Forum Moderators: martinibuster
We've also added some language to anticipate Google's retrieval of advertiser landing pages. To further improve program quality, our system will soon visit and evaluate all landing pages specified in AdWords ads.
Does this mean curtains for the dreaded MFAs?
The sign for the end of PPC advertising industry?
I don't think it's a sign of the end - I think it's an opportunity for someone to do it better and reap the rewards.
FarmBoy
You both did mention this of course, however couldn't legit advertisers counter this by producing good copy themselves?
"Good copy" is at a disadvantage when competing with lies and distortions.
An MFA can write, "8 best sites for finding cheap widgets." They have nothing to lose. And they just might gain if the visitor clicks an ad as a way off the page.
But if Joe's Widget Company tries that and someone lands on his site expecting to find a review list of 8 good widget sites, Joe's reputation takes a hit. And Joe doesn't make any money when the visitor goes away mad.
FarmBoy
Yes, that seems a good opportunity for Google's competitors if that got better controls and management.
I agree with the underlying points regarding MFA's being driven by profit
David you say:
Therefore if an advertiser buys adwords, that sum should be divided between Google and the content providorI totally agree.
However here is where I disagree:
Add a layer of middlemen that are overall takers from the system. Who pays for that? Additional costs such as nett takers have to be paid for by someone.
I hear the counter arguments put forward by mzanzig and yourself regarding an MFA's need and tendency to target higher paying clicks. However haven't most us legitimate publishers looked at ways of targeting higher ads within our respective niches? How would the MFA have any greater ability in procuring that elusive high paying click than the average quality (legitimate) publisher?
This is why I just don't get it:
Take an example of a middleman in any other industry. In this case I will use the the insurance industry example with the insurance sales person or reseller as the middleman. Selling insurance obviously adds to the end price of insurance and the middleman does take a cut that is obviously indirectly paid for by the end user. In this case the end user pays because the insurance sales fees are factored in and contribute to the overall price of the product. I see MFA model as being totally different. Consider this scenario:
1. Blue widgets ad is displayed on the quality publishers site at 30 cents per click
2. Within the same ad block sits an MFA paying 10 cents per click. A visitor comes along and chooses the MFA to click on instead of just clicking on the blue widget ad.
3. Visitor lands on the MFA and for whatever reason sees and clicks on the blue widget ad (lets say at still paying between 15-30 cents)
Google has just charged 40 cents gross between the the two ads. The MFA has made a profit. Everyone wins except the quality publisher who has forgone a good paying click for an lousy MFA click.
If you look at the example of the insurance salesman the costs of the final product are accumulative because the underwriter negotiates with it's agents and factors their costs into the final insurance product price. In the MFA model the MFA has to display ads at the going rate (or less) in the hope that their advertising campaign costs do not blow their margin. The final price of an ad displayed within the Awords system is not influenced by the price that MFA pay for traffic.
mzanzig
I agree with much of your analysis regarding the need for MFA's to target in such a way that keeps them well above the break even point.
However all this says to me is that MFA's do work on volume and yes it does explain why one operator would run zillions of different niche sites. I do see your point here and totally agree. I would also agree to a large extent that many MFA's go for lucrative keywords, however I have seen cases to the contrary from time to time (probably due to the MFA'er being new to the game or something)
However, all these points that I do agree with, do not necessarily allow me to conclude that the MFA's are a cost to the overall chain or cycle. Nor can I conclude that MFA's result in the accumulation of costs resulting in an inflated CPC to the publisher
From my observations within my niche I do agree somewhat that margins for MFA's might be growing smaller. A couple of weeks ago I posted a thread regarding observations I had made which led me to the conclusion that the number of MFA's on my site had fallen considerably. At the time I was of the opinion that a possible decline in seasonal internet activity was mostly to blame and that savvy MFA webmaster had adapted to market trends by pulling back temporarily.
