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Christmas Card to the Others Online Team

My core Others Online team -- Mike, Neal and Sam -- kicked serious ass this year, during the first half of the year when we were Others Online and even moreso during the 2nd half of the year as the Data Intelligence team of the Rubicon Project.

So they get a Christmas card like no other. And I threw in my dog Skye too!

Try JibJab Sendables® eCards today!

December 15, 2009 in Others Online | Permalink | Comments (0) | TrackBack (0)

Others Online Acquired by the Rubicon Project

On September 15, 2009, the Rubicon Project announced the acquisition of Others Online, a company I founded in 2006, the 3rd company I've founded, and the 4th startup I've built up.

Internet_Ad_Revenue_Growth

Others Online was founded on the vision of advertisers being able to reach people, not pages. When I had looked at the revenue growth of Internet advertising revenues from 1997-2007, I noticed two clear growth trends. The first growth trend, from 1997 through 2000 (v1.0), was primarily fueled by content targeting -- Web sites and content were the proxy by which advertisers reached people.

The second growth trend, starting in roughly 2002 (v2.0) was primarily fueled by keyword targeting -- search and context keywords were the proxy by which advertisers reached people.

My belief, and the bet we made with Others Online, was that the evolution of the Web would result in a third growth trend (v3.0) -- the ability for advertisers to reach specific audiences directly, thereby supplanting the use of proxies. Indeed, the industry is seeing tremendous growth in the area of audience targeting. However, the ability to correctly identify specific audiences is dependent on two things:

  1. Lots of audience attention data, representing what we're devoting our precious attention span to online.
  2. Technology to aggregate, process, score and summarize the audience attention data.

Audience attention data is everywhere. Every online media company has a fragment of attention data, and we've seen a number of companies form in the data space, each offering valuable data for sale to advertisers. Not just "behavioral" data either -- contextual, demographic, purchase intent, location, search keywords, etc. But that's the problem; no one has a complete picture, merely fragments. The true market growth opportunity can't be realized unless/until there's an aggregation point for audience data, coupled with media inventory, and the mechanism by which advertisements can be targeted based on the multiple facets that define us as people, at scale.

Others Online built a powerful technology platform to aggregate, process, score and summarize audience attention data, with services that helped publishers better understand, segment and target audiences. In our discussions with the Rubicon Project, we quickly realized the power of combining their global reach and scale (45B monthly impressions to 500M users, across 30K Web sites) with our technology to not only provide incremental value to everyone connected to the Rubicon Project platform, but also to fuel the next growth trend in audience-targeted online advertising.

As with all announcements though, there are bound to be misconceptions. Though future press releases will certainly add clarification, I thought I'd at least try to dispel a few potential misconceptions upfront!

  • This acquisition does NOT make the Rubicon Project a "data exchange". We do not resell publisher or 3rd party data, nor will we. We provide a platform through which 3rd party data providers are developing an incremental distribution and sales channel.
  • The Rubicon Project (still) does NOT sell media directly to advertisers. We remain 100% focused on providing value to premium Web publishers, helping them make more money, protect their brand and save time.

The Others Online team couldn't be more excited to be a part of the Rubicon Project. But mostly, we look forward to adding value to their publisher partners and in doing so, hopefully realize the market opportunity at hand.

September 17, 2009 in Attention data, Behavioral targeting, entrepreneurship, Online advertising, Others Online | Permalink | Comments (1) | TrackBack (0)

Swing for the Fences or Focus on 1st Base?

Who is more likely to produce long-term shareholder value -- the entrepreneur who raises too much investment capital, or the entrepreneur who funds growth through profits alone?

First time entrepreneurs often have skewed visions of "how it all works". Their perceptions are often shaped by the numerous successes that get touted about the media, rather than by the 1000-fold number of failures. It makes the "accidental success" of YouTube appear reachable, or at least "just as likely" as any other startup.

One of the things that entrepreneurs usually believe is that once they have an idea, they need investment -- that's just how it works, right? Once they start to talk to investors though, as well as advisors and other folks in the startup community, the questions usually come up ... is this a lifestyle business or a "swing for the fences" big market opportunity? A "lifestyle business" is one which you intend to keep running for a decade or two -- like my Dad's optometry practice, for instance, or my brother's event audio/visual recording business -- typically an owner-managed business in which the profits are used solely to support the ongoing lifestyle of the proprietor.

