Consumers, Internet, & Technology

Microhoo. An Advertiser's Perspective.... we like a strong #2.

2008-02-03T07:02:00.000-08:00

It's very interesting to me that 9 months after when rumors of the deal surfaced we actually have a deal AND it's the start of the new year. Good to yah Microsoft exec team. Thank you for stepping up to the plate and doing something about your search share woes.

Something drastic needed to be done while Google continued to extend their overwhelming share (~60%). If #2 Yahoo (~20%) and #3 MSN (~7%) were to make any run on their their own, it would have been a very LONG road by way of infinitesimally small gains. Not meaningful to them and certainly not meaningful to advertisers.

Integration aside (big, nasty, and hairy), I welcome this deal as an advertiser. PPC advertisers for the most part are beholden to Google's supply of goods (traffic, revenue) and what company wants to have one supplier. It's just not smart business.

The new Microhoo as I've dubbed the new company presents not a formidable competitor to Google but one with a fighting chance. All online advertisers should want to diversify their spend away from Google so that they aren't only drinking from the milk of Google. It can certainly be painful you when Google decides to, for whatever reason, shut down your campaigns. And then, that milk tastes pretty bad.

I think a lot of people have not paid attention to anyone outside of Google simply because they were irrelevant. Microhoo has now by way of math 1+1=2 (not saying 3 yet) become more relevant to advertisers. Relevance is good for your customers.

This merger and acquisition, however, needs more than relevance. Ultimately, the new company needs to create/reshape a search product, experience that rivals Google's (easier said than done) AND for advertisers, create a meaningful level of traffic that will deliver on their marketing dollars (i.e. ROI, conversions).

Trulia Raises $10 million from blue-chip Sequoia Capital

2007-05-24T09:45:00.000-07:00

More smart money into online real estate space ... Series C Round.

Here's a good take/analysis on the deal & space from Matt Marshall at VentureBeat... comparing Trulia to Zillow.

Check out Glenn Kelman's (CEO of online broker RedFin) comments about management' talent/education & experience on Trulia vs. Zillow - quite amusing.

VentureBeat Article.

Marketing in Web 2.0

2007-05-24T07:53:00.000-07:00

Last night, I attended a speaking event called "A Whole New Ball Game: Marketing Successfully in the Web 2.0 World," which was put on by the Northwest chapter of the MIT Enterprise Forum. They typically have influential, well-known leaders in the space and the panel this time was represented by execs from Technorati, Facebook, Wetpaint, Aquantive, and Zaaz.

The turnout at the Bellevue Hyatt was quite good; lots of familiar faces from the Seattle tech scene. And I got the chance to catch up with ex colleagues at HouseValues, which was nice.

So what did I learn? Nothing too extraordinarily eye-opening but a few nuggets here and there:

To leverage the power of Web 2.0 which they defined simply as being - 2-way interactions, expressions, personalized conversations, points of view, etc., a marketer needs to be active and present in the "communities" to reach them since they are highly atomized
You have to engage the influencers first since they are the drivers of the content/influence
It's important to reassess your audience and periodically reshuffle your segmentation to see what works
Re: monetization, advertising is a necessary evil to users but make it as much as possible a benefit vs. a cost (related to various segmentation strategies)
Embrace the fact that your brand is going to be manipulated and be" put threw the ringer"; as such, you need to be present to address what people are saying and be authentic in your voice (i.e. no corporate speak)
Lastly, look for ways to leverage these networks/audiences on places like Facebook, MySpace, et al. (e.g. engaging distinct segments where they "hang out")

Microhoo. A Microsoft and Yahoo Combination

2007-05-04T12:11:00.001-07:00

The press caught early wind of more talks between the #2 and #3 players in search, Yahoo and Microsoft/MSN, respectively.

As a result, Yahoo shares surged 18% from $28 to $33 at the opening bell. It was the big news story on CNBC this morning. $50 billion has been thrown out there as a purchase price which to me sounds a bit rich based on today's current valuation and based on Yahoo management's most recent performance outlook.

I am guessing this deal will not happen ... setting financing aside, I think there's pretty huge integration risk. Yahoo is not the dinky startup with 10-15 employees that Microsoft typically absorbs into its amoeba-ish structure. The consumption of Yahoo seems simply way too big for Microsoft's stomach.

