Musings on online advertising, the data layer, audience targeting/optimization, life, and my hobbies. (All opinions are my own, and not necessarily those of past, present or future employers, family, friends or foes!)
Just had to share the pictures of the pumpkins we carved last night. The one on the right is puking, and the one on the left is laughing at it -- my kids' idea! Yes, maybe they are a little twisted (like me).
Exclusivity on ad representation/sales for certain ad types. Probably not ALL ads, but enough clearly. They already had this deal, but probably added to it.
Access to social graph data for MSFT's competitor to AdSense.
Farcebook is getting ready to announce some sort of SocialAds deal in NY next week. I would suspect they're expanding their Flyers service in some way. But what I doubt they'll do is distribute their advertising across the Web, like AdSense. But MSFT absolutely needs to do this.
MSFT now has all the advertising tools, sales people and agency relationships (through the aQuantive acquisition). What they lack are the publisher relationships and a compelling reason for publishers to switch from AdSense to their content network. Microsoft will launch an AdSense competitor which will not only utilize the profiling data/targeting from aQuantive but also the social graph from Facebook.
Here's where this potentially hurts Google. AdSense pays for shit. The AdSense ad unit is dead, from the standpoint of the creative life cycle -- people are now blind to it. And Google's content network is responsible for the vast proportion of their ad delivery. Publishers would gladly swap that program out and try something new, if there was enough buzz and especially if there was a fresh design.
Average click fraud rate in PPC adverts on search engine content networks was 28.1% in Q3 2007, up from 25.6% in Q2, 21.9% in Q1 and 19.2% in Q4. That's about a 50% increase in click fraud just this year so far!
Over 60% of traffic from parked domains and "made for ads" sites was click fraud.
This is a big problem for domain aggregators, in particular. The search networks will have no choice but to punish the ones simply populating their pages with paid links, forcing them to rethink their primary revenue source, and they'll reward the ones providing worthwhile content.
65.4% of Americans say they've spent two or more hours in a single sitting searching for specific information on search engines.
72.3% experience "search engine fatique" when researching a topic on the Internet.
75.1% of those who experience search engine fatique report getting up and physically leaving their computer without the information they were seeking.
78% "wished" that search engines could (in effect) read their minds to deliver the results they were looking for.
Also some info on why these people were so frustrated -- the issues look to be somewhat evenly distributed, instead of just one problem:
When asked to name their #1 complaint about the process, 25 percent cited a deluge of results, 24 percent cited a predominance of commercial (paid) listings, 18.8 percent blamed the search engine’s inability to understand their keywords (forcing them to try again), and 18.6 percent were most frustrated by disorganized/random results.
It's a beautiful day in Seattle, sunny and 70 degrees. So I couldn't resist taking 15 minutes to cruise a couple blocks on 9th avenue and Lenora on my longboard. Nice gentle slope, but enough where you need to turn and scrub speed (or else you just keep going faster). Made me think of longboarding the Long Walk in England, so I went back to the Bastard Bombers Web site and was pleased to see myself in one of their videos -- I hadn't seen the video before.
So what do I do? I steal it and stick it up on YouTube so I can post to my blog! I'm the second to the last guy, right after the guy throwing his fist in the air. You can see the Copper Horse in the background, but unfortunately you can't see the other direction -- down a steep hill and on to Windsor Castle. That steep hill was quite a bit faster than you see people going in this video.
How many Web pages are viewed per person per day? How many Web pages (unique URL's) do Web users surf to each day? Same question really.
Back in my previous company, we had data that showed an average Internet user browsed to 120 pages per day. Today I learned from someone I trust, who certainly has access to this type of data, that it's increased as I expected. Per him:
Our data indicates that the average broadband US internet user surfs to 138.1 pages per day. For dialup, the number is 136.4.
I was one of the panelists at the recent TiE event Opportunities in the Web 2.0 Ecosystem, and moderator John Cook asked whether a new startup ought to build their company around the new Facebook platform or choose to build their own platform and network effect.
For a while there (after May, when the platform first launched), I kept getting questions from investor-type people asking me if I was going to build a facebook app -- there seemed to be a lot of "enthusiasm". We chose not to, for a variety of reasons. It'll be tough to ever know whether that was a bad decision or not (it's not like the opportunity is forever gone), and clearly there are many companies building their business around a facebook app.
But in my opnion, the value of a facebook app is as mere advertising and/or a feature, not as distribution, a standalone product or a business. Here's why:
When you're offering a free service within another free service, it's damn hard to arrive at a sustainable business model. The advertising revenue model with Facebook apps is still unproven.
You don't own your facebook app users, facebook does. Users/customers form the core value of a business, and you're not going to have any unless you get a facebook user to register separately for your service.
The biggest value to web 2.0 products, besides users, is the network effect -- which is more valuable than the sum of all users. With facebook apps, you don't own the network or any of the connections between the users, facebook does.
Facebook is free to compete with your app, shut you down, etc. They are already doing so.
As a startup, a core value in your company centers around your distribution -- your users. Jeremy just wrote a good post on how to value a social media company, and # of users is his first variable for good reason -- assuming they're YOUR users. I guess maybe I'm just old-fashioned and want to build my company earning my own users instead of someone else's (who can be taken away from me within 24 hours). I just wouldn't do a distribution deal unless it added tangible value to my core business.
Now there are times when a facebook app makes sense to me, such as:
As a feature of your core product/service, which is offered across multiple channels. Any social media company is going to have a percentage of their users on facebook, so why not make it easy for them to use it within their fb community?
Promoting your core product/service. Just as widgets ought to be viewed as advertisements promoting your company, a facebook app ought to be viewed the same.
Optimizing your viral coefficient. Startups need to continually hone their messaging and features in order to improve their viral capacity. Doing this on a closed network can be very effective for ongoing iteration/testing.
The companies that focus on a core product/service, earning their own user base and network value, utilizing Facebook (or any other closed platform) as just one channel of promotion and testing will be in the best position to create real shareholder value. The companies that are defined by their Facebook app incur a greater risk that they end up creating no shareholder value at all.
According to the Internet Advertising Bureau, Internet advertising revenues (US only) for the first six months of 2007 grew to almost $10B, a 27% increase over the same period in 2006. Search and display continue to be the leading formats:
– Rich Media (Includes Video)
– Ad Banners / Display Ads
– Slotting Fees
It's not surprising to see continued growth in search, lead generation and rich media. I DO find it surprising to see the growth (albeit not as a % of the total) in ad banners / display ads, given the poor typical response (due to banner blindness). I suspect that behaviorally or contextually targeted display advertising were included in this category, especially when you look at the decrease in CPM deals compared to pay-for-performance. Pay-for-performance and incredible targeting are the future of online advertising.