Blogs by Magic

Thoughts & ideas from a digital magician.

It finally happened

So what’s the catch? The only catch is money. As long as you’re willing to pay the minimum of $20 a day, Reddit will enter you into a pool with everyone else willing to pay to determine how much face time you’ll get on the homepage. For example, if the total bids for the day equal $200, and you bid the minimum $20, you’ll get 10% of the day in this ad slot. It seems very likely that the daily bids are going to be quite a bit more than that, so $20 probably isn’t going to buy you much, but still, it will get you something.
via techcrunch.com

It seems as if Reddit has adopted the same ad model that I played with at a startup a few years ago. I actually wrote a post about this earlier this week, and an in-depth review of what we did and how it worked on my works blog just last week.

Reddit has essentially adopted the "variable CPM" model that I talked about. Well, not essentially. It is. Someone has finally gone ahead and done it. I knew it was just a matter of time before advertising itself became democratized. I actually wrote an email to both Digg and Reddit about this after Digg launched their Digg Ads platform. I never heard back. I wonder if someone over at Reddit read my email.

I'm definitely interested to learn out how this pans out for Reddit. We always thought that for individuals, the model was most compelling if you aggregated all their content together to create a larger pool of impressions; but for huge networks (like Reddit) the model actually works better if it's reversed. That is, if the advertiser can choose which individual page it is they want to place their ad on and you have multiple pools going on for every given piece of content. This way there is an incentive for people to advertise on stories and content that they speculate might become popular or viral, so they can catalyze on the low initial cost of those impressions before everyone else joins the pool. Of course, this requires a more transparent marketplace and the ability to actually track what's going on in real time, but it's completely possible – I should know.

I guess my post on Monday really was spot on. Thanks, Reddit.

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Why good ideas never fail

A few years ago I tried to start a company called Anatomy Ads. We tried to create a social advertising network. This company failed as a business. You can read a lengthy post about what we did and what happened here.

But it didn't fail as a concept. Someone, somewhere, is going to invent a social ad platform that works. It's just a matter of time. What I wanted to address is everything that we did right, and why there is an even greater opporunity to do it again—and do it right.

When we started, there was a [now defunct] company called TipJoy which billed itself a "a social micropayments service." It was the closest analogue to what we were trying to create. TipJoy allowed you to leave a tip for someone else, usually a blogger or some other kind of creative person creating new media content. If you were a blogger, you'd put their widget on your site and people could leave you tips. All your readers had to do was fill out a tip amount and register their email address. TipJoy would send them an email and ask them to pay for their tip. It let people tip first and pay later. It was very simple. In a lot of ways it was a Web 2.0 version of the PayPal "Donate Now" button.

I thought it was an interesting idea immediately, but noticed there was a problem. There was no real incentive to leave a tip other than the warm fuzzy feeling you might get for doing so. Unforunately, that's not enough for most people. Leaving a tip for a blogger isn't like leaving a tip at a resturant. If you don't tip them, no one is going to spit in your food if you come back. On the web, no one even knows who you are. Moreover, it's just not customary to do so. You're asking people to change their behavior and you aren't giving them an incentive to do so.

We looked at this and thought about what might happen if we gave people a real inventive to "leave a tip". What if you gave people impressions. What if you gave them a voice on the blogs and websites they admire so much. Would that be enough? How many people would be willing to pay a dollar to get on Mashable even if they didn't know how many impressions they would get?

These were among some of the questions we tried to answer with the Anatomy Ads platform, and we ran into problems:

  • The system we created was too complicated.
  • Our widget didn't work on enough platforms.
  • We deviated away from IAB standard units. Huge mistake.
  • We forced people to create a separate login with us.

Part of what made TipJoy work at all was that it was so simple. They took the PayPal model, made it a little bit easier and more user friendly, and created a business out of it.

Simplicity is what has got me thinking about the idea of social micropayments and tipping again. Now we've got single sign-on services like Facebook Connect, Twitter OAuth, OpenID, MySpaceID and Google Friend Connect. What if you allowed people a quick way to create ads, testemonials, or leave shoutouts using Twitter and Facebook? Could you make social advertising work?