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October 2007

Wednesday, October 31, 2007

Advertisers, Only You Can Save Web 2.0

The following is my Advertising Age column for next week. It builds on what I wrote earlier this week - to which many of you added lots of great thoughts. If you're a web start-up now is the time to consider your revenue streams. Advertising will not save all, I am afraid. Remember - as much as budgets are going digital, advertising is still cyclical.

Only You Can Save Web 2.0

Years ago the Advertising Council started a landmark campaign with Smokey the Bear that had a rather ominous tagline. It reads: "only you can prevent forest fires." (They still use it today.) The subtext, which the recent fires in California clearly reminded us, was that the word "only" implies that the "you" here is singular. In other words, if you're not out there preventing forest fires, then no one will.

While not quite as dramatic, a similar burden is starting to fall on digital marketers. Are your shoulders feeling heavier yet? They should because, you see, "only you" can save Web 2.0.

Nearly every online start-up you can think of is basing their business model on advertising. It's as if your digital budgets are a bottomless pot of money with more than enough to go around for everyone. Ask any of them how they plan to stay solvent and they all fire off the "a-word" - advertising.

The conventional wisdom in Silicon Valley is that as all advertising goes digital, there will be plenty of money for every business. Further, they argue that it doesn't take much to make a start-up profitable. The cost of starting, scaling and operating a Web 2.0 site is a fraction of what it was during the Web 1.0 era.

However, just like Social Security won't allow every baby born this year to retire in 2072, the harsh reality is that there will not be enough ad dollars to go around for everyone. For starters, advertisers have infinitely more choices on where and how to allocate the spend. More importantly, you're wisely looking for ROI - scale, quality and performance. These are three qualities that many start-ups lack.

The only remaining exit strategy for the gaggle of Web 2.0 sites that are depending on you is to sell themselves to a larger player, such as Google, Yahoo, AOL or Microsoft. Some certainly will. Many won't.

If you feel you saw this movie before, you did - in 2000. The sequel ends the same way, but not with as much carnage. That might change. But remember, only you can save Web 2.0.

links for 2007-10-31

Tuesday, October 30, 2007

"Do Not Track List" is the First Shot in the Behavioral Targeting Wars

Advertising Age reports that several big privacy groups, including the EFF, tomorrow will rally to get the "Do Not Track" list off the ground. As proposed, it's similar to the Do Not Call list. The bigger story, however, is that this is probably the opening salvo in what is a brewing war over behavioral targeting.

The targeting of web ads based on the deep data mining of online behaviors is the fascination du jour of many online marketers these days - particularly as they focus on ROI. While it's not new, what is different now is that a) people are sharing more information about themselves online so there's more information to use and b) marketers are increasing their spend on digital marketing as TV wanes in effectiveness.

Behavioral targeting is perhaps most top of mind within companies that have been able to successfully integrate the more cerebral CRM discipline into creative, brand marketing side of the house. That's one reason why marketing inside soc nets is so attractive - data.

Right now, the marketers can really dabble a lot and perhaps even blur the line with what's ethical. I am not saying they are nor am I condoning it. However, since this level of behavioral targeting is relatively new, the unwritten ethics rules - in theory - could be bent since a lot of consumers aren't paying a lot of attention - yet. Plus, of course, they benefit from more relevant ads.

That's all about to change. It's clear the FTC is concerned about user privacy. That's why they're hosting hearings next week.

Regardless of where the Feds decide to weigh in, the noise around mining behavioral data and patterns and the potential privacy implications is only going to get louder in the coming months. All of this is going to make consumers even more aware of just how much is being tracked. Some will begin to ask serious questions. It will be particularly interesting to see how Gen Yers react since at times they seem to not care much about their privacy. Other times, they do.

All of this will spur lots of debate in the coming months and will impact the so-called social graph and other innovations in Web 2.0. Get yer popcorn. It's going to be fun to watch.

