Google’s (s GOOG) AdSense is brilliant in that it very simply provides relevant contextual ads across millions of web pages. But what if you make that process a little less automated and provide ads that are endorsed by the creators of those web pages? So instead of an algorithmically matched text ad appearing next to a blog post about the same topic, readers see an on-topic product recommendation by a writer they trust. It’s something that could get very messy very fast — and it already has, in the form of outrage over paid tweeting and blog posts with undisclosed sponsorships.
San Francisco-based MyLikes.com is wading into those waters with full awareness of the potential pitfalls, but a hope that it can evade them and in doing so steal AdSense’s $6-$7 billion per year in revenue. The startup comes from two former Googlers, including the former tech lead for AdSense, Arvind Sundararajan. He and wife Bindu Reddy, the former head of product management for Google Apps, have co-founded the company, are its only employees, and have invested into it $200,000 of their own money.
So why not start the same product within Google? “Doing stuff inside the company always takes longer,” Reddy said in a phone interview. And what about taking outside investment? Well, for one, Reddy and Sundararajan didn’t have to — but as she explained, “Getting capital right now would be similar to Google — you’d have to answer to someone.”
In an effort to offer an endorsement service that’s decidedly not scammy, MyLikes started out by building a consumer product, Likaholix (see Om’s write-up from March). “We were afraid that if we started an ad product with no consumer product, people would not be genuine,” said Reddy. Now, the company is extending its network of 30,000 members and 300,000 “likes” as seeds for its sponsorship program.
On the new site, which launches Wednesday morning, each user has a profile, and earns an “influence score” based on their presence on Twitter and their blogs. They can post one ad every two days on their sites, which they write in their own words. The ads either appear in a post that discloses the relationship with the sponsor or in an AdSense-like unit. They receive 20-60 cents per click. MyLikes (which was formerly called Likes.com, but switched names after Like.com complained about its trademark) currently doesn’t take a cut, but will at a later date from for-profit users (users also have the choice of donating their proceeds to charity).
MyLikes and its affiliate ads face competition from the likes of Ad.ly and Sponsored Tweets. Federated Media also does similar work on what it calls “conversational marketing” with larger publishers. My concern would be that as such services become more widespread, lifestyle blogging will be so littered with product placements that it will be polluted and boring. (In some cases, that’s already happening.)
Reddy said that she thinks MyLike’s model of full disclosure (which is what the FTC now requires) and performance-based payments will incentivise effective ads. Plus, bloggers will be limited to one ad every two days.
So if you can only run one ad every two days at a 20-60 cents CPC, is there actually a real business here for bloggers/tweeters, and eventually MyLikes the company? Reddy thinks so, because as compared to an impersonal AdSense placement or a banner, “our ad is going to be better.”