Advertising

Two interesting events in Adworld in the last 2 days show how tough it is proving to make Ads work in the video world:

Firstly, ITV is looking at placing Ads in their programs, on blank spaces - as The Times notes:

ITV is developing a new form of unavoidable advertisement that can be embedded in television programmes.

The new technology, which is known as “automatically placed overlay advertising”, uses complex computer algorithms to find clear space, such as blue sky or blank walls, in video footage in which to display logos or messages.

The technology, which was developed for ITV by Keystream, a Californian company, is currently being tested in news footage on the broadcaster’s ITV Local website. If it is well received, and if regulations permit it, ITV hopes to transfer it to the television screen.

We await with eager anticipation the McDonalds ads on those beautiful Georgian walls in the next classical bodice-ripper (will the software be able to tell the difference between heaving bosoms and those walls we wonder ). As the Times notes:

Colin Macleod, research director at the World Advertising Research Centre, an independent advisory body, said: “Consumers are becoming a lot more clever in avoiding advertising, and now that they’ve got the technology to do it it’s become a big issue for advertisers. They need to be smarter.

Smarter does not necessarily imply increasing the stridency of something that isn't working though. We've not done formal tests on these reactions, but we suspect this will not be a hit - as teh article notes:

“Anything that they are able to use to attract viewers’ attention they will welcome, but as long as viewers feel comfortable about it. This potentially could cause some friction between broadcaster and consumer.”

Here's a prediction - it will cause more scorn and parody than friction, and will be quietly dropped as they find the audiences just switch over elsewhere.

Secondly, YouTube is reaching for the Post Roll Ad (for the 4% of YouTube videos that take it), as Liz Gannes of NewTeeVee reports:

YouTube, which has never had trouble growing an audience but hasn’t yet figured out the trick for monetizing them thar eyeballs, is adding a trick from the old playbook: post-roll advertisements. As we understand it (and this has been confirmed with the company), if you don’t click on an overlay ad when it shows up in a clip you’re watching, the video ad it would have played rolls automatically at the end of your video. Previously a post-roll video wouldn’t play without being initiated by the user. This type of ad started rolling out over the last few weeks.

Post Rolls are an "interesting" option, in that the probability of them being watched is pretty low compared to the other options, but it is less intrusive. which is the issue - the other formats are not working. Liz:

Just this summer Google CEO Eric Schmidt touted the effectiveness of embedded ads versus pre- and post-rolls. And earlier in the year he promised forthcoming ad products that would be “much more participative, much more creative, much more — much more interesting in and of themselves” than in-line ads. Since then, new products have included ad formats like a full-screen HD movie trailer and publisher tools like “Hot Spots,” which shows which parts of a video viewers are most interested in. That is to say, very few socks were blown off.

Profy notes how its done:

CareerBuilder generated all the activity required to make the name of the site the most discussed topic on Twitter on its own. The thing is that the guys behind the website simply configured a few Twitter accounts (each account focused on a particular city) to broadcast all the latest job positions advertised on CareerBuilder automatically to Twitter. This resulted in a few dozens of new tweets posted to a few timelines belonging to different CareerBuilder geographical sections every hour (as I believe they must have some moderation for new jobs where they approve new postings to the site in bulk).

I also suspect that these tweets are posted using some sort of a script as they show “from web” as the posting method while normally when we see such automatic tweets published via RSS we see “from Twitterfeed” there. Unfortunately I don’t think it is realistic to publish more than 1 tweet every minute manually from the web interface, I think CareerBuilder has a script in place to automatically transmit all the jobs. But since I don’t think it violates Twitter ToS in any way, it is Ok - the only thing it proves is that this frequent posting of updates is intentional.

But heck, I reckon more than half the A Listers on it and various OTT "community managers" knew that already . Its just that this is maybe the first to use an automated process - and we showed you how this could be done back in May.

Day 4 of the Technorati State of the Blogosphere dawns, and we can finally follow the money. (See earlier articles on Technorati blogonomics here and here). So, what can we glean:

Firstly, about half of the blogosphere (46%) don't use Ads. Of those that do, most (28% out of 54% who use Ads) use 3 Ad methods or more (Search 38%, Display 30% and Referrals 20%) As you'd expect, most (69% ) use Pay Per Click Ads, but (35%) use referrals and 19% negotiate deals directly. Most who don't advertise feel its because they either don't want the hassle and/or the site cluttered, and the most of the rest don't think they don't have enough traffic.

