After seeing so many GF tests I decided to make my own.
As she rides home from university alone in the bus observe her behavior. If she endlessly chats on cell phone it means she is ready to throw money away, she does not care about it, she is unable to count her own money. She is not serious and she is a bad match.
Limitations: Impossible if she does not use mass transit.
Disclaimer: it is a joke, do not take it seriously.
Monday, December 29, 2008
Friday, December 26, 2008
Is there any wealth created by clicking ads?
Recently many economics bloggers, some of them have Ph.D, blamed new financial instruments for the crisis. Key claim of many of them is that fancy financial instruments do not create zero real economic value are not connected to labor productivity. Something that gives one money without useful work done is potentially evil. I'm not going to argue with them, I will explain how intangible banner clicks generate wealth.
Billy and Jimmy create state-of-the-art decorative fences from beer cans. Give them soldering iron and a ton of recyclable aluminum and they will create real masterpieces. They are very proud dudes, so proud that they refuse to work with Coca-Cola cans, only beer cans, please, Czech bear preferred. Also they are not very successful at selling their product, so they only work 3 hours a day.
Alice browsed a web site and saw a Google ad (under Firefox with AdBlock extension she wouldn't see it). She clicked the banner to read about decorative fences. After reading the relevant information she decided to order some for her garden. For the next three week Billy and Jimmy work full time and overtime thus reducing unemployment and creating real product to be consumed.
This way a single click that increased employment, GDP, consumption and everything else.
But wait! Alice could spend the money differently, she could spend it on aesthetic wallpapers from synthetic waffles that would require even more work-hours without wasting precious aluminum. She could donate it to kids starving from cancer. She could save the money for later use.
One more thing to note. Bob and Rob also clicked the link, but they did not need anything that Jimmy and Billy could offer. Their clicks that cost real money to Jimmy without creating actual wealth, they are potentially evil.
Back to our topic. Was there any wealth created by clicks? We will never know. Economics is about making theories based on wrong assumptions. Assumptions that are known to be wrong from the beginning. You can define wealth in one way and discover five alternative ways and no definition is better, in general case, than the other.
Billy and Jimmy create state-of-the-art decorative fences from beer cans. Give them soldering iron and a ton of recyclable aluminum and they will create real masterpieces. They are very proud dudes, so proud that they refuse to work with Coca-Cola cans, only beer cans, please, Czech bear preferred. Also they are not very successful at selling their product, so they only work 3 hours a day.
Alice browsed a web site and saw a Google ad (under Firefox with AdBlock extension she wouldn't see it). She clicked the banner to read about decorative fences. After reading the relevant information she decided to order some for her garden. For the next three week Billy and Jimmy work full time and overtime thus reducing unemployment and creating real product to be consumed.
This way a single click that increased employment, GDP, consumption and everything else.
But wait! Alice could spend the money differently, she could spend it on aesthetic wallpapers from synthetic waffles that would require even more work-hours without wasting precious aluminum. She could donate it to kids starving from cancer. She could save the money for later use.
One more thing to note. Bob and Rob also clicked the link, but they did not need anything that Jimmy and Billy could offer. Their clicks that cost real money to Jimmy without creating actual wealth, they are potentially evil.
Back to our topic. Was there any wealth created by clicks? We will never know. Economics is about making theories based on wrong assumptions. Assumptions that are known to be wrong from the beginning. You can define wealth in one way and discover five alternative ways and no definition is better, in general case, than the other.
Wednesday, June 4, 2008
Why IDC is wrong and what should BSA do about it.
In IDC/BSA piracy report you see the size of pirated software market measured in billions of dollars and percentage of pirated units. It is wrong. Not only the number is wrong, their so-called researchers measure it in wrong units.
Pirates measure themselves in gigabytes. Bob will never say "I downloaded 7 movies that would cost 269$ if bought legally". In fact his friends will hear "I downloaded 15GB of videos and it all was crap". Pirates who sell disks in Moscow or Beijing do not charge per title or as percent of the price of legal copy, their customers pay per disk. Show me a BitTorrent tracker or DirectConnect server that measures users' activity in stolen dollars and number of products uploaded.
IDC/BSA should measure piracy in terabytes. They will surely learn something important if they do. I do not know what exactly and how, but using appropriate measures and terminology is always a good thing to do.
Surely you can say that Americans constitute 10% of all human mass on Earth, but such statistic fails to shows the population of USA and the obesity rate.
Pirates measure themselves in gigabytes. Bob will never say "I downloaded 7 movies that would cost 269$ if bought legally". In fact his friends will hear "I downloaded 15GB of videos and it all was crap". Pirates who sell disks in Moscow or Beijing do not charge per title or as percent of the price of legal copy, their customers pay per disk. Show me a BitTorrent tracker or DirectConnect server that measures users' activity in stolen dollars and number of products uploaded.
