Chitika - What Went Wrong?
Author: Matt DeAngelis
Author: Matt DeAngelis
All I have to say is WOW. I haven't seen this kind of vitriol
since the last Democratic Convention, and all directed toward
Chitika, a startup ad company that was supposed to be the
Google killer. Their crime? Cutting people's revenue checks
after they've earned the money. Not a great PR move. And it
looks like there are more problems with what, on the surface,
looks like a great idea. I have to admit I don't understand how
anyone (including Chitika) makes any money with their revenue
model.
Darren Rouse of problogger.net, who I respect immensely (and
who makes a couple hundred grand a year blogging), has really
flogged the heck out of Chitika. Right from the start I had
trouble understanding how they were going to make any money.
Chitika Mini Malls allow you to sell specific products
(merchandise) within the pages of your website or blog. The ads
boast the best price for a specific product, and then allow the
user to click to (supposedly) buy the product. They also
include tabs for search and other functionality built right
into the banner-like ad.
Publishers can choose to show ads by keyword (they pick the
words), or by page context like Google (having both ads in
contextual mode on your site violates Google's terms of
service).
Apparently Chitika has deals with companies like Shopping.com ,
Ubid and others to share in clickthroughs. Or they may just go
through channeladvisor.com, a syndicator of content for the
major shopping sites (which explains why they all have the same
content).
From my comfortable chair I can see where the trouble begins.
When someone comes to Shopping.com they're looking for
something, whether it is duck boots from L.L . Bean or a battery
charger from Sears, and they're looking for the best price,
presumably so they can buy the product (it's not called just
looking around.com. It's shopping.com.
So Bean or Sears doesn't mind paying Shopping.com fifteen cents
or a quarter or whatever to get the person to press the buy
button, because they know the person is ready to put down the
credit card number.
I'm not sure moving that model out to my web site is going to
pay off in a pay-per-click model. Back when we did CASIE-award
winning (5 awards actually) campaigns for John Hancock, the
goal was to capture someone having a specific life event such
as having a baby, marriage, graduation, etc., and get them to
Hancock. The presumption was that they would be ready to buy.
Chances are if they saw a banner that said Ready to tie the
knot? Are you covered? or some such thing and they clicked,
they were ready to buy, and it would have been worth paying for
the click.
Shopping.com is similar. If you're there, the life event is a
new TV (not quite as profound as marriage, but important just
the same).
I'm not sure how much a click on the Best price for a TV
MiniMall ad by someone who is not ready to buy a TV is actually
worth. Remember, they haven't come to Shopping.com. Shopping.com
has come to them.
Keeping that in mind (the value of a click from my site vs. the
value of a click from the Shopping.com site), all of the
controversy makes perfect sense.
Let's start with the auditing fiasco. They told a bunch of
publishers how much oney they made from people clicking on the
ads, then decided to take back some of it. They claimed to be
taking back money from clicks from countries where the products
couldn't be shipped and accounting for click fraud. While this
is annoying, I can understand it, though I'm not quite sure how
they could examine every click and figure this stuff out,
especially when rumor has it the system isn't exactly a
technological powerhouse. In fact, according to Shoemoney.com,
the technology is a PHP ripoff.
So they threw out a few clicks, right. Big deal. But here's
where Chitika crossed the Rubicon as far as I'm concerned —
they decided that they were going to filter out what they
called curiosity clicks, which they loosely defined as clicks
that are not likely to result in a sale.
Wait a minute here…no one said anything about sales. As I
mention in my previous article about Pay-per-click advertising,
the publishers responsibility in the pay-per-click model is to
get the user to click. The rest of the chain is then out of the
publisher's hands.
Chitika has basically created its own model here, and I call it
Pay-per-selected-click. They are, in effect, deciding that some
clicks are more valuable than others. Specifically they are
saying that clicks resulting in sales are better than clicks
not resulting in sales. Viola! They have invented Pay-per-Sale
(or Pay-per-Action for those semanticists in the audience).
Other people call it BS. Actually so do I. I think it is
dishonest to tell publishers that you will pay them for every
click and then decide which clicks to pay for. That's like
telling the lottery agent that you'll buy the tickets now for
$1 each, but you're coming back after the drawing to return the
ones that didn't win for your dollar back.