But what you really wanted to know about is the money, I'm sure

This is the money-shot slide:



Look at the European vs US revenues - you would have thought the US would have higher earning blogs, given people like Shiny Media's travails vs the clear funding offerings the US blogs have received. Its doubly surprising given the CPMs:



European blogs get, on average 80% higher revenues with 75% of the CPM rate, that implies nearly double the traffic. The Median also implies double the traffic....hmmm

And the typical pro-blogger profile - a top 10% blogger earns $19k pa, is likely to be professional, and many (c 2x) more are self employed than employed. The typical output is vc 80 posts a month, c half blogging over 10 hours a week (a lot more to get 80 posts methinks) and investing $7.5k, for a return of c $11.5k - so just under $1k a month.

Every so often the real world intrudes into Geekland - about once a week over the last 2 weeks something about the Credit Crunch surfaces on Techmeme. This week its BoomTown noting that Yahoo is probably soon to swing its axe. (Update - Valleywag via Techmeme said today they will bring in Bain & Co*). Underlying this article is the assumption that online Ad revenues may fall:

according to several sources at Yahoo, for example, top execs are telling some employees that the company is considering options to get itself sized right for an expected slowdown in the advertising market.

Let us repeat that in caps:

OVER THE NEXT FEW YEARS, ONLINE AD REVENUES MAY ACTUALLY FALL

Yes, long term they will grow, but most trends go in fits and starts. And the biggst financial crisis since 1929 will have an impact on advertising, its an early cut spend in many sectors.

A few weeks ago we made a similar aside to the startups at Seedcamp when we saw that nearly all their plans had Ad revenue underpinning it. Our research into the Online Ad market was already pointing to a slowdown in Online Ad growth versus previous assumptions, but the events of the last 2 weels change that picture substantially - we now believe there is a very real chance it may actually drop - y'know, like in 2001.

We would also make another prediction now - that the amount of funding propping up FreeConomic models will start to dry up, simply because as we move into more straightened circumstances the chance of a liquidity event will reduce, and the runway needed to fly such kites will lengthen. Its no accident Marc Andreessen felt he had to get his war chest before nuclear winter set in. The Web 2.0 kids probably don't recall what San Fran's South of Market area was like in 2002 - a wino wasteland. There is an increasing possibility that it will look the same by 2010.

Enough of the doom 'n gloom, I hear you say - what should we do?

So here are some thoughts based on surviving (or not) the first time round:

- Find real customers with real money. "Free" obscures things - if all this Web 2.0 gear is so good, why does it have to be given away for free? (Answer - because Google subsidises their stuff with Ad revenues. Get off that pitch)

- Get the burn rate right down

Chase the cash and keep the costs down - not exactly rocket science then (though you'd be surprised how many tech Co's build what they want rather than what customers will buy).

But wait, there's some nuance here. Real customers are people who derive sufficient value from your services to give you money. If you can't work out how they get that value from you, you ain't got a service that will survive.

A second thing is to choose your market. Everyone says go after big markets, but in Hard Times there are some more nuances:

- Find customers in industries where there is a large surplus (and that usually excludes very competitive markets), and/or


- Find customers in industries where there is rapid growth.

Trying to flog stuff in declining markets with low profitability is a hiding to nothing.

Another thing that is often said is to Do Something Hard. In tough times we'd add that its more important to pick a good market first, and just try and Do Something Well

*You know you are Olde Media if you are bringing in one of the Big 3 Strategic houses for rationalisation

AVC / Fred Wilson, a normally fairly sensible chap, has come up with an - er - "interesting" idea - fill the various Web 2.0 feeds with marketing messages - he starts with the thought that:

FeedBurner did that with this blog's feed and many other feeds with ok results a few years back. But honestly, the ads were not targeted enough or relevant enough to work really well. Facebook has probably done the most of anyone to allow marketers entry into the feed.

Feedburner's play limps on, and Facebook's play was not exactly a success, as I recall.....anyway:

So what we need to happen is the web services that render these feeds for us; google reader, netvibes, friendfeed, twitter, outside.in, facebook, etc, etc need to provide api accesss to these feeds to services that will serve marketers who want to get their messages targeted into them.

The targeting is the key and I am not entirely clear how this should work. In the case of search driven feeds, it should clearly be keyword based. In the case of geo feeds like outside.in, it should be zip code or neighborhood based. In the case of things like facebook or google reader, I think the targeting is more likely to be behavioral.