A key question ... do the potential synergies (likelihood of increased market share) created from the combined search orgs overcome the integration risk? What I am saying is that after you risk-adjust those synergies, are they still there?

I'm no post merger integration expert by any means but the task just seems too daunting. Too many things can go wrong - talent exodus, differing technology platforms, culture, misaligned strategies, et al.

Will be interesting to see what falls out in the next few weeks.

Update: 4 pm PST 4/4/07. It appears the WSJ has confirmed no substantial talks are taking place regarding the takeover.

Yapta. Seattle's newest consumer travel site...

2007-04-30T19:02:00.000-07:00

Is there something in the water that propels Seattle's entrepreneurs to focus on online travel and real estate. I don't get it.

The latest Seattle startup to pre-launch ... comes from some former Foddog execs, which includes a former manager of mine at HouseValues, Tom Romary.

The product is likened to a bookmarking pad to track airline ticket prices - allowing users to find the best deals on specific itineraries and ultimately save money. Looks like the business model will come from generated airline fees, advertising and potentially other fees. I'm happy to say that I haven't seen anything like it so far and it could prove to be a very useful consumer tool.

As usual, TechCrunch broke the initial story. Read more ... link.

Supplier Power & Google Economy

2007-04-23T17:57:00.000-07:00

Earlier this month, Google made a little boo-boo in their Ad Words system whereby they turned off many keywords for their customers and increased minimum keyword bids to very high levels (upwards of $10 a click) that became cost prohibitive to run campaigns. See below the dotted line for their explanation of this.

As a result of this snafu, I thought about all the companies out there who rely on CPC advertising for generating sales for their businesses so that they can pay the bills and their employees. The Google economy is big - with a current run rate of almost $16 billion and backed by a $150 billion market cap.

When parts of this bustling train come to a screeching stop, it reverberates. I am certain (very certain) that this put a mighty scare into all the small to medium (and big) businesses who rely on Google as their primary source for customer/sales acquisition.

Doesn't this make you wonder ...

When will people (meaning businesses) start to realize that they have to build other online channels and spread some of that channel risk around? I guess it's easy to be lazy when your largest supplier is meeting your needs. But no reason to be.

Shouldn't we all be scared of that awful b-school term, supplier power. I'm not a Google hater but there needs to be a much more competitive market in the paid search space so customers can make choices and aren't beholden to a hegemonic supplier (no offense Yahoo and MSN).

In the words of the bellicose Emeril, I would like Yahoo, MSN, et al. to "step it up a notch!"

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Unexpected Minimum Bid Increases

Last Friday, during a routine infrastructure update, we experienced a technical issue that significantly increased the minimum bids for some keywords. Because the maximum CPC for these keywords was not changed, a number of impacted keywords became inactive for search, resulting in fewer leads for some advertisers. This technical issue was completely unrelated to the Quality Score updates that we have planned for later this week. We sincerely apologize for any disruption that it may have caused to your traffic. Below, we've answered a number of questions that we've heard since Friday:

When was this issue resolved?
This issue was resolved by our engineers on Saturday morning (PST) for the vast majority of impacted keywords. The minimum bids for these keywords have since returned to normal.

Will you be issuing credits?
Once we have completed our analysis of the impact, we'll automatically issue credits to advertisers who overpaid due to this issue. As soon as these credits have been applied, we'll email the affected advertisers to let them know.

I paused some of my ad groups because the minimum bids increased and they are still unusually high. What should I do?
If you paused any of your ad groups on Friday due to this issue, we recommend that you unpause them, but do not raise your maximum CPC. Unpausing your ad group should allow the minimum bid to return to normal without taking any other action.

Will this happen again?
Our engineers have been working tirelessly to understand why this issue occurred and to ensure that the proper measures are in place so that this is not repeated in the future.

Does this issue reflect the upcoming Quality Score improvements?
No, this issue is not related to our upcoming Quality Score improvements, which remain scheduled for later this week.

We greatly apologize for this issue. Please let us know if you have additional questions that you'd like us to answer on the blog.