Monday, October 29, 2007

The Web 2.0 World is Skunk Drunk on Its Own Kool-Aid

KoolaidmanThis is a sad time for the web. It's as almost somber as the time just before the last bubble burst in 2000. I was working in PR with dot-com startups at the time and the way I feel now is how I did back then. I wish I didn't, but I do. Something needs to be said. Even if no one listens or cares what I think.

Now, it needs to be noted that I am as optimistic about technology's long-term impact on business, society and marketing perhaps as much as anyone you know. I bet my career on digital marketing. However, since I started this blog lots of people have rightfully made fun of how much I touted every little new site to come along. Their criticism is accurate.

However, over the last year my thinking has evolved dramatically. I have become less interested in every new shiny object and more engrossed in the social changes it, slowly, effects. This is in part a byproduct of the tech blogosphere getting drunk on its own Kool-Aid.

Many people I know, love and respect are heralding every new site as like it's Jes.usR.com. No one's casting a cynical eye anymore. No one's looking at valuations and reality - or at least very few people are.

The endless dot-com parties are back. So are the countless trade shows/conferences that regurgitate the same "new paradigms" the last 10 events did - with no end in sight. And yes, the ridiculous BS press releases are flying into my Gmail box. This is why I don't speak at or attend very many Web 2.0 conferences anymore. I don't have the heart for it. I would be stirring the big pot of Kool-Aid.

Let's face it, we're skunk drunk and it's because of money. It's almost like we all need to enter Betty Ford Clinic 2.0 together. This time, it's not stock market money but private equity, M&A, VCs and to some degree the reckless abandonment of logic by some advertisers who are perpetuating what is sure to end badly when the economy turns. Hubris is back my friends.

The bubble really began in earnest on October 9, 2006 when Google bought YouTube. That's when every person with an entrepreneurial itch woke up and smelled the hype and money. Prior to then, startups were more focused on the entrance, not the exit. But the Google YouTube deal and many others that followed (including big time investments) really opened up the floodgates to money and it changed the attitude of the web.

Meanwhile, the sleeping giant many of us mocked - the big media - got with the program. CNET's CEO talked about this today. The TechCrunches and Gizmodos of the world aren't a threat to his business. They're a boon because they send his sites traffic. Beth Comstock from NBC echoed a similar theme.

I am sorry to be a party pooper on conventional wisdom, really. But I miss the days of 2004 when the class that includes Flickr, del.icio.us and others started. They really were about changing the web, not making a quick buck (they did so only because they added value). There are companies still out there like them. Twitter is one I believe takes this approach. Automattic (the company behind Wordpress) appears to be another. Dave Winer also shares this spirt. He creates services like NYTimes River because it's fun and he thinks it will add value to our lives (and he is right).

However, most of the rest of today's net startups are only after the almighty dollar and while that's capitalism, it saddens me because it has done little but breed hubris.

Getting Service the Old School Way

Nick Starr, frustrated by the fact that the new IMAP feature remains disabled his Gmail account, decided to take matters into his own hands by posting a letter on the door of Google HQ. No space is sacred in this customer-centric world. (By the way, Nick wrote the letter in Google Docs.)

US Journalism Job Growth Sputtering, Feds Say

According to the latest statistics from the Labor Department, demand for journalists in the US is set to grow only five percent between now and 2014. Forbes reports...

"Another endangered species: journalists. Despite the proliferation of media outlets, newspapers, where the bulk of U.S. reporters work, will cut costs and jobs as the Internet replaces print. While current events will always need to be covered (we hope), the number of reporting positions is expected to grow by just 5 percent in the coming decade, the Labor Department says. Most jobs will be in small (read: low-paying) markets."

Meanwhile, demand for PR specialists is expected to climb 18-26% during the same period. So what are all those bodies going to be doing exactly? I don't believe that the industry is progressing fast enough when it comes to embracing the digital age so there feels like there is some big disconnect here. (via)

Friday, October 26, 2007

links for 2007-10-26

Wednesday, October 24, 2007

Web Apps Strike Corporate IT Like Cloud-to-Ground Lightning

Quietly, in cubicles around the world, a perfect technology storm is brewing. This tempest may prove more disruptive to business than any other tech surge we've seen to date, including instant messaging, web-based email, corporate blogging or social networking. There's a great battle brewing over technology choice vs. control.

