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Microsoft's Reality Distortion Field

It was hard to escape the news of Microsoft's Live Search Cashback program yesterday. I gave it some time to soak in, read through the flurry of opinion in the blogosphere - some good, but mostly bad. I even spent quite a bit of time with it this morning, making a purchase through one of their merchant partners.

One thing really stuck out to me as I read through the AP report, and that's this quote by Bill Gates:

"It's exciting. I think years from now you may look back and say, 'Wow, search started to get a fair bit more competitive,' and you can look back to that announcement,"

I'll let that just linger in the air for a minute before I continue....

OK...here's the deal, folks: Microsoft is apparently living in an alternate universe, where they understand consumer behavior on the Internet, and create innovative products to meet their demands.

In the real world, they are chasing their tale. Here's why Cashback probably won't amount to anything of consequence:

Where's the Innovation?: The MS Cashback site is really nothing more than a glorified affiliate program, where they pass their commission through to the consumer. Fatwallet has been doing this for quite some time. Upromise lets you take your cash reward and help fund your kid's college fund. iGive uses the same model, except they take the commission and donate it to any number of charitable causes. (I probably don't need to tell you how much more responsible the latter two examples are, as opposed to having a couple of bucks hit your PayPal account.)

It Will Change the Landscape of....: Comparison shopping on the Internet. Not search, and certainly not how marketers pay for search. I honestly can't see Google shaking in their shoes over this. Now, PriceGrabber,  Shopping.com or NexTag? They should be very afraid.

Consumer Behavior Will Prevail: Think about how you use search. Do you compartmentalize searching for something that you want to buy online differently than you do for other types of content? I'm guessing not....sure, you may end up at a product comparison site like the ones listed above, but there are good odds that you got there from a search engine link in the first place. How long until we see Google AdWords for Cashback links just like you do with every other shopping comparison site?

I have to make a slight disclaimer here: I work for a company that sells eCommerce software that competes (sort of) with Microsoft. I'm not Microsoft-bashing here for any other reason than I think they simply don't understand how they fit in the Internet space. I honestly can't think of a single instance in which they have truly innovated in years, and I wouldn't count Internet Explorer because we all know how it got it's initial market share. I will agree with most of what has been written so far, in that this smells really desperate.

Ad Serving Run Amok!

I bought a nice shiny new MacBook yesterday. I'm not sure how many Macs I've owned in my lifetime, but I think this might push the number into double digits. Anyway, it's my first Intel-based Mac and I've giving it a pretty good road test over the last 24-hours.

I've been thinking about writing a post on the current state of ad serving lately, so out of curiosity I decided to take a peek at my cookies in Firefox this morning. Holy crap! I've owned this computer for less than 24-hours. I installed Firefox maybe an hour after unboxing, and I'm guessing that I have 3-4 solid hours of browsing time logged so far.

Total number of cookies: 168
Number of cookies from ad serving networks: 71

It's not the sheer number that freaked me out....ok, the number did kinda freak me out a little bit...it's the fact that online marketing professionals are still buying into this as a viable way to spend their precious marketing dollars, and apparently there's a LOT of it going on.

If you're reading this right now, then I'll make the broad assumption that you've purchased something from the Internet before. Most likely, you've purchased a lot of things online. Now, when the last time you saw a banner-type ad somewhere, clicked-through and actually bought something as a result? Exactly...

Most of the ad networks today tend to dress up their services by calling it  "behavioral" or "contextual"  targeting, but it's far from being transparent or effective.

Example: I have a nice  canister vacuum from one of the high-end U.S. manufacturers. I realized that I hadn't changed the filter recently, and went to the manufacturers site to buy one. (I have no interest in going to Sears or Target in hopes that I could find a 3rd-party filter that might fit. I imagine it would be a lot like going to OfficeMax and trying to figure out what kind of ink jet cartridge I need for my printer.) Anyway, I don't see a filter for the model I have, so I find the nearest store and leave the site. About a day or so later, I notice that I keep seeing banner ads for a fancy new upright vacuum from the same company. And then I start seeing that same banner ad EVERYWHERE. I'm not the smartest guy in the world, but I realized what's happening here: The ad serving network saw that I abandoned their clients site, so obviously I have exhibited the target behavior for displaying their ad. Never mind the fact that I already own one of these ridiculously expensive vacuums. Or that I was explicitly searching a new filter. What the heck...throw that ad up there anyway. Maybe I need a second one so I won't have to carry the other one up the stairs all the time.

You get the point. To make matter worse, the pricing model for most of these networks is just ponderous. In my previous life, I sat in a room with a couple of sales guys from a very large network. The dialog went something like this:

Big Ad Network: We will monitor people that come to your site and then drop a cookie on those that exhibit certain behavior (i.e., they don't buy anything). Then, we'll serve up an ad to those same people as they traverse the Internet. If that same person returns to buy from your site, you'll pay us a small percentage of the revenue.

Me: You mean that I'll pay you if the user actually clicks-through from the ad that you're serving up, and then buys something, right?

Big Ad Network: No...we feel that we are influencing the user's behavior by simply showing the ad. If they return to buy, it's most likely because we "re-exposed" your brand to them.

At this point, I just smiled and nodded and thought about what I was going to have for lunch that day. This is just wrong on so many fundamental levels:

1. The vast majority of consumers don't generally buy on the first visit to a site. They research. They read reviews. They look for a better price. They bookmark the site with the intention of returning later. Do you really want to pay someone 5-10% off your margin for what is fairly common behavior?


2. On average, consumers click on 4 paid marketing campaigns before they make a purchase. Given the above behavior, why artificially inflate your customer acquisition cost?

Unfortunately, this wreaks of desperation marketing at a time when there is an abundance of tools for marketers to truly understand what the return is for their marketing spend. Stop the madness, people!

Twitter: The Mobile Worker's Best Friend

Up until about a year ago, I have spent just about every day working in an office of some sort.  I now work in the field for ATG, and when I am not on the road (which is about 40% of the time) I work out of my home office. It was a pretty big adjustment, and my biggest hurdle centered around managing my time and staying focused in an environment where there can be a lot of distractions.

I think I've made the transition fairly well, and while there's a ton of upside to working from home, I felt like there was something missing. When I was at home for more than a week, I found that I had to leave the house and go work at a coffee shop just to be around people. I probably wasn't horribly productive on those days, but I needed the interaction to break up the solitude.

I was at our user conference last week, and ran into some fellow Tweeters (is that the right expression? Sounds better than Twitterers). We started talking about how great Twitter was for the mobile worker, and then it dawned on me what I think I missed most about working in an office. It's the little hallway conversations about mostly trivial subjects: movies, last night's episode of "Lost", sports, etc. With Twitter, you can "kinda" have those conversations in almost real time.....it's not the same, but it's pretty darn close.

In some ways, it might even be better - when I need to put my head down and knock something out, I just shut down my Twitter client. Try doing that in your office when you have a deadline, but "fantasy football guy" stops by your desk and wants to chat for 25 minutes about the implications of Brett Favre retiring.