Posted by Sarah, Inside AdWords crew

Google's Play into Real Estate

2007-03-06T20:55:00.000-08:00

Google's foray into Internet domination continues. Watch out Craigslist, Realtor.com, Ebay, et al.

It was announced yesterday that the company is teaming up with Trulia, one of more interesting online real estate plays today, to host real estate listings with a company called Realogy. It makes sense to me.

Real estate listings are a big draw for consumer eyeballs and this type of hot inventory is the way to start building momentum on Google Base, their searchable database. In online real estate, it's not easy for any ABC company to scale listings nationally due to the fragmented nature of the MLSs. MLSs are essentially little fiefdoms across the country who still control the distribution of property listings within their "jurisdictions." (That will slowly erode over time.) It's this reality that allows Realtor.com to maintain its hold as the #1 property listings site because of their special relationship with the National Association of Realtors (NAR).

Google's partnering with Trulia who already uses their technology (Trulia is a mashup) and a Realogy who has a base of core listings allows Google to put in a stake in the ground on real estate content.

This does beg the question of how much market power and reach Google will eventually achieve in all categories and verticals on the web. They've upped the ante in the game for online real estate players who's focus has been building a consistent pipeline of traffic to their site - giving consumers another choice/option for listings while building another channel for their advertisers to reach such consumers.

The Google and YouTube Marriage: What it Means

2006-10-10T20:50:00.000-07:00

I'm kind of sick of hearing about the Google/YouTube acquisition.

Yes, I know. Another uber-success story of two twenty somethings who just cashed in on a gazillion dollars on a site they built in their apartment with a few developers. That's real nice.

Despite my acerbic tone, I commend the founders for their product innovation and consumer foresight. The end result of their hard work ... a pretty darn addicting site which has very high entertainment value.

Right now, Steve and Chad are probably at the plane dealership saying "does that GulfStream V come in Google blue."

Being acquired by Google is not a bad thing. You could have worse parents (think Microsoft). What did Mr. Hurley and Mr. Chen get .....

... the most recognizable brand name in technology, top notch technical talent, and sprinkle that in with loads of financial resources.

It will be interesting to see how Google mashes YouTube up with the current Google business model, if at all.

The execs at Google are wondering and scheming ...

How do we leverage/monetize the 35 million users, the 100 million daily video views we just bought for $1.65 billion.

Is it a pre and post roll play?

It's HAS to be much more than that. Otherwise, Google could have invested in their own video offering to do just that (just minus the audience, big assumption). The incremental opportunity lies in integrating some type of sponsored text ads into the video experience. This comes down to relevancy and targeting, Google's core competency (their secret sauce).

How much are those clicks worth now that you have a highly engaged consumer? Do you cross market a product/service based on previous click streams and that video? (i.e. behavioral targeting) Are these consumers THAT more ready to "transact"?

I don't know the answer to that.

I think it depends on the content. Quality content drives quality eyeballs/quality clicks.

I am curious to see how this merger impacts the world of paid search.

Clearly, a new channel has been born via this acquisition and Google will be putting their best and brightest on task to figure out the optimal way to capture more advertising spend here.

Offline Print Media Will Survive

2006-09-28T08:08:00.000-07:00

The imminent and current decline of eyeballs to print media is something that is often discussed. Clearly, people are moving online to consume today's media; this is happening across all verticals from autos, real estate to entertainment news.

Question is what do the newspapers, magazines do to keep those consumers?

Likely two options: A) invest in an online property if they already haven't or B) cut costs to keep the offline customers and make the business more efficient.

Sites like the Wall Street Journal and NY Times have done a tremendous job in executing on Path A but what about the rest of the bunch (i.e. the "mom and pop" type newspapers who still operate a printing press). The mom and pop don't necessarily have the financial resources of a rich parent company or the expertise to get into the online space.

It's a tough place to be right now, especially with all the money going into new consumer technologies and innovation. Competition can be deathly, as Darwin has so hypothesized and proven correct.

A ray of light does exist for old media .... "history shows that emerging mediums are additive. When a new medium shows up, the existing media still exist," says a VP at PQ Media, Leo Kivijarv.

There will always be a place for reading a newspaper over a Sunday morning coffee but over time, but I will ask .... for how long.

Funding Web 2.0, Venture Capital

2006-09-21T09:31:00.000-07:00

No doubt that money is flowing into Web 2.0, however you define it.

