MetaMuse

What is Twitter?

"Web 2.0" is so much about the movement of our collective attention being streamed to the Web -- what we care about, what we're thinking about, our opinions, what we're doing, writing, shopping for, planning on, worrying about, etc. It's the implicit and explicit sharing of behavior and information.

Twitter fits into this movement. I'm a light user (and apparently also a famous Twitterer). But I really like  CommonCraft's Twitter in Plain English video below.

By the way, you can find me on twitter at http://twitter.com/kickstand.

Entrepreneurial Marketing - UW Biz School

Once again, by request of brilliant professor Deb Hagen, I guest lectured to her class today at the  University of Washington business school. The class is on marketing and entrepreneurship, and Deb requested me to talk about online advertising, SEO, SEM and SMM. If you don't know what that means, please feel free to page through the deck below!

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Good times though, great questions from the students, and Deb tells me it's of tremendous value given the lack of related material covered in her or any other classes.

Drop in Social Media eCPMs and Forecasts

Just read two separate data points regarding social networking advertising, and the struggle for advertisers to figure out how to make it work -- resulting of course in a hindrance on average eCPM rates earned by social media companies.

First I read that eMarketer has lowered their estimates for US social networking ad spend in 2008, from $1.6B to $1.4B. They claim the economy is partly to blame for this decrease, as companies cut experimental ad dollars first. As important, they claim that social networking sites are still trying to figure out what works. Net net, it's the same reason -- the ROI isn't there yet for advertisers.

Next, I read PubMatic's AdPrice Index for May which is real data (not a forecast). They found that eCPMs earned within the social networking category of sites dropped 47% , from $.37 in March to $.19 in April. Average eCPM for large Web sites (>100M pageviews/month) dropped from $.38 to $.18, and 95% of all Web sites with >1M page views per month earned less than $1 eCPM. (Keep in mind that PubMatic's data set is only remnant inventory, not direct sales.)

I've been talking a lot lately with social media companies, and they are indeed having a tough time monetizing their page views. Ironically it's such a rich source of information in terms of describing an audience and their affinities, yet it's so undervalued by advertisers. What they need are tools to help them harness that information and segment their audience into concise targeting parameters.

Startup Challenges - Raising Money

I'm on the board of directors for the Northwest Entrepreneur Network, who last week held their annual Early Stage Investment Forum. I could only attend in the afternoon, and I missed a great video (shown during lunch) with 4 local entrepreneurs on starting a company, raising money, pitching at a conference, etc. Extremely well edited, and I think they do a good job capturing the challenges of startup fund-raising. (FYI - Others Online presented at ESIF last year and it was definitely worth our time!)

Great job to Sam, Alyssa and David! (I don't know the other guy.)

Behavioral Advertising: Targeting Growth

I was doing some market research and found an eMarketer report on the forecasted growth for behaviorally targeted advertising. Behavioral targeting is when you target online consumers based on their past behavior rather than the current page they're on (contextual targeting), and is generally considered to be a segment of the display advertising market. As you can see from the below graph (courtesy of moi), search advertising (contextual targeting) has been responsible for the continued erosion of display advertising market share.

This was derived from a forecast of US online advertising spending by format, combined with some IAB press release data. Some of the other relevant data points I determined regarding display vs search were:

• Revenue -- search generated $81.65 in revenue per 1000 searches (in 2007), compared to display at $1.99 per 1000 page views. Display continues to trend down, with 83% of display ad volume sold at less than $1 CPM.
• Volume -- display generated 25x more page views yet earned half the market share.

As I said before, display advertising and CPM rates have to stage a comeback, and I think behavioral targeting will be a driving factor. eMarketer tends to feel the same way -- in fact, they say explicitly "Internet advertising is no longer all about paid search. Targeted online display advertising is exploding. Spending for Internet advertising with a behavioral targeting component will soar from $575 million this year to $1 billion in 2008, and that still represents only 11% of the US display, rich media and video market."

Here are three reasons why I believe behavioral will grow relative to contextual:

1. The % of Web page views that don't have very good context is growing. Think about all the user-generated content with poor context -- and this inventory is cheap!
2. Behavioral targeting helps marketers reach those with at least some interest, and reach that audience with fewer impressions, than the typical "spray and pray" model of advertising.
3. User behavior is getting easier to capture. Online users are publishing their thoughts, interests, and affinities more freely than ever.

This said, the behavioral targeting market has several major obstacles to growth -- scale, ease of implementation, and privacy/perception issues.  But that's another post!

eCPM Ad Rates for Remnant Inventory

Small sites (less than 1M page views/month) earn 3x better on their remnant ad inventory than medium (>1M page views/month) and large Web sites (>100M page views/month). Interesting data from the PubMatic AdPrice Index which shows average eCPM ad rates for Web site publishers in Jan-Mar 2008:

Month/eCPM			Large	Medium	Small
Jan-08			$.31	$.34	$1.00
Feb-08			$.33	$.33	$1.15
Mar-08			$.38	$.34	$1.18

This pricing data reflects text and banner inventory sold to ad networks (remnant), not any inventory sold directly, and is net to publisher (excluding the ad network commission). Nothing was said on whether the eCPM calculation (which is net revenues per thousand impressions, regardless of pricing model - CPM, CPC, CPA, etc.) included or excluded the display of unpaid (unsold) "default ads". I would expect it does include defaults in the calculations.

In my opinion, the reason for the large delta between "small" sites and medium/large is that small sites are often much more focused in their content and incur fewer page views per user visit. Large sites have more challenges segmenting/optimizing their inventory, because their content is frequently more generalized and broad in nature.

CPM Ad Rates for Facebook Apps

Andrew Chen links to some data from Facebook app developers on the CPM advertising rates they're making. I was surprised to see that it's a little higher than I expected, but he noted the issues with sell-thru ("fill rates") -- the % of ad inventory that gets filled with an ad vs. remaining unsold.

If your eCPM with one network is $.50 and your sell-thru (or fill) rate is 50%, then you're no better off than the network making you $.25 eCPM with 100% sell-thru.

Social Media Research

Great stuff on social media usage, activities, trends, numbers, etc.

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