IDC/BSA should measure piracy in terabytes. They will surely learn something important if they do. I do not know what exactly and how, but using appropriate measures and terminology is always a good thing to do.
Surely you can say that Americans constitute 10% of all human mass on Earth, but such statistic fails to shows the population of USA and the obesity rate.
Saturday, March 22, 2008
Update your web site!
My friend invited me and 15 more friends to a restaurant in Tel Aviv. As we arrived we failed to locate the restaurant at the expected location. Our "leader" called them earlier at the same day to ask about their ability to accept 20 visitors at evening and the answer was positive. A quick investigation showed, that they moved long without updating their address on the web-site. This way small businesses lose customers by not updating their site.
P.S: (December 26, 2008) After several months of inactivity this post reminds me that I should do something with this blog.
P.S: (December 26, 2008) After several months of inactivity this post reminds me that I should do something with this blog.
Wednesday, February 13, 2008
Hover Ads: When statistics hurt.
Bob just loaded a web page, but he can not access the content yet. A large flashy ad appeared in the middle of the screen and offers discounted MP3 download, there is no obvious way to close it. Bob scrolls the page, but the banner remains in the middle. Bob minimizes the window and restores it, but nothing happens. After a dozen of seconds a small red cross appears in the corner, but clicking it changes nothing. At the end, out of desperation, Bob clicks in the middle of the intruder and the advertised site appears in the new tab. He quickly closes the new tab and looks at the original page. The banner is gone. After a several minutes he navigates to the next page. He clicks on the hover ad there without even reading it and quickly closes the newly opened page.
Not everything is so smooth. Alice just loaded a web page and she is already very angry. The banner in the middle of the screen says “Smart way to exploit Forex! Enlarge your budget!” There are two buttons there as well, one says “Show it to me!” and the second reads “No, I’m not smart enough.” At the end she clicks the second button, and feels frustrated. Next time she looks at the ad briefly, clicks the first button and closes the new window instantly.
In all such cases the banner is impossible to ignore and click closes it. Furthermore it is easier to click it, than to close it without opening the advertised site. The exact mechanism can vary, "close" button can take long to appear, it may be broken or contain humiliating text.
Such ads are widespread now, the abundance depends on language and region, but you can see hover ads in every language used on the web.
Below is the explanation of what just happened.
Mike is a publicity manager in a small, but very ambitious firm. Today his boss told him “Our web-site, realgreatcarsforfun.com (RGCFF), needs more visitors. You must do something about this!” Mike spent 6 hours reading about online advertising. He now knows about Click Through Rate (CTR), Pay Per Click (PPC), Cost Per Thousand (CPT) and much more. His head is full of Three Letter Acronyms (TLA) including “WTF”.
On the next day he starts comparing offers from advertising networks. The networks’ sites provide information on CTR, PPC, CPT and WTF of average ad in each of the numerous advertising plans offered. Some advertising networks will even design a banner for his firm if firm does not have one already. And all of them promise “best value for your money”.
Mike’s time is limited. He needs to make a motivated choice and report to his boss. At the end he picks a very special offer from doreallyclicknow.com (DRCN). The offer features incredibly large CTR and low CPT. He also checks the information on how it works; ads hover over the publisher’s page making them hard to ignore thus leading to higher response rate. DRCN will even design a free banner for a new advertiser.
Mike’s boss approves. A new banner with a stylish car and almost naked girl comes out of the void. The webmaster of RGCFF observes increase in the number of visitors. Everyone is happy.
After some time boss finds, that the number of page views per visitor declines rapidly. He is not alarmed yet, “at least they all note our nice title page”, he thinks. Only when the sales start to decline RGCFF employees start to suspect something.
Economists call it “market with asymmetric information”. For RGCFF clicks from all advertising plans are the same and their publicity manager picks the cheapest clicks. DRCN knows that clicks generated by overly-intrusive hover-ads are rotten. If advertisers could not evaluate the quality of incoming clicks the entire market would become rotten as all ad nets would switch to selling cheap irrelevant clicks to stay competitive. Fortunately it is possible to measure the effect of advertising, at least approximately. Mike did not read the report on annoying ads by Bunnyfoot Universality which says that at least 90% of clicks RGCFF pays for do not bring potential customers.
Now look at the situation from publisher’s (owner of the web-site that shows the ads) and user’s perspective.
