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All I have to say is WOW. I haven’t seen this kind of vitriol since the last Democratic Convention, and all directed toward Chitika, a startup ad company that was supposed to be the Google killer. Their crime? Cutting people’s revenue checks after they’ve earned the money. Not a great PR move. And it looks like there are more problems with what, on the surface, looks like a great idea. I have to admit I don’t understand how anyone (including Chitika) makes any money with thei...

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All I have to say is WOW. I haven’t seen this kind of vitriol since the last Democratic Convention, and all directed toward Chitika, a startup ad company that was supposed to be the Google killer. Their crime? Cutting people’s revenue checks after they’ve earned the money. Not a great PR move. And it looks like there are more problems with what, on the surface, looks like a great idea. I have to admit I don’t understand how anyone (including Chitika) makes any money with their revenue model.

Darren Rouse of problogger.net, who I respect immensely (and who makes a couple hundred grand a year blogging), has really flogged the heck out of Chitika. Right from the start I had trouble understanding how they were going to make any money.

Chitika Mini Malls allow you to sell specific products (merchandise) within the pages of your website or blog. The ads boast the best price for a specific product, and then allow the user to click to (supposedly) buy the product. They also include tabs for search and other functionality built right into the banner-like ad.

Publishers can choose to show ads by keyword (they pick the words), or by page context like Google (having both ads in contextual mode on your site violates Google’s terms of service).

Apparently Chitika has deals with companies like Shopping.com, Ubid and others to share in clickthroughs. Or they may just go through channeladvisor.com, a syndicator of content for the major shopping sites (which explains why they all have the same content).

From my comfortable chair I can see where the trouble begins. When someone comes to Shopping.com they’re looking for something, whether it is duck boots from L.L. Bean or a battery charger from Sears, and they’re looking for the best price, presumably so they can buy the product (it’s not called just looking around.com. It’s shopping.com.

So Bean or Sears doesn’t mind paying Shopping.com fifteen cents or a quarter or whatever to get the person to press the buy button, because they know the person is ready to put down the credit card number.

I’m not sure moving that model out to my web site is going to pay off in a pay-per-click model. Back when we did CASIE-award winning (5 awards actually) campaigns for John Hancock, the goal was to capture someone having a specific life event such as having a baby, marriage, graduation, etc., and get them to Hancock. The presumption was that they would be ready to buy. Chances are if they saw a banner that said Ready to tie the knot? Are you covered? or some such thing and they clicked, they were ready to buy, and it would have been worth paying for the click.

Shopping.com is similar. If you’re there, the life event is a new TV (not quite as profound as marriage, but important just the same).

I’m not sure how much a click on the Best price for a TV MiniMall ad by someone who is not ready to buy a TV is actually worth. Remember, they haven’t come to Shopping.com. Shopping.com has come to them.

Keeping that in mind (the value of a click from my site vs. the value of a click from the Shopping.com site), all of the controversy makes perfect sense.

Let’s start with the auditing fiasco. They told a bunch of publishers how much oney they made from people clicking on the ads, then decided to take back some of it. T....[MORE]

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