Notes

Advertising Model

Right now, the online advertising industry is said to be under trouble because of a few reasons. Consumers do not trust advertising, Consumers do not want to view advertising & Consumers do not need advertising for info on products. Banner ads, which are the most common form of advertising on the internet have been criticised by their own creators as "in the business of interrupting what you are doing" & "creatively disappointing"

“The creativity is disappointing at best. It’s easy for me to say it sucks, but I don’t know what the better thing is, most [banners] aren’t serving value. They’re in the business of interrupting what you’re doing.” - G.M. O’Connell

Currently, there are two main commodities traded in the online advertising market. These are impressions for brand awareness and clicks for traction. Generally, advertisers are willing to pay for impressions if the aim of the advertising campaign is to increase brand awareness. However, they are more inclined to pay for clicks if the goal is to generate traction which in turn increases the probability of a sale. -http://mahdian.org/ppa.pdf

These pricing models both face largely the same problems that prevent them from being effective.

1. It is very hard to track actual conversion from clicks or impressions & even when you do track conversion rates they often do not justify running the campaign.
2. You have to pay for non-interested users who would never have converted.
3. The tracking is done on the publisher side & so advertisers have no way of knowing of verifying the integrity of the clicks or impressions.
4. Advertisers need to setup their own means of measuring results to minimise risk.
5. There is no flexibility in what you are trying to achieve - i.e I want to increase the number of people that are reading/signing up or interacting with my site.

Promocial brings advertising down to the users who use their already available friends on social networks to make money. Consumers may not trust advertising, but they do trust their friends, they don't want to view advertising but they do want to hear what their friends have to day. It is this trust that will make promocial one of the first platforms to be part of a new class of advertisers who leverage consumers through social media.

Despite this, the current pricing model of paying per share or even paying per click on a share faces the same problems as pay per click or impression.

Recently, the pay per action model has received quite a large amount of attention in the advertising world as a way to minimise risk for the advertiser, increase the integrity of results & create a flexible platform for advertising that is not limited by the 2 metrics that publishers have 2 offer. The best implementations of this are things like pay per install - which, although produce great results are only a very small part of what could be possible with this.

What I am thinking for Promocial is a system in which advertisers define a set of events/sequences of events that they want done on their site. These don't have to happen immediately & could be as complicated or as simple as the advertiser wants. The events will end up looking something like the funnels that people draw of users from when they visit to when they purchase or sign up. They are structured in trees to allow for multiple branches of paths & and the advertiser will choose his own price for every event based on what the user is worth at that point. All the advertiser has to do is record an event on his site, categorise it i.e signup, purchase, read, comment etc & then give it a price. This allows the advertiser to effectively grow any specific event artificially in a way that is easily measurable, does not penalise for uninterested users & guarantees results.

The pay per event system would work very closely with our ranking system to give the users who have friends that are better at achieving certain categories of events within certain demographics the opportunity to run campaigns that are worth more within that specific event. The advertiser is able to see the difficultly rate of each event based on conversions & then adjust the price to be higher/lower based on whether he wants more or less conversions. The advertiser knows exactly what he's paying for at all times & the we can classify users based on how likely their friends are to produce certain events.

Ranking System

So, I mentioned ranking user's friends earlier & so I will go into more detail now as to how this will work. Basically, the idea is that every time a user runs a campaign his friends are going into a competition against other groups of friends to produce certain events. Similar to the way people rank chess & other games, you already have a 'rank' which in case is a rate & then it will go up or down based on how well you do against people who have lower or higher ranks than you.

Users just starting out will be given much more random campaigns against both good & bad users in a number of demographics to determine what their friends want & how good they are at producing certain events. Things will stabilise after that, but the user will still be given wildcards to make big jumps up or down. At no point in time are you safe from a bad rank & their is no milestones for rank. If you are doing well you stay up & if you do badly you go down. This determines what kind of prices you will be paid so the advertisers can increase or decrease their conversions with ease.

This ranking system won't be visible to the advertiser or the user, it is designed with the interest of both of them in mind but a user cannot improve his friends & so this is not the same thing as levels.