social advertising – Silicon Valley Technology Blog

Facebook Closed Event – Innovation? – Are They Stuck In The Middle?

Facebook is having an open house today – oh no one knew about it so it really was closed.

What strikes me about Facebook is that they seem to be ‘stuck in the middle’ as it goes in business school. Are they a software developer of a great user experience web service or are they an innovative advertising solution? With all the mounting pressure to monetize they may be falling in the trap to force a monetization strategy that will fail. What comes to mind is the Portal crazy in the late 90s.

Back in late 90s Google created a kick ass search app then just picked up (copied) the search paradigm from Goto.com. Why? Because they developed a great app called search. Search drove Google’s success in advertising because their core competency was in algorithms and data center efficiencies that translated directly to what the ‘scaling’ ad market wanted. Google was smart. They knew what they wanted to do.

Here we see Facebook (I wasn’t invited so I can’t comment on what they presented) rolling out a new design for the profile page. It feels like a little AOLish to me. I just don’t get the feeling that Facebook gets UI, discovery, and search. Are they force fitting the UI, navigation, and user experience to get paid on the monetization side? What I will be looking for here is how well they design the ‘utility’ for users. If they try to hard to monetize they will fail. Facebook has to innovate on the software side or they will lose users fast. Facebook has to solve their ‘clutter problem’. Additionally, I hope that they are more open for integration for developers.

If Facebook screws this up they won’t be the next Google, but instead be a victim of what we saw with Portals in the late 90s. We all know how that ended up.

Will Facebook be the Portal model of Social Networks? What is their core strength?

Facebook seems to be stuck in the middle.

Social Media is the New Standard for Emerging Online Advertising

This blog is about the cutting edge of technology and social media. It is often overlooked by the social media experts who are just now approaching the cutting edge. I’ve seen that the best social media consultants just don’t understand what social media is? To fully understand social media you have to look at the trends within Internet Infrastructure side of web 2.0 – collaborative filtering, software search tools, viral sharing, measurement. Most social media experts come from a PR background – not that there is anything wrong with that. I have yet to meet a PR person who can really nail the value of social media.

Forget all about that infrastructure stuff for now – just look at the numbers. Alternative media is growing fast. source:adage

Alternative media or emerging media or social media is fast becoming the standard in online advertising. Why? Because Web2.0 is about connected relationships with channels of abundant content that is fully measurable.

What the web page was to web1.0 social media is to web2.0.

The numbers are behind it. Below are the highlights from AdAge.

Spending on alternative media hit $73.43 billion in 2007, a 22% increase over the previous year, and will continue to grow, according to PQ Media’s Alternative Media Forecast: 2008-2012, released today. The research firm tracked 18 digital and nontraditional segments, with a combined 16.1% of total advertising and marketing dollars in 2007, up from 7.9% in 2002, yielding a compound annual growth rate of 21.7%.

The forecast predicts a 20.2% increase over the next year, to a total of $88.24 billion, and a compounded annual growth rate of 17% for 2007-2012, reaching $160.82 billion. By then, alternative media will represent 26.6% of all advertising and marketing dollars.

The upswing is as much a result of the effectiveness of new media in a fragmented market as it is from a lack of confidence in traditional media, said PQ Media President Patrick Quinn. “Traditional ad budgets have been going down, but spending has remained stable. This shows where the money is going,” Mr. Quinn said.
Alternative advertising, including online, mobile, entertainment and digital out-of-home advertising, saw spending rise at a compounded annual growth rate 25.8% to $39.22 billion in 2007, accounting for 17.7% of all ad spending that year (compared with 7% of all ad spending in 2002), and grew at a compounded annual growth rate of 26.2% from 2002 to 2007.

Online and mobile advertising spending –including search and lead generation, online classifieds and displays, e-media, online video and rich media, internet yellow pages, consumer-generated ads, and mobile advertising — reached $29.94 billion in 2007 (up 29.1% compared with 2006), a compounded annual growth rate of 31.4% over the 2002-2007 period. The category received heavy infusions from brand marketers trying to reach key demographics that have migrated online and to wireless thanks to wider broadband adoption.

