Who’s afraid of Quigo?

According to a recent New York Times article, both Yahoo! and Google should be worried about this New York-based ad services upstart that’s positioning itself as an alternative to the online giants. The article says,

Here is how this contextual advertising has traditionally worked: Google and Yahoo post ads on hundreds of thousands of Web sites, but both operate as blind networks they do not tell advertisers which sites their contextual ads run on. Instead, the advertisers buy keywords for ads across Google and Yahoo’s vast networks of Web sites, including the home pages of big media companies and the smallest of bloggers.

Quigo, on the other hand, gives advertisers a list of sites where their ads appear and plus they also get to choose where their ads appear.

Seth Godin says,

Remember, the point of the ad is to get someone to click (that’s what you’re charged for…  the click) and then the goal of the site is to convert that click into permission and eventually a customer.

So, does it matter where the ad runs if it works?

That’s a very good question. My answer to Seth’s question is Yes. Where the ad runs does matter, because quality of clicks matters and so does my (advertiser) brand.

As an advertiser, I am concerned about the conversion rates (clicks to sales ratio)and if the conversion rate is higher from clicks on premier sites, why am I wasting my dollars on clicks generated through some unknown blogger site, which has a low likelihood of conversion?

Jason Clement, associate director of search engine management at Carat Fusion, an agency in the Aegis Group that buys online ads for large advertisers, says the lack of transparency has kept some large advertisers from spending heavily on contextual ads.

In a contextual advertising test on Yahoo and Google, some clients report bad experiences with their ads showing up in odd places. For example, Mr. Clement said a large client of his saw an ad run late last year alongside an article that said soy milk might be linked to homosexuality.

Contextual ads are far from perfect and algorithms will never be a substitute for good old-fashioned marketing intuition ie. which brands are synergistic with our brand/product offerings and where should our brand be displayed. Do I want my premier brand diluted through association with some third-grade site? D’oh.

For the big media companies, Quigo offers another advantage: it allows them to sell their own contextual ads and run the ads under their own brands rather than Quigo’s. In many cases, ads placed by Google run under a header that says Ads By Google.

As far as the media companies go, it’s all about control. It’s a given, that they would gravitate towards any alternate solution that would give them control both over their brand assets and their relationship with the advertiser, plus a bigger slice of the revenue pie. But you have to admit, the Google folks are clever. The media companies (in essence) were paying Google to promote it’s own brand via "Ads by Google".

Here’s part of a response from Quigo founder/exec

Now, while Quigo caters to both marketers and publishers, we view our platform primarily as a publisher solution. We offer it as a private label to publishers, and let them acquire and manage their advertisers through it. It’s the publishers who we see benefiting most from the AdSonar solution, with marketers benefiting as a result of our insistence on catering only to the highest quality publishers in the country.

In the end, whomever or whatever (be it an upstart from New York) forces more transparency in online advertising, it will create a win-win for everyone. This will only encourage more of the skeptical advertisers to come on board. Google rode the wave of online democratization to phenomenal success, it’s only fair that others follow. Control is evil.

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