Put another way, if you're giving away 70% of what you earn
(60% to the publisher and 10% to his referring publishers), you
can't be throwing around dollar bills. And if your model is
stupid (which this one clearly is), you need to pull some
hocus-pocus man-behind-the-curtain
give-with-one-hand-and-take-away-with-the-other kind of magic.
The most amusing part of this has to be picturing the look on
the marketing weenie's faces at L.L. Bean and Sears when the
bill for a million clicks comes in and they find that they made
four sales.
The bottom line here is that in this context (selling someone
merchandise) a click from Shopping.com has more value than a
click from Bobsblog.com.
Chitika turned me down for an account. They said that I didn't
meet the qualifications. Darren Rouse says that web sites that
are product centered. Chitika says the same thing.
This proves my point even more. If a website is product
centered (in other words reviews computers or exhalts the
virtues of a Palm Pilot), then the fact that you are on that
site means you have some interest in the product. Your Chitika
MiniMall is the Buy It Now for that product. This means that
there won't be as many curiosity clicks, and Chitika won't take
as much of your earnings back.
You are getting subjected to Pay-Per-Action criteria with
Pay-Per-Click rewards. If you want to see how publishers are
reacting to this, you might want to Google Chitika sucks, or
look up one of the anti-Chitika web sites like Shitika.com.
Jensense also has a nice synopsis you might want to take a look
at.
Without looking I'm going to guess that the angry people are
the ones furthest from Shopping.com in content and model, and
the ones who had the least taken off their earnings are more
product centered (whatever the hell that means).
Chitika claims to be The Leader in Impulse Merchandising. Their
model puts a different spin on the word context. For their ads
to work, you have to be predisposed toward purchasing the
product on one of their banners, and the theme of the site on
which the ad appears is the actual context of the ad, not the
keywords you supply or context Chitika uses to choose the
banner.
I'd replace Chitika with a Pay-Per-Action ad that fits the
theme of your site. If you're lazy stick with them, at least
until they either change the model so they make more money or
go out of business. At this point I'm not sure which one to bet
on.
About The Author: Matt DeAngelis runs http://AffiliateBlog.com.
Matt is the former CTO of Modem Media, a pioneer in the Internet
ad space. As a foot soldier in the Internet revolution, Matt
devised the technology behind many of the most successful ad
campaigns of the time.
since the last Democratic Convention, and all directed toward
Chitika, a startup ad company that was supposed to be the
Google killer. Their crime? Cutting people's revenue checks
after they've earned the money. Not a great PR move. And it
looks like there are more problems with what, on the surface,
looks like a great idea. I have to admit I don't understand how
anyone (including Chitika) makes any money with their revenue
model.
Darren Rouse of problogger.net, who I respect immensely (and
who makes a couple hundred grand a year blogging), has really
flogged the heck out of Chitika. Right from the start I had
trouble understanding how they were going to make any money.
Chitika Mini Malls allow you to sell specific products
(merchandise) within the pages of your website or blog. The ads
boast the best price for a specific product, and then allow the
user to click to (supposedly) buy the product. They also
include tabs for search and other functionality built right
into the banner-like ad.
Publishers can choose to show ads by keyword (they pick the
words), or by page context like Google (having both ads in
contextual mode on your site violates Google's terms of
service).
Apparently Chitika has deals with companies like Shopping.com ,
Ubid and others to share in clickthroughs. Or they may just go
through channeladvisor.com, a syndicator of content for the
major shopping sites (which explains why they all have the same
content).
From my comfortable chair I can see where the trouble begins.
When someone comes to Shopping.com they're looking for
something, whether it is duck boots from L.L . Bean or a battery
charger from Sears, and they're looking for the best price,
presumably so they can buy the product (it's not called just
looking around.com. It's shopping.com.
So Bean or Sears doesn't mind paying Shopping.com fifteen cents
or a quarter or whatever to get the person to press the buy
button, because they know the person is ready to put down the
credit card number.
I'm not sure moving that model out to my web site is going to
pay off in a pay-per-click model. Back when we did CASIE-award
winning (5 awards actually) campaigns for John Hancock, the
goal was to capture someone having a specific life event such
as having a baby, marriage, graduation, etc., and get them to
Hancock. The presumption was that they would be ready to buy.
Chances are if they saw a banner that said Ready to tie the
knot? Are you covered? or some such thing and they clicked,
they were ready to buy, and it would have been worth paying for
the click.
