Facebook And Google Compete By Flipping Each Other's Models Inside Out

from the it's-about-time dept

For years, we've been disappointed with the fact that none of the big web companies seemed to recognize the importance of establishing themselves as core to the web platform. In fact, Google has quite often done things to move away from being such a platform -- which seemed like a dangerous strategic move leaving things open to other providers. Early on, it had seemed so obvious that Google should set itself up as a "web operating system" on which others could build applications -- but the company has been slow to embrace that kind of vision, preferring to remain somewhat closed off. So far, surprisingly, Amazon had seemed like the most eager to embrace enabling the web platform with its S3 and EC2 services. However, in the last few months, Facebook has received much of the attention for its platform play. To be honest, we initially had high hopes for Facebook's platform play, but despite the hype and attention it has generated, it's actually gone in the wrong direction. It seems like Facebook's attempt at being the platform is more about bringing apps into Facebook, rather than allowing outside apps to make use of Facebook as a component. In fact, it's a little bit like Google's misguided strategy -- focused less on enabling things outside of its system, and more on bringing things inside.

However, both Google and Facebook are getting ready to launch new offerings that look like they hit directly at the other company -- but which really demonstrate some of the tactics both companies are hoping to use in branching out from their core areas of business to become more of a web platform. And both involve hitting the other provider by doing what it won't do in terms of opening up certain data to outside uses.

First up is Facebook, which is rumored to be launching a major ad network initiative designed to compete with Google's ad platform. The key is using Facebook profile information tied to an ad cookie to make the ads that someone sees as they surf around the net a lot more relevant (or creepy, depending on your point of view). It's this vision that Microsoft is buying into (as the supplier of the ads). This is a clever move. It's something that Google can't do as directly or efficiently, as Facebook in many cases will have a lot more data about the user's specific interests and profile. But, it's also an example of Facebook finally doing something that involves pulling data out of Facebook to do something useful elsewhere.

Then, there's Google. The company is launching a new set of standards designed to make it easier to build apps that run across any willing social network. The company has built up an interesting alliance of networks, including (no surprise) its own Orkut, but also LinkedIn and Salesforce.com. The idea here is that developers can now have their apps easily work with a variety of social networks. Facebook hasn't signed on to the deal, and may resist it for some time -- but if it really starts to get some traction, the company may feel it necessary to join in. In effect, this is Google's way of forcing social networks to open up more and be a part of the larger web platform -- rather than being stuck in their own little silos. If it works well, Google could conceivably then build a similar ad offering on top of multiple networks of information, and it would also serve to protect Google somewhat from the faddish nature of social networks, as it wouldn't matter if one particular network declined as another gained prominence -- as long as they're all using these standards.

Comparing the two strategies is interesting -- as both revolve around doing the sorts of things the other company doesn't want or cannot easily do, yet which will directly impact the other's business. But, both also involve a somewhat tricky cat and mouse game of determining which parts of a business are really open and which are closed, with both seemingly hitting at each other's key weakness within their core offerings. In other words, it's about to get a lot more fun to observe how these strategies play themselves out. As for who wins? Despite thinking that Google should have opened up years ago, I think Google has the stronger position here. On top of simply having a lot more money available, it's strategy is much more about enabling others to do much more online. Facebook's strategy, on the other hand, risks consumer backlash over having private info spread outside of Facebook, and also leaves the company reliant on everyone staying within Facebook just as Google is about to make other social networks potentially more interesting.

Filed Under: advertising, social networks, web platform
Companies: facebook, google

Online Publishers Still Having Difficulty Counting

from the math-is-hard dept

The common advertising problem that "half the money I spend on advertising is wasted; the trouble is I don't know which half" was promised to be remedied by the introduction of the supposedly measurable medium of the Internet. However, in practice, the measurement of online audiences has proven to be difficult, at best. Most recently, Comscore reported a 9.3 percent drop in Facebook's traffic, which was met not by fears that the traffic to the super popular site was waning, but rather by explanations that that Comscore was likely under counting traffic from students who were doing their surfing from home during the summer. So, despite being around for over a decade, online publishers continue to have issues reporting consistent, accurate measures of their online audiences. Depending on who you ask, the number of pageviews for a site from one source may be double the number reported from another. To make things more confusing, earlier this year, Nielsen/NetRatings announced that it would no longer use pageviews as the standard unit of measure, opting rather for time spent on a website. As the amount of money spent on online advertising approaches $20 billion this year, this measurement issue is starting to become significant. However, this complaint about online advertising is ironic, since measurement in the other mediums is, at best, a crap shoot. Perhaps the problem with online advertising is that it, in fact, has too many numbers -- with television, print and radio, audience numbers are typically estimates. So, while those numbers may not be accurate, at least they're consistent.