Had I checked my site to see what was being displayed outside the USA, the UK and Australia I would have seen something quite different. Last week I checked my site from Brazil, Spain, Malaysia, etc to find that all the old MFA's and many new ones were alive and strong. My conclusion is that these MFA's had been pushed out of their older markets but have remained within markets where inventory or competition remained weaker.
In my niche I see a lot of adorable small businesses that run a really nice shop, but their homepages look, like, 1998. Animated GIFs, bright colours, missing navigation, Times New Roman all over. I do not expect them to write excellent ad copy, at least not copy that can compete with MFAs.
Yes I do totall agree. I have made the same observations. It is quite sad really because as long as this situation remains the same many decent advertisers will lose faith in Adwords. This is also where I do believe that advertisers' costs will increase. If i am not mistaken the only hope for these advertisers to gain exposure would be to raise the CPC of their ads.
Yes, that seems a good opportunity for Google's competitors if that got better controls and management.
I don't mean to try and take the thread off-topic, but over the past few days as I've read this thread, I've also been reading, via the blogosphere, of a number of people being upset with Google and lots of recommendations for other search engines being thrown back and forth.
FarmBoy
As MFA's do not contrinute to the system, their costs have to be absorbed somehow. I don't think we disagree that they ARE an additional cost somewhere along the lines. I'm not saying that there isn't room for arbitrage sites, or even MFA's in the system. I'm sure that to an extent the costs of them can be absorbed without anybody being any worse off. But the problem is the massive percentage of them. In my niche, most of the "Advertisers" are MFA's. There are less and less genuine advertisers who are willing to foot the cost. I notice that the ones left in the sector are either scaling back campaigns or pulling out altogether. My site traffic hasn't really changed much over recent months, but the quality advertisers no longer appear so often. Many of the ads are what I would consider relevant, but not premium payers, and my earnings have taken a dive. So much so that I'm not really concentrating on that sector any longer, but building up a new site in a fresh sector and moving on. The site existed some years before adsense, and will continue to exist. It's a huge shame, because the site is in the top 4 for the keywords on Goolge and therefore prime advertising real estate. If it wasn't for the MFA problem in the sector it would still be a good earner.
If i am not mistaken the only hope for these advertisers to gain exposure would be to raise the CPC of their ads.
But the problem is that they simply don't want to. They have to pay extra already to try and get placement above ads that pay so much less for placement, why should they pay even more because they are good at business but bad at making an ad look scummy? Adsense should be looking after these advertisers, but doesn't and rather than try and outwit MFA's who spend all say trying to game the system they cease advertising.
If i am not mistaken the only hope for these advertisers to gain exposure would be to raise the CPC of their ads.
But the problem is that they simply don't want to.
Not only they don't want to, often they simply can't, because it is not reasonable to them to increase their marketing cost.
Let's take the example I used before in this thread where I explained the MFA point-of-view. The MFA makes 30 users click through to the genuine advertiser, at $0.14 each. A total spending of $4.20 for 30 visitors. Now, how many of these convert into sales? 1% or 5% or 10%? Let's assume a 3.3% conversion rate. That's one of the thirty guys doing a purchase...
If the gross profit margin on the product (i.e. without the cost for marketing) is 10%, the order volume needs to be $42.00 minimum. At this point, the advertiser BREAKS EVEN, i.e. he's sold the product and he's paid Google. But he has not earned a single dime!
You see - if you want Adsense/Adwords to work properly for any advertiser, the conversion rate needs to be high (or the gross profit per product sold needs to be high). That's why advertisers are complaining about low conversions from Adsense. The message "clicks, but no conversions" is poison for them. And if people just click to exit a MFA page, it's no surprise that there are fewer conversions.
As MFA's do not contrinute to the system, their costs have to be absorbed somehow.