The web has arguably established itself as the decade's dominant development platform. This shift is rapidly spawning the roll-out of innovative applications that equip information workers with newfound capabilities for managing work, either solo or in collaboration with others.

Rich online apps such as Highrise, Google Docs, Zoho, Spinvox, Yahoo Mail, Picnik and countless others that operate "in the cloud" are quietly making bootstrappers more productive, all without the help of corporate IT. Further, this revolution is dawning just as millions of free spirited Gen Yers enter the workforce. Unlike their Baby Boomer parents, this generation is even more tech savvy and will do anything to control the flow of work as it tries to seep into every crevasse of their personal lives. They simply won't allow that.

However, all of this directly conflicts directly with today's corporate IT agenda. Understandably for a myriad of legal, ethical, reliability and security reasons, they work hard to to ensure that business information stays on internal servers. They license a host of enterprise applications - many of them are web-based.

Unfortunately for corporate IT, however, they will find that they can't move as fast as Web 2.0 does. Talent isn't the issue here. IT inertia, long-term vendor agreements, the law and Sarbanes Oxley are all weights that can shackle corporations. All the while, a more free spirited workforce is using what's freely available to them because it fills a void. With this, information is flowing into data caverns that only the employee - and really no one else - controls.

The silent adoption web applications in the enterprise will strike directly at the heart of corporations like cloud to ground lightning. IT managers who can surf into the storm waves will gain considerable competitive advantage. The key is to embrace change - or, as one Googler suggest, to give employees choice over control. (This arguably gives small and mid-sized companies a considerable advantage.) Those that crack down on choice, however, may find themselves struggling to keep up with the competition as their workforce becomes more productive, efficient and happy.

Monday, October 22, 2007

Schmidt Hints Adsense Maybe Coming to Facebook Apps

Google Adsense may be coming to Facebook applications. Google CEO Eric Schmidt told AdAge ...

"How will those developers get paid for those services? We would like to have our ads in those applications."

This makes a ton of sense. However, as Facebook starts to look like Times Square with ads on top of ads - some they control, others they don't -  it will turn the community off. Already I can't stand it when I see ads in my news feed. That's the problem with open platforms. Also, how long before these applications start to appear outside Facebook on places like iGoogle. Me thinks soon.

Read

Cabinet Bloggers

Two senior members of the President's Cabinets have started blogs, AP reports...

(Michael) Chertoff and (Mike) Leavitt discuss issues facing their departments and occasionally sound off on criticism of their policies.

Read

Saturday, October 20, 2007

Saturday Morning Streams

Jason Calacanis and Fred Wilson have started a new form of blogging that's more Twitter style. It consists of brief commentaries on a myriad of subjects. Here's my shot at it as I sit in a Starbucks with my iPhone waiting for my car to be serviced. Let me know if you like this approach. I will add links later on. 

My move to Wordpress is not progressing as quickly as I would like. The WP team is making a Herculean effort to maintain my permalinks. They are terrific to work with and I really appreciate their efforts. If I can't take my permalinks with me I will stick with Typepad.

The iPhone version of Typepad meanwhile is quite good. I hope WP gets a similar interface.

The age of Web 2.0 innocence is well behind us. Some say it ended when Flickr sold. I see the sale of YouTube as the marker. I miss the innocent days when money wasn't the big motivation. The mania feels very much like 1999 without inflated IPOs.

As more brands begin launching their own content sites they may find themselves competing with the media. The media companies should get in front of this by enabling brands to create content. Yahoo's brand universes follow this model. BTW we haven't heard much about these sites. I like the concept. 

The whole Joe Torre episode depresses me. The man gave the last 12 years to the Yanks and was very successful. He deserves better.

