Friday, September 28, 2007
Time-waster of the day: Sim Web 2.0. It’s a little flash game that automatically generates a name for your Web 2.0 startup, like Twitcast or Youcrunch, a press clip, and a list of things to do to build the company:
Thursday, September 27, 2007
On Sept 5th I had the distinct pleasure of being invited to present as a part of the Authors@Google series. As the author of a new book it was such a thrill to be invited, especially when you look at impressive authors who have been invited (some of my favorites: Seth Godin, George Soros, David Brooks, Ben Cohen, Clotilde Dusoulier).
The title of my talk was: Redefining Web Analytics.
The presentation covered the back story about my book, Web Analytics: An Hour A Day, the back story about why traditional web analytics finds itself in a pickle and presented my vision, definition and outline of Web Analytics 2.0.
I had presented the idea of Web Analytics 2.0 in the Achieving Marketing ROI Online workshop series in July. But it took the invite from the Authors@Google to get me to formalize it and present the details of what the big hub hub was all about.
Before we do anything else, here is a formal definition:
Web Analytics 2.0 is:
(1) the analysis of qualitative and quantitative data from your website and the competition,
(2) to drive a continual improvement of the online experience that your customers, and potential customers have,
(3) which translates into your desired outcomes.
Wordy? Yes. Bland? No. Could mean anything or everything? No. Specific & direct? Yes.
Hopefully you’ll agree (I absolutely welcome suggested improvements, especially from all you with a Masters in English!).
Here’s the delightful video:
(YouTube: Authors@Google: Avinash Kaushik)
For those of you who would like to skip forward and go directly to what interests you:
- The book’s back story: 00:00 - 09:30 (mm:ss)
- Why is web analytics in a “soup”: 09:30 - 18:00
- Introducing Web Analytics 2.0: 18:00 - 20:00
- Specifying the Web Analytics 2.0 mindset: 20:00 - 39:30
- Lots of work? Expensive? Priorities?: 39:30 - 42:00
- Interesting Q&A with Googlers: 42:00 - 55:55
Here in higher resolution is Web Analytics 1.0:
You’ll have to watch the video to learn what that little circle is (I think you know what it is but you don’t want to admit it!!! :)).
Here in higher resolution is Web Analytics 2.0:
Each circle representing a key component of what your web analytics strategy should be, regardless of what your size is. Each circle also approximately represents the amount of data that you’ll have access to as you try to find insights / correlations.
Can Web Analytics 2.0 be explained in plain English? What are you solving for here? Yes……
It is not enough to simple pontificate randomly about a vision or a new methodology. People demand specific details!! :) Absolutely - if you have not already then please consider watching minute twenty through minute thirty nine of the video were practical real life examples were presented to help you understand exactly what each component entails (for example what does “multiple outcomes analysis” mean in a Web Analytics 2.0 context?).
After that segment of the video you’ll learn exactly what you need to do to fill out the missing components to ensure you are executing with 2.0 in mind and not still in the world of 1.0.
I want to assure you that while this might seem a lot, it is not. It does not have to be expensive. It does not have to all happen overnight. You can start small, you can start cheap/free, you can start tomorrow morning.
What is critical is that you “get” the mindset and that you have enough details to get going. At approximately minute 40 in the video I even provide a prioritized (rank ordered) execution strategy for you.
I cherish and value the readers of my blog more than any audience in the world! So just for you all I have cooked up something extra special that was not a part of the original presentation….
The big challenge for crossing any chasm, like this one, is not technology or tools or other related items. It is mindset. It is entrenched mindsets. For me and you and all of us the challenge will be to evolve our mindset to think 2.0. Here is the mindset evolution that is absolutely required if you are to move yourself / your organization to Web Analytics 2.0:
In the world of Web Analytics 2.0 clicks don’t rule rather it is the combination of the “head and the heart” where you care just as much about what is happening on your website as you do about your competitor’s all the while automating as much decision making as you can so you eliminate reporting and even to some extent some analysis. Your world is one of continuous actions (surveys, testing, behavior targeting, keyword optimization…) and continuous improvements where Customers rule and not HiPPO’s.
[I am sure you have also noticed my riff of the iconic Apple Think Different campaign in the image above - Apple used Einstein, Muhammed Ali, Pablo Picasso and others, I could not think of anyone in our context more iconic to honor than Jim Sterne.]
Here’s something that inspires me, and hopefully you as you take on this 2.0 evolution, the text of the Think Different campaign:
Here’s to the crazy ones.
The round pegs in the square holes.
The ones who see things differently.
They’re not fond of rules.
And they have no respect for the status quo.
You can quote them, disagree with them, glorify or vilify them.
About the only thing you can’t do is ignore them.
Because they change things.
Even as Facebook’s Mark Zuckerberg reportedly considers a Microsoft (MSFT) investment, upstart entrepreneurs at the MIT Emerging Technology conference ponder what comes next. Digg.com founder Kevin Rose made an obvious point yesterday. “I was talking to Mark,” said Rose, who sat on a panel with StumbledUpon.com’s Garrett Camp and NetVibe’s Tariq Krim.
“He was saying he’ll rely on people like the three of us to launch applications. Well, we’ve all launched applications. But if you look at the most popular ones, it’s, like, Pirates vs. Ninjas.”
Although neither Digg.com, StumbleUpon or NetVibe purports to be a social network, replacing a Facebook, each is a leader in new forms of social Internet use. NetVibes lets users pepper a personal dashboard with widgets. StumbledUpon is social search that lets users unearth sites that might be interesting to them. And with traffic that often rivals the New York Times Website, Digg lets users vote their favorite stories to the top of the site. All three were named among MIT Technology Review’s 35 innovators under the age of 35.
Rose had news about Digg: new features will include a suggestion service (If you dug this, you might digg that…) and an image section. He’s also working on predictive features that could suggest how popular a story might become based on very early patterns of interaction between the most passionate Digg users.
Particularly fascinating was Netvibes, the Paris and London-based site started in September 2005 by Krim. The jovial Parisian entrepreneur works under an assumption: In the not-so-distant future, Web users will enter the Web in new ways. Rather than starting on Google (GOOG) and navigating through their favorite pages online, they’ll have a landing page where they’ve assembled all of their favorite sites in small page-on-a-page boxes, or widgets. It’s the same bet Zuckerberg is making, of course, and he wants Web users to enter the Web on their social networking profiles.
Krim, however, thinks people want less structure. With NetVibes, he has designed an open landing page. You title it. You drag and drop your favorite widgets onto the page. One widget might track the top headlines in the New York Times Business Section, for example. Another might track the changes in your Facebook profile. And a third might alert you when you have new gmail messages.
There are no banner ads. There is no mugshot, no top friends, no wall on which those top friends post comments. By the end of the year, Krim hopes to add some social components – the ability to share your widgets, with friends, for example. But ultimately, Netvibes is a personal widget market place – publishers (often advertisers) list them and you choose whether to pull them on to your page.
It’s an idea that has attracted interest among valley legends. Netscape founder Marc Andreesson was among Krim’s angel investors. The site has less than $15 million in venture funding, led by Accel Partners in London. But Krim is the first to acknowledge these are early days for widgets. Publishers have to create more, better designed widgets. Advertisers need to figure out how best to advertise on them and through them, and how to sell that advertising.
And did I mention there are no plans for banner ads? Krim says Netvibes should be entirely neutral. There will be advertising, he says, but it will happen entirely through widgets, and those widgets will be added by users. The pressure is on advertisers to come up with creative ideas that appeal to users. But the users, according to Krim, are growing – to 10 million last month.