Then there are the "swing for the fences" big market opportunities. These are the startups with big goals, where the entrepreneurs focus on a market opportunity >$100M. To get there, most companies on this track sell ownership in their company at some stage of their business to raise the capital necessary to build their company. Some companies even raise huge amounts of venture capital, at a hefty dilution mind you, before they even arguably HAVE a business. (Twitter comes to mind ...) Investors are compelled by visions of a healthy return on their investment, and in the latter case also by extremely savvy entrepreneurs.

For whatever reason, I'm NOT a "lifestyle business" kinda guy. I'm only interested in building a company with a compelling market value and resulting shareholder ROI, but as a founder I'm ALSO uninterested in immediate dilution down to single digit % ownership. I want as much equity in the company as possible.

I learned long ago that the best way to build personal wealth and shareholder value is through "bootstrapping". Bootstrapping is the art of building companies with very little outside capital/investment. I'm proud of my bootstrapping skills actually, which I've developed over four startups now, yet I've also realized that outside capital is also essential to developing/realizing a substantial market opportunity.

The reality is that there is a middle ground. Bootstrapping your way 100% to IPO, while honorable, is very difficult and uncommon. If the market opportunity is truly there, being under-capitalized will usually result in missing the market window of opportunity. Conversely, raising too much capital too early rarely results in long-term shareholder value. In other words, given a large market opportunity -- a startup that raises too much investment capital is just as likely to fail (to generate shareholder value) as a startup that doesn't take any investment capital. 

I've been building Others Online based on what I thought to be an appropriate balance of equity financing and bootstrapping ("sweat equity" financing). Unfortunately we're still not profitable and thus reliant on investment capital at a time when the market opportunity is large and we're landing large customers, but market conditions are unstable and investment capital has dried up. And the other day I was talking to one of my investors, who literally wrote the book on bootstrapping, about our status as a company. He insisted that there "has to be a way" to generate more cash from our pipeline immediately. The only way I can see to do that is to shift our business model in the short-term, and I worry that doing so may negatively impact our ability to achieve the "big market opportunity".

I keep thinking about this. Is it possible to "swing for the fences" (big market opportunity) at the same time as focusing on 1st base (getting to cash flow breakeven)? Or are the two incompatible? I suppose it depends on the market opportunity, but I'd argue most high-value windows of opportunity in the market are open for a limited period of time. Rarely do you not have competition eyeballing the same opportunity, and sufficient funding is generally a prerequisite to nailing these windows of opportunity.

Market leadership positions are always attained as a result of execution. Financing is not execution. However, financing provides the means to develop the necessary components to execution: team, timing, marketing, and product development. Since paths to success are rarely a straight line, financing also helps recovery from bad decisions (on any of the above). Under-capitalized companies are therefore at greater risk. That said, bootstrapping is also essential. It teaches you to make your mistakes quickly and therefore least costly. Bootstrapping is good execution.

2009 is going to be a difficult time for companies who are "swinging for the fences" but aren't financed for the next 12-18 months.  If you're one of them, like we are, it seems you can only either change your game plan and just focus on 1st base, or merge your team with a team in a far better position to hit the home run.

February 14, 2009 in Business/Technology, entrepreneurship, Others Online | Permalink | Comments (5) | TrackBack (0)

Can Display Ads Outperform Search?

Fred's views of "predictions" match mine, as does his prediction. In this post (where the comment stream is even better than the post), Fred predicts:

display advertising will get so cheap and the tools to target it will get so good that it will be shown that it can outperform search

I wrote about this at the beginning of 2008 in my post CPM Rates Will Rise, They Have To (which means either I was exceptionally wrong or exceptionally astute), where I posited that high CPC rates (in SEM) and better targeting/technology will be the major forces behind a rebirth in display advertising. In any event, the comment thread in Fred's post was rich in opinion and dialogue, which led me to comment: 

CPM rates are already extremely low. I don't think remnant rates are going to fall much more. And an average CTR of .1% means that banner blindness can't get much worse either. In other words, I think we're at the bottom for eCPMs and CTR (for the majority of inventory out there), and as Fred points out, the tools will pave the way for a rebirth in display.