The iPhone sorely needs cut and paste. Cmon 1.1.2.

Very few community sites have had staying power over the years. Two that come to mind are iVillage and eBay. Many others have wilted.

There was just as much news from companies that did not participate in the Web 2.0 conference than those that did.

I hope Twitter doesn't sell anytime soon. Can they hold out? My gut says no.

Google Docs, Zoho and Microsoft's eventual entry into the web based office wars could really replace most wikis. The versioning is quite good in these apps.

I am using Gmail for a big research project and it worked quite nicely as a database. I think a lot of people are overlooking how useful and versatile web mail is.

Most of the top podcasts on iTunes are dominated by the big media companies. They really did a great job embracing the technology.

Behavioral targeting is the big rage right now in online marketing. The challenge is that consumers are becoming more aware of the privacy implications.

Maybe I should try this blogging format more often! It fits my mobile lifestyle.

Thursday, October 18, 2007

links for 2007-10-18

Tuesday, October 16, 2007

links for 2007-10-16

Monday, October 15, 2007

Five Reasons Why a Pay Per Click Recession Looms

For the last several years, search engine marketing has been on a tear. While the big advertisers sat on the sidelines in the beginning, they have lately been ramping up their spend on pay-per-click advertising, primarily on search engines but also affiliate sites like those that run Google Adsense.

However, I am calling a top to this market now. Here are five reasons why a pay-per-click advertising recession looms. (If you depend on Adsense for the bulk of your revenue, this applies to you as well.)

1) Clutter
Have you shopped for a car lately? I have. And I did a lot of Google searches in the process but largely ignored the ads. The reason - clutter. Take a look at this search. Ads are stacked on top of each other. There are 10 ads in my browser. Advertising clutter is a known deterrent to advertising effectiveness. TV advertising suffers from clutter and there's no reason why search engines are immune. The New York Times touched on this today.

2) Declining Relevance of Traffic/Transition to Cost Per Action
OK, you have heard this from me twice in a week now so I won't spend a lot of time here. Traffic is becoming irrelevant unless it results in action. There will be some pain as search engine marketing moves to a cost per action model, rather than one based on sometimes irrelevant clicks. This will contribute to a search engine marketing slowdown.

3) Rising Costs
According to a five-year Forrester interactive marketing forecast published last week, costs per keyword rose an average 33% each month in Q1 2007 compared with the same period in 2006. As a result, some marketers are buying lots more Long Tail terms. Further, Forrester says that "many still spend with abandon." The reason is that search outperforms other advertising - but for how long? And again, how do you define perform (see point #2)? The madness will end as soon as the economy tightens.

4) Marketers Spread the Ball Around
Move over search, you're not the only game in town. Marketers are increasingly investing in behavioral targeting, webisodes as well as more social channels like blogs and soc nets studies say. These formats are becoming more targeted and effective too.

5) Search Ads Are Viewed as Untrustworthy
If there's anything that Enron, Bill Bellichick, Marion Jones, Worldcom and Barry Bonds taught us, it's this - trust is king. Google CEO Eric Schmidt knows this - note his comments this week to AdAge. However, according to a study published by Nielsen last week, search engine advertising suffers from low trust.

Now, before all the search consultants flame this post with comments, I believe strongly in the marketing firepower of search engines. It's a terrific venue and one that I regularly advise our clients to invest in.

However, it's impossible to deny that pain is coming. As SEM matures it will move to a new model just as spending on digital marketing overall rises and diversifies. This means the market will recede before it expands. In the long run, that's good for everyone. Just be prepared for what's coming.

links for 2007-10-15

Saturday, October 13, 2007

links for 2007-10-13

Friday, October 12, 2007

Web 2.0 Economics 101

This is going to be a short post about economics, a subject I never studied in school. Even though I am no Bernake, I do know one thing: capitalist economies operate on supply and demand. As supply goes up, it indicates that demand is heading down. As demand goes up, then it points to supplies going down. Any 7th grader knows that. It's the law. (Tell me if this severely math-challenged monkey has this all wrong.)