Will Facebook’s users tire of the traditional social networking structure and leap to Netvibes? It’s worth watching.
Wednesday, September 26, 2007
When I was about 29 years old I got a spiritual "assignment" on an Easter morning in the old city of Jerusalem. According to this assignment my job was to live as if I had only 6 months left to live. I was in perfect health and in the middle of a ten-year round the world trip, so this interruption was unexpected and strange. I've told the full story of that curious mission on the very first episode of This American Life, the public radio storytelling hit, 10 years ago, so I won't go into further detail because you can hear my account on this streaming audio file from the NPR site.
Tuesday, September 25, 2007
"Society of the Query?": Geert Lovink on some of the problems we face in the merely searchable Web 2.0 (The Googlization of Everything)
Rumors of Google's plans to create a virtual world that rivals that of Second Life have popped up once again over the weekend. The company could now be collaborating with Arizona State University to test the 3D social network, which may be tied into Google's current applications of Google Earth and Google Maps.
ASU students received a questionnaire yesterday, screenshots of which were originally posted by a MacRumors forum member, that hinted strongly at Google's plans. Specifically, the questionnaire intro says that students will be able to test a product that will be publicly launched later this year by a "major Internet company," and the graphic makes reference to 3D modeling, video gaming, and avatars. It proceeds to ask questions about students' involvement with social networks like MySpace and whether they have Gmail accounts. The social network referenced by the questionnaire is currently being dubbed "My World."
Monday, September 24, 2007
This blog, the result of a collaboration between myself and the Institute for the Future of the Book, is dedicated to exploring the process of writing a critical interpretation of the actions and intentions behind the cultural behemoth that is Google, Inc. The book will answer three key questions: What does the world look like through the lens of Google?; How is Google's ubiquity affecting the production and dissemination of knowledge?; and how has the corporation altered the rules and practices that govern other companies, institutions, and states? [more]
Should we start calling Facebook, the popular social networking site, Microbook or Facesoft?
The Wall Street Journal reported on its Web site Monday afternoon that Microsoft is considering investing $300 million to $500 million for a 5 percent stake in Facebook. The high end of that range would value Facebook as a whole at $10 billion. A spokesperson for Facebook told CNN that it had no comment about the speculation and a representative from Microsoft said the software developer had no comment as well.
But the WSJ indicated that talks are just in preliminary stages and that Google (GOOG), the search industry leader, is also interested in making an investment in Facebook, which has seen its popularity explode since the company developed an open platform for applications developers earlier this year. The site has gone from being one that was more of a niche social networking site popular on college campuses to a legitimate challenger to News Corp.’s (NWS) MySpace.
SEPTEMBER 24, 2007
Ad flux expected to continue through year-end.
Internet display advertising grew 17.7% to $5.52 billion during the second quarter of 2007, according to TNS Media Intelligence.
However, TNS found total ad spending in the first half of 2007 fell 0.3% to $72.59 billion versus the same period in 2006.
"For the first time since 2001, media advertising expenditures have declined for two consecutive quarters," said Steven Fredericks, CEO of TNS Media Intelligence, in a statement. "Given the uncertainties about near-term economic growth and consumer spending, we expect core ad spending will continue to face challenges during the second half of the year."
The results differ by industry, TNS research director Jon Swallen told eMarketer.
"For example, financial services advertisers are moving more money to Internet display ads from other media," Mr. Swallen said. "The Internet gets about $22 out of every $100 in financial services ad spending. By contrast, pharmaceutical firms are not making the same moves and are underallocating to display.
"Internet spending growth used to be driven by small and midsize businesses," he said. "Now it's the large companies like consumer packaged goods firms which are getting more into the Internet. The percentage of budget allocated to display by the top 50 blue-chip firms is still comparatively low, but that's changing."
eMarketer's own US online ad spending estimates include search and video figures as well as display. In 2007, eMarketer estimates that total online ad spending will reach $21.7 billion, up from $16.9 billion in 2006.
SEPTEMBER 21, 2007
An old media dog learns some new tricks.
The Newspaper Association of America has reported double-digit growth for the last 13 consecutive quarters of online newspaper advertising spending, which reached $795.7 million in the second quarter of 2007.
Randy Bennett is vice president of audience and new business development at the NAA. eMarketer spoke with him about what factors are driving this growth, key issues of the day and how newspapers are adapting to online publishing.
eMarketer: Online ads seem to be a bright spot for newspapers these days. Why?
Mr. Bennett: Part of it has to do with online ad growth overall. But newspapers are also making aggressive efforts to make their sites more compelling.
Online newspaper site content is more than just news. It includes community sites and content created around them, including user-generated content and video. This changes the value proposition. If you want to buy local ads, newspapers are a hub with a connection to the community. Advertisers can trust that ads will appear next to respectable content. Having varied content also draws a wider audience.
You can geotarget through a portal site, but news sites are where people are talking about things that affect their lives.
eMarketer: Some observers have said that only the largest newspapers are profitable these days. At the same time, local news site ads are picking up. What's the relationship between a paper's size, site and profitability?
Mr. Bennett: That's not true. Profitable newspaper sites come in all sizes. It's not so much a question of size as the amount of effort put into a site. Success is related not to cost-cutting, but to making the content better. Expanding content and the types of media available on news sites helps bring in more readers and helps with ad sales.
eMarketer: Small papers do seem at a disadvantage for offering robust content on their sites. Is there a trade association that helps them with the scale of what they carry?
Mr. Bennett: Newspapers handle content creation and packaging well, and their connection to the community is a core competency. Building platforms is not, so some newspapers are partnered with Yahoo! [in] the Newspaper Consortium. This includes smaller sites, since there's a desire to bring the local newspaper experience to a national audience, especially for marketers.
eMarketer: What types of local ads work best?
Mr. Bennett: There's nothing unique. Search is successful both locally and nationally. The thing is, newspapers are both online and offline. Bundling ads which use both media tends to be a good way to lift brands and spread messages.
eMarketer: What's the role of online video on news sites?
Mr. Bennett: We're still trying to figure that out. Newspapers with a local broadcast presence are trying newscasts. Some are using video for entertainment value. It just makes for more compelling content overall. Newspaper sites are still experimenting and there are lots of different approaches.
Some of it is definitely working. Newspapers capture half of online video dollars, according to Borrell Associates.
eMarketer: How do forums and the community portions of news sites fit into the news site mix?
Mr. Bennett: Consumers are looking for a one-stop shop for their community. Newspaper sites can be that. They don't just focus on breaking news, but also on what's going on in the community. Site users in forums are asking things like "How can I live my life better?"
eMarketer: Is there anything that online advertisers or marketers want from news sites that they're not getting, such as support for various ad types, campaign types or metrics?
Mr. Bennett: Metrics are a key issue. How do you tell the story that despite declines in traditional products, there is a growth story to tell?
[Ed. ï¿½" Mr. Bennett is referring to the drop in print newspaper ad revenues. The drop has overall news ad revenue growth trending negative, despite online newspaper ad growth.]
The Audit Bureau of Circulations used to just report circulation, but now they're reporting who's reading, how often print copies are passed along, total readership and online readership. Scarborough Research has also started reporting total readership, online audience and reach.
The issue is that it's not your father's newspaper. Newspaper sites are not just the newspaper online. As a result, they can deliver segmented audiences.