As I wrote last year, high CPC rates (SEM) and better targeting/technology will be the major forces behind a rebirth in display advertising. If you're a marketer seeing your bid rate for keywords exceeding $2 per click, the effective CPM rate you're paying is high. At .25% CTR, you're paying $5 CPM. At 1% CTR, it's $20 CPM. If you're paying $2 CPC rates , all you need is a measely .05% CTR to put $1 CPM inventory on par (which is what 83% of the inventory is selling for, and also 5-10x the price of most social media inventory these days)!

Display offers >25x more volume than search, and new targeting techniques for CPM ads will shift dollars back towards the display market -- assuming ad networks rise to meet the market opportunity. I think they will, slowly but surely. They have to, in order to grow their business.

I was very pleased to see his reference to the estimation that Google has over 1.3M advertisers -- I've been looking for that data. We've also seen at Others Online that display ads are the only advertising format to monetize social networks -- text ads don't work at all. So in order for display to make a big comeback, it has to cater to this long tail of advertisers. Which means to me there are three ingredients necessary to offering advertisers the performance of search:

  1. Targeting - Advertisers must have access to deep and more standardized targeting. Proprietary categories/channels/audiences are arbitrary and non-standardized. Keywords are the lingua franca of SEM and SEO, and everyone knows what they mean. In the absense of a search query, the targeting can only be based on context (targeting content) or affinity (targeting the person).
  2. Self-service buying - Long-tail advertisers want to dabble first with low $ amounts, and the friction needs to be taken out of the process -- they need to be able to place a buy in minutes, as they now do with AdWords.
  3. Ad creation tools - Indeed, part of the friction is the design/dev of the ad creative. Tools must make this as easy as creating/optimizing text ads.

January 10, 2009 in Behavioral targeting, Online advertising, Others Online, Social media advertising | Permalink | Comments (0) | TrackBack (0)

Best Year Ever for Others Online!

(Cross-posted from the Others Online blog.)

I've never been one to think in terms of calendar years starting/finishing -- rather I view new years just as I do new days or months, as simply a progression of time. I suppose it's because of this that I've never embraced either resolutions or predictions. But I do like to recognize achievements now and then.

Others Online started building our core technology in 2006, and the company pretty much flat-lined for most of that year as we dealt with an emotionally upset and litigious [former] consultant. So 2006 pretty much sucked. In 2007 we got back on track, added some amazing investors, launched consumer services and grew that user base nicely by the end of the year. But by January 2008 it was apparent that our affinity profiling technology was more valuable to online media companies (B2B) than online consumers (B2C). So 2008 was the "year of the pivot" for us.

As I look back on 2008, I am extremely proud of what Others Online has accomplished, notably:

  • Successful shift from B2C to B2B, earning valuable customers, real revenues and an AMAZING pipeline for 2009!!
  • Quietly launched our Affinity Profiling Platform in mid-July, moving our data center infrastructure from our own servers to an elastic, cloud-computing infrastructure -- thereby allowing us to scale much more rapidly to meet demand.
  • Since July, expanded our cookie footrpint to nearly 80M.
  • Since July, developed over 52M rich profiles comprised of over 3B individual affinities, based on almost 300M Web searches and well over 1B page views across nearly 1M sites.
  • Drove targeting for >500M ads, resulting in an increase in eCPM rates exceeding 50%.
  • Added Sam Tingleff to the Others Online team.
  • Added a half-dozen incredible angel investors -- the caliber of people whose accomplishments humble mine.

All this despite the declining economic conditions in 2008! So while I'm not one to generally congratulate ourselves on a job well done -- rather I'm much more inclined towards the "only the paranoid survive" school of thought -- I am quite proud of what we've done as a team in the last year, and I'm ready to face the challenges of 2009. In fact, I believe 2009 will be a much better year than 2008!