...why should they pay even more because they are good at business but bad at making an ad look scummy? Adsense should be looking after these advertisers, but doesn't and rather than try and outwit MFA's who spend all say trying to game the system they cease advertising.Ah yes I do totally agree on this. I was simply raising the issue here rather than advocating a solution. I'm afraid the advertiser will end up losing out in the end and until MFA's are dealt with this situation will become worse.
mzanzig
I think your argument is based on the assumption that all visitors who land on MFA's will only click on ads to exit the MFA and will only exit via ads rather than other means such as closing the browser or using the back button. Based on this assumption I would agree that MFA's do add to advertiser's cost. However, how often can we say that this would occur?
From my experience many visitors from my blue widget website probably have clicked and landed on poorly targeted MFA sites advertising red widgets. If those visitors went on to click the badly targeted red widget ads then the result would be non-conversion. However, this may sometimes be the case but certainly not always be the case, as I have seen MFA's on my site that are beautifully targeted to blue widgets.
I guess that although I do not agree in whole to the middleman theory in it's purist sense, I have come away agreeing in part with the both of you. Firstly, I do believe that MFA's create impediments for advertisers by competing for advertiser space and displacing legitimate ads. then there is the point that if the ads are mis-targeted they do increase the possibility of creating situations where stray traffic may click on the ads and thereby lowering advertiser conversion rate.
Google has just charged 40 cents gross between the the two ads. The MFA has made a profit. Everyone wins except the quality publisher who has forgone a good paying click for an lousy MFA click.
You neglect to mention the two places MFA's bother me the most - in SERPs
I didn't neglect anything as the issue you raise was not the point of discussion, is not in dispute and has been acknowledged many times before.
Isn't it that the history is always repeating? The story of Yahoo and now Google. Could we expect a new star is on its way?
Could we expect a new star is on its way?MSN perhaps? What ever happened to Chitika as an alternative? I don't see much mention of them in this context anymore.
The problem with new players (such as msn etc) entering the market is that unless demand for advertising grows, we will see more discounting of clicks in an effort to increase market share.
I didn't neglect anything as the issue you raise was not the point of discussion, is not in dispute and has been acknowledged many times before.
When I said "not in dispute" I was acknowledging that I was in agreement with your points on MFA's.
However my main focus in that particular discussion was that I don't fully share the view regarding the MFA model being that of any regular middleman.
Isn't it that the history is always repeating? The story of Yahoo and now Google. Could we expect a new star is on its way?
Problem is - it seems the "other" search engines being mentioned get their results in whole or part from Google.
FarmBoy
This is where I ask; how? How can the MFA's Adword cost be cost be passed on to the overall financial cost of the clicked ad?
I think this might be the area of uncertainty. My point is not that a specific advertiser will be paying extra costs because of a specific click on a specific ad. I'm looking at the overall picture. MFA's take money from "The system". The system means they pay into adwords and take from adsense, making a profit in the process. Therefore they are adding to Google's overall costs. Overall costs end up being shared by all advertisers - not just specific ones. Therefore ALL advertisers who are trying to sell goods and services end up paying an increased cost to fund the arbitrage game. The same applies to content providors - we all get less returns from Adsense because Google is sharing the cost amongst publishers as well.
Firstly, we don't know if MFA's are actually receiving the same CPC as a quality publisher would. I can't see that an advertiser would pay more for an ad simply because it was sitting on an arbitage driven site when it was clicked.
I'd hope they weren't, but with smart pricing not being very smart, who knows. If they get more or less per click than real publishers isn't relevant. Either way they end up taking money from the system and pushing up costs for real advertisers, and pushing down returns for real publishers.
Yes, that is the point, and we only need to realize this point.
It is rather meaningless and useless to understand the internal conventions of the AW/AS system as they would just change from day to day upon Google's interest and many other factors.
MFA's take money from "The system". The system means they pay into adwords and take from adsense, making a profit in the process. Therefore they are adding to Google's overall costs.
This is a main sticking point where our views differ. I think that for the short term (at least) MFA's are actually adding to Google's revenue. Is it not a common belief that that the reason Google doesn't ditch MFA's is because they don't want to loose that particular revenue stream?
