Would you pay $.01 or $.05 to read this blog post?

Google’s thinking you might.  After years of speculation that Google is going to get into the micropayments business, it finally appears that the search giant may extend its Google Checkout feature to take small payments for content.  This may be a dream come true for publishers, who are seeing print subscriptions plummet and advertising get scaled back.

I don’t see micropayments as the saving grace of all publishers.  You’re still going to see a tremendous number of newspapers, magazines, and even media websites closing in the coming years, as the public continues to change its media consumption habits and these media outlets simply can’t make enough money.  However, a Google micropayment system might help the more successful publishers prop up their ad revenues with another source of cash.  And because of Google’s firm grasp on a constantly increasing number of web applications, the search giant might have the best chance to push a true micropayment standard into the market.  The concept of micropayments isn’t new – it’s been kicked around since the dot-com boom of the late 1990s.  But no company has succeeded at this game…yet.

If micropayments catch on with published content like news articles, perhaps some new models might crop up in the online music business too.  Real-time streaming of music has really come into its own in the past couple years, with Pandora, MySpace Music, Fizy, and dozens of other sites that give people access to their favorite tunes.  A universal micropayment platform could be a huge win for many music sites too.

Photo by mil8

Do you have a strategy for iPhone? You should.

This chart from Morgan Stanley (via TechCrunch) tells you why:



Also consider that if Facebook was included on this chart, it would only have somewhere between 12 million and 20 million subscribers within the first two years after launch.

Digital marketers budgeting for 2010: Feels like throwing darts blindfolded

It’s a Saturday afternoon in late October, and that can only mean two things: time to watch college football, and time to do budgets.

As I’m working on my 2010 budgets, I’m wondering what the point of this exercise is.  Sure, budgets used to serve a very important purpose in business.  But after the volatility nearly everyone has experienced in their business in the past year or so, I don’t think there are many executives in any industry who are confident in their budget plans for next year.

Earlier this year, Business Finance magazine ran a cover story called “The Budget (1922-2009)” in which the author announced that the traditional way of budgeting had finally died.  And a new video on Business Finance website called Death of the Budget explores the topic in a similar way.

If the budget – which is a 13-15 month look into the future – is dead for most businesses (as many in the finance community are beginning to argue), that must mean budgets are even more dead within the digital marketing business.  How can you budget revenues, costs, or even have the foggiest of ideas what you’re going to be doing in December 2010 in such a dynamic business climate?  Think about how 15 months ago Twitter was still in its infancy as a marketing tool, few companies were using Facebook for business purposes, and the banner ad was still enjoying reasonably good click-through rates.  So what will the next 15 months bring, and how dramatically could those events completely destroy your budget plans by the end of 2010?

Long-range planning is a good thing for businesses -- but within the realm of digital marketing, I feel like the one-year budget is starting to feel like a three-year or five-year strategic plan used to feel – uncomfortable to put together at best, and the equivalent of throwing darts with your eyes closed at the worst.  I’d expect to see the most forward-thinking digital marketing companies using shorter budgeting cycles – maybe three month or six month cycles to determine revenues and spending.  For these companies, a yearly financial look ahead will be limited to strategic exercises.

Photo by wili_hybrid

Digg’s online ad unit: Relevant content on top, ad on the bottom

Yesterday TechCrunch posted a story about a new type of online ad that Digg has rolled out.

As you can see in the picture, the ad unit contains several Digg links about the sponsor at the top, along with a graphical ad at the bottom.  In this example it’s clearly labeled as sponsored by Warner Brothers, so there’s no user deception. 

TechCrunch seems to think it’s a win-win, since it’s getting clicks on Digg content that users have already found valuable, while also getting Digg some CPM ad dollars.  I think it’s a good model that Digg (and probably a number of similar sites) can use with certain advertisers in certain situations.

But the obvious downfall of this method of advertising is that not every sponsor’s product will have content that works for the top half of the ad unit.  What if most of the press on the movie Where the Wild Things Are was negative?  Warner Brothers might have trouble finding articles in Digg that were positive.  Or even more likely, what if nobody was talking about the product in the first place?  For example, I randomly did a search for “Clorox”, a typical consumer product, on Digg.  The first article that came up was one that questioned how green Clorox’s new line of GreenWorks products is. The second was about how Clorox and dozens of other companies pulled their ads from Glenn Beck’s show.  Beyond those two articles, no other Clorox article had more than one Digg.  So this type of ad unit might be best reserved for increasing buzz on a product or service that’s already getting some public attention – rather than trying to generate buzz from something that probably isn’t being talked about much in social circles (like Clorox).

Publishers have been doing these types of “editorial alongside advertising” placements for years, but Digg has done a nice job of adapting the model to its particular brand of “editorial”, if you will.

Will Google soon own the banner ad market too?

A few weeks ago Google announced that it has rolled out the DoubleClick Ad Exchange, which is a marketplace for buyers and sellers of online display advertising (i.e. banners).  An online display ad exchange is not a new idea by any means, but because this iteration has the support and brains of 800-pound gorilla Google behind it, many experts are predicting a shift in the buying and selling of banner ads.

Don’t get me wrong – I think the DoubleClick Ad Exchange has an excellent chance of grabbing a sizable chunk of the banner ad market.  But at the same time, the only way it will be anywhere nearly as successful as Google AdWords is if this new platform can address the bigger problems that currently plague online display ads.

The days of counting clicks on banners are numbered for most advertisers.  Many online marketers have known clickthroughs are not a good predictor of campaign ROI for a long time, but the movement has really gained momentum in the past year or so as clickthrough rates (CTRs) have plummeted across every industry.  So if clickthroughs shouldn’t be the ultimate metric that measures banner performance, what should be?  That’s an ongoing debate – but my bet is that brand awareness, purchase intent, and engagement will be evaluated more closely in the future.  That doesn’t bode well for the DoubleClick Ad Exchange, since it’s easy for an ad exchange to measure clicks but much harder to measure these types of metrics.

You can also look at schools of thought like the one put forth in this TechCrunch article about killing the CPM.  Perhaps DoubleClick Ad Exchange will incorporate lots of different ways to set up your campaign to address the many different types of revenue metrics currently out there.  (If there’s a company that can take a dizzyingly complex set of data and simplify it, Google is it.)

I think the success of DoubleClick Ad Exchange all comes down to whether or not Google will find the magic formula for:
1) helping advertisers reliably measure the true performance of their ads using some other metric or combination of metrics, to combat the decline of the clickthrough; and
2) balancing the needs of site owners and advertisers to find appropriate rate types that help each side.

The banner ad isn’t dead – it’s just evolving.  Now that Google is getting its hands into the market in a big way, you might not even recognize banners in a couple years.