Entertainment and digital out-of-home advertising — including local pay TV, digital out-of-home media, video on demand, interactive TV, and digital video recorder, video game, home video and satellite radio advertising — increased at a compounded annual growth rate of 15% from 2002-2007, and rose 16.2% over the previous year to $9.28 billion in 2007. The growth was driven by rising adoption of entertainment technologies, including ad insertion technologies and ad platforms to reach young audiences.

Alternative marketing — including branded entertainment and interactive marketing — hit $34.21 billion in 2007, a 17.9% rise over the previous year, and grew at a compounded annual growth rate of 17.5% from 2002-2007. This brings its share of total marketing expenditures up to 14.5% in 2007, compared with 8.7% of total spending in 2002.

Branded-entertainment marketing — including event sponsorship and marketing, paid product placement, advergaming and webisodes — also saw and increase of 14.7% to $22.30 billion last year, and climbed at a slower compounded annual growth rate of 13.4% from 2002-2007.

The deployment of new-media strategies focusing on better interactivity, entertainment and engagement than traditional media was the driving factor.

Thanks to strong gains in segments that reach affluent and influential consumers, interactive marketing — including e-direct marketing, word-of-mouth marketing, and e-custom publishing — saw big increases in 2007 of 24.4%, reaching $11.9 billion, compared with the previous year, and a compounded annual growth rate of 28.6% over the 2002-07 period.

Say hello to social media and the upcoming engagement metric.

Social Everything: Interaction and Integration – The Future of Social Networks and Media

For the past three years I’ve been working with over 40 corporate advertisers in developing, testing, deploying, and measuring social media. I’ve discovered many things and learning more everyday. As I am documenting my findings I have to highlight Charline Li’s post from yesterday.

Charlene Li has a great post on her views of Social Graphs and business models. It’s about “Social Everything”.

The big trend in Charlene’s post is that social individuals, groups, networks, graphs are great, but they still don’t connect to real world value. This linchpin to real world benefits is where I have the vision for social everything – it’s about collaboration. Virtual activity is highly productive, but seems to dead end when translating and scaling to real world offline benefits.

If you have been one of the 10k people following my blog you know where I stand and have a sense of what I’m working on for my next venture- Social Advertising, Social Media, Social Graph, Social Everything. Charlene’s post reasonated with alot of my findings and the direction that I’m heading. Here are some nice gems in Charlene’s post:

“.. the idea of social graphs being “owned” by different social networks makes no sense. Yet, all of today’s social networks build their business model and competitive advantage on having the largest, most complete social graph. The result: I have a close colleague who enjoys exploring all of the new social networks and “friends” me on all of them, figuring I’m a pretty good person to have in his new network. In a world with a single social graph, he would be able to import his existing personal, social graph into any new service, and immediately begin enjoying the new service without having to wait for his friends to catch up. And I would be spared the insanity of having to accept his umpteenth “friend” invitation!….In a world of a single social graph, social networks will have to compete on the basis of creating the best experience for its members – not because it controls a unique social graph.”….

…”The brilliance of Facebook Platform is that it greatly expanded what people could do on social networks. The problem is that what people do is still pretty limited. Take a look at the top applications on Facebook – they can be roughly grouped into 1) managing/comparing/interacting with friends in a general context; 2) self-expression (FunWall, Bumper Sticker); 3) games; and 4) media preferences (iLike, Flikster). These are all fun and interesting, but they only begin to scratch the surface of what I do every day.”….

…”A business model where social influence defines marketing value. Today’s advertising models don’t work on social networking sites – that’s because simply targeting better on profile or social graph details is still the same old media model of CPM and CPC pricing. What’s missing is marketing value based on how valuable I am in the context of my influence. For example, Steve Rubel is a highly influential person because he is an authority on social media, the people in his social graph tend to interested in his views, and they in turn have a great deal of authority as well. (Several people came up to me after the speech and said that this is similar to a “PageRank of people”, a very easy way to crystallize the idea.)

This means that each person will have their own “personal CPM”, an idea I heard JWT‘s Marian Salzman discuss at a private event in February (here are more details on the JWT’s Top Trends for 2008). The idea is that marketers want to reach highly influential people, and hopefully curry their endorsements. This has traditionally been the province of public relations, where they reach out to key influencers. But in the world of social networks, this is influence writ large and wide – every person has their own network of influence, and hence, their own personal CPM or value that they contribute to a social network.