I think that for the short term (at least) MFA's are actually adding to Google's revenue. Is it not a common belief that that the reason Google doesn't ditch MFA's is because they don't want to loose that particular revenue stream?
Makes me think of the busy taxi owner who decides he can increase his profits if he doesn't spend money on things such as oil changes, brake pad changes, etc.
But sooner or later.....
FarmBoy
Taxi driver takes old dependable taxi, who many times got people where the wanted to go, in for complete mechanical overhaul, body work and shine. Ryders who have rode taxi for years pass up brand new shiney taxis and elect to stay with their current driver. In fact, they are so happy and comfortable they start handing out the drivers number and tell all their friends to take the taxi. Then the drivers business increases so much he can take ads on top of the competing taxis and gain even more ryders. Also the story in the newspaper about the reconditioning causes the taxi driver's phone to ring off the hook with bookings.
Yellow Logic
This is a main sticking point where our views differ. I think that for the short term (at least) MFA's are actually adding to Google's revenue. Is it not a common belief that that the reason Google doesn't ditch MFA's is because they don't want to loose that particular revenue stream?
An interesting sticking point:)
If MFA's paid more in than they take out, then Google would be silly to close of a source of profit. My difficulty with this is that if you follow that line of reasoning, then MFA's by paying more into the system than they take out are running at a loss. Why on earth would they do that? Why would they multiply exponentially, and queue up to make a loss?
The whole purpose of MFA's is not to make a loss, but to profit by playing the system. If they didn't profit, then they simply wouldn't do it. Hence my problem in believing the huge raft of junk sites exists to make a personal loss.
I guess at the moment Google doesn't see it as a huge problem in comparison to click fraud. At least they aren't getting sued for it as yet. But they should bump it up the list as a problem to be fixed. The percentage of MFA's is getting larger by the day, and they have killed off my sector to the point that most of the big advertisers have opted out of Google completely. This is what is going to happen overall if they don't get their arses into gear and sort it out soon.
If MFA's paid more in than they take out, then Google would be silly to close of a source of profit. My difficulty with this is that if you follow that line of reasoning, then MFA's by paying more into the system than they take out are running at a loss. Why on earth would they do that? Why would they multiply exponentially, and queue up to make a loss?
The auction house takes a commission on every sale, so it makes money no matter who buys the items it auctions. It likes the MFA's presence, as the MFA bids up the price on items that would otherwise sell for less, giving the auction house a larger commission.
Now picture the MFA using the same auction house to resell everything it buys. The MFA on the whole is good about picking up items below market value and reselling them at or above market value. Occasionally it stumbles and it takes a loss. But the auction house still takes a commission on every item the MFA sells.
The auction house doesn't care if the MFA makes a profit or a loss - auction house profits either way.
Google's issue with MFA is in their serps not AdSense
E.g, the ebay ads for stuff you so abstract that you can't own it. They obviously make more on sending a totally untargeted customer to ebay then it costs to advertise for them on adwords.
E.g. a site with "cheap" keywords, get pointed to an MFA that has soem (well hidden) "expensive" keywords. The result: the advertising paying the expensive keywords is fed up and quits the program, I can't get him either after that anymore.
And, no I won't send unteargeted and misleading traffic to an affiliate channel, I want that visitor to return and hence not ever see any scammy ads on my site.
Unfortunately I'm at a loss how to keep the scams off of it, the competing ad filter just is not good enough, there is no way to set a minimum big to make the game unprofitable for the scammers, I can;t even kill keywords like "free" in the ad copy.
So I/we *NEED* Google to clean house in the adwords advertisers or give us tolls to do it ourselves or I/we'll have little choice but to step out of adsense in order not to be associated with the scum they'll have left.