Shopping.com is similar. If you're there, the life event is a
new TV (not quite as profound as marriage, but important just
the same).
I'm not sure how much a click on the Best price for a TV
MiniMall ad by someone who is not ready to buy a TV is actually
worth. Remember, they haven't come to Shopping.com. Shopping.com
has come to them.
Keeping that in mind (the value of a click from my site vs. the
value of a click from the Shopping.com site), all of the
controversy makes perfect sense.
Let's start with the auditing fiasco. They told a bunch of
publishers how much oney they made from people clicking on the
ads, then decided to take back some of it. They claimed to be
taking back money from clicks from countries where the products
couldn't be shipped and accounting for click fraud. While this
is annoying, I can understand it, though I'm not quite sure how
they could examine every click and figure this stuff out,
especially when rumor has it the system isn't exactly a
technological powerhouse. In fact, according to Shoemoney.com,
the technology is a PHP ripoff.
So they threw out a few clicks, right. Big deal. But here's
where Chitika crossed the Rubicon as far as I'm concerned —
they decided that they were going to filter out what they
called curiosity clicks, which they loosely defined as clicks
that are not likely to result in a sale.
Wait a minute here…no one said anything about sales. As I
mention in my previous article about Pay-per-click advertising,
the publishers responsibility in the pay-per-click model is to
get the user to click. The rest of the chain is then out of the
publisher's hands.
Chitika has basically created its own model here, and I call it
Pay-per-selected-click. They are, in effect, deciding that some
clicks are more valuable than others. Specifically they are
saying that clicks resulting in sales are better than clicks
not resulting in sales. Viola! They have invented Pay-per-Sale
(or Pay-per-Action for those semanticists in the audience).
Other people call it BS. Actually so do I. I think it is
dishonest to tell publishers that you will pay them for every
click and then decide which clicks to pay for. That's like
telling the lottery agent that you'll buy the tickets now for
$1 each, but you're coming back after the drawing to return the
ones that didn't win for your dollar back.
Put another way, if you're giving away 70% of what you earn
(60% to the publisher and 10% to his referring publishers), you
can't be throwing around dollar bills. And if your model is
stupid (which this one clearly is), you need to pull some
hocus-pocus man-behind-the-curtain
give-with-one-hand-and-take-away-with-the-other kind of magic.
The most amusing part of this has to be picturing the look on
the marketing weenie's faces at L.L. Bean and Sears when the
bill for a million clicks comes in and they find that they made
four sales.
The bottom line here is that in this context (selling someone
merchandise) a click from Shopping.com has more value than a
click from Bobsblog.com.
Chitika turned me down for an account. They said that I didn't
meet the qualifications. Darren Rouse says that web sites that
are product centered. Chitika says the same thing.
This proves my point even more. If a website is product
centered (in other words reviews computers or exhalts the
virtues of a Palm Pilot), then the fact that you are on that
site means you have some interest in the product. Your Chitika
MiniMall is the Buy It Now for that product. This means that
there won't be as many curiosity clicks, and Chitika won't take
as much of your earnings back.
You are getting subjected to Pay-Per-Action criteria with
Pay-Per-Click rewards. If you want to see how publishers are
reacting to this, you might want to Google Chitika sucks, or
look up one of the anti-Chitika web sites like Shitika.com.
Jensense also has a nice synopsis you might want to take a look
at.
Without looking I'm going to guess that the angry people are
the ones furthest from Shopping.com in content and model, and
the ones who had the least taken off their earnings are more
product centered (whatever the hell that means).
Chitika claims to be The Leader in Impulse Merchandising. Their
model puts a different spin on the word context. For their ads
to work, you have to be predisposed toward purchasing the
product on one of their banners, and the theme of the site on
which the ad appears is the actual context of the ad, not the
keywords you supply or context Chitika uses to choose the
banner.
I'd replace Chitika with a Pay-Per-Action ad that fits the
theme of your site. If you're lazy stick with them, at least
until they either change the model so they make more money or
go out of business. At this point I'm not sure which one to bet
on.
About The Author: Matt DeAngelis runs http://AffiliateBlog.com.
Matt is the former CTO of Modem Media, a pioneer in the Internet
ad space. As a foot soldier in the Internet revolution, Matt
devised the technology behind many of the most successful ad
campaigns of the time.