Friday, September 21, 2007
An argument between Google and click-stream auditing firm ClickForensics about the level of click fraud on Google is getting increasingly heated.
Last week, Forbes published an interview with Google click-fraud czar Shuman Ghosemajumder, in which Ghosemajumder said, in effect, firms like ClickForensics have no idea what they're talking about. This week, the fair and balanced Forbes interviewed Tom Cuthbert, CEO of ClickForensics, who responded in equally vehement fashion. Forbes' Andy Greenberg knows a lot about this issue, so his questions are smart:
Forbes: You say that click fraud is increasing, while Google's Shuman Ghosemajumder says that click fraud is under control. Are you accusing Google of hiding the extent of the problem?
Cuthbert: You'll notice in your Q&A with Shuman that he doesn't actually answer the question of whether click fraud is getting worse. That's because he knows from Google's own data that the problem of click fraud is getting worse and will continue to get worse.
Are your estimates inflated by "fictitious clicks"--clicks that Google doesn't count?
...All of our data is also based on Google Click ID, and Shuman knows that. He may be correct about other auditors in this space, but what he's said and the way he said it is misleading...
How do you handle "click-backs," situations in which a user reloads an advertisement's landing page? Do you and other auditors count the page's reloading as another click on the ad? [a Ghosemajumder assertion]
Absolutely not. Using Google Click ID prevents us from counting click-backs, and even when we have analyzed the number of click-backs compared to the overall problem of click fraud, it's a very small percentage. Regardless, using Click IDs and other methodologies means there are no fictitious clicks in our data.
If I sound somewhat aggravated, it's because I am. Shuman knows very well that we use Google Click ID. But he has a tendency to talk about fictitious clicks and then bring up our name to try to link us with that, even though he knows it's not true. We're a bit frustrated with that.
Lots more where that came from. For what it's worth, we've spent time with Cuthbert and find him and ClickForensics' methodology very credible. We also thought Ghosemajumder's decision to start talking about click fraud more openly was an intelligent one. As to the substance of the arguments, we believe there is merit to both. And here's our take on the click fraud issue:
- It's getting worse.
- It is more prevalent and more of a concern on third-party ad networks (distributed search/Adsense for content) than on Google's own sponsored search.
- It's especially bad news for content providers who make a living using AdSense, et al.
- It is something advertisers should pay attention to and spend money analyzing
- If nothing else, the use of a good third-party auditing firm provides comfort that money isn't being thrown away.
- Google et al could/should consider providing more detail about, at the very least, the number of total clicks vs. the number of clicks the advertiser was charged for.
New Item: Google reports anecdotal advertiser cutbacks from mortgage crisis (though not on Google). This is the first acknowledgment by a major media company that some advertisers are cutting back. Earlier this week, CBS and Viacom said they had seen no signs of cutbacks. Timeline of data points below.
Summary. We continue to believe that we may be in the first stages of a cyclical downturn for advertising and the Internet sector--one that will affect not only start-ups and second-tier players but majors like Google (GOOG), Yahoo (YHOO), AOL, et al. Such downturns do not begin suddenly, and they are not instantly obvious (except in hindsight). Rather, as with the housing market, the environment changes gradually, over many months, with early signs slowly becoming a steady torrent of bad news.
For the past two months, we have been tracking and analyzing data points that we believe could be early warning signs (along with some offsetting, positive ones)...
Taken together, we believe these signs paint a clearer picture of the changing environment. It's always possible that this will be a "blip," but these cycles usually take years, not months, to play out. So we think it's smart to expect tougher times ahead.
Sep 18: NY VC Fred Wilson: The Coming Downturn
Aug 17: Dear Internet Industry: Brace for harder times
Aug 17: What happens to Yahoo, Google, et al, in recessions?
Aug 1: The market's crashing: Are you recession proof?
Sep 14: First online ad estimate cut for mortgage crisis.
Sep 13: Countrywide gets life support, but we still worry about online ads.
Sep 12: Ad network Burst Media reports cancellations from "budget constraints"
Sep 11: Mortgage giant Countrywide fires 12,000, WaMu sees "perfect storm"
Sep 11: TNS reports two quarters of decline in US ads--first since 2001.
Sep 10: Online mortgage ads remain strong in August: Good sign or false signal?
Aug 30: How Bad Could Mortgage Mess Get for Google, Yahoo, et al
Aug 29: Will mortgage crisis hurt web ads? Sure looks that way.
Aug 29: Bankrate CEO call provides more reason to worry about online ads.
Aug 27: Cracks in Manhattan's commercial real-estate market?
Aug 22: JupiterMedia CEO Meckler says every Internet company now for sale.
Aug 17: Dear Internet Industry: Brace for harder times
Aug 17: What happens to Yahoo, Google, et al, in recessions?
Aug 16: About that crashing stock market
Aug 3: Bankrate confirms online ad market strong, print weak
Aug 1: The market's crashing: Are you recession proof?
July 20: Google blows up the stock market
Thursday, September 20, 2007
If asked what an unknown article in the DMConfidential might cover, longtime readers as well as significant others to writers of this publication might guess any of the following - a) Google, b) search arbitrage, or c) the ringtone market. Call this one predictable then, but it covers two of the three directly, Google and ringtones. More than that though, call this the story we knew would happen, but we didn't know when. What we're about to report is not good news. We discuss what amounts to nothing short of a dramatic change in the way much of the ringtone market works. From a performance marketing standpoint, if you did email you ran the various subprime offers - credit cards, pay day loans, and other financial services. If you did paid search, you ran ringtones. Like the subprime offers, they appealed to a broad audience, had a relatively high cost per acquisition, and converted well, a part of which was due to the flexibility allowed to affiliates to customize the look and feel. Unlike many other offers, ringtone offers cost money. And, when there's money involved, especially when it's perceived as easy money, there comes scrutiny. It has happened with secured credit cards (a company was even briefly raided and shut down) and it has begun with ringtones.
No different from Columbia House, ringtone offers revolve around a subscription service. Consumers sign up for the service because of an incentive, and the end advertisers monitor the length of their stay to determine what they will pay for a new user. When it comes to ringtones, the end buyers - companies that have structured deals with both the cell phone carriers, i.e., Verizon, T-Mobile, at&t, etc., and the content providers, i.e. Universal Music, generally charge a fee of $9.99 per month to the user. The subscription service providers, referred to as "off deck" marketers because users purchase content via the web as opposed to the built in menu on their phone, split almost 50% of the billable amount with carrier. Let's say you bought a ringtone through your phone. You would pay 1.99 per tune. These services entice you to sign up by offering you the equivalent of 10 to 15 tunes for the price of five tunes. It's not a bad deal if you like your music and stay active in the service. Unfortunately, many users, or at least those on the side opposed to the current marketing methods, would argue users sign up without a clear understanding of the service or the price. As a result, many will leave after the first month. If all users stayed on the service for six months, then a company would make (6 * (.5 * 9.99)) or roughly $30 per user. That isn't the case though. Like a radioactive isotope, users fall off each month.
For a company to pay $15 for a new user means that all users must stay a little more than three months for the company to break even. As mentioned, though, that doesn't happen. Because users constantly fall off, in order to simply break even at a $15 payout, a company usually must wait six or more months. Given that they must pay the marketing company / cpa network a few dollars on top of that, all of the sudden they often must wait close to a year before breaking even. And to think affiliates complain when they get paid longer than fifteen days after the month. Imagine spending millions each month only to receive a fraction of it at a time. That said, these companies have made it work, and so too have affiliates. Of all ringtone subscriptions generated online, upwards of 60% come from affiliates (via the CPA networks such as Azoogle Ads, CPA Empire, Primary Ads, etc.) as opposed to the direct to consumer marketing by the subscription providers. And, when it comes to affiliates, they've signed up new users on the companies' behalf not by promoting the brands directly but generally starting users off at what has become known as carrier pages.