Two things immediately hit me.

- I can see why a VC may want some of his companies to have access to users' pub/sub feeds to make a better business plan and model, and I can see why some supplier companies would wish to do this, but I don't see whats in it for the users - its an economic tax on their attention and bandwidth.

- Users (generally) don't like this as an experience either! From junk mail to unwanted telesales, from email spam to Popups in your web browsing, this has not gone down well. Beacon flopped publicly (though I see it reared its head again, I see). We invented all sorts of online devices to cull the noise, and we don't like people that do it

Also, targeting is very hard in this case - I suspect that any form of attempt to get sufficient behavioural data for any one feed would be seen as extremely invasive. Apart from Google or maybe a Social Net or an ISP (and see the worries its causing when they do), its hard to imagine who would even begin to have enough data to do useful targeting .

I can see why a company may want to do this short term, not sure what its longer term benefit may - especially be if competitors don't.

The Judy Estrin "Innovation" book plug / story is doing the rounds and popping up repeatedly on Techmeme, appearing on a 2 day interval approximately:

August 27th - Mike Masnick's TechDirt -

Innovation Isn't Dying In Silicon Valley; It's Just Changing — Apparently Judy Estrin, a well-known Silicon Valley tech entrepreneur and exec, is coming out with a new book warning that the infrastructure needed for innovation in Silicon Valley is going away.

August 29th - then on to the NYT's Bits Blog by Claire Cain Miller:

Does Silicon Valley Face an Innovation Crisis? — Judy Estrin, who has built several Silicon Valley companies and was the chief technology officer of Cisco Systems, says Silicon Valley is in trouble. In a new book, “Closing the Innovation Gap,” which will be in bookstores Tuesday …

Sept 1st (slightly longer period) it hits the NYT main paper - Claire is again the author....

Another Voice Warns of an Innovation Slowdown — MENLO PARK, Calif. — Judy Estrin, 53, has spent her entire career in Silicon Valley, a region that thrives on constant innovation. Ms. Estrin, the former chief technology officer of Cisco Systems, has founded four technology companies.

OK, OK I get the message - there is less Innovation in Silicon Valley than in the Good Old Days

The other interesting message though, is that a PR campaign looks lamer as the same aggregator (Techmeme in this case) picks it up each time its spikes, in rapid succession. Oscar Wilde said you can never be talked about too much, but I wonder if he was thinking about "story porpoising" like this......

Was it on porpoise, we wonder, or an interesting by product of digital news aggregation on linear media marketing? Is this the Olde PR failing to innovate, or a new innovation using the nature of aggregators?

Of course, we can now confidently predict we will see it again on the 3rd/4th September, what is less clear is the paper it'll be in. We're offering 3:2 on Wired and 4:3 on the WSJ .

My view - I by and large don't buy it - I subscribe to the Marc Andreessen view that innovation is a numbers game (aka a Darwinian system) and as the numbers have never been greater, I suspect neither has the innovation. What may be true is that the old measures and metrics are still looking under their respective lamp-posts for illumination. (Measuring patents, not start-ups for example, or long term funded projects vs metaproject progress in a field)

(Note - article is written in widescreen TongueincheekOcolor)

TechCrunch UK's slightly testy thoughts about a Jason Calacanis post led me to read the latter, and I found myself in the curate's eggy position of violently agreeing and disagreeing with it:

First this:

You don't need a PR firm, you don't need an in-house PR person and you don't need to spend ANY money to get amazing PR. You don't need to be connected, and you don't need to be a "name brand." Today, many bloggers lament how much press folks like Kevin Rose and Robert Scoble get. They say that they get too much attention and that they got this attention too quickly and without earning it.

This is the same argumument that musicians etc should sell music for free and make money on T shirts - its fine if you are a well known "A Lister" but not very practical if you are not. (Or as one wag put it on Twitter, Calacanis' advice for Tech PR is to be Calacanis )

Then this:

What's funny about this is that "A-list" ceWebrities like Scoble and Kevin Rose are overnight successes 10 years in the making. Scoble and Rose have been everywhere for a decade. Me? I've been everywhere in this business since 1994 when I was 23 years old in New York City trying to get any meeting I could (for those of you who wouldn't meet with me back then I totally understand--chances are I wouldn't have met with me back then).

Things that look like an "overnight success" typically are not.