Mary is the owner of best-baby-meal.com (BBM) a very popular web-forum about breastfeeding. She wants to earn money by showing ads to the visitors. The number of visitors is finite, so is the number of page views, so is the number of ads that can be placed on every page. She must choose. Now Mary thinks, “no matter how bad the ad is people will not leave just to avoid the banner”. In her eyes price elasticity of demand is perfectly inelastic. She finds a very tempting offer from DRCN – hover ad. It appears in the middle of the page and seems quite annoying, but there is no problem, users can just close it. Also users will click it more and each click generates some money. Mary enjoys the income and prefers to ignore the thread asking for removal of annoying pop-ups. Only when a group of forum-veterans boycotts BBM and goes to young-mothers-forum.com (YMF), her competitor, she feels that there is something that needs to be changed. Her model of user behavior was wrong.
Now look at the end users. They are the real creators of the goods traded in the online advertising market – clicks. Some of them click by mistake; many of them click ads out of curiosity; some clicks still bring potential customers to the advertised resource. There is a finite capacity of the market; if someone produces clicks out of the void it is already suspicious. One tomato can be processed to one bottle of ketchup, but you can make 3 bottles of ketchup with a single tomato if you try hard, it depends on the amount of starch. You can increase click rate by proper targeting, by making sure that people see only relevant ads. But some will do it the easy way: by using hover-ads – the starch of online advertising industry.
What is the root cause of the problem? It is caused by advertisers who create the demand for rotten clicks. They do not handle statistics correctly and rely too much on CPT, CTR and other indicators of doubtful value. CPT and CTR are important, but you must know to use them properly. Otherwise statistics will hurt.
Not everything is so smooth. Alice just loaded a web page and she is already very angry. The banner in the middle of the screen says “Smart way to exploit Forex! Enlarge your budget!” There are two buttons there as well, one says “Show it to me!” and the second reads “No, I’m not smart enough.” At the end she clicks the second button, and feels frustrated. Next time she looks at the ad briefly, clicks the first button and closes the new window instantly.
In all such cases the banner is impossible to ignore and click closes it. Furthermore it is easier to click it, than to close it without opening the advertised site. The exact mechanism can vary, "close" button can take long to appear, it may be broken or contain humiliating text.
Such ads are widespread now, the abundance depends on language and region, but you can see hover ads in every language used on the web.
Below is the explanation of what just happened.
Mike is a publicity manager in a small, but very ambitious firm. Today his boss told him “Our web-site, realgreatcarsforfun.com (RGCFF), needs more visitors. You must do something about this!” Mike spent 6 hours reading about online advertising. He now knows about Click Through Rate (CTR), Pay Per Click (PPC), Cost Per Thousand (CPT) and much more. His head is full of Three Letter Acronyms (TLA) including “WTF”.
On the next day he starts comparing offers from advertising networks. The networks’ sites provide information on CTR, PPC, CPT and WTF of average ad in each of the numerous advertising plans offered. Some advertising networks will even design a banner for his firm if firm does not have one already. And all of them promise “best value for your money”.
Mike’s time is limited. He needs to make a motivated choice and report to his boss. At the end he picks a very special offer from doreallyclicknow.com (DRCN). The offer features incredibly large CTR and low CPT. He also checks the information on how it works; ads hover over the publisher’s page making them hard to ignore thus leading to higher response rate. DRCN will even design a free banner for a new advertiser.
Mike’s boss approves. A new banner with a stylish car and almost naked girl comes out of the void. The webmaster of RGCFF observes increase in the number of visitors. Everyone is happy.
After some time boss finds, that the number of page views per visitor declines rapidly. He is not alarmed yet, “at least they all note our nice title page”, he thinks. Only when the sales start to decline RGCFF employees start to suspect something.
Economists call it “market with asymmetric information”. For RGCFF clicks from all advertising plans are the same and their publicity manager picks the cheapest clicks. DRCN knows that clicks generated by overly-intrusive hover-ads are rotten. If advertisers could not evaluate the quality of incoming clicks the entire market would become rotten as all ad nets would switch to selling cheap irrelevant clicks to stay competitive. Fortunately it is possible to measure the effect of advertising, at least approximately. Mike did not read the report on annoying ads by Bunnyfoot Universality which says that at least 90% of clicks RGCFF pays for do not bring potential customers.
Now look at the situation from publisher’s (owner of the web-site that shows the ads) and user’s perspective.