The ringtone subscription providers, companies such as Dada Mobile, Blinko, Playphone, and Thumbplay to name a few, much like any company, excel in certain areas more than others. One company might know how to monetize users from at&t better than the other, whereas one might not even accept users from T-Mobile. Over time affiliates realized the strengths and weaknesses of a particular provider and started to adjust their traffic accordingly. They paid per click, so it was in the affiliate's best interest to route the traffic to the most effective buyer. This method worked well for affiliates but didn't always sit well with the end buyer who might have preferred an even mix of users instead of a mix based on their particular strengths. The buyers made differing amounts based on the user mix, and if a company sent them only certain types of buyers, that threw off their new customer acquisition formula. This has led to a back and forth between those wanting new customers and those driving them.
Despite what might seem like saturation in the market, new contenders on the user generation side continue to emerge. The vast majority of companies leveraged search, where given the carrier landing page approach, a new site could spring up almost daily. Those buying traffic could, and would, constantly tweak their pages or come up with new ones to try and maximize search. This meant users had a lower likelihood of knowing from whom they subscribed. The real issue, though, came prior to this when fewer restrictions existed governing the languages companies - both end providers and their affiliates - could use in marketing to potential customers. Prior to June or so of this year, a company could market to users saying get "free ringtones." As a user though, the ringtone didn't come free of charge; it came by joining a subscription service. Not that there was any misleading taking place; it was simply a new market, unsure what it could and couldn't say - constantly adjusting and ideally self-regulating.
The ringtone market though, has fallen victim to its own success. Throughout its growth, it has tried to correct its issues, e.g. the banning of the word free, but not quite fast enough. The "free" issue and attempts to ban the use of the word and related words led to a level of scrutiny on the entire process, including an inquiry by the Florida Attorney General. In their eyes, the current method is flawed, and they want changes. Which brings us to where we are today - upwards of a hundred thousand new subscribers daily, almost no barriers to entry from the affiliate side, a large reliance on Google, carriers seeing increased complaints from users, the off deck providers seeing higher costs and lower returns, and everybody wanting a say in how the business operates going forward all at once. It's the perfect storm for a business that was frothy, ripe for change, but not necessarily for what it's about to get.
Ready to know more? Join us now in Part 2 of the Ringtone Shakeup
If you read Part 1, you see the makings for an industry ripe for change. It's a market that relies heavily on affiliates to drive new sign-ups and has little to low barrier to entry. Few offers have the breadth of reach, the run of network quality found in mortgages and online education, but unlike those two popular and widely run verticals, there is no cost to the user. Ringtones, though, cost money, but there's no credit card transaction. Users simply enter their phone number onto the site, wait for a text message to their phone, then enter the PIN received in the text on the web to confirm sign up. Do that, and your phone bill receives charges of $9.99 per month. It's a process that, despite its double opt-in nature, still leaves room for a user to not truly understand the nature of the product being received, especially in our instant gratification world. There is nothing illegal going on today, no FTC related inquiries into the ringtone market, but there is an incentive that piques the users interest, and when there is an incentive, especially one where money changes hands, you will have issues. In the grand scheme, those facing the ringtone space aren't major - no lawsuits - but there is too much room for error and a system that has given affiliate marketers too much control. Now, all major stakeholders are pushing for change, and all at once - the off deck ringtone providers, Google, and the carriers - and what they want.
Off Deck Ringtone providers
At the heart of the business sit those that created a compelling product, one that has relationships with the carriers and the content and has turned that into a service for users. They have found a good working relationship with the CPA networks, and outside of slightly decreasing returns (users not staying on board long enough), they have one major focus - compliance. They belong to the Mobile Marketing Association which has taken the lead on setting the standards for marketing. It's not an official regulatory board but a trade association looking out for the best interest of the users and the companies. Compliance today revolves around disclosures and language - display of terms and conditions, price, and the proper use of phrases such as complimentary or lack of use of certain phrases such as free.
With direct marketing, especially in a competitive traffic acquisition landscape where affiliates bare the cost of media, this means pushing the envelope. It's a cat and mouse game all too familiar to those in the space, that is generally benign, but work nonetheless to make sure they push enough, but not too much. When it comes to ringtones though, the process got thrown off towards the end of last year when the Florida Attorney General started to look at the practices of certain players. Then, the "free" issue, and the combination of the complexity involved in search marketing along with a few bad apples has kept the industry in catchup mode. The providers have tolerated the carrier page method to date, tolerated certain networks and traffic providers having the ability to do what the lead gen world refers to as host and post - two things that have played an integral role in the ability of marketers to drive users in scale profitably. Whether pressured by financial or legal reasons, the major lead buyers have changed their stance and issued, jointly, new guidelines to "ensure that consumers have a great experience and are treated fairly." As they say, "We believe that these guidelines combined with strong policing will enable our industry to successfully utilize the online affiliate channel the way major brands such as Netflix, Ebay and Blockbuster have been doing so for years." "We (Buongiorno, Dada, Flycell, Jamster, Playphone, and Thumbplay) encourage every company selling content off-deck to join this initiative and agree to follow and enforce the practices outlined in this document."
What does this agreement say? Namely that, "As of September 11th, 2007, affiliates/partners will not host or control the pages in the sign-up flow. This means that the following pages will only be hosted by the Advertiser - Phone # entry page and PIN/Password entry page." And, "As of October 1, 2007, affiliates will not be permitted to host a “choose your carrier page.” All advertising must point to a page hosted by the Advertiser by October 1, 2007." This is big stuff if you are a ringtone marketer. The timeline is a little too aggressive but once implemented it's, on the surface, a landmark change. It accompanies other specific rules regarding their desires for search marketing and other traffic channels. Speaking on search, Government Google has decided to make some changes of its own.
Some have estimated that as much as 5% of their revenues comes from ringtone marketers. The rise of carrier pages has lead to the most efficient user generation, but there are so many that it was almost inevitable that Google would bring up the user experience card. Whether these often changing, rarely branded, pages are an effective user experience is debatable but in the end irrelevant. From Google's perspective, it simply allows too many people to market the same thing, which in their eyes is always a problem. It's in their eyes a form of double listing. In this case, ringtones became a victim of its own success - converting too well, running too successfully that Google saw them as a threat to their brand and mission - super relevance not broadcast marketing. The marketing of ringtones continues to get more refined, but Google has decided to speed up the process in two ways - requiring their own changes to the pages their users see and in quality score. As for the physical changes, Google wants greater upfront disclosure of pricing and the subscription nature, which they feel is best done with the addition of a check box explicitly stating those two things prior to submitting the phone number. The backup policing comes from quality score changes which they announced on September 18th. That announcement is a whole other subject as it seems, for lack of a better phrase, to put the smack down on some of their biggest advertisers. From the post on Inside AdWords, "The following types of websites are likely to merit low landing page quality scores and may be difficult to advertise affordably." They list four, two of which are "Comparison shopping sites" and "Travel aggregators." To top it off, Google "will no longer post advance notice of upcoming updates." Nice.
