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Project Wonderful to cease to be wonderful?

In the blog under his comic, Matthew Skala has been thinking about the same concerns I have with Project Wonderful, and thought them to their logical conclusion:

In Project Wonderful news, I started scaling back my bids because my account with them was running low, and I've already sunk what feels like more than enough money into it. I decided to shoot for breaking even - spending no more money buying ads on other people's sites than my own ad boxes bring in. So I've been looking at my bids, figuring out which are most expensive per click, and lowering those until they're no longer winners - the idea being to reduce my total expenses while keeping the bids that produce the best performance of clicks per unit money. Thing is, though, pretty often when I lower a bid to the point where it starts losing the auction, it only loses the auction for a short time. Other people are lowering their bids too. I wonder if I've started some kind of a thing. Unfortunately, it's happening on my own boxes, too. The vertical box went from 0.10 and 0.20 bids, to 0.02, in the last couple of days. Of course that reduces my budget and means (if I'm going to be serious about the break-even thing) that I have to lower my own bids even more.

I wonder if this is going to stabilize in some kind of steady state, or if it's a basic problem with the market. Money leaves the system for Ryan's 25% cut, and presumably some of the big-time ad venues (the ones that get bids of dollars per slot per day) are taking out profits as well. I'm not taking out profits. If too many of the small-timers like me decide they want to break even, there's going to be very little actual money entering the system, and the stable state is going to be basically a free banner-swap network. For it to work as designed, there need to be more buyers bidding more real money, and I don't know where they're going to come from.

I'd add that that projected steady state would be a free banner-swap network that is much smaller than PW's current network because people would start taking down their PW ads and returning to the warm, heaving bosom of Google Adsense and other large advertising networks. If I was Ryan North, I'd worry about this a bit.

I'm definitely experiencing the same phenomenon that Matt is talking about, partly because I'm one of the people he's inflicting it on, the cheap, cheap bastard. It's extra painful for me because I spent rather a lot of money on Project Wonderful in the final months of 2006, and once I take that into account, it's very unlikely I'll break even over the full period I've been buying and selling ads through it. I'm running in budget-neutral mode now and I'll be able to claim the late-2006 advertising binge on my taxes, but with hindsight, I'd have done better to keep it in my pocket.

Note that this is the third time I've linked to Matt since he started putting his ads on my site. I'm normally against doing that. It's a conflict of interest even though the amounts of money involved are infinitesimal. But every time I click on Matt's ad I find, if not necessarily a great episode of The Bonobo Conspiracy, then at least a well-written and/or thought-provoking article about one of his many geeky interests. Besides, there's actually a perverse incentive for him to take down his ad, because the permalinks to this blog are free and are arguably a lot more effective than the tiny button ads he's currently paying a penny for (the cheap, cheap bastard).

Another effect that may be coming into play with Project Wonderful if not enough new buyers enter the network is bid monopolies. I think one of my ads may be in a bid monopoly situation: One bidder is willing to lock in a bid over and above the likely real value of the ad for a long period, so that people willing to bid the real value and not a lot more end up giving up, leaving the overbidder to snap up the ad spot for pennies.

I hope Matt is wrong about the direction PW is heading in, and I hope someone will prove me wrong about that other thing as well. But right now, I'm a bit bearish about it, as they say.

Oddly, the one place where my PW ads still do well is this blog, which you wouldn't think of as an ideal place to put (mostly) webcomics-related ads.

Comments (1)

I agree with most of what your saying. I too have enjoyed the transparency of the system.

One of the sucesses, as far as I see it, is that, particularly amongst webcomic-ers, there has been a coagulation of interlinking sites, enabling readers to effectively skip around a vast webcomic network.

I used the system to buy ads with the revenue I have made from selling them - a basic self-supporting system that gets me few, but free hits. This revenue has decreased over the last few months despite a general increase in my traffic, leading to depleting returns.

Still, until something better comes along, right?

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This page contains a single entry from the blog posted on March 18, 2007 7:06 PM.

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