The Shoppero Hype

We have a start-up in town and it’s called Shoppero. The general idea of a user driven review system, sharing the revenue with the users, allowing widgets to be placed on web sites with your review, … all that is good and I can see this thing succeed to some extent. The problem is that it is (was?) way over-hyped. We all know that Nico is very optimistic about the future and with Jens Kunath joining in, things are sure to get hot in the current investment climate. Underpromise and Overdeliver guys.

> In times such as these, it is no failure to fall short of realizing all that we might dream, — the failure is to fall short of dreaming all that we might realize. We must try. — Dee Hock

They are going in the right direction, even though we already hear of all the problems, first and foremost huge holes in the platform. Werblogger wrote some things together and also pointed to this post on thinkphp about the big XSS hacks. Werblogger also pointed to the problem of the general rules of the platform, but Nico already corrected the point that they will not use your email for spamming. Didn’t expect that and I know that you will write your rules a bit more carefully if you are in a hurry.

But they need to be fast, because the platform is fairly simple to build. Hell, they did it in 6 weeks for a first release. Signing up you will get an Amazon aStore for example, but that is very easy to build and it took me a few minutes (store in german for now). Of course they will connect more affiliate systems but Amazon is really working on having almost everything available, so you are mostly fine there. And if you are big enough to turn any meaningful revenue for other stuff, you can do that too. Of course, this is long tail, but as said, this thing could work.

It just comes to the biggest problem I see with their communication strategy. They are saying that you will make more money with it. Jens had a long post about traffic optimization. The general idea is to give the user what he wants as an ad, and that even Google AdSense is not relevant enough in many case. Why is relevance so important? Because it will lead to higher click through rates. I can even totally attest to that because I have run performance marketing systems for some time now. Now Jens argues that through Shoppero bloggers will be able to get higher revenues than by other means at the moment. Sadly, there it brakes for me. That is total nonsense.

It’s a pretty simple calculation really. You can get a 1% CTR and more on AdSense if you place them right. Now let’s presume you are making $1 CPM on AdSense through this. That means that 1000 impressions lead to 10 clicks worth $0.1 each. That is not a lot and you can probably go higher, but lets be conservative. Now let’s look at my last 10 posts to see how relevant my ads are. I have router management and dsl ads on my Fonera post, the unddu.de post has social networking in there, my first post about mymuesli.com has VC stuff and the VOIP via Mobile post has lot of fitting VoIP links. All in all very fitting and nothing in there that would lead to a higher click through rate in my mind if I had linked my Canon EOS 350D or Nokia E70 or some Books or Wine or any other product. I mean Fon is linked anyway, mymuesli too and stuff like Jajah and Cellity are linked to. Nothing for Shoppero to earn there unless they change my links which I won’t let them do.

But let’s presume I do post about the Nokia E70 and how much I like it. Let’s presume that 1000 people read it (probably $1 earned via AdSense, possibly more as there would be other high paying E70 links). As the direct link to an E70 it might have a better CTR and let’s presume that it is 5%. Most of those would probably not even want to read a review (they just did) but get more info on the E70. The many people that don’t know me, are very unlikely to do an impulse buy of a phone (or any product) and will probably continue to think about it. Those that do know me, will probably send an email to get more views, pretty similar to how Jens bought his E61. In any case, many will not buy in a trackable manner but somewhere else. Knowing conversion rates of special landing pages for free services, I do not think that they will get conversions anywhere near or above 1% from after the click. And if I then get $10 for the sale, I would get 60% of the $5 made, meaning $3.

This obviously is more (5% is a high CTR! 2% and you are lower) but the problem is that it presumes that every post I do has a fitting review to it. That is surely not the case and if it is 1 to 10 than it is a high ratio. Suddenly I am only making 30 cents. Of course I am also making money on the stuff that Shoppero lists on their site (20%) but Squidoo tried that too and failed. Above that, suddenly it is no longer about making money via my blog but almost free for Shoppero. Above that I have work as I need to create the widget and it’s not ala AdSense where you put the code on your site and you are done. Sure, review bloggers can make money, but they also can with linking to Amazon directly or joining other Affiliate Systems. And yes, you are also making money on other stuff Shoppero makes money with, like AdSense, but I am pretty sure that you are making more integrating AdSense on your blog directly than by loosing people through click through rates and through an additional revenue share.

Jens actually suggests adding an adget (how they call their ads) on the right side of your blog which means that CTRs are way lower than at the end of the article (I know). It’s also no longer context sensitive, which is the entire point. As a short background, I have run AdSense similar ads for services on some of the biggest publishers and am doing that again, and we did beat out Google AdSense (and are doing it again with Ormigo for relevant traffic). The more interesting thing is though that one publishers opted to put links from a big affiliate system at the same spot (good for them, you need to try stuff out!) but stopped doing it after a very short time even though they probably got way bigger commissions than normally or rather good CPM without consideration for conversion (which is why the affiliate system stopped doing it :)).

The thing is that sales are just barely trackable on the net. Too much moves outside the tracking system. I would be very happy to be proved wrong, because we need something more for blogs. We are moving the same direction with Ormigo, going more long tail on the advertising system, but first need to increase the breadth of offerings where we can create customer contacts (which are instantly trackable). It’s hard. Blogs are very diverse, and relevance is a must.

As a summary. I think for special niche blogs or for pages with reviews, Shoppero might make sense. Then it might be too much work for the hassle though. I’ll probably add an Amazon aStore to the right side of the blog soon to try it out (too much US traffic that Shoppero can’t handle and OpenAds can do the targeting for me for Germany and other Traffic.)

Good luck with your start-up, it’s interesting times.

Update: There are other things than only monetary reward for using a system. This is something that Shoppero can play, because they are the nice guys. One of their biggest benefits that is. :)