..”There are several start-ups as well as established agencies that are already looking at marketing, brokering, measuring, etc. social influence, so you can expect to hear more about this topic soon. But don’t expect advertising spending to quickly embrace social influence – after all, the vast majority of ad budgets are spent by media buyers who still cleave to the tried and true reach and frequency, CPM models.”

Why is this relevant? Because as pointed out yesterday by industry visionaries, the iPhone SDK announcement represents the biggest trend since the PC revolution – socially connected individuals, groups, and media are at the heart of this new revolution.

Social Everything includes devices (iphone) to connect to networks (open social + social graphs) to consume media and information (social media). Users love it and so advertisers will soon have solutions – hopefully provided by us entrepreneurs.

Twitter is the Ultimate SmartMob – The Money is in the Collaboration

It’s no surprise that Howard Rheingold loves and is addicted to Twitter. I have been at the center of social networking and social media from day one and have seen tools come and go. Twitter is the real deal.

Many people don’t get it and will never get it. Where’s the business model – they cry. Many see Twitter as a geek utility – a low cost to run utility. It is clearly a solid communication utility.

Where’s the Beef people ask? Two Areas:

1) Communication and Coordination: At PodTech we did many social media experiments and one of them was implementing Twitter mobs to drive brand awareness – we used as a communication tool to create an engaged “smart mob”. Did it work. It sure did.

2) Smart Collaboration: Another area that Twitter rules is what I call the “smart collaborative mob”. This is the Web 2.0 “holy grail”.

Let me give some examples: I have been personally using it this way for sometime in vetting out my next venture. Also, more publically take a look at Seesmic and Loic Lemur. He is actively using Twitter as a collaboration tool to build his business – I love that about Seesmic. Just this weekend Loic Lemur was going through 900 feature ideas from the community – talk about smart mobbing for collaboration. It’s open source entrepreneurship – high quality, efficient and low cost.

Twitter is one major component for Social Media but it can’t be used unless it has a community.

Where’s the big business model in Twitter?

Answer: “Smart Collaboration”

Who owns it:? Everyone

Who makes money:? Everyone and Twitter

Online Advertising Slowing? Just More Money – Expect New Products in Social Networks

New data is out confirming that online ads are growing. Many people are looking at a potential online advertising recession. NOT. In fact more money is going into online ads then ever before. It’s recession proof. Last week Forrester came out with research confirming it. Now IDC has data confirming this online ad growth trend.

The real story is that Google is losing share *and* the ad formats are changing. In discussing the company’s latest quarterly report about Internet advertising, IDC analyst Karsten Weide said businesses affected by the slowing U.S. economy will slash other advertising budgets before paring their online campaigns. “We think there will be some effect on ad spending overall, but we think online ad spending will almost be unaffected even if there’s a depression,” he said.

For the first time ever, IDC’s research found Google actually lost a bit of market share. “Their domestic sales growth has slowed down,” the analyst said. CPM based ads are dying giving way to Microcontent and social network ads.Look for new standards to come from online advertising groups like the Association of Downloadable Media (ADM).

Big Picture: Ads dollars are coming from Broadcast and Print sectors. The money has to flow somewhere and it will be online. Expect video advertising to dominate the big dollars.

No recession here only expansion.

Finding The Next Google – We’re Getting Close

Everyone has been looking for the next Google — well at least here in Silicon Valley. When I saw this article the first word that came to my mind was “validation”. I’ve often been called crazy for saying that the next Google will come from media not technology. It’s becoming clearer that this is happening. Advertising dollars move based upon who can understand user behavior. Google did it with web pages in Web 1.0, but now in Web 2.0 it might be a media company like NBC Universal.

Media Content networks (TV networks, corporate networks, studio networks, event networks, etc) will be a viable business model. It is known that venture capitalists here in Silicon Valley reject the notion that content is a viable business model. However, this NY Times article by Matt Richtel validates the idea of Microcontent as a business model. My original intention with PodTech was to create a content platform business. I did not have the opportunity to finish what I started (My VCs removed me from employment at PodTech last summer – PodTech is now focused on breakeven cash flow positive and is very close to achieving that goal).

