Arb’s Law of performance-based advertising

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manyadnetworks_small.jpgDM CONFIDENTIAL — In a pivotal scene during “Happy Gilmore,” Shooter McGavin, played by Christopher McDonald, has his ball land on the foot of Mr. Larson, aka 7’2″ actor Richard Kiel.

The man known for his role as Jaws in the James Bond classic, “The Spy Who Loved Me” wore a very memorable shirt during that scene. It read, “Guns Don’t Kill People. I Kill People.” It seems like a fitting joke for a man of his size, but for some even stranger reason than associating that scene / shirt with accountability, it also reminds us of the current brouhaha in the flogosphere . What’s going on now is nothing short of a giant mess, but it isn’t the marketing of health and beauty or the advertorial that are bad, it’s how we have combined the two.

In covering the space and seeing the almost countless iterations that have evolved – from the straight forward fake blog, the celebrity endorsed version, celebrity gossip site style, news site, to the news paper version – what we know for sure is that a) the people in the performance marketing space are clever, perhaps too clever, and b) we’re not seeing anything new; we see companies pushing hard and fast to gain market share with abandon for future consequences.

There is nothing that we can do or would want to do about the creativity. The second part though bothers us, because we’ve seen this story before. And, like mot sequels, this one looks to be much worse than its predecessor. And, while we wish there would only be a sequel, given that the original is based off of human nature, we might have to go through more of these blights.

The question of blame always comes up, but blame doesn’t help get at the root of the issue, namely how can companies adopt a longer-term view without one breaking that online advertising goal of quitting smoking. And, as we’ve mentioned before, it’s not getting people to agree that is an issue, it’s stopping that slide towards accommodating the lowest common denominator that is a problem. Once, your competition does it, all of a sudden you must do it to stay competitive. That for example, means a company who publicly wrote how they don’t have any floggers to have one sending them lots of traffic, and not just any traffic, but ultra non-compliant traffic, that exact sort that has Dr. Oz filing law suits.

Herein lies the big issue. No one really wants to admit they did anything wrong. And, those with the most money are statistically the ones that have taken the biggest risk. So, to attack them is to attack those who could make the biggest impact were they not to engage in acts of the lowest common denominator. At some point in the future, we will have a Moore’s Law for performance-based advertising.

For now, we will pretend it is called Arb’s Law which describes the rise of new traffic sources and a new generation of arbitragers who figure out how to leverage these sources for gain. Equally important, Arb’s Law also describes a negative correlation between the rate of growth and number of entrants to the magnitude of overall success. If ringtones generated well north of a billion dollars over their lifespan, flogs won’t according to Arb’s Law. Not good, since we all want to make as much money as possible. Our goal should be not to drain the well as quickly as possible but to gather as much from it as possible. At some level, we want it but are just too busy.

Having covered the industry for a number of years, we’ve learned that we aren’t nearly as smart as the players that we follow, but we can help do one thing – bring them together. And, the recent pressure on performance marketing – its reputation and practices, has galvanized us into action. In just under four weeks, we’re hosting 80/20. The show is all-day Tuesday, September 22, 2009 in San Francisco at The Palace Hotel. San Francisco is the hub of digital innovation and traffic innovation so it seemed necessary to host the first gathering there. The premise is simple. Personal relationships and a commitment to each others business will make this succeed.

The answer isn’t bitching but a focus on sustainable business practices, scalable businesses, and long-term growth. Get a bunch of leaders together, and another great thing happens – lots of undiscovered revenue. We have attending CEO’s and other executives from some of the largest gatekeepers of traffic including those that have already shown the ability to take performance-marketing to new heights. There are two draw backs, timing – it unfortunately overlaps with ad:tech London, and access. Attendance is capped at 150, and not open to just anyone. If you are an 80/20, though, let us know.

 Courtesy of DM Confidential editor

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