BTW: a better tool does include a far better tool to track who's advertising in what geo locations (e.g. a big table on the adsense website) that preview tool is way too simple for the task. While at it, make it easy to click to refiure the advertiser (not just refuse the ad, allow us to refuse the entire adwords account)
Hence my problem in believing the huge raft of junk sites exists to make a personal loss.I am not arguing that I am of the belief that MFA's run at a loss.
If MFA's paid more in than they take out...by paying more into the system than they take out are running at a loss. Why on earth would they do that?
Here again, I do not believe that MFA's run at a loss simply because they are paying their way into the Adwords network. What I do believe is that MFA's pay for the privilege to competing with us (as they generally rate poorly in SERP's) and taking a swipe at the very same Adsense Ads. Along the way MFA's are paying Google for this privilege. I don't dispute that MFA's pay peanuts either, however if we consider the possibility that they work on volume those peanuts payed to google add up to a tidy sum.
If we were to assume all things being constant (ie MFA's are no more or less susceptible to smart pricing than we are) then it would be fair to say that MFA income is equal to our income less Arbitage costs. One would assume that the resulting MFA profit remains healthy enough to allow them to exist and possibly flourish.
MFA's by paying more into the system than they take out are running at a loss.It's not my belief that MFA's run at a loss. However they are adding that extra click or two between the visitor and the advertiser. By paying that for extra click and accepting a smaller margin per click (as a cost of Arbitage) MFA's are generating additional income for Google. If we agree that the MFA CPC is the same as our CPC the advertiser is out of pocket for exactly the same amount of $$ regardless yet (additionally) Google has made extra revenue from the MFA along the way.
If we are talking about MFA's causing a potential indirect long term burden to Adsense, then I am with you here. By indirect burdens I am thinking about potential harm to Google's and publishers' credibility, visitor add blindness, visitor frustration. These issues I believe, have the potential to harming the programmes involved, publishers and ultimately legitimate advertisers.
The MFA haunts the hallways waiting for auctions where few bidders appear or where the bidding seems low. The MFA bids on items it believes it can resell at a profit.
If you subscribe to the theory that the MFA is a bad payer, the MFA bid does not raise the price of bidding by it's financial participation in bidding process. However we don't really know if all MFA's are bad payers as some are also likely to be reasonably good payers. One point that some here do agree on, is that also Adwords operates on ctr not just cpc, so it is plausible that MFA's do find their way to the top position by writing good copy. I did mention that I do agree with the theory that legitimate advertisers do lose out somehow in the bidding process
I agree the aucion house does receive a larger comminsion and I have stated this. However I do not belive that this increases the final cost of the resold item to the advertiser.
The MFA on the whole is good about picking up items below market value and reselling them at or above market value
Keep in mind that the MFA cannot set it's resale price, unlike the middle man that reselling his wares.
Makes me think of the busy taxi owner who decides he can increase his profits if he doesn't spend money on things such as oil changes, brake pad changes, etc.
But sooner or later.....
FarmBoy
I am not sure if you are refering to the MFA or google here. If it's the MFA:
It is not a matter of the MFA's avoiding their operating expenses to increase profit margin. MFA's pay their way in by participating in Adwords so unlike the taxi driver they are not avoiding anything.
If you are referring to Google not responding to what are arguably foreeable problems I would be inclined to agree.
When you further consider that a few MFA's are also deceptive in their layout you could further argue the point that some MFA's do cause invalid clicks because they are click traps and result in advertisers paying unnecessarily.
Just to cite an extreme example of an extremely deceptive MFA that I came across in a couple of variations; I remember doing a Google search on "webmaster keyword tools" and followed an adwords advert for such. Upon arriving on the landing page, surely enough was a search box and a title webmaster keyword search or similar. I recognised it for what it was (MFA) and proceeded to type in a query. Lo and behold it somehow called up one or two borderless 250x300 boxes as the results! Of course I didn't click on the ads, however an unsuspecting visitor would have and once again the poor advertiser would have been the victim. If there was ever an example of an invalid click generator this would have to be up there with the best of them.