VentureOne defines it as business models organized around some combo of user generated content, networking, and collaboration. They just came out with the latest numbers on 1st half 2006.

Here's a quick summary:

$262.3 million of venture capital into 49 Web 2.0 startups in the U.S. in the 1st half of 2006
Consumer models are hot. They soaked up 63% of the funds at $165.3 million in the first half (27 deals)
Median deal size for Web 2.0 companies was $4.4 million, 41% lower than the $7.5 median for venture financings on the aggregate

Zillow's Aiming at Customer Acquisition

2006-09-20T09:28:00.000-07:00

Zillow came out with a new feature that is aimed at getting consumers more engaged and making their Zestimates more accurate.

Sounds like a win-win for the company and consumer.

What is it? A homeowner can edit their home facts.

The homeowner gets to set the facts straight on their home (SF, # bedrooms, bath, etc.) which will "help improve the accuracy of your Zestimate over time."

Very smart.

Why wouldn't every homeowner in America want to make sure their home is shown in the best possible light? Especially when it's time to sell.

Great in theory but in order to do this. The homeowner needs to REGISTER (ah ha!) and completing this process isn't exactly easy.

They need to verify you as the homeowner. That means you must provide either a credit card number or fax/mail a copy of your deed/title, mortgage statement, tax assessment, or utility bill to the company. How big of a barrier is this? I, myself, am not going to do this until others are using the Zestimate as a viable and trusted source for home values. It's a bit of a chicken and egg problem.

It's darn interesting to see how Zillow is trying innovative ways to build a relationship with their customers. I do wonder how many folks are going to take the time to pluck down a credit card or even fax a personal financial document to the company. Time will tell.

Here's a link on How To: Edit Home Facts.

Web 2.0 Directory

2006-09-16T18:08:00.000-07:00

A nicely executed directory with logos of all Web 2.0 companies. Visually pleasing. Check it here: Web 2.0.

Feeding the Edge

2006-09-01T00:43:00.000-07:00

Edge Feeders.

Sounds like a specific category of the animal food chain. I came across this concept through a blog entry written by Fred Wilson, a managing partner at Flatiron Partners and Union Square Ventures.

He talks about the value of the network and how consumers want to create content on their own terms (think MySpace and YouTube) and want to be able to distribute that content on the edge. Content on the edge is not contained by a site/operator, like listings on a real estate site or editorials. It's the stuff that's widely and easily distributed by its creators. Enablers of the edge are the Edge Feeders who basically provide a platform for this content to be distributed.

The example he uses is Flickr. Flickr allows you to put all of your photos there and from there, you can post it to your blog, a family website, an Evite, et al. You get the point. It feeds all of your channels on the web. The value of this application is the ability to aggregate an enormous amount of edge content, organize it, and distribute it.

So what does this mean if you're not an Edge Feeder? I believe that site operators need to think hard about how to take advantage of facilitating the feeding of the edge. Giving control to the consumer is good and if you are in some way relying on user generated content, you will figure out a way to make it damn easy for users to feed their content into your site (i.e. click on a button and you have a direct feed from Flickr).

As evidenced by Flickr and Delicious, containing content creation is a thing of the past and feeding the edge is the future.

Fred's blog entry on Edge Feeders.

Podcasting & Apple

2006-08-31T16:41:00.000-07:00

Can I tell you how much I like podcasting?!? Yes, I'm a bit late to the game but don't call me a luddite.

You see, I recently acquired a Nano from my mother-in-law (she won it in a raffle) and now finally understand why people are fanatical about Apple products. They're just so damn easy-to-use and not to mention beautifully designed. The last time I used an Apple product was back in my college days at Dartmouth where Apple had a deal with the college and all students used Macs. Once I graduated and entered the business world, however, there was no reason to go Mac.

So what about podcasting ...

Apple's collection of podcasts is very well-merchandised in their music store (by category and top lists) and most importantly, the quality of content is high. I love the fact that they have all types of NPR and NY Times podcasts. It's really opened up consumer access to very niche and specialized content. For example, I can subscribe to a podcast on Tai Chi or even learning Spanish.

