In a recent post I commented on a troubling trend towards compensating publishers at the low-end of the funnel and the implications this may have on the entire online advertising industry. I anticipated that this problem will get solved over time and today we are one step closer to that.
Earlier this week, Google announced a new feature for AdWords called remarketing (also called retargeting). Essentially this gives advertisers a way to present targeted ads to users who have already been to the advertiser website by planting the double click cookie. This new feature presents great value for advertisers and I'm sure it will be adopted quickly by the majority of the advertisers.
Putting aside the privacy issues that this new feature presents, Google just created a very big opportunity for publishers at the higher end of the funnel to get better compensation for "intent generation". As this new feature gets widely adopted it's implication on conversion rates will be quantified and it will be easy to associate a dollar value with the act of planting the cookie (flagging). I expect that soon after a new payment model will be developed to compensate such an act - let's call it cost per flagging (CPF). The advertiser will be able to plan a campaign where a user gets flagged on the publisher website if he reached certain criteria based on time of exposure to the ad, dwell time over the ad or some interaction with an interactive ad (widget). Since the advertiser can now associate a dollar value with the flagging he will be able to pay much higher rates in CPF as compared to CPM and since very little user actually click out of the publisher website, CPF will also yield more RPM/eCPM than CPC for the publishers.
This can have very significant implications on the entire web since it can revert the current trend towards the end of the funnel. Giving more revenue to the publishers at the higher end of the funnel means more quality online content and less annoying aggressive advertising which tries to get you to click out of the website. So essentially, it means better web experience for the users.
The implication on the online advertising industry can also be tremendous. The existing trend towards trapping the online advertising industry in the "intent harvesting box" can now be reverted and the advertisers will start shifting the huge brand advertising budgets from other media channels to the online channel as they will be able to measure the ROI on "intent generation" / brand advertising.