At Adtech in NY it was clear to NBC’s Beth Comstock that the big networks, studios, and advertisers were formulating their plans around emerging Internet content business models. NBC Universal is clearly focusing on this now. Hey Beth, NBC could be the Google of the media business if you move fast.

It is my opinion that Microcontent is the best online advertising business model – why? It’s the contextual keyword for the media business. What Adwords and Adsense is for Google – Microcontent is to media networks. Microcontent targets the audience, and provides the best opportunity to deliver the smartest marketing information from both behavioral and contextual advertising. If you add in the ‘flat’ global Internet then you have the ability to sell global, regional and local ads. This is huge. It is the future of online advertising, because now video ads once only made for broadcast TV can viably move to the web at scale.

How fast will this happen? It is hard to tell, but I’m watching HD as the key variable for this timetable. Specifically, the timetable is highly correlatated to the speed at which Intel, AMD, Adobe, and Microsoft move to achieve the computing and web display technologies such as flash players, widgets, xbox,…etc. (The other variable that I’m watching is too crazy to talk about in public at this time but it has to do with video).

This is opportunistic news for web 2.0 content folks and emerging indie networks. Tip of the hat to Matt Richel of the NY Times for getting IMHO one of the biggest “little” stories coming of CES.

Overiew of Current Web Video Ads Solutions – Inside the Numbers

What is the current web video marketplace today for advertisers? What are the options? How much? This compilation by WebVideoReport documents the going asking rates for different kinds of ads connected to Web video.

Web video is growing rapidly and the solutions are changing. I’ve been very public about new solutions around social media and I think that they are coming fast. That being said the one thing that is important is standards. In today’s marketplace the standards are basic but functional – pre-roll, companion banners, and network buys. Why? Comprehensive targeting and behavioral solutions don’t exist yet. Add another new trend like collaborative ad – where consumer contribute to the ads- and you have really crazy change. Well for now it’s preroll and companion banners.

Below is a sample of some of the populare solutions. There are many left out like PodTech which does custom ad solutions for viral social media, Facebook the leading social networking site, LinkedIn – the leading B2B contact mgt and business social portal, and handful of ad networks. Outside of PodTech, Facebook, and LinkedIn the rest of the market is similar to what is outlined below. PodTech, Facebook, and LinkedIn offer an entirely different value proposition than CPM based solutions. For more on why I think PodTech, Facebook, and LinkedIn are valuable see my post on Microcontent for Microtargeted environments.

PUBLISHERS
Wall Street Journal
The Wall Street Journal, the flagship newspaper for News Corp.’s Dow Jones company, is building out its video advertising content as an adjunct to the subscription revenue and static Web ads it sells on WSJ.com.

Ad rates: The CPM for video on WSJ.com is $90. For more information, see the video sales sheet.

Web video ads offered:

A 15-second pre-roll

A coordinating 300×250 ad unit that is visible above the content space during the pre-roll video

An expandable reminder unit that remains to the right of the video “You Are Watching” headline. When a user clicks “Expand”, the 300×250 unit displayed during the initial video pre-roll ad will reappear, enabling further user interaction.Integration: The Wall Street Journal sells video advertising packages that run across the Wall Street Journal Digital Network, which includes WSJ.com, Barrons.com, MarketWatch.com and AllThingsD.com.

Past clients: Recent video advertisers include Skyy Vodka, Cisco, IBM, HP, Jaguar, Knight Capital Group and Mercer Consulting.

CondeNet
The Conde Nast magazine empire’s online incarnation includes properties such as Epicurious.com, Concierge.com, Style.com, Men.Style.com, and Flip.com.

Web video ads offered:

Pre-roll ads

Companion Ads (300×250)Integration: CondéNet has established relationships with major portals including MSNBC, Yahoo!, YouTube and other video sites to distribute its content and accompanying ads.

Past clients: American Express, Visa, Bertolli, Hilton, Nestle, Haagen Dazs, Charles Schwab

Ad Prices: Flat Fee Sponsorships or CPM. CondeNet declined to share details on pricing.