January 01, 2009 in Business/Technology, entrepreneurship, Others Online | Permalink | Comments (0) | TrackBack (0)

Behavioral Profiling: Online vs. Offline

Despite continued sensationalistic reporting on cookies, behavioral profiling and lack of online privacy, I've long held the belief that my online behavior affords me far more privacy than my offline behavior. It is in this context that I took interest to the recent Businessweek article "Digital Snoops Have Nothing on Joe Salesclerk", which contrasts Web-based behavioral profiling with offline behavioral profiling. The punch line? Yes computers are tracking your online behavior, but in terms of surveillance sophistication you can't beat a good salesperson at a brick-and-mortar store.

Clearly, online behavior is valuable data -- which many companies (such as my own) is analyzing.

We may be just browsing or comparison shopping online, but our Web wanderings paint a picture of who we are, what we desire, where we go. In all, we create a vast laboratory of human behavior for the data miners at the e-merchants, portals, and search engines.

However, this "behavioral data mining" is unavoidable, offline or online. Every purchase we make via credit/debit card, every building we enter, everyone we talk to over the phone, even our homes and the streets we drive down -- are recorded in some way, increasingly so. And there are companies that aggregate/store all this data in a way that's personally identifiable. In many ways, our offline behavior is far more open and publicly available than our online behavior. (It's amazing to me why people get so upset over browser cookies.)

Computers can search for correlations between the Web pages we look at, the articles we read, the ads we click, even the size of our e-mail communities and our instant-chat habits. This may feel intrusive, but remember: All of this observation and analysis is done by machines. Most of these analysts—the people I call the numerati—recognize us only as patterns. Their computers see us as dots in a universe of millions. [edited for brevity]

Now compare that with offline "behavioral profiling", in stores and neighborhoods.

Walk through the holly-bedecked doorways, and store owners immediately note your race, your clothes, the way you walk. Maybe they can see your car out the window. Within seconds and without conscious thought, most will draw conclusions about your social status, your income, maybe even your religion, drinking habits, and sexual orientation. (This is a level of analysis eons beyond the power of the brainiest computers.) These insightful humans, their brains busily linking you to other people they have known, heard of, read about, or even smelled, will then guide you toward the kitchen appliances, books, or tools they suspect you'll like. This attention, which on the Web would be called "targeting," is known in the physical marketplace as the "personal touch."

What do you think? Do you feel more anonymous online than offline, or are you much more concerned about your privacy online in comparison?

December 29, 2008 in Attention data, Behavioral targeting, Online advertising, Others Online | Permalink | Comments (0) | TrackBack (0)

Actual vs. Perceived Progress

When you spend all your time at a "low altitude" elbow-deep in code (or similar deep effort), it's easy to lose site of the difference between actual progress and perceived progress. External stakeholders are often only  concerned with perceiving progress, not measuring ever little detail of actual progress.  And in many cases, it doesn't matter how much actual progress you've made if the critical stakeholders can't SEE it -- even if what they see is completely trivial and/or simplified. In fact, oftentimes the more trivial the indicator the better off you are. Simple visual indicators are the best indicators of progress, especially when the individual components to progress are complex.
Evolution For instance, check out this simple visual of an evolutionary algorithm evolving the design of a car (in Flash) to traverse the landscape without the red circles touching the ground. It's a simple visual demonstrating what I'd guess to be a complex set of code. (Evolutionary algorithms are optimization algorithms designed to evolve/mutate on their own, using mechanisms inspired by biological evolution: reproduction, mutation, recombination, and selection.)
In business, one thing you can count on is that everyone is extremely busy. Therefore, it's important to apply the fruits of your efforts to visual metaphor, so that stakeholders (investors, customers, partners, etc.) can empirically see their progress without even caring about how it was done. For board meetings, they're called KPIs (key performance indicators). It gets harder though when software engineers and business people need to communicate. This is why I think it's so important for engineers to learn to SHOW their progress, instead of simply achieve progress. No one else is going to care what you did or how you did it, until/unless you can demonstrate it. The perception of progress, therefore, is much more important than the actual progress.

December 08, 2008 in Business/Technology, entrepreneurship, Others Online | Permalink | Comments (2) | TrackBack (0)

The Coming "Ad Network Shakeout"

Any of you who keep up on the online advertising market through related blogs, articles, etc. have certainly noticed the rapidly developed "ad network shakeout" meme. The story goes like this -- as the economy worsens, companies will continue to decrease their marketing/advertising budgets, and the hundreds of new ad networks that have popped up over the last few years will have to compete more vigorously for the diminishing dollars available, thus resulting in a shakeout where many won't survive.