Mary is the owner of best-baby-meal.com (BBM) a very popular web-forum about breastfeeding. She wants to earn money by showing ads to the visitors. The number of visitors is finite, so is the number of page views, so is the number of ads that can be placed on every page. She must choose. Now Mary thinks, “no matter how bad the ad is people will not leave just to avoid the banner”. In her eyes price elasticity of demand is perfectly inelastic. She finds a very tempting offer from DRCN – hover ad. It appears in the middle of the page and seems quite annoying, but there is no problem, users can just close it. Also users will click it more and each click generates some money. Mary enjoys the income and prefers to ignore the thread asking for removal of annoying pop-ups. Only when a group of forum-veterans boycotts BBM and goes to young-mothers-forum.com (YMF), her competitor, she feels that there is something that needs to be changed. Her model of user behavior was wrong.
Now look at the end users. They are the real creators of the goods traded in the online advertising market – clicks. Some of them click by mistake; many of them click ads out of curiosity; some clicks still bring potential customers to the advertised resource. There is a finite capacity of the market; if someone produces clicks out of the void it is already suspicious. One tomato can be processed to one bottle of ketchup, but you can make 3 bottles of ketchup with a single tomato if you try hard, it depends on the amount of starch. You can increase click rate by proper targeting, by making sure that people see only relevant ads. But some will do it the easy way: by using hover-ads – the starch of online advertising industry.
What is the root cause of the problem? It is caused by advertisers who create the demand for rotten clicks. They do not handle statistics correctly and rely too much on CPT, CTR and other indicators of doubtful value. CPT and CTR are important, but you must know to use them properly. Otherwise statistics will hurt.
Tuesday, February 12, 2008
Clifford D. Simak and MMORPGs.
In this post I will discuss "City"(1952) by Clifford D. Simak, in modern context. I will not analyze the book as whole: it is outside of the scope of this post. However, I will explain the connection between “webster” civilization and massively multi player online games (MMORPG).
Many experts are concerned about the growing number of players addicted to MMORGPs. Such games provide a virtual reality for players, and some players may find themselves spending more time in game than living real life. Psychologists often describe this as a pathology and propose doubtful methods of solving the problem.
The problem could become a nation-wide epidemic. The Chinese government defined digital addiction as a clinical disease that, in some cases, must be treated by specialists. It also imposed legal limits on the amount of time players may spend in game. Numerous online resources advise on how to overcome attraction. Some researchers claim, that 40% of World of Warcraft's multi-million user-base can be classified as addicted. The addiction takes its grim toll with human lives.
Virtual worlds are, for some, more attractive than real life. Economists said there is a competition for time, and the real world is rapidly losing its advantages. Digital technologies already provide an incomplete alternative to life itself.
In Simak's "City," human technology has advanced to transform human beings to native Jupiterian lifeforms while preserving consciousness, memories and personality. The life of Jupiterian species is far superior to what humans have. The technology is mature enough to provide a complete alternative to human existence. Mankind is tempted by it and succumbs. Fortunately four our reality, virtual worlds remain unable to feed people with nutritious pixels.
Did characters of Simak's book suffer from "acute addiction to being a Jupiterian"? Did they expose evil behavior? Did they all go mad? Did they fail by not seeking aid of competent psychiatrist?
We do not need to fight addiction to games, but we should try to learn from Simak's wisdom. The real world must become competitive, or the quality of virtual life must be decreased. Is there any other option?
Special thanks to Derrick Sobodash for editing stupid mistakes out of this post.
Many experts are concerned about the growing number of players addicted to MMORGPs. Such games provide a virtual reality for players, and some players may find themselves spending more time in game than living real life. Psychologists often describe this as a pathology and propose doubtful methods of solving the problem.
The problem could become a nation-wide epidemic. The Chinese government defined digital addiction as a clinical disease that, in some cases, must be treated by specialists. It also imposed legal limits on the amount of time players may spend in game. Numerous online resources advise on how to overcome attraction. Some researchers claim, that 40% of World of Warcraft's multi-million user-base can be classified as addicted. The addiction takes its grim toll with human lives.
Virtual worlds are, for some, more attractive than real life. Economists said there is a competition for time, and the real world is rapidly losing its advantages. Digital technologies already provide an incomplete alternative to life itself.
In Simak's "City," human technology has advanced to transform human beings to native Jupiterian lifeforms while preserving consciousness, memories and personality. The life of Jupiterian species is far superior to what humans have. The technology is mature enough to provide a complete alternative to human existence. Mankind is tempted by it and succumbs. Fortunately four our reality, virtual worlds remain unable to feed people with nutritious pixels.
Did characters of Simak's book suffer from "acute addiction to being a Jupiterian"? Did they expose evil behavior? Did they all go mad? Did they fail by not seeking aid of competent psychiatrist?
We do not need to fight addiction to games, but we should try to learn from Simak's wisdom. The real world must become competitive, or the quality of virtual life must be decreased. Is there any other option?
Special thanks to Derrick Sobodash for editing stupid mistakes out of this post.
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