Props to Steve Jobs and team for building beautiful hardware, easy-to-use software paired with content that is unique to my interests. While it's unclear that iTunes will own the podcasting space, it's clear they've done a wonderful job of integrating it into the core product.

Ruby on Rails & Benefits to Web Innovation

2006-08-28T20:35:00.000-07:00

Being on the business side of the Internet, I think it's important to stay on top of recent technology developments and what developers are using to build the latest and greatest web applications. I'm discovering that a fairly recent programming language called Ruby on Rails is catching on in the coding world.

It's important for a few reasons:

Shortens development cycles because it's a) easy to read, b) easy to write, and c) extremely iterative (immediate feedback)
According to devs, the process of writing in Rails allows more expression and is generally more fun to code in

A few examples of sites built on Rails are:

The obvious benefit for us as consumers is the speed at which new web apps and services will be launched and tested ... exciting stuff.

Support your "Local" Artist on Sellaband

2006-08-26T09:34:00.000-07:00

A new site, called Sellaband, allows users to support their favorite musical artist (from all over the world) by buying monetary "parts"($10/part) and sharing in ad revenue from the music produced.

What an innovative way to allow new artists to showcase their talents, reach audiences all around the world, and develop a fan base that participates in the artists' success. It's going to be critical for the founders' to get the word out for this thing to scale. The artists need to get on board and the audiences will follow.

As for me, I found this Evanescence-like band from the Netherlands, whose lead singer has great vocals. Check them out on Sellaband: Nemesea.

See this TechCrunch article for other commentary: Sellaband.com.

Long Tail Economics

2006-08-14T00:53:00.000-07:00

Big in the press and among the businessrati these days (as in the last year). Just started reading The Long Tail by Chris Anderson and it's an interesting read so far.

The basic premise is that the aggregate sales of all the niche sales along the tail of the demand curve exceeds those in the head of the curve. And this goes against the traditional practice of focusing on the big hits in the head of the curve (i.e. movie blockbusters, billboard charts leaders).

This new model works particularly well for Internet based companies because the web has essentially created a costless distribution channel - making it very cheap to carry and sell all of the niche inventory. This long tail then becomes economically attractive.

Think Amazon, Real Networks' Rhaspody, Netflix. All those hard-to-find books, tracks, and videos.

Not totally revolutionary but nonetheless useful as one thinks about starting an Internet business and how you plan to serve your customer. Can you take advantage of these long tail economics in your business model?

Here's a link to the original Long Tail article from Wired magazine.

User Generated Content & Incentives

2006-08-12T22:23:00.000-07:00

With my recent time off, I've had the time to think and write/blog which has been sort of a guilty pleasure since I'm not really being compensated for my "work" and it's not contributing to what I'd consider productive activities like mowing the lawn or paying my bills.

As such, I've begun to wonder how the recent explosion in user generated content (i.e. high flying startups like MySpace, Flickr, YouTube, Digg, Yelp) have given rise to real businesses. Real in the sense that that large corporations are willing to pay large dollars for it. But behind these businesses are the millions of folks pouring their sweat into creating this unique content.

So....

Will the consumer always be a free, willing, and abiding source of content?

Will there be a point in time when the collective force and motivation of individuals to contribute breaks down? When it becomes more difficult to scale ...

A likely response to this is for businesses to create a menu of incentives for individuals to 'play' on their network; this could be monetary (e.g. share in ad revenue) or intangible (e.g. favored/star status amongst users). So far, most of this has come in the form of self-aggrandizement but I suspect the monetary component is not too far off.

Something to think about as these businesses compete for a finite amount of resources, their "workers" time.

Zillow Thoughts, First of Many

2006-08-07T19:28:00.000-07:00

A lot of my friends from around the U.S. have asked me what I think about Zillow.com. You've probably heard or read about them in the press. Zillow is the Seattle-based real estate start up that provides consumers with a free valuation on homes. The founders have managed to raise a significant amount of capital, $57 million, in 2 rounds which means there's an expectation that an exciting pipeline of new features and tools are on the horizon.

I personally like Zillow's site. It's got a fun, campy feel to it and the value proposition is pretty compelling. It's going to tell me the value of my home (or my neighbor's or my boss's or Bill Gates' home if you have his address). No strings attached.