While I'm in full agreement, and feel their survival depends on technology, targeting and optimization (an ROI differentiation), that's another post altogether. But I did want to note a few smart comments I read recently, made by folks within ad networks. Philip Smolin of Turn notes in this article:

Some media buyers still think of contextual and behavioral targeting as separate ‘silos’ – you choose one or the other, but you don’t use both at the same time. And in fact most advertising platforms don’t enable you to combine them even if you want to. But in reality both are very powerful predictors of advertising performance – you get better results when you combine the power of the two.

Some of our algorithms at Others Online combine the power of both contextual and behavioral, and we've also found this to improve results. Contextual targeting (behavior now) generally outperforms behavioral targeting (past behavior) except when page context is just really bad. And it's just logical to reinforce your contextual targeting with behavior you've seen in the past.

Who’s going to survive? The platforms with unique technology or differentiated solutions that make advertising more effective – they’re going to thrive. Behavioral will be a key component because of its effectiveness in display advertising.

Behavioral has always been about display advertising, and yes it will be key. But what about text ads and other keyword-based (not category-based) targeting? I find it interesting (and exciting) that Others Online is the only company today offering behavioral targeting technology for keyword-based ad inventory.

Another interesting comment made by Joe Apprendi, CEO of Collective Media at Behavioral Insider (link requires password/registration, unfortunately):

It used to be people bought media with a site-centric mentality. It was a legacy of the print planning and buying business. You looked at what sites indexed or reached your target. Today that site-centric mentality probably represents about 70% of the overall display media spending. But there really is a shift going towards this audience-centric buying methodology. Marketers and largely brand advertisers are recognizing that there are alternative ways to reach target audiences. We believe that no matter what the overall demand for display media, there is a shift happening from site-centric buying, which is usually more expensive and the softest area of the display market. It is going from 70% to 50% very fast. A lot of that is reliable behavioral targeting, not absolutely dependent on what site you are running on.

Couldn't agree more. If I'm an advertiser, I'm only interested in reaching an audience with certain product/market-oriented affinities -- otherwise it's just a waste of an impression ("spray and pray"). I hear this a lot from ad networks, and it's frustrating them because most of them have NOT indexed their audience -- they've only indexed the sites in their publisher network.

November 12, 2008 in Attention data, Behavioral targeting, Online advertising, Others Online | Permalink | Comments (0) | TrackBack (0)

Cover Story, Above Bill Gates!

Everyone gets their 15 minutes of fame, right? Well, maybe mine is now (or maybe it's more like 15 seconds).

PSBJ My picture is on the cover of the Puget Sound Business Journal (click on the image to the right to see full size), with the lead story of how the economic situation is affecting startups. The opening words are "Jordan Mitchell is trying not to get rattled". You can read the full story at TechFlash. I find it humorous that big ole' me is higher on the page than Bill!

Just to be clear, I'm not rattled about our business. All indicators are very good actually -- growing revenues, expanding bizdev pipeline, successful trials, great team, strong market opportunity, etc. But I am concerned about how the current financial market situation (which I dub "10/11"), and it's effect on the investment community, will affect the growth of our business.

October 24, 2008 in Others Online | Permalink | Comments (0) | TrackBack (0)

The Power of "Mommy Bloggers"

Just read some interesting findings about moms who blog. They're not just blogging about their daily lives and personal experiences, they are sharing opinions and launching conversations about brands. As a result, they are increasingly building brand awareness and influencing consumer behavior.

From the report:

  • 96% of moms value recommendations they find on Mom Blogs
  • Over 78% of mommy bloggers now review products and services
  • 94% of moms rely on other moms to make purchasing decisions
  • More than 60% of mom bloggers consider making money important and want more connectivity with companies
  • 37% of mommy bloggers have been contacted as resources for the press

October 19, 2008 in Attention data, Behavioral targeting, Online advertising, Others Online, Social media advertising | Permalink | Comments (0) | TrackBack (0)

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