Last and absolutely not least come the carriers, the ones with the billing relationship to the consumer. Those in favor of ringtone marketing like to point out how much the carriers make - especially given their almost 50% take off any subscription price. On the flip side though, losing a customer costs them much more than they could make on ringtones. Think of what they will do to get one - free phones, high CPA's, and what they do once they have them - long contracts, high penalties, big incentives to renew. If not the most complex, theirs is certainly the least nimble piece in the equation, especially as cooperation among them isn't a high priority. Two things have started to emerge, nothing quite as formal as the agreement between off deck marketers, but still changes that could impact conversions significantly. The first is price. $9.99 has been the standard charge. Some carriers allowed more, but now it seems as though $9.99 will be the max. The second is more significant. Currently, the text the users receive is not just initiated by the off deck marketers but controlled by them too, i.e., what the users actually read. At least one carrier has started the process to change that, where instead of the users receiving a PIN code couched in marketer speak, they would receive a carrier written message to which instead of entering numbers on a website they must reply with a sign of their understanding. It would presumably lower conversions, but perhaps as much a monkey wrench, it makes tracking difficult, removing the cookie / pixel process and all the benefits that come from web based conversion tracking.
Like incentive promotion, ringtones is too big to go away, but like incentive promotion, it was ripe for change. I'm not sure if any would have expected quite as many changes from as many parties. There are some loopholes, so while these sound severe, it won't hit like a stock market crash. It will come in waves. Stay tuned.
In their quest for data, marketers often lock in on browsing and surfing behavior (gathered non-consensually) as the royal road to unlocking consumer value. Understandably -- but short-sightedly, as Chase Norlin, CEO of image and video search firm Pixsy, explains below. Browsing data may give an interesting snapshot of what consumers are sampling online, Norlin says, but real understanding of what consumers want requires a consensual opt-in model of consumer cooperation and participation in behavioral targeting.
Behavioral Insider: How did Pixsy get involved in image and video search?
Chase Norlin: Image and video search are the fastest growing consumer search verticals, and of the two, image search is actually the more popular, even though people are more obsessed with video. So our premise all along has been: if these search verticals are so wildly popular, why doesn't every site have it?
The idea we started with was to make image and video search easily accessible to any site, from a huge commercial site like Travelocity to a small blog site or MySpace user. We did this by creating a media platform that aggregates content from across the Web, slices and dices it into an organized database, and then enables any site to get access to that material via image or video search. Publishers benefit from new search activity, content, and monetization for their sites; content owners benefit from traffic being driven to their material.
BI: What are the challenges of using behavioral data to target this kind of search activity?
Norlin: One unique thing about search, the reason it's the best targeting mechanism ever known, is that there's a real window into consumer intent from keywords used. Monetization is the next challenge and big opportunity. Monetization of image and video search is in its infancy. The reason is, you don't have the same volumes of commercial keyword content as you do in algorithmic text search. People don't search for ‘mortgage videos,' for example. On the display side, graphical networks are reluctant to run branded ads on images and video search due to the potential for ‘mixed' results. This is why Pixsy is building a new advertising system to address the opportunity for monetization of image and video search results across our large network of publishers.
BI: What will that entail? Could you describe the road map?
Norlin: The road map to using behavioral targeting is for advertisers to understand that that's where their users are going. There are really two ways, fundamentally different ways, of looking at how to optimize the behavioral potential in multimedia, and they pivot around whether there's consent by users or not. On the one hand, there's a non-consent model, which is what behavioral targeting has been for the most part thus far. That's entailed collecting as much browsing data as possible from cookies and predicting interests based on that. I think as consumers and marketers become more savvy about what they want out of the Web, there's a new paradigm emerging, which is consent-based.
BI: Could you elaborate on that?
Norlin: The reason is that over time consumers have moved from having their Web experience being primarily about surfing to being about utility, about actually being able to find what's important to them personally in a short period of time. As this happens, the Web experience becomes about doing less, not more. For Web site publishers looking to keep visitors engaged, and for advertisers, that implies a fundamental shift from a model based on non-consent to a consent model, where you provide consumers with specific value in exchange for information they provide about their interests and the type of content they want to see. One example might be a frequent visitor to travel sites [who] could opt in to see ads for special discounted fares in flight lanes they're particularly interested in.
BI: So in a way this involves a rejection of the cookie or pull model of web targeting that's been predominate?
Norlin: The irony is that we may well find that the next phase of behavioral targeting will actually revive the long-discarded Pointcast model from the earliest days of the Web. In this model, instead of having to go out and surf the Web for what they wanted, consumers could define what kinds of information they were most interested in and have that information ‘pushed' to them. We've gotten to a point where there's so much information out there, so much extraneous noise, that finding what we want, when we want it, is becoming increasingly more difficult. As the Web gets deeper and more complex, its intrinsic value becomes derived from simplicity and immediate gratification.
BI: So, similarly to how email has evolved, you see opt-in as the lynchpin of next-generation behavioral targeting?
Norlin: Another irony I think we may be looking at in the next year or two is the resurgence of consent-based adware style technologies. While they've received a bad reputation in the past for deceptive practices and consumer privacy issues, ultimately their consent-based model represents some of the most innovative thinking in the ad targeting world. Opting in is going to become even more important to the Web of tomorrow. For example, Google giving away cell phones in exchange for targeting and monetization. Not much different than the value exchange between opt-in ad providers and consumers.
As the Web becomes more and more fraught with issues like identify theft, credit card fraud, etc.... consumers will end up trying to protect their personal information and behaviors even more. The way for marketers to get at that is not through deception, but by having consumers willingly share that information because of the value being offered in exchange.
Wednesday, September 19, 2007
Web sales pitches are getting better, thanks to new programs designed to sell you stuff you didn't even know you wanted, reports Business 2.0 Magazine.
(Business 2.0 Magazine) -- Online shopping recommendations are the Internet's answer to the old-fashioned upsell. "You like that red Prada hobo bag? You'll love this black canvas number from Dolce & Gabbana."
And apparently they work. Consumers last year spent $220 billion online, according to Forrester Research analyst Sucharita Mulpuru, who estimates that recommendation systems can account for 10 to 30 percent of an online retailer's sales.
This, naturally, suggests that there's yet more money to be made by offering even better product suggestions. Amazon.com (Charts, Fortune 500) popularized the practice a decade ago with a system that suggested items to customers based on what they and others like them had previously bought -- or even just window-shopped for.
As online shopping scales up, however, the limitations of Amazon's approach are starting to become all too apparent. One reporter who purchased two backyard animal books as a gift -- the only books on the topic he's ever bought -- complains that three years later Amazon is still recommending that he buy Squirrel Wars: Backyard Wildlife Battles & How to Win Them.
Amazon CEO Jeff Bezos says he is not exactly sure why this happened but views personalized recommendations as a "key differentiating factor" for his company. Amazon's engineers are constantly working to make the system better, he says. "If we have 66 million different customers, we want to have 66 million different stores."
But even as Bezos fine-tunes his existing system, several new companies are determined to beat him at his own game. Moreover, they have already started to hire out their sophisticated sales tools to other online retailers.
ChoiceStream is one of the largest newcomers, with more than $10 million in revenue. But scrappy startups like Aggregate Knowledge and CleverSet are also gaining customers. All three are focused on "discovery" -- selling people goods they didn't know they wanted. And all three work on the premise that you need more than a customer's old shopping list to get him to buy new stuff.
Take CleverSet, currently being tested by big-name retailers like Drugstore.com, Sephora, and WineEnthusiast.com.
