Let me ask you something. Do you want advertisement on your favorite web site? Do you want it on your news site?

Now raise your hand if you demand to see ads?

And now let me see who wants to protect and shield themselves from ads?

Oh, Yes, that’s what I thought… You are asking what ads? I don’t see any ads. Yeah, I hear you, I am running adblock plus too.

See, we go out of our way to avoid ads. Especially us, software developers, are savvy bunch when it comes to blocking ads. We’ll even put algorithmic brain blocks to tune out ads…

And yet smart people don’t get it. I am listening the Podcast #64 by Joel Spolsky and Jeff Atwood (J&J from now on) and hear them complaining how hard it is to monetize Stackoverlfow’s impressive almost 1 million views a day…  Here is part:

Atwood: At the beggining it was first type of advertising we were experimenting with (Google AdWords).

Joel: And what it was, like 18 cents a year we were making from it…

Atwood: Well, so this is my complaint. We recently turned off Google Adwords completely. It wasn’t worth the time which is really depressing considering… Stackoverflow as it is now gets tons of traffic… It does seem wrong…

They do say that Google ads relevance was a problem, but real kicker comes later in podcast courtesy of Jeff:

I actually turned Adblock off, because it got really almost like a comedy routine. I work on our ad code, I would get frustrated because it wasn’t working and I would realize I had ad-block on and was blocking myself…

Well J&J, nobody is demanding the ads. People don’t go out of their way to actively look for them. I don’t go to Stackoverflow and think, oh boy, now I am going to look for some ads to buy products I did not even know I needed. You don’t do that either.

And when people do look for ads, they go to places where they can find all of them in one place. Think software catalogs, job sites, download sites, yellow pages, Craiglist and classifieds.

You’ll have success when people are actively looking for your ads, pull mode, rather than actively avoiding your ads. You sell what people want, it is basics, really!

Now they do say that the worse performance by far were Google Ads and that their internal Stackoverflow generated ads perform magnitude better, but with Google Ads you earn per click and Stackoverflow internal ads earn per impression. See, no-clicks no money in Google case. Per impression sales of course earn better, your earnings are not tied with performance of the ad. Only browsers might be seeing the ads, but that does not matter since you earn per impression whether machine or human… With all that though they can’t still support their entire staff in Stackoverflow. I believe they have 5 people now and growing, so they need about $150K per person per year. They’d have to make at least $2K every single day to barely brake even.

I agree with J&J and attribute partially poor Google Ads performance to relevance, but I also do not discount the fact that ad-blockers are aware of Google ad servers and come with Google ad filters pre-installed. If Jeff himself is blocking the ads, like most developers do, advertising there gets really iffy. Does anybody really sees it?

Lets look at the numbers from advertiser side. I have some data that other developer oriented advertising networks have click through rate between 0.08% – 0.3%. So million ad views generate between 800-3000 clicks. From that, if 3% of people convert, which is reasonable average conversion rate that people experience selling online, you might sell between 24-90 units of something. Million ad views at $5 per thousand of impressions is $5000 which puts cost of selling each unit at between $55 and $208. I call this click-to-sale cost.

I think these are best case scenarios for both conversion rates and click-through rates. To be on safe side you’d have to expect between $100-$200 per unit sold as cost of advertisement. I should note that in my experience conversion is between 0% and 0.01%. Yep, you read it right, from zilch, zip, zero, nada. You might not convert anybody! At 0.01%, if you are lucky, your click-to-sale cost is $500 per unit! At such high cost per unit, you’ve got to sell some high-priced product to be profitable as seller. Forget pushing ThinkGeek wares…

So what Stackoverflow should do to monetize the huge traffic they have? In my opinion they need to concentrate on pull type ads. The ads that people are actively looking for and that don’t need to be shoved down their throat. What are those? Joel said job ads are working for them. That’s exactly the pull type ad that I am talking about and is what they should be concentrating on. That’s why they are working, people are looking for them.

People go out of their way to look for job advertisements. Stackoverflow job-site should position itself as premium site where employers and employees meet. Forget Monster.com, Stackoverflow could be making a killing in programmers job market. If most of programmers already traffic Stackoverflow, there is no reason not to have every single tech company that is looking for employees advertise there.

If they charge companies to advertise jobs on Stackoverflow just $500 a month with only 120 ads each month they could start to cover their cost. And $500 is inline with strongly targeted audience that Stackoverflow provides. They charge now $350. Not enough I say, raise the price. Actually, no, have a range from $199-$1000 per month. They should push that big time… At 500 ads a month (I know that’s a lot but that’s why its a hard work) they’ll all drive gold-plated humvees.

Sadly, right-now, I do not even see link to Stackoverflow job site in the header!

And if you come to Stackoverflow as developer looking for help on technical issue, they have obligation to you to let you know that they have job section with all tech jobs. It is in your best interest that they do. Its a win-win situation. Stackoverflow should also actively ask developers to recommend the Stackoverlfow job site to their employers so they post open positions there.

Forget banner ads. Nobody wants them. Its battle you cannot win. Joel himself did not spend a dime marketing FogCreek that way, but has concentrated on providing value to developers through his JoelOnSoftware blog and articles. That’s how most us know about him. Joel, Why ask others to spend money on things you did not want to spend money yourself?

P.S. I love what J&J did with the Stackoverflow. No disrespect is meant by my post. Stackoverflow is asset to developers.

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