Three reasons why content advertising conversion rates are so bad:

1. It’s not search. By definition the people clicking on the ads aren’t in the process of shopping for your products, they’re just reading a story online, so they’re less likely to pull the trigger.
2. Content ads are poorly targeted. Language is really hard. As good as the engines are at making sense of the web, content ads for metal working still show up on “heavy metal” websites.
3. Click fraud. Site owners have a huge incentive to develop creative ways to click on their own ads to increase their ad revenue.

This all makes sense, and we’ve found that by carefully knocking out specific bad actors and bidding appropriately given the poor conversion rates, many companies can get a small but worthwhile bump out of content ads.

But content isn’t the only area that requires serious scrutiny. Smart marketers are coming to realize that some of the engines’ search syndication partners are not much better than the fraudsters.

Take a look at the following example from the Ask.com network:

With Content we provided 3 good reasons why conversion rates could be bad, the first two of which were purely functions of the medium. Indeed, explanations 1 and 2 above should not apply to the search networks at all: they are search responsive ads, and by definition they should be relevant. The only reason conversion rates should be markedly different is…fraud. Okay, there may be demographics at play, but please…these data show that traffic from Ask.com only represents 6.6% of the ASL Network, and yet it drives 57% of the sales. That means the conversion rate on the network is about 1/20th the rate on Ask.com!

The data from the other networks isn’t quite so dramatic, but important nevertheless. Here’s data showing the fraction of traffic coming from the Syndicate Partners and the conversion rates of that traffic relative to the conversion rates on the main sites.

What should you do about it?

• Google: split campaigns into Google.com only and Syndication only, and bid accordingly. At this point, Google doesn’t allow users to block specific offenders, you have to take the syndicates as a package. It would be great if, in the name of pursuing the greater good, Google allowed us to select partners.
• Yahoo: good news! Yahoo is planning to adjust the cpcs paid to syndicate partners based on conversion rates. Partners whose traffic converts at half the rate of traffic on Yahoo.com get paid half the normal cpc and the savings go to the retailer.
• MSN: MSN’s syndication partner is Live.com. Currently there’s no way to segment that traffic.
• Ask.com: There’s no way through the interface to block syndication or select Ask.com only, however, if you “ask” nicely, they can knock out specific syndication partners who seem to be sending unusually poor traffic.

The more you can accurately segment traffic and treat those segments appropriately the better your results will be.

Michael Wesch, Professor of Cultural Anthropology at Kansas State University, on the societal significance of Web2.0: