Graeme Thickins on Tech

Reflections & analysis about innovation, technology, startups, investing, healthcare, and more .... with a focus on Minnesota, Land of 10,000 Lakes. Blogging continuously since 2005.

Tag: online advertising (Page 1 of 2)

Widget Summit, Day 1: Advertising & Widgets

October 16, 2007 / / 2 Comments

[Okay, it’s actually Day 2 now, and I’m sitting in the main hall getting ready for today’s sessions to get rolling.  But I still have posts to do about Day 1! So, please bear with me (bad wi-fi in my hotel, you know….in SF??), while I keep playing catch up…]

"Monetization" is what this panel is about, said Saar Gur, a partner with Charles River Ventures. He introduced Lance Tokuda, the CEO of RockYou, to kick things off — and Lance was happy to brag up his business to no end for us. "We offer 40 widgets…one of every four online users has one…and we’re number-one in engagement," he said. A very key point that Tokuda made is that networks with an API give your widgets "seven times the distribution."  Widgetadvpanel
That’s Facebook now, of course, "but more are coming soon." He said that RockYou is "the largest CPI widget ad network."  What’s CPI, you ask?  Cost per install. "Widget distribution is hard," said the RockYou CEO. "Only 1% succeed."  But, he wanted to make sure we all understood that "third-party ad networks enable better distribution" — specifically, he said their experience is 30 to 100 times better with ad support.

Doubleclick’s VP of rich media, Ari Paparo, says his firm is "enabling widget advertising." They’re helping advertisers take campaigns viral by putting elements like an "Ad to Google" or "Share" button in their ads. "We offer 100 different custom metrics per widget — the advertisers are demanding these."

Doubleclickwhy
Peanut Labs CEO, Murtaza Hussain, said his firm "helps widget companies monetize through market research."  With a Facebook app they designed, they allow people to earn money by taking surveys. They have 120 research clients, and an industry-leading 29% response rate.

Moderator Gur jumped back in to mention some other ways that people are looking at monetizing: "affiliate links, the iLike model, and using virtual currency." Then he popped  a good question to the panel: "How much are all widget companies now generating, in total, in the way of revenues?"  Are you ready for the answer to this one? "Maybe $1 million per month," said RockYou’s Tokuda, causing a collective yet silent gasp to go up from the crowd. "Those who try to get installs by themselves fail," he said. In the next breath, he said it works much better, of course, to get a firm like his to advertise for you, to get those installs.  The moderator pointed out that, when we talk monetization of widgets, the majority of revenues is very definitely now coming from advertising.  What were some ideas for future monetization, he asked?  Peanut Labs: "Premium models." Doubleclick: "It may sound boring, but commerce." RockYou: "Delivering games into social networks."

Next question: "Who are the first-mover types of advertisers in this space, and are they more brand focused or direct response?"  Doubleclickroadmap
Doubleclick’s Paparo jumped in: "Definitely brand advertisers," he said. "And we see the first-movers especially in the theatrical (movies) and auto categories."  Peanut Labs’ Hussain: "Any advertiser looking to understand the Gen Y demographic." He said his firm asks 16 demographic and psychographic questions of its survey respondents.

The moderator then asked: "What kinds of packages are you selling, with what metrics?" RockYou: "Most just want to know the clickthrough to their site — Dell, for example. We’re also seeing a preference for Facebook buys."  When asked what the going rate was for an install, Tokuda said anywhere from 50 cents to $1.00 is the CPI rate for RockYou. He said a blogger his company follows recently reported that RockYou is getting double what others are charging, which he obviously takes great pride in.

"Before a widget maker launches, what advice would you give him or her?" moderator Gur asked. Peanut Labs: "Do market research!" He also would advise looking at virtual currencies, "which are strong." Doublclick would recommend using just standard ad units. "Collecting demographic data is over-rated." RockYou said to get your page views maximized, and that the demographic of young girls is a great way to do that.  "How do you scale?" the moderator followed up.  "You’ll start with an ad network, then eventually go to a direct model," said Doubleclick. And what do you need to support ad sales?  "You’d need an ad server of your own. But you’re probably not going to go direct for a while.  I mean, if annual revenues in the whole widget industry is only $12 million right now, then it could only support 10 sales people!"  The moderator switched gears: "As your widget develops, what’s a good time to start advertising?" RockYou: "I’d say maybe one million impressions per day." At that point, he said, it could make you $1000 a day." Speaking of sales people, Peanut Labs said it’s stopped accepting more publishers because it doesn’t have the sales people to support them.

In the panel followup and audience Q&A session, moderator Saar Gur said he thinks the real business models for widgets are still three to five years out. Doubleclick’s Paparo offered up some more insight into the current advertising picture. "It’s no secret that banner ads on Facebook aren’t selling well right now," he said. "The successes of banner ads on social networks in general are fairly spotty."  But perhaps the most interesting comment he made was this last one:  "Ads can’t be widgets — they’re different things. That’s how a lot of the brands I’m talking to are thinking."

Widget Summit, Day 1: How Do We Measure ‘Em?

October 16, 2007 / / 1 Comment

Ian Kennedy, product manager for MyBlogLog at Yahoo, was a great moderator for this panel on how to do audience measurement of widgets. The writeup of this session tantalized us with talk of new “engagement metrics” — though little new was revealed, despite the moderator’s atempts to drag something out of the panelists. Widgetmeasurement1
We did learn, however, from Jeff Gillis, that Google will drop us a piece of news on us Tuesday via his analytics blog — he said 12 pm, and that would appear to mean noon, since nothing’s there yet.

Hooman Radfar, founder of Clearspring, kicked things off with a commercial about his widget platform and distribution service. He said more than 75 brands are now using it, and “thousands of developers.”  He also said his is the only company that provides real-time metrics. Clearspring’s original engine was built with RockYou, said Radfar, “which is the largest widget provider in the world.”  He said a new metric Clearspring has is “placement,” so you can track the sites where your widget is appearing. Looking forward, Radfar said his firm will be at Launchpad in November to introduce its new “open platform.”

Introduced next was Eyal Magen, founder of Gigya, who said his widget distribution network is used by 7 of the top 10 widget sites, and that it’s only a “30-minute integration.” He said what’s new from his firm are “Widget Usage Reports.” Widgetmeasurementpanel

Google Analytics’ Jeff Gillis followed with his hint-hint, wink-wink, that he’d have news on his blog on Tuesday. (He couldn’t have dropped the news on us on Monday? The team must be working all night….) He said we could sign up for the beta with a secret code, only for attendees. (Yeah right — ask me if you want it.)

Moderator Kennedy popped the big question at this point, “What do each of you have for measuring interactions within a widget?” Stunned silence. Gillis rambled about how Urchin Tracker measures “15 dimensions.”  But what about interaction within the widget, Kennedy repeated, “like tracking which specific buttons users are clicking on.”  No, Gillis said, they’re not able to do that.  Clearspring’s Radfar saw an entry here to say “we have ‘interaction analytics’ coming out.” No word of when. He said they “won’t be dependent on Flash.” He also admitted there are other things as well that aren’t being measured yet, including “viral spread and most popular,” among others.

Are there any best practices yet, asked Kennedy, regarding placement of a widget on a site?  After all, “there’s a whole science of where best placement is in other media” — certainly for print, to name one. Google’s Gillis said it’s too early, but eye-travel studies (the so-called heat map) show an “F” pattern, which would suggest left-side placement as best. Gigya’s Magen said something to suggest that top placement might be good. Clearspring’s Radfar commented to just “keep it simple….people have a tendency to cram a whole web site in a widget.”  He also stressed a key point: that advertisers expect different metrics than publishers. Gillis said it’s “user-specific metrics” that many want.

“Where will we be in a year?” asked moderator Kennedy. “Will we have a definition of ‘engagement metrics’?” Google’s Gillis: “The term can mean many different things to different web sites.” Radfar: “A big issue will be how are you going to collect data in a non-intrusive way?”  Moderator Ian Kennedy closed the panel with a take of his own: “People will want to measure direct revenue and indirect revenue.”  Ah, the elusive monetization.  More on that later.

UPDATE (10/16, 10:30 am Pacific):  This just in, as promised — the latest Google Analytics news.  Now I know why they held it till today….there’s an eMetrics event in Washington, DC, where they’re making this multi-part announcement.

 

Widget Summit, Day 1: Max Levchin Speaks

October 15, 2007 / / 0 Comments

The well-known founder of widget leader Slide (and formerly a cofounder and CTO of PayPal), Max Levchin is the closest thing there is today to a rockstar in the nascent world of widgets. Slide had 134M uniques in June according to comScore. P1030545
He noted that Slide has three of the top four apps on Facebook: TopFriends, FunWall, and SuperPoke.  Gee, check out all the things you can do to your friends on that last one!  Max said Slide is now working a lot on monetization, and doing well (movie promos, etc). Most people would agree that Slide seems to be mostly about "MySpacing" Facebook. But, that may not be a bad thing — because, with its numbers, it’s likely to be the widget company that most quickly figures out how to make money in this game, working with the advertisers that will be the main route to that $$ –and they already are very much talking to them, running lots of trial campaigns to prove their worth.  Other than that, I didn’t understand a whole lot of what Max said….he talks really, really fast.P1030546

The Coming Explosion of Advertising on Blogs

August 30, 2007 / / 2 Comments

I read an interesting article yesterday on Mediapost’s Marketing Daily: 8 Of 10 Americans Know About Blogs; Half Visit Them Regularly. This is a publication read by marketers, both traditional and online, across all industries. And it reminded me, again, that this is a topic I’ve been meaning to blog about.