CleverSet's engine analyzes consumer purchases by product descriptions, prices, ratings, and dozens of other attributes. The software organizes the information into a relational database and then offers products with similar attributes, even if they're not big sellers. Buy a book about camping in Alaska, for instance, and it might suggest a subzero sleeping bag.
CleverSet also tracks how visitors click through a site and makes educated guesses about whether they're browsing, researching, or buying -- knowledge it uses to close the sale. So far, the techniques seem to be paying off: CleverSet CEO Todd Humphrey claims that the 75 online retailers using his engine are averaging a 22 percent increase in revenue per visitor.
ChoiceStream uses a similar approach, especially for movies, music, and the like. The company has painstakingly categorized 40,000 films by more than 50 attributes; these allow its system to match movies by genre, actors, plot type, and more.
For instance, if you like the movie Babel, it might suggest that you check out Do the Right Thing. At first glance, the Brad Pitt vehicle set in Morocco and the Spike Lee movie set in Brooklyn might not seem to have much in common. But ChoiceStream's engine knows that both are complex, unpredictable, suspenseful, and based on sociopolitical themes; each plot is heavy on character transformation and delivers a twist.
That matchmaking logic can help lead viewers to niche titles they otherwise wouldn't have considered, something that's helped Blockbuster (Charts, Fortune 500) compete with Netflix (Charts) in online DVD rentals. Since Blockbuster adopted ChoiceStream, cancellation rates have fallen and subscribers have nearly doubled the number of movies on their order lists.
"We think the technology is more accurate than anything we have looked at," says Shane Evangelist, general manager of Blockbuster Online.
The discovery market has turned out to be lucrative; many industry insiders think it will eventually be as important as basic search. "Discovery is when you don't know what you are looking for to start, but you know it when you see it," says Paul Martino, CEO of Aggregate Knowledge, which is backed by $25 million from Kleiner Perkins Caufield & Byers and DAG Ventures.
Aggregate Knowledge soon will offer cross-site recommendations. Searching a newspaper site for stories about the Valerie Plame CIA leak, for example, can lead you to a site devoted to the old TV series MASH, a send-up of bumbling buffoonery perpetrated in the name of national defense.
In the fall, Martino plans to launch a discovery network that will make connections between online media consumption and online buying. "We can make use of your news browsing to make better product recommendations," he says.
If that blurs the line between recommendations and advertising, that's fine with Martino. It's one of the ways he plans to make money from the service; product suggestions will become highly targeted ads that consumers will discover without ever typing a search term.
Erick Schonfeld is an editor-at-large at Business 2.0.
|by Gavin O'Malley, Tuesday, Sep 18, 2007 7:45 AM ET|
| WITH ITS CONTINUED FOCUS ON advertising, AOL has established a new division for its ad networks--including Advertising.com and Tacoda--and named Curt Viebranz, former CEO of TACODA and a one-time Time Inc. executive, to lead it. The unit, called Platform A, will reach an estimated 90% of Web users. |
AOL also announced that it's moving its headquarters from Dulles, Va. to the media capital of the world--New York City. "Over the past eight months, we have put together a network with unprecedented reach and state-of-the-art solutions," said Randy Falco, Chairman and CEO of AOL.
Platform A will encompass Ad.com, the direct-response network AOL acquired in 2004; Tacoda, the behavioral ad network it recently bought for $275 million; the video ad network named Lightningcast; Third Screen Media, a mobile ad network, and AdTech AG, an international online ad-serving company based in Frankfurt, Germany.
"With the launch of Platform A, we are unleashing this powerful network to deliver unrivaled transparency and return on investment for our marketing partners," said Falco.
Viebranz has been named the president of Platform A--while Mike Kelly, president of AOL Media Networks, is leaving the company.
Lynda Clarizio will continue to head up Ad.com, and Kathy Kayse, senior vice president of sales at AOL Media Networks, will now run AOL brand advertising. Dave Morgan, who was rumored to be getting a new title with within AOL, will hold on to his position as chairman of TACODA.
Media buyers were positive on the news, adding that AOL's recent spate of ad network acquisitions would have been pointless without their eventual integration.
"It wouldn't have made sense otherwise," said Steve Ustaris, group media director at Aegis Group's Carat Fusion. "This will make it much easier to manage inventory."
The reorganization comes amid criticism that AOL has so far failed to meet some media buyers' expectations, and less than two months after parent company Time Warner released slower ad growth numbers for AOL--news that sent its stock price down 3%.
Still a force to be reckoned with, AOL has plenty of admirers in the agency world.
"They've done a good job responding to sales leadership, and it's great to see them focusing their efforts in this area," said Ed Montes, executive vice president-managing director of Media Contacts, a digital media agency owned by Havas. "They very recently came to us with some interesting new products that combine several of their new ad networks."
Selling advertisers both performance-based and branding programs, AOL plans to eventually have a single data platform that would give it the ability to target ads across its different network businesses.
AOL is not alone in its focus on ad networks as a way to fend off a slowing ad market overall. Yahoo, Microsoft, and even holding company WPP Group have invested in ad networks over the past year.
"With the increasing fragmentation of online audiences, the best way to serve advertisers is to enable them to harness massive advertising networks that reach across the entire Internet, not just our AOL Web sites," said Falco.
AOL, however, might do well to concentrate less on new ad networks, and more on its own ad inventory, commented David Moore, chairman and CEO of 24/7 Real Media, the online ad firm acquired by WPP Group in July for $649 million.
"It's interesting to watch all these portals buying up ad networks when they're not sold out on the inventory they've got on their own sites," Moore said.
Separately, AOL on Monday said it has signed an agreement with HP to offer co-branded, localized versions of its portal, toolbar and search on HP desktop and notebook PCs sold worldwide. Under the agreement, the co-branded portal will be set as the default home page, and the co-branded toolbar and search will be default settings in various countries worldwide.
The agreement extends and expands the existing relationship between HP and AOL, which provides consumers with a co-branded AOL/HP portal as the default home page for HP consumer PCs sold in the U.S.
The Pharmaceutical Marketing Online report checks the temperature of online advertising spending by the US pharmaceutical and healthcare industry.
By 2011, the pharmaceutical category will account for 5% or $2.2 billion of Internet advertising. Growth will come from pharmaceuticals, hospitals and other healthcare services, courtesy of the increasing influence of consumer-directed health plans.
Meanwhile, the pharmaceutical industry hasn't fully adopted Web 2.0, and by restricting their brand sites to simple online information centers, pharma marketers are missing opportunities to engage consumers and boost compliance.
Key questions the "Pharmaceutical Marketing Online" report answers:
- Where are pharmaceutical companies spending their ad budgets?
- How are consumers searching for health information online?
- What can pharmaceutical marketers do to improve trust online?
- And many others...
eMarketer Reports—On Target and Up to Date
The Pharmaceutical Marketing Online report aggregates the latest data from marketing and communications researchers with eMarketer analysis to provide the information you need to make the right business decisions—right now.
To download the report to your desktop—or receive a bound paper copy via FedEx—click Add to Cart:
The Indian InternetSEPTEMBER 18, 2007
It may be only a sub-continent, but it is a mega-country.
India is booming.
The South Asian country has acquired de facto membership in the elite club of acknowledged nuclear powers, created more billionaires than any other country in Asia and become one of the world's most dynamic and fastest-growing economies.
India's economic boom is forecast to moderate in the next two years, with GDP growth slowing to 8.4% in 2007 and 2008 and to 7.9% in 2008 and 2009, from a record 9.4% in 2006 and 2007.
