How to avoid going Agloco
The December announcement from Agloco wrapping up current operations provides valuable information for the start-ups wanting to play in the Attention economy.
"We would like to update you on the status of AGLOCO's operations. We continue to believe in the AGLOCO concept, but our revenue is currently not sufficient to give Members a meaningful distribution. And though there are increases in membership, the resulting revenue is not enough to support operating costs. As a development team we are unable to continue to use our savings to fund the operations. If any Member would like to pursue continuing the operations of AGLOCO, you may contact us at agloco1@live.com .
We would like to thank every Member for supporting our effort to bring a piece of the Internet directly to the user. We hope that we can find a way to keep the operations going."
AGLOCO Development Team (Tuesday December 11th, 2007)
Agloco's plan was to provide a downloadable viewbar that it would use to place ad's in front of you. As an Agloco member, you would provide some basic details - name, age, location and email address - and the downloadable captures your browsing history. Based on this data, the toolbar determines the most relevant ads to place. John Chow's YouTube video describes how it works.
Agloco's advertisers would pay Agloco a commission for Search, Advertising, Transactions and Software, Service and Product distribution. All 'members' who downloaded and used the toolbar would share in the profits. And everybody would live happily ever after.
Being paid to view ads
'People being paid to look at ads' was never going to work. Today, most people have no time. The people with money to spend have less time than that. Unless you are going to pay them spectacular amounts to surf ads they just won't do it. If you've ever tried to recruit people for a focus group, you'll appreciate this problem.
A user is okay with viewing Google Ad's because it takes them zero effort and Google provides them with a high value service. The same for MapQuest, Yahoo, Hotmail, Facebook or any of the other valuable services we get for free.
As soon as you have to make the user do something (e.g. download and install), there is a steep curve where the value needs to exceed the effort. In the case of a downloadable component, you can either provide speed and convenience (as in the del.icio.us button) or you bundle it into some other component such as a browser (e.g. Google desktop).
Question - What is the correct value:effort ratio to make a user do something?
Did the Egg come First?
If you have enough consumers then the advertisers will come. If you have enough advertisers to give you revenue to share, then the consumers will come. So where to start? You either need a stunningly useful service (such as Google, Hotmail, MySpace, TripAdvisor) or you need very deep pockets. Deeper than Agloco's apparently.
Questions - How many advertisers do you need to start making money? How many consumers do you need to attract those advertisers? Then how many new customers do you need to attract the next advertiser? Then do you need a sales force to go out and sell advertising opportunities?
Is attention really worth anything?
The model relied on users making more money by recruiting more users. Viral or pyramid by another name. So this viral model could have recruited enough users to allow sufficient advertising to be sold to kick start the model
The AttentionTrust spent some time trying to understand the worth of user behavior, however there seems to be no clear model emerging of how to monetize that attention data. As I commented in my previous posting on Microsocial Ads in Facebook, if you simply pay people for clicking, then people will click and soon enough advertisers will realize that those clicks are hollow and worthless. Google contextual Adwords remain king.
Questions - Is there a way of compensating people to click on an ad without creating the opportunity to scam the system? Perhaps it is simply commissions on sales, but then the model becomes too complicated to administer unless you want to be a Mary Kay, an Amway or an Avon.
Die Siedler von Catan
Over Christmas I played for the first time the Settlers of Catan. If you know the game, then you'll understand how you could build a game around working some of these problems out.
Who has the right answers
Over the next twelve months it would be worth watching the following companies to see what their answers are going to be.
Finally here's one that seems to be in the space, but I can't make out what their value model is: MarketingPond They tell you that you can make a lot of money online and they have a lot of frogs on their site - maybe that is good enough for some people to sign up!
Bibliography
John Chow and the Agoloco Toolbar video
Agloco doesn't pay to surf joins deadpool at TechCrunch
Just went past 6500 AGLOCO referrals on McCallsNotes
AGLOCO -- Own the Internet at FreeCashSpace .
How I got to 17,000 AGLOCO referrals - and you can copy it for free - really, nothing to buy :)on McCallsNotes
What was the Business Mistake of AGLOCO? at Just make money online
New AllAdvantage Meets Same Fate As Old AllAdvantage at Techdirt