Okay, my headline above may be a bit sensational, and maybe not a prediction the article makes per se. But read between the lines, people. Sure, ads are already blaring at you everywhere on major blogs like Tech Crunch, Read/Write Web, and GigaOm, but they’re really big media properties now. I’m talking long-tail blogs. Here’s an excerpt from the article (by the way, Mediapost, I love you, but how about starting to put *links* within your stories? like to more details about the study itself?):

Ad spending on blogs is still in its infancy … the eNation study, conducted in late July, shows there is real potential for ads on blogs. Among people who have visited a blog (485), 43.2% said they have noticed ads on blogs, and three out of 10 people in this group said they have clicked on ads while visiting a blog. Among the youngest consumers, a whopping 61.2% of 18- to 24-year-olds said they have noticed ads on blogs.

Some advertisers are trying to slip brand names in through the blogosphere’s back door by recruiting bloggers to write favorably about their brands…

That latter point is something I wanted to focus on today. It speaks to a major trend to watch in how advertising will be spreading onto blogs: that is, “sponsored content” versus traditional ad banners or text-link ads. The former seems to be coming on strong, on multiple fronts. Sponsored content can be whole stories written in news or editorial style and placed on blogs (or social networks, for that matter) — much the same as many “mat services” have done for decades as a service for small, weekly newspapers (which you know if you’re in the PR business) — to a blogger’s own writing that is directly influenced by and paid for by a sponsor (and hopefully disclosed by the blogger!), to even paragraphs written by a sponsor and paid for and just dropped in by the blogger, with blogger editing even allowed (yes, it’s being pitched out there — I know). There are many creative ways that “advertising” will be infiltrating and propating on blogs. So, hold on for the ride….

What do you think? Which kind of advertising would you rather see on blogs? (Relevant ads, of course — that’s a given.) Or how about on this blog right here?

For that matter, should I even be accepting advertising at all, in whatever form?

UPDATE: And for more on the growing readership of blogs: Blogs Make Tech Impact: 78% of Tech Journalists Read Them.

2nd UPDATE, 9/4/07: And yet more: One-third of blog visitors have clicked a blog ad, study says.

It Won’t Just Be Facebook Getting Personal With Ad Targeting

August 23, 2007 / / 5 Comments

So, the Wall Street Journal screams out this morning, on top of page B1, that ad targeting is coming to social networking site Facebook. See the article here (may require subscription). It seems, in order to justify the $10 billion valuation some of its investors are touting, they’re realizing that — oh, yes — we need to monetize this baby! Yeah, that’s right, before we go IPO…. 🙂 Facebooktargets So, let’s start giving advertisers the ability to pinpoint their ads at just the specific individuals on Facebook, within certain very narrow demographics, that will most be interested in the product or service they’re advertising. Such, after all, is the Holy Grail of marketers everywhere. And, by golly, Facebook sure does seem to be a place where a glorious experiment like this could be carried out.

But, if Facebook needs more monetization of its service, think how much all the other, lesser social networks must, too. There are literally hundreds of thousands of these networks already set up, and more coming online every day. A typical site may only have a few thousand members. Ning alone will soon have 100,000 sites using their social networking platform. And an increasing number of firms offer such platforms for anyone to set up a social network, with basic levels of service that are free. See this recent TechCrunch post, which reviews several of them, and this accompanying chart that compares these offerings in great detail.

Sure, Facebook and MySpace, and a handful of other second-tier sites most people couldn’t name, account for a huge percentage of social networking web traffic today. But the long-tail of social networking sites promises to have traffic at least that big, collectively, ongoing. Have you ever stopped to think how these small players are supposed to monetize their sites? Meaning, get advertiser revenue that can support the cost of running a social network, paying for bandwidth, adding new features and original content, and so forth. The way things stand, there is little they can do now to pay for their sites. Some may be charging members for subscriptions, but that model is surely not one that can gain much traction.

Thus, I say longtail monetization via targeted advertising is the bigger story in social networking, with advertisers getting their ads (or sponsored editorial content) only to the specific demographics they want to reach, out in the long tail. Say, only males 20-30 interested in water sports, living in urban areas in the southest U.S. Perhaps a given ad would appear on hundreds or even thousands of sites, as opposed to a media buy that’s a huge swath of readers on just a single large site. So, for example, instead of buying exposure to 2 million people, the ad may only be seen by 200,000. But the idea is that ad performance will be much better because the audience is more interested in the ad, and more likely to act on it.

I think this latest news of Facebook starting the ball rolling with targeted social networking advertising is great. A large, innovative site like this should rightfully lead the way. But, with specialized ad targeting technology becoming available from new startups, I think it marks the beginning of what could be a much larger trend toward monetization of the entire social networking landscape. And I will surely be following this space very closely.

UPDATE (8/23): To add these links to the latest Hitwise social network rankings….for the U.S. and for the rest of the world.

2nd UPDATE (8/24): Online Media Daily posted a story this morning, by Gavin O’Malley, that attributes quite a statement to Forrester analyst Josh Bernoff — that Facebook’s ad targeting plan “could represent the most significant move in the world of online advertising since the advent of AdSense.”

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