In a story that might begin, "A long time ago, back in the third quarter of 2008, a site that looked like a blog appeared." Since then, the fake blog and its relatives – the fake news site and fake celebrity/gossip site – have taken over the web. Whether as a text ad placement through one of the self-service networks or as an ad on display, you can hardly navigate the web without running into an example of fakevertising. Years ago, in a similar media environment, a similar phenomenon happened, where users could go to almost any site and be assured of seeing the same type of ad running – those for mortgage refinance. Ad networks call these campaigns "soakers," because like a sponge they are what show when no other good (i.e. premium) ads exist. Neither of these soakers were obvious candidates for success, but once they showed signs of sticking, companies came out of the digital woodwork to profit from the trend. And, like refinance, few would have have predicted the staying power and economic power that the flogs have shown, even with the depressed media prices.
How similar are they, though? And, what can mortgage tell us about the future of the flog.
What they having in common
- Run of Network – Both campaigns have a certain target or at least a certain demographic more likely to convert than others. With mortgage, you need to own a home and with the health and beauty fake sites, women more than men are likely to convert. Yet, because both make up such a large percentage of web surfers, the cost to target the campaigns would actually not help them. Like late night infomercials or performance-based television ads, the economics might be good but not good enough to (on the whole) pay for premium placement. So, they are best off running (generally) untargeted.
- An Acquired Taste – People, be it site owners and/or publishers, either love the ads or hate them. For them to succeed, the ads must grab the user’s attention. NexTag and LowerMyBills had a competition it seemed for who could create the wackiest ads with an entire genre of creatives being born, the stretched dancing animals. The goal wasn’t irreverence, though, it was clicks; and while a bouncing stalk of corn has little to do with refinance, given the good chances that someone who clicks could convert (again back to the run of network, shotgun approach), they just wanted to get people to notice. The same applies with the fakevertisers whose ads have started to evolve from just before and after pictures to rather interesting
- Buyer Network – Fakevertising works because it takes only a handful of companies to provide national coverage. You don’t need a different partner if you want to advertise to women in Georgia versus New Jersey. The only real question is which of the acai, ResV, colon, etc. will convert the best. Mortgage in its prime, offered the same and is what allowed so many to enter. All it took was a direct relationship with a handful of top buyers, and that meant almost any lead generated could be sold. In both, third-party aggregators also played a huge role in the process. With mortgage, it meant those good at getting traffic could sell the leads to an aggregator, whereas with flogs, hardly any who generate traffic sell directly to the end-supplier.
- Screwing The User – Both mortgage and fakevertisers results impact people’s monthly payments. While you could argue that mortgage refinance ads didn’t set out to screw the user, they brought with them a likelihood for abuse (now more than obvious), with people entering into something they don’t fully understand.
Where they differ
- Affiliates vs. Companies – While aggregators play a role in both ecosystems, a look at who is buying the traffic shows that in the fakevertising world, it’s an affiliate driven model. With the exception of CPX Interactive who runs their own fake ads as house campaign, aggregators just supply the ads but don’t buy traffic. Mortgage was very different. There were affiliates, but the big players were specialized companies, like LowerMyBills. NexTag played in more than mortgage, but they had an entire business unit that in size of operations and revenue topped many of the cpa networks. Another way of saying it is that people can make money on fakevertising, but it doesn’t serve as the foundation for a real company.
- Lower Tech – Fakevertising isn’t devoid of technology, but you will hardly find any proprietary technology involved or needed. It’s differentiated only in the affiliates ability to design, buy, and convert, all of which matter greatly and take immense risk and skill… just not technology. Compare that to a mortgage aggregator who had to build complex lead routing platforms, reporting, and optimization. True, in mortgage’s peak, you could be a one or two man affiliate but not at the same scale and as competitive with the specialists.
- Screwing The User – Unfortunately, there are no shortage of cases with users not being happy with the outcome. Where you could argue a difference is in the number of true success stories.
- No Exit – A number of people are making great money from the fakevertising ecosystem, but no one will make the kind of money that the founders of NexTag did when they successfully raised multiple rounds of capital because they could or when they sold the company at a billion dollar plus valuation. LowerMyBills too had a highly successful exit, and while cynics might point out how the market for mortgage has since changed and some frothiness might be involved, the same will not happen in the fakevertising space.
- Sales as Differentiator – Also a result of the fakevertising being an affiliate driven model versus a specialist (company driven one), sales matter but the relationships aren’t exclusive. The cpa networks who deal with the continuity programs want all of their best affiliates to excel. There are a handful of vertically integrated operators, but they don’t represent a large percentage of the total dollars, which was not the case in mortgage. There, the companies like LowerMyBills comprised most of the online dollars, and a key to their success was the backend-buyer network. The same holds true with lead generation for areas like insurance. The depth of its buyer network becomes a big advantage.
- Macroeconomics vs. Micro – Last and definitely not least, both fakevertising and mortgage have/had the right economics to succeed in a market where inventory abounds at affordable prices, but one was the result of a global trend versus a relatively arbitrary concoction that just happened to work. The products the flogs promote have been around for quite some time, they just needed the right packaging to make them work. And, while the flogs may bring down performance marketing, they aren’t part of a trend that could bring down the economy.
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