Online, the Indian government declared 2007 the "Year of Broadband," setting a goal of 20 million broadband users in 2010.
However, according to the new India Online Overview report, eMarketer expects India to reach 10.5 million broadband households, or just over one-half the target, by 2011.
eMarketer also estimates that 25.5 million Indians used the Internet at least once a month in 2006 and expects India's online population to reach 33.2 million in 2007 and 71.6 million by 2011.
With just 2.3% of its citizens online in 2006 and 2.9% projected for 2007, India's Internet penetration is the lowest in the Asia-Pacific region.
India is often compared to China, but the number of Indians online is more comparable to Australia, a country with just 2% of India's population.
Nevertheless, according to comScore, India is the world's eighth-largest Internet population and its potential for growth is practically limitless.
To get the whole picture, read the new eMarketer India Online Overview report today.
By Fred Aun , September 18, 2007
Slow to catch on, mobile advertising is about to enter its heyday, according to the latest ad spending projection from The Jack Myers Media Business Report.
The forecaster believes advertisers are currently spending about $500 million annually on mobile advertising but will increase that amount by 120 percent next year and reach about $1.1 billion.
The spending won’t stop there, said report publisher Jack Myers. He estimates another 120 percent boost in mobile spending for 2009, meaning marketers will shell out about $2.4 billion to dangle their goods and services in front of mobile device users. According to his forecast, 2009 should be the year mobile advertising draws 1 percent of the $254 billion total ad spend.
“Mobile advertising, in 2005, was at virtually the same level as gaming advertising," said Myers in an interview. “It was growing at a fairly parallel rate with gaming.” However, if his projections prove correct, mobile ad spending will grow twice as fast as game ad spending in 2009.
While it will not come close to the growth rates of either mobile or game ad spending, general Internet advertising -- including search and video -- is still on the rise. Myers projects online spending to increase 20 percent, to $16.7 billion, this year. Similar growth rates should follow, according to Myers: Online/Internet should see 24 percent gains in 2008 and 28.5 percent growth in 2009.
He said video advertising will be the heavy hitter of the online advertising lineup. “Search growth is slowing, but everything to do with video is accelerating,” said Myers. While monetization of YouTube and other user-generated video is a hot topic these days, Myers said the big growth in online video ad spending will benefit large, commercial sites. “More the CBS, Disney professional type video,” he said.
While online advertising is growing, it still amounts to a small slice of overall marketing budgets. “In 2007, online represents 7.2 percent of total advertising and advertising represents 31 percent of total marketing,” said Myers. Noting that online represented only 5.3 percent of total advertising in 2005, Myers predicts it will have doubled to 10.5 percent by 2009.
Myers forecasts overall media advertising will increase 6.9 percent in 2008 and 3.1 percent in 2009, and his report notes categories untracked by some other forecasters, such as cinema, mobile, games, branded entertainment, satellite radio and custom publishing, are expected to collectively grow 20.3 percent this year, 18.4 percent in 2008 and 18.5 percent in 2009.
Meanwhile, Myers projects newspapers will sustain the largest declines in ad spending. He said the papers will lose 4.6 percent in ad revenues in 2007, 2.4 percent in 2008 and 4.5 percent in 2009.”
Google Gphone still on the way, say sources; Google will definitely launch its own-brand handset but has yet to finalize the handset's specifications, OS, production contractor and operating partners, according to sources at Taiwan handset makers. Digitimes
GOOG has hired Andy Berndt, co-president of the New York office of WPP Group PLC's Ogilvy & Mather, to be managing director of Google's newly formed Creative Lab unit, which will look for more creative ways Google products can be used in marketing pitches. GOOG wants to work closer w/agencies on new ways GOOG pdcts can be used in advertising. Berndt's hiring is likely to unnerve some on Madison Avenue, who may worry that Google intends to get into creative services (the task of designing ads), which is the ad industry's bread and butter. A Google spokeswoman said the company was "not moving into the ad agency business" and wouldn't work with marketers directly. [Wall Street Journal]
Word is that Google will officially launch its gadget ads by the end of the day today. As mentioned previously, a gadget ad is an ad unit that’s actually an interactive widget:
It’s basically a more interactive AdSense ad unit, allowing advertisers to use flash apps, videos, real-time feeds and transaction capabilities within the ad. As a publisher, you embed some code on your page and the advertisers bid to fill that space with a widget…it seems that advertisers need to develop their own Google Gadgets in the standard format, so there’s nice integration across the Google properties. Pricing is either CPC or CPM, and publishers will be able to track performance through Google Analytics - yet more integration with other Google services.
Tuesday, September 18, 2007
LOS ANGELES — Members of the booming social network Web sites treat their individual profile pages as a creative canvas for personal expression.
The social networking companies see those pages as a lush target for advertisers — if only they could customize the ads. Although Internet companies have talked about specifically aiming their ads since the inception of the Web, so far advertising on social networks has been characterized by mass-marketed pitches for mortgages and online dating sites.
But MySpace, the Web’s largest social network and one of the most trafficked sites on the Internet, says that after experimenting with technology over the last six months it can tailor ads to the personal information that its 110 million active users leave on their profile pages.
Executives at Fox Interactive Media, the News Corporation unit that owns MySpace, will begin speaking about the results of that program this week. They say the tailoring technology has improved the likelihood that members will click on an ad by 80 percent on average.
“We are blessed with a phenomenal amount of information about the likes, dislikes and life’s passions of our users,” said Peter Levinsohn, president of Fox Interactive Media, who will talk about the program at an address to investors and analysts at a Merrill Lynch conference in Los Angeles on Tuesday. “We have an opportunity to provide advertisers with a completely new paradigm.”
MySpace’s rival, Facebook, also says it is experimenting with ad customization with the help of Microsoft, which signed with the up-and-coming social network last year to provide display ads on the service. To the consternation of privacy advocates, who say Internet users are unaware of such activity, the social networks regard these detail-stocked profile pages as a kind of “digital gold,” as one Fox executive put it last year.
The companies hope that customizing ads to their members’ stated enthusiasms will improve the effectiveness of the ads and recruit new advertisers who want to pitch their messages to refined slices of the online audience. Fox executives also hope the technology can help MySpace recapture some of the momentum and attention that has recently gone to Facebook.
Richard Greenfield, the managing director of Pali Research, predicts that MySpace’s fledgling program will help increase MySpace’s current revenue to $70 million a month from $40 million a month by next year.
“This is a critical evolution of the MySpace business model envisioned from the day News Corporation bought it,” Mr. Greenfield said.
A 100-employee team inside the Fox Interactive Media offices in Beverly Hills, called the “monetization technology group,” has designed computer algorithms to scour MySpace pages. In the first phase of the program, which the company calls “interest-based targeting,” the algorithms assigned members to one of 10 categories that represents their primary interest, like sports, fashion, finance, video games, autos and health.
The algorithms make their judgments partly on certain keywords in the profile. A member might be obvious by describing himself as a financial information enthusiast, for example. But more than likely the clues are more subtle. He might qualify for that category by listing Donald Trump as a hero, Fortune magazine as a favorite publication or “Wall Street” as a favorite movie.
The system also looks at the groups members belong to, who their friends are, their age and gender, and what ads they have responded to in the past. “Our targeting is a balance of what users say, what they do and what they say they do,” said Adam Bain, executive vice president for production and technology at Fox Interactive.