Advertising Age
This Crain publication, a sister to WebVideoReport.com and TelevisionWeek, is the leading news source covering the advertising industry.

Ad rates: Flat rate for pre-roll only, custom pricing for integrated programs. For instance, a video ad in the Garfield’s Ad Review feature costs $15,200 for four weeks and $124,800 for 48 weeks.

Web video ads offered:

Pre-roll

Video in bannerIntegration: AdAge also sells Web-video ads packaged with standard online, print, mobile, RSS feeds, and events

Past clients: A&E, Video Egg, Meredith

WEB VIDEO SITES
YouTube
YouTube, the biggest video sharing site, hosts user-generated and professionally produced content. The site, a Google subsidiary, is experimenting with ways to wring revenue from its content, offering a variety of Web-video ad formats.

Ad rates: According to parent company Google’s Web site, advertising on YouTube requires a $50,000 spend within 90 days. On brand channels, advertisers must spend $250,000 across Google and YouTube, including $100,000 or more on YouTube only. A YouTube home page roadblock is a $100,000 per day flat fee plus a $100,000 incremental spend on Google and YouTube within 90 days. The company said on its site: “Currently you can apply to advertise directly with YouTube if you’re willing to spend a minimum of $50K and you’re interested in running a large branded campaign. This advertising option requires an authorized contract or purchase order with YouTube, and ads are served on a reservation-purchase basis, rather than the AdWords auction model.” For more information, click here for their guide. Companies wanting to advertise on YouTube for less can sign up for Google AdWords for as little as a $1 CPM.

Web video ads offered:

Home page video ads

Video ads

Traditional display ads

No pre-roll adsIntegration: Through Google’s content distribution via AdSense, YouTube video units are syndicated to Web sites across the Google Content Network. There have also been integrations, for example, between Google Gadget ads and contests on YouTube.

Past clients: Adobe, Verizon Wireless, Samsung, BMW, MGM

MetaCafe
Metacafe is one of the first generation of video-sharing sites. The site offers short-form, original video content that gives users entertainment breaks. The sites users identify the most popular videos and the site’s producers’ rewards program pays video creators for their best work, as determined by the viewers.

Ad rates: Rates range from $10 CPM to $35 CPM, depending on placement. The rate card for pre-roll, and home-page sponsored video units is $35. The rate card for overlay ads is $20, and a static companion ad runs from $10 to $20.

Web video ads offered:

Home page player

Search results page player

Pre-roll

Overlay

Companion ads next to pre-rolls and overlays (300×250 to right of player and 468×60 below player)Integration: Metacafe said it offers a range of ad programs, such as basic in-stream options of flash overlays, and pre-roll and post-roll ads. The site also offers accompanying companion units as well as customized home-page programs, mash-up tools, custom content integration, as well as various types of product placement.

Past clients: Adidas, American Apparel, Axe, American Online, Activision, Barilla, Carlsberg, CanalSat, Canon, Coca Cola, Colgate Palmolive, Dove, Ford, Gillette, Goodyear, Heineken, Heinz, Kodak, Lancome, Lego, LG, Match.com, Merck, Mentos, Microsoft, Miller, MTV, National Geographic, Nike, Nokia, Orange, Orbit, Palmolive, Peugeot, Pepsi, PS2, Playstation 3, Real Networks, Renault, Rockstar, Samsung, Sega, Skype, Snickers, Sony Ericsson, TCM, 20th Century Fox, Ubisoft, Universal Pictures, Virgin, Visa, Vodaphone, Xerox.

No Good TV
No Good TV (www.ngtv.com). No Good TV is part of the profusion of ventures creating short content and syndicating it across the Web. The site recently caught the attention of the traditional TV community, and syndicated evening show “Extra” will be integrating No Good TV segments into its Monday-Friday program.

Ad rates: CPMs range from $15 to $40 and vary based on length of term, extent of exclusivity and customization. All sponsorship agreements are customized for each individual client.

Web video ads offered:

Banner ads

Overlays

Skyscrapers

Alpha video

Transitional pages and full channel sponsorship

Pre-roll and post-roll (15 seconds or less)

No Good TV can also create “parody” pre-roll, post roll and full promotional spots using real products/brands in a humorous scripted vignette.

