As some of you know, I have spent a fair amount of my past with Advertising.com (now owned by AOL). I was one of their larger publishers in 1998, and then worked for/with them from 1999 - 2004 as an employee. During some of that time I was VP of New Product Development, and worked with co-founder John Ferber creating, building, supporting, and later cost-effectively dis-mantling GetPaid4. GetPaid4 was our version of the paid to surf model that was pioneered by AllAdvantage.
AllAdvantage pioneered the "paid to surf" model, where a web surfer was paid (typically per hour) to leave open a small application that would place a banner ad on the edge of the users screen while he/she went about his/her business surfing the internet. A model tremendously interesting to internet users, but only fleetingly interesting to advertisers. Given the adverse selection of the groups of internet users drawn to these models, and the incentives of and ease to cheat the system, the concept of paying some to be exposed to ads in this model is destined to skew towards a low-value, low-impact viewer.
I have been following the re-incarnaction of AllAdvantage recently.... I signed up for the service their old leaders have recently created (AGLOCO), just to keep tabs on it. A good friend is working on a competing service, and another good friend owns a few typo's of their domain name and is making some money off of them...so it's a company worth watching for me. I received the following email earlier, and big red flags started flying in my head:
"Our first data points are in with our AGLOCO/Ask search system. Average net revenue for AGLOCO per click is already over US$0.20 – the average Member click through rate on ads on the Ask search page - 20% to 25% of the time the ad is clicked on (one ad click for every 4 to 5 searches).
If every AGLOCO Member did 4 to 5 Ask searches a day and they clicked on average just one ad, the revenue generated for the AGLOCO community would be US$6.00 per month per Member. This would be a great start to building revenue for Member distributions.
AGLOCO’s challenge is to get every Member to have the Viewbar open all the time and to use the Ask search box to make their searches."
I find it wild how little has been learned. The Agloco user base is worth less then the average consumer. And this user base has been incented to use, and click, on the search results / service. And their company is less efficient and has less competition and lower bids then Google does. And yet still they think they can sustainably generate $6 per member per month, even when google's superior and non-incented search product generates only half or so of that?
If you have an interest in the ASK, bet on a short term uptick in revenues, and then a quick drop, as everyone first sees an uptick in usage/revenues, and then later realizes the usage is worth little and advertisers realize what is going on and pull out or significantly lower their bids.
AGLOCO users of the ask.com engine are worth a tiny fraction of what organic ask.com visitors are. And it isn't priced as-such right now. Short term up-tick in revenues, medium-term exodus of advertisers and/or degradation of pricing per click.