MySpace evidently does not completely trust the technology. Every two weeks, 200 temporary workers, which the company calls “relevance testers,” come to Fox Interactive’s offices to manually check member profiles against the categories they have been assigned to.
The company said that several national advertisers are trying out the service, though they declined to name them. Fox Interactive executives say that some kinds of ads benefited more than others. Clicks on tailored auto ads more than doubled and clicks on music ads jumped by 70 percent.
For the last two months, Fox Interactive has also experimented with the second phase of its targeting program, called “hyper targeting,” in which it further divides the 10 enthusiast categories into hundreds of subcategories. For example, sports fans are divided into subgroups like basketball, college football and skiing, while film enthusiasts are further classified by their interest in genres like comedies, dramas and independent films, and even particular actors and actresses.
For now, Fox’s advertising sales representatives are selling the new kinds of ad abilities. In November, according to Michael Barrett, Fox Interactive Media’s chief revenue officer, the company will set up an automated online system to allow smaller companies to aim at MySpace users with their ads without ever talking to a human being at Fox.
A punk band performing in Seattle, for example, could publicize a performance by looking up all the people on MySpace who live in that area who are punk fans.
MySpace also plans to give its advertisers information about what kind of people its ads have attracted. “We want them to leave knowing more about their audience then when they came into the door,” Arnie Gullov-Singh, vice president in the advertising technology group at Fox Interactive.
That is precisely the goal that worries some privacy advocates. They argue that users of social networks like MySpace and Facebook are not aware they are being monitored and that current ad-targeting is only the first step in what has become a huge arms race to collect revealing data on Internet users.
“People should be able to congregate online with their friends without thinking that big brother, whether it is Rupert Murdoch or Mark Zuckerberg, are stealthily peering in,” said Jeff Chester, executive director at the Center for Digital Democracy in Washington.
His organization will ask the Federal Trade Commission, during a planned hearing on Internet privacy in November, to investigate social networks for unfair and deceptive practices, he said.
MySpace and Facebook executives argue that they are harming no one. They say that they are using information their members make publicly available, and contrast their ad targeting with efforts by Yahoo, America Online and Microsoft, whose advertising technologies follow people around the Web and try to deduce what they are interested in based on what sites they are looking at.
Fox executives also say they are planning on letting users opt-out of the ad-targeting program on MySpace, though it means those members will see fewer relevant ads.
At least one MySpace member has no problems with the new technology. Mark Gong, a 26-year-old photojournalist from Washington, runs the 3,000-member Wanderlust group on MySpace and on his profile expresses an interest for foreign films like “Lost in Translation” and “The Spanish Apartment.” Not surprisingly, that has defined him as a prime target for travel ads on MySpace from companies like ShermansTravel.com, a travel deal site. “I’m not opposed to advertising,” Mr. Gong said. “They have got to make money.”
But he also says he hopes MySpace spends the extra cash on making the site more reliable and fending off the Facebook threat. He says many members of his group have flocked to Facebook in the last two months and that even he is logging into Facebook more often.
“Everybody I know is switching to Facebook,” he said. “MySpace has its work cut out for it.”
Monday, September 17, 2007
Flat Earth: Online Marketplace OpenAd Has the Potential to Disrupt the Global Ad-Agency Model
By Matthew Creamer
Published: September 17, 2007
The pitch, despite its strong international flavor, didn't involve any jet-setting or big-agency boondoggling in far-flung lands. It all unfolded over a website called OpenAd.net, a Slovenian-based online marketplace where ad and design ideas from about 9,000 creatives worldwide are bought and sold. Since it opened for business past year, OpenAd has served European clients, but a trans-Atlantic expansion is under way. The service is quietly being tested by major U.S. marketers such as Gillette parent Procter & Gamble and plans to establish a physical presence here in coming months.
If it's successful in penetrating the biggest ad market, OpenAd will be yet another potential disruption to the global ad-agency model, and one a long time coming. A dozen years after the internet gained mass appeal, OpenAd represents the ad industry finally taking advantage of flat-earth economics and communications realities to solve one of the marketing business' biggest challenges: finding ideas. Ad agencies once had a lock on that job, but a more complex media world has challenged traditional assumptions, meaning that all manner of interlopers, from media sellers to regular consumers, are now providing grist for the idea mill.
This kind of online marketplace isn't going to replace Madison Avenue's giants. It simply doesn't offer the strategic guidance, account management or executional capabilities agencies have, a fact that one of its founders, Katarina Skoberne, readily owns up to. "In an ideal world," she said, "agencies will use OpenAd on behalf of clients."
Just how well reality measures up to the ideal should reveal itself in the next few months, as OpenAd establishes a beachhead here with an office in New York and, further down the line, one on the West Coast and a third in an undisclosed location.
Russel Wohlwerth, principal at the consultancy Ark Advisors, said the diversity OpenAd affords could be a boon to marketers trying to get close to pop culture. "Agencies can be way too ivory tower," he said. "This is a chance to get close, tap into an incredibly diverse group of people, not just ethnically and racially but in terms of their backgrounds."
Advertisers ready to bite
Agencies are, for many good reasons, protective of their turf as brand stewards and often have trouble collaborating. Advertisers might be more receptive. Ms. Skoberne said the company has already presented twice in front of Association of National Advertisers groups and that several marketers, including automakers, retailers, and food and beverage companies, are kicking its tires.
What they'll find is a massive trove of galleries maintained by freelancers and agencies who register with the site. The service is free to the creatives, but marketers pay to join, and pricing on the ideas, which are vetted by an OpenAd team, is variable. Gillette, for instance, paid the winners of its pitch $1,000 each.
But when marketers don't specify price, the creatives can suggest their own terms. Arriving at price range initially was difficult since ad agencies are usually paid for their man-hours, Ms. Skoberne said. OpenAd, however, has worked to develop pricing guidelines based on the size and power of the market the work will run in, from between a few hundred dollars to more than $100,000.
Marketers can purchase ideas or submit briefs of their own and choose from ideas that it inspires, which is what Gillette did to win converts among its Latin American audiences. The razor maker opened a pitch that was eventually won by Live 1, an Indian agency that came up with the idea "She knows the difference." Gillette then went back to the OpenAd well to get guidance on how the idea could be fleshed out in four different media: TV, print, promotions and interactions.
An unconfirmed report in India's Business Today said the concept had also been licensed for the U.S. market. A P&G spokeswoman didn't respond to an e-mail request for comment, and Ms. Skoberne declined to comment on the Gillette pitch.
For creatives in many markets, the upper end of the OpenAd fee range would be an incredible windfall, and a labor pool so intensely international begs a question: Do marketers, especially bottom-line-driven organizations, use OpenAd to outsource labor to cheaper workforces, such as India or Eastern Europe, instead of for its polyglot qualities?
Ms. Skoberne said the company has been approached by procurement types but defended that breed of executives, combating stereotypes that they're mere cost-cutters and are really "looking for ways to add value." Mainly, she said, she's dealing with marketing departments eager to be free of geographical constraints. About 20% of OpenAd's creatives are from Latin America, 15% from Asia, 32% from continental Europe, 20% from the U.K., and 6% from the U.S. and Canada.
The other potential entanglement is quarrels over intellectual property. A formal dispute over rights has yet to arise, but Ms. Skoberne said the company tracks the work on the site closely to make sure no one's ripped off. She said there's also a fair amount of teaching going on as well.
"It's such an unpopular subject," she said with a laugh. "But I think now we probably have the most litigious bunch of creatives you've ever seen."