I'd say that's a pretty big hook for the consumer. A few thoughts here...

The user/consumer needs to buy into this number. Do I believe it? Does the market believe it and use it? I.E. buyers, sellers, realtors. Zillow will need to fine tune and continue to invest in the Zestimate so that folks start to respect and treat it as a leading market indicator of value. Otherwise, the allure of the Zestimate could fade quickly and it becomes another hokey online tool.

Also for the ad business model to work, there's the issue of getting the consumer to stay on site. A one trick pony a business model don't make.

Right now, once I've looked up my target home, say my buddy Mark's in San Diego, I get my jollies sated and leave. I need something else compelling to click, read, etc.

While the company has done a great job of getting folks to the site (ave. 3-4 million unique visitors/month), what are they going to do to keep them there in the long run?

New content, services. Certainly. More recently, they've aded a financing tab and heat maps of cities around the U.S. to help with this.

I do wonder, though, about the ultimate opiate that will keep folks on-site .... listings?!?

You heard it here first. If Zillow were to somehow infiltrate the world of the Multiple Listing Service (MLS), I'd be first in line to put my meager savings down for a round three of financing.

Yelp's Secret Sauce and Local Advertising

2006-08-05T22:13:00.000-07:00

I think the guys behind Yelp.com may onto something big. At a basic level, Yelp is a directory of reviews on local restaurants, shops, and other services. We've seen this before on Citysearch, Yahoo Local, and Judy's Book.

However, the difference here is that this site has a strong social networking thread that permeates the user experience. Think MySpace plus Judy's Book. I can create a profile (with pictures and other self-notables) to share my experiences, make my views known, and interact with other reviewers through comments and ratings. As a reviewer, I essentially become an authority/expert and I want to share this with other folks (leading to high value content). Morever, the UI does a good job of facilitating interactions between members. For example, my reviews can be rated as useful, funny, or cool AND users can even leave compliments, like "You're the best!" This keeps the member engaged and for some, they are delighted.

Here's the secret sauce: the output/content on local businesses is for the most part expressive, rich, personal, and valid. It's unique and real. You won't find this type of content on CitySearch or Yahoo Local. With this special content, you have the ability to garner a set of extremely engaged consumers .

Yelp now can sell these eyeballs to local advertisers (i.e. the local businesses the members are writing about). Local advertising has been the holy grail of online advertising but most companies have failed to gain any traction here. The Yelp model could prove to be an extremely effective channel to the small business owner.

In fact, Yelp HAS the goods (the detailed reviews) to pitch to the local dry cleaner or Thai restaurant. All they need now is to build a telesales force if they haven't already or partner with somebody who does.

Today, Yelp is sellling 1) enhanced listing information and 2) sponsored listings. Not surprising.

The key to scaling (getting more comprehensive and deeper) will be to continue to build a base of VERY influential and vocal reviewers in major cities across the U.S.

I will be watching closely to see what programs and incentives they use to grow this content.

I've recently jumped on the bandwagon myself. Check out my Yelp reviews HERE.

Mo' Money in Big Three?

2006-06-14T08:28:00.000-07:00

A lot is happening in the consumer Internet space and we're fully aware of these major trends since we hear about them in the daily press. I'd like to call them the big three: social networking, blogging, and video. Sure, they've received a lot of buzz but has anybody in the space figured out how to work a revenue model into the equation?!?

I'm waiting for a YouTube, MySpace, or a Facebook to provide the GOODS on how monetizable their current user bases are. Yes, I understand that having a critical mass of users can support an advertising based model but can this be achieved in each case.

I have my doubts. A few things to throw out and test the waters. What is the likelihood of a wholesome P&G to advertise on the space of "Dark, Lolitish Vixen in Upper East Side" or how does YouTube overcome the ever rising hosting costs of all that video uploading? I would only imagine x% of pre roll or post roll ads (small %) are suitable/allowable. This is just a taste of the challenges facing monetization.

I'm confident that the media titans and their hired guns (bankers) are now closely considering the possibilities of leveraging said user bases and plotting an acquisition strategy. Lots of questions on what's strategic vs. financial, I'm sure.

I would hate to be the guy to put a value on an acquisition; yep, that's where the bankers get to earn their fees. ;)