Sponsorship agreements can range from traditional banner ads to integrated original live-action or animated short-form series programming.Integration: No Good TV said it offers customized and strategic product and brand integration into the program content. Advertisers integrated into No Good TV’s show also gain additional exposure on YouTube, which carries a No Good TV channel, which is currently the fourth most-viewed YouTube partner of all time. Additional brand exposure includes event presence and party sponsorships.

Past clients: Microsoft’s Halo 3, Universal Studios, Sony and Avid

Break.com
Break is a video-sharing site that aims to engage young male viewers that advertisers are interested in reaching. The site shows over 12,000,000 videos and 5,000,000 pictures daily.

Ad rates: Traditional placements range from $10 CPM to $35 CPM. Rates for video placements and custom sponsorships vary by project.

Web Video Ads:

Flash overlays

Pre-roll

In video bugs

Accompanying companion unitsIntegration: Break lets clients advertise within original content and user-generated content. Break also can integrate brands into its rich media ads. In addition, Break will develop customized sponsorships such as home page programs, content integration, and product placement.

Past clients: Anheuser Busch, Axe, Burger King, Diageo, EA, Honda, Jim Beam, Keystone, MTV Networks, NBC Universal, Nike, Paramount Pictures, Universal Pictures, Sony Pictures, Verizon, Viacom, Vivendi Games, Warner Brothers Home Video
SOCIAL NETWORKING SITES
MySpace
MySpace, a News Corp. business, is the biggest social networking site. The Web site users set up pages into which they can plant music and video, and MySpace offers entertainment channels with exclusive, original music programs, as well as video shows.

Ad rates: A pre-roll video in the music section of MySpace.com (15-second video with a 300×250 pixel ad unit) carries a $25 CPM.

Web video ads offered:

Pre-roll

Mid-roll

5-second pre-roll bumpers

Banners and display ads also live on pages with videoIntegration: MySpace ads are sold solely on MySpace.

Past clients: Ford, Toyota, Hairspray the Movie

New Emerging Solutions: PodTech, Facebook, LinkedIn

There are many left out like PodTech which does custom ad solutions for viral social media, Facebook the leading social networking site, LinkedIn – the leading B2B contact mgt and business social portal, and handful of ad networks. Outside of PodTech, Facebook, and LinkedIn the rest of the market is similar to what is outlined below. PodTech, Facebook, and LinkedIn offer an entirely different value proposition than CPM based solutions. For more on why I think PodTech, Facebook, and LinkedIn are valuable see my post on Microcontent for Microtargeted environments.

Social Networking Online Advertising – It’s Video but not Pre-rolls

This is a repost from an email that I received from Sam Levin. Social Networking online advertising opportunity is not about Facebook or some social network. To me it’s about video advertising. Broadcast TV ads are moving to the web. It will be video that cracks the high yield advertising value proposition, and it will be the biggest money maker.

——- Social Networking is Hot

This year, 37% of the US adult Internet population used online social networking at least once a month. That figure will rise to 49% in 2011.

”The continued growth of social networking seems assured,” says Debra Aho Williamson, eMarketer Senior Analyst and author of the new report, Social Network Marketing: Ad Spending and Usage, “unless teens stop social networking as they become adults.”

Don’t bet on that.

Currently, 70% of all US teens visit social network sites on a monthly basis.

“By 2011, one-half of all online adults and 84% of online teens in the US will use social networking each month,” says Ms. Williamson. “There is little to suggest that this activity will go away.”

When it comes to translating eyeballs into advertising revenues, eMarketer projects that worldwide online social network ad spending will grow from $1.2 billion in 2007 to $2.2 billion in 2008, 82%.

Worldwide spending will top $4 billion in 2011.

In the US, spending is projected to rise to $1.6 million in 2008, from $920 million in 2007.

”MySpace and Facebook together receive more than 70% of all US social network ad spending,” says Ms. Williamson. “And they are hard at work to convince marketers to allot more of their budgets to social network advertising.”

The advertising offerings of the two social network giants are becoming more diversified, and now include not only profile pages but search, display ads, widgets and more.

“But if social network marketing delivers on its promise of peer recommendations the flow of advertising dollars will turn into a flood,” says Ms. Williamson.