As we showed in our post on typical S curve growth, there is a "below the radar" stage that is usually long and arduous - and you can't buy your way into it, except for short term "pop" goods. PR helps, but in my experience, in most cases, if the real demand isn't there, it reverts back to its nascent state as soon as the hypercharging switches off.

Then the TCUK testiness - I think it's useful to read Mike's commentary on Jason's "10 points for PR success" as a useful translation for dealing with the "Out of USA" world.

If I may be so bold, having lived in the US and a few other countries, the issue is that the US, culturally, is acclimatised to - ahem - "putting your best foot forward" 24/7/365. The Rest of World, with some exceptions, finds this somewhat irritating, especially if it is continuous. If there was a "roll your eyes" function on Twitter I think some of the SV "community managers" and digigurus would probably be quite taken aback

From PaidContent, who have counted all the deals from Q1 '07 to Q2 '08 - interesting factoids are:

VC Investments:

-- Total number of investments:160
-- Total number of disclosed investments: 137 valued at $1,925,830,000
-- Average investment size: $14,057,153
-- Best estimated value of overall investment in the space (disclosed and undisclosed): $2,126,620,000

Acquisitions:
-- Total number of acquisitions: 100
-- Total number of disclosed acquisitions: 46 valued at $17,535,320,000
-- Average acquisition size: $327,313,415
-- Best estimated value of overall transaction in the space (disclosed and undisclosed): $20,594,510,000

However, given a few very high profile ones ( Google "merger" with Doubleclick at $3.1 bn, Microsoft buys Acquantive for c $6 bn - thats over half the total), the average sizes here are probably a bit misleading. Median / Mean may be better measures?

Article on TechCrunch about the 2008 Gartner Hype Curve, and where things lie on it.



See that one on mobile robotics - we've been tracking that awhile, I was fascinated to see that Chris "Long Tail" Andersen's other website is on Unmanned Aerial Vehicles - or Drones as they are also known. Ditto, we've been tracking behavioural economics and surface computing. There are a number I don't see - open source hardware, various deep algoritms based approaches etc.

I also suspect after this week that Cloud Computing has shortcircuited straight onto the slide into the Slough of Despond . To make matters worse, today the US Patent Office told Dell it couldn't patent the term. we're also dubious about Location services. Apart from that, its fine

The Hype curve's early rise is driven not just by PR and hyperbole pimping New New Things, but by irrational market projections. We can go back over the years and show how various forecasters often hugely over-egg the early day forecasts and recant later, and more quietly. Mobile and Advertising are very susceptible, Mobile Advertising especially so- though not usually as bad as e-Marketers for Web Video advertising this year:

In February, the Web prognosticator said YouTube et al would sell $1.4 billion in ads in the U.S. this year. Now its says it was overzealous: It has ratcheted its estimate back by 64%, to $505 million.

What's happened since then? eMarketer blamed "changes in methodology" at the Interactive Advertising Bureau to MediaWeek. But in his new report, analyst David Hallernan says advertisers remain tentative and still confused on what types of video to buy and where. In other words: You got us.

65% drop in 6 months - that is the best yet, we usually have a 33% drop over 1 year rule of thumb

Update - Speaking of hyping the Cloud, here is one of the more extreme examples - off RWW, strangely. The hyper it goes.....

From Silicon Alley Insider re our apparent love of watching web TV pre-roll:

...video ad network Tremor Media says we and everyone we know are in a small minority. It says only 20% of Web video watchers give up and leave when confronted with the pre-rolls it serves up. Or, as Tremor is putting it in a release later today, 80% watch the ads all the way through.

Tremor says its audience sticks around because it doesn't serve up crappy use-gen video, and that "audiences are willilng to accept pre-roll advertising in exchange for content they want, on demand." And Tremor also says that its stuff is so good (it measured 65 million ad impressions across 100 different ad campaigns) that the bail-out rate didn't change if the ads were 15 or 30 seconds long.

Not to be outdone, Break Media is claiming an even higher "completion rate" -- 87% -- for its pre-rolls, which includes a whole lot of user-generated video. Break's sample was a lot smaller than Tremor's -- 5.85 million impresssions.

Is this real, or just wish fulfiment from Planet Marketing to coax money out of corporate trousers? SAI are sceptical, and so are we - received wisdom is that most people don't like pre-roll - or rather, don't sit through them.

Anybody out there who watches pre-roll?