadable software, unless you are an approved partner, because it ‘may affect the user’s computer’ (even if it doesn’t ). This wasn’t at all clear in their guidelines and they let me run 5 ads before they enforced it (these ads are still running BTW). Thanks Facebook, I like you less with every passing day (and I didn’t like you much to start with). At least I got enough data to show that I was unlikely to ever get a return on advertising a £20/$30 product. I also console myself with the fact that PerfectTablePlan is doing better financially than Facebook (after 7 years and with 500 million users Facebook are finally cash flow positive, but nowhere near recouping the estimated one billion dollars in venture capital) and my product will hopefully still be selling profitably after Facebook has been buried by the ‘next great thing’ that comes along so regularly in the world of social media.

Do customers need to see an advertisement seven times?

A few years ago, when I was buying magazine ad space for my table planner software, I was told by an ad salesman that customers need to see an advertisement seven times before it is effective. How very convenient for his commission. I have heard variants of this “advertising rule of 7” quite a few times since, but I have never been able to find out where it originally comes from. I have now taken to asking people that quote it what evidence they have to back it up. So far no-one has been able to point me at a paper, study or any other form of credible evidence.

I have just searched google for see “ad seven times” and I found lots of mentions of the “advertising rule of 7”. Here are some of them that appeared high in the search results:

surveys prove people need to see the same ad seven times in order to buy

After all, they say, a person needs to be exposed to your ad seven times in order to create an impression.

The standard wisdom is that a consumer has to see a particular ad seven times before the message of the ad will even begin to sink in.

In fact, the Direct Marketing Association will tell you the average person needs to see an ad SEVEN TIMES before he responds to it.

Statics show that people see an ad seven times before responding.

The last statistic I saw pertaining to impressions stated that consumers must see your ad seven times before they really even notice it.

It’s estimated that potential members need to see an ad seven times before the marketing begins to register in their awareness.

This is not all bad since people generally need to see your ad seven times or more before they buy

A cardinal rule of advertising, known as “The Seven Times Factor,” says as a general rule, potential customers needs to see an ad seven times or more before they buy.

After all, research shows that, on average, you have to see an ad seven times before you even notice it.

In marketing, it is said that a customer has to see an ad seven times to remember it.

Marketers like to talk about “The Rule of Seven”: the idea that people need to see your marketing message seven times before they take action. Actually, research has shown that the number ranges from five to twelve, but seven is a good rule of thumb.

The Rule of Seven is an old marketing adage. It says that a prospect needs to see or hear your marketing message at least seven times before they take action and buy from you.

But again, no links, references or citations to back it up, even from the people that said it was based on “statistics”, “surveys” or “research”. What statistics/surveys/research? Is it based on some form of scientific study that can be reproduced, is it a rule of thumb that has been given more credit than it deserves or is it total bullshit made up by a crafty ad salesman? I suspect the latter, but I would love to know. If you know the origin of this “rule of 7”, please post a comment below.

** Update 09-Jun-10 **

I have had some useful feedback from this post, particular in the private ASP forums[1] (always a great resource). David Trump posted a link to this paper:

THE REPETITION/VARIATION HYPOTHESES CONCEPTUAL AND METHOLOGICAL ISSUES [Schumann & Clemons]

I used references and keywords in this paper to find 3 other relevant papers:

Beyond Effective Frequency: Evaluating Media Schedules Using Frequency Value Planning [Cannon & Leckenby]

The shape of the advertising response function [Simon & Arndt]

The Shape of Advertising Response Functions Revisited: A Model of Dynamic Probabilistic Thresholds [Vakratsas, Feinberg, Bass & Kalyanaram]

These papers talk about an ‘advertising response function’. This is a curve plotting the number of exposures to an ad against the customer likelihood of being influenced. Some theorise that there is a threshold below which ads don’t have an effect, a saturation point above which exposures may have a negative effect and a sweet-spot in between. This ‘S’ shaped response function could provide some support for ‘you have to see an ad 7 times’, except support for the presence of a threshold effect seems to be weak to non-existent. Only one of the papers [Vakratsas, Feinberg, Bass & Kalyanaram] cited any evidence and that seemed less than convincing from my quick reading.

For effective frequency to be valid, advertising must be subject to a threshold effect, reflected in an S-shaped advertising response curve (Stankey 1989). But research suggests that, in actual advertising situations, response curves tend to be concave, characterized by Continually diminishing returns (Simon and Arndt 1980; Schultz and Block 1986; Zielske 1986). [Cannon and Leckenby]

In brief, then we are satisfied that the field experiments as a group show no solid evidence for increasing returns over operating ranges. … Taken together, the studies using physical and monetary variables add up to the conclusion that there are not increasing returns to advertising—that is, no S-shaped response function-over the normal operating range. [Simon & Arndt]

Futhermore, some of the papers mention a theory that a customer might have to see an ad 3 times, but none of them mention 7 times.

Krugman (1972; 1977) captured the imagination of the industry with his three-exposure theory, which described an intuitively appealing sequence of consumer responses to television advertising that appeared to be consistent with a communication threshold. He suggested that the first exposure causes consumers to ask, “What is it?” The second causes them to ask, “What of it?” The third exposure is both a reminder and the beginning of disengagement. … The magic number “three” came to be a commonly accepted industry standard (Lancaster, Kreshel and Harris 1986). [Cannon and Leckenby]

Al Harberg pointed out that those claiming a “7 times rule” might be confusing the ability to recall information (where 7 has been shown experimentally to be the “magic number” for short term memory) with the number of ad exposures taken to influence someone. Two completely different things.

So please shout “bullshit” very loudly next time you hear the “advertising rule of 7″ mentioned. Especially if it is by someone trying to sell you ad space.

[1]Private correspondence in the ASP forum referenced with permission.

** Update 13-Mar-19 **

Paul Moore writes:

“I read your blog post from a few years back, and thought you might find this of interest. It’s a article passed around several newspapers at least as far back as 1859. It showed up even in 1910. Here’s the earliest iteration I was able to find on Google – the text is identical in several other American newspapers of the time. I have no idea where it originated, but the theory has been around for a while. I guess in modern times the number of impressions went from six to seven!”

A French editor gives the following amusing description of the effect of an advertisement: The first time a man sees an advertisement, he takes no notice of it; the second time he looks at the name; the third time he looks at the price; the fourth time he reads it; the fifth time he speaks of it to his wife; the sixth time he buys. [Weekly Constitutionalist (Augusta, Georgia) June 1, 1859]

Facebook don’t need no steenkin’ software ads

I don’t really ‘get’ Facebook. Maybe that is because I am 42 years old and I am not supposed to. But I do get the advertising potential. Facebook have cunningly extracted detailed demographic data from their customers and are using this to offer highly targeted advertising to businesses. For example, Facebook currently has 32,080 females, aged 25-40, with a college education, in the USA who are engaged. These are the sort of people I would love to advertise my seating planner software to. But Facebook doesn’t want my money. A quick read through the Facebook advertising guidelines reveals:

No ad is permitted to contain or link, whether directly or indirectly, to a site that contains software downloads, freeware, or shareware.

This might possibly be due to worries about malware, but that seems to be covered by other clauses. Maybe they just want to keep their customers on the Facebook site, so they can click more ads? But, aren’t most URLs going to indirectly link to sites containing software downloads if you keep following links?

Successful Software

…requires more than just good programming.

Tag Archives: advertising

Are you wasting your AdWords budget on in-app ads?

Amazon PPC Ads

Is it worth advertising Mac software on Google Adwords?