Yet people are not thinking about economics when it comes to the web - particularly Web 2.0. Here are two key trends to consider.

A) As the supply of content rises, attention decreases and demand lowers -  e.g. traffic thins
As I wrote earlier this week, the entire concept of measuring sites on traffic is becoming totally moot. Why? Yup, good ol' uncle supply and demand. It's much harder to attract people to web sites when there's much more content and it becomes a commodity. The people who got in early and achieved scale or have a truly differentiated approach will be the winners (thanks in part to Google Juice). The Attention Crash is another force at bay here too. It's directly related.

B) As the supply of ad-supported media rises, inventories swell - e.g. this equals less ad revenues
There's a good story on Reuters today about how there will not be enough ad dollars to go around to all of the sites that hope to make money from it. Why? Yup, uncle supply and demand. As media proliferates, the ad budgets gets flattened across all of these sites. There is one key exception, however. Advertisers still - for now - like to buy lots of eyeballs. So once again uncle supply and demand spoils all the fun and that's why consolidation rules.

The economics of the web are truly deflating. These two trends are directly related. When people start ignoring basic economics that spells trouble (which rhymes with bubble). If you're a start up or an advertiser, pay attention to these two trends. They will have a big impact. It's going to get very hard for advertiser-supported startups to get any scale when it comes to revenue.

Bookmarklets for the Web 2.0 Jedi Master

Bookmarklets, in case you're not familiar with them, are bookmarks that perform a specific action. I can't live without these because they speed up my day, especially when you use them with browser keywords. Here's a list of some new ones that I have started to use in the last few months. Just drag these to your bookmarks/favorites bar and you're good to go. For more fun with bookmarklets, be sure to also check out Blummy.

Pocket Tweets Pop - pops up the Pocket Tweets interface for interacting with Twitter. (More pop-ups here)

Twit This - send a web page directly into Twitter (requires you first enter your info on the TwitThis site)

Map This - pops up a window, enter an address and you will take you to the map

Gmail-to-Gcal - takes any selected text in Gmail and converts it into an event

Mobilize Me - great for mobile phones, takes any web page you're viewing and strips away the formatting by running it through the Google mobile transcoder

Share on Facebook - takes a web page and sticks it into Facebook as a shared item

Pasword Saver - for sites that won't remember your login info, click this link then enter your username/password and your browser will never forget it

Take Screenshot - automatically create a screen grab of any public web page you're visiting

Search and Highlight - scans a page for any term you enter then highlights the results

New Doc - creates a new word processing Google Document

Movie Times - enter your zip code and get a list of all the movies playing in your hood

Amazon This - pops up a little window, enter a term and it will run your search through on Amazon

Convert Me - takes any YouTube video and converts it into another downloadable format using Zamzar

Edit in Picnik - pushes a web page's images into Picnik where you can edit and save it

Thursday, October 11, 2007

links for 2007-10-11

Wednesday, October 10, 2007

On the Devaluation of Traffic

There's a fairly intense conversation today about how much traffic certain web sites generate over others. To me, a lot of it misses the point. As I have said in the past, Web site traffic overall is devaluing. The Long Tail is the culprit.

My Google Analytics account is my laboratory. And over the past year I have noticed a trend. Most of my traffic is from Google and they are largely passerbys. The same holds true for anyone who visits my site from Techmeme, Digg or even big blogs. A prominent mention in The Wall Street Journal a couple of weeks ago garnered me a whopping 40 visitors.

Brands are waking up to this as well. An Avenue A study found, according to AdAge, that "more consumers are coming to brand sites through the side door of search means search engines are starting to circumvent brands when it comes to online shopping."

So debating which sites drive the most traffic is really meaningless. A more fruitful discussion should be around what metric succeeds the page view. A lot of people are measuring by traffic, but those days are coming to an end - slowly.

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