Filed Under: advertising, measurement

German Court Tells Telco It Can't Advertise On BitTorrent Search Engine

from the you-can-only-advertise-on-sites-we-like dept

A German court has apparently not only decided that it doesn't like bittorrent search engines, but that it's somehow illegal to advertise on one. Specifically, the court has banned the telco Arcor from advertising on the BitTorrent tracker site BitReactor.to. This seems odd for a variety of reasons. First of all, BitTorrent tracker sites are really no different than search engines, meaning that it's a bit of a stretch to claim that they're inherently illegal. But, more importantly, why should the court have any say in where a company chooses to advertise?

Filed Under: advertising, bittorrent
Companies: arcor, bitreactor, vodafone

Verizon Wireless To Hand Over Your Info To Advertisers Unless You Opt Out?

from the making-friends,-pissing-off-customers dept

Jeff A. writes to let us know that Verizon Wireless is trying to change its policy on what it can do with your calling record info. Basically, it sounds like they want to start selling it to marketers, so they had to change their terms of service. What they did was send customers a letter telling them they had 30 days to call and opt-out of this new plan to hand over your calling records, or you'd have automatically accepted their changed terms of service and Verizon Wireless could hand over the info to advertisers. Of course, many people will probably just see this as junk mail and toss it out, not realizing that they've just agreed to get a lot more advertising sent their way -- and, more importantly, opened up access to (what they thought were) their own private phone records. This is doubly sneaky, because the FCC recently released new rules on how telecoms shouldn't release info to third parties without "explicit consent from a customer." Verizon Wireless seems to think that sending this letter with its fine print and demanding people opt-out within 30 days falls under "explicit consent," though some customers would likely disagree.

Filed Under: advertising, opt-out
Companies: verizon wireless

Ads On eBay Piss Off Sellers

from the don't-forget-your-primary-business dept

By placing ads on its pages, eBay was able to make approximately $76 million in revenue during the second quarter of this year. However, in doing so, eBay has drawn the ire of it sellers, who complain that the ads distract buyers from placing bids on their listings. eBay claims that their analysis shows that the advertising on the site "does not get in the way of people who intend to buy or sell items on the site." Considering that eBay's advertising revenue has doubled in 2007 as compared to 2006, the ads are a good way to monetize traffic that does not end up making a purchase. Furthermore, since the ads are contextual, eBay argues that the product experience is improved since the ads are relevant to the user's query. eBay's findings make sense; if a buyer really is interested in placing a bid, it seems quite unlikely that they would be derailed simply by viewing an ad. In any case, sellers are not convinced; they continue to fear that the ads distract potential buyers, despite not having any studies that indicate such a trend. Perhaps this fear is actually symptomatic of the true problem that eBay is facing today: sellers are no longer ecstatic to be on eBay. And, there's data to back that hypothesis up: the number of items listed in the second quarter of this year was 2 percent lower than the previous year.

Filed Under: ads, advertising, ebay
Companies: ebay

Mary Meeker's YouTube Math Misses The Mark

from the back-in-the-news-together dept

YouTube's new ad overlays continue to engender a lot of discussion about their potential impact on the online video market. One person who is quite optimistic about the program is the infamous (but still employed at Morgan Stanley) Mary Meeker, who estimated that the new system would add a staggering $4.8 billion to Google's top line. But, as none other than Henry Blodget points out, there's a little problem with Meeker's analysis (via Valleywag). She mistakenly took CPM to mean 'cost per impression' rather than 'cost per thousand', meaning that her estimate was off by a factor of 1,000. In other words, by her own logic, the new ad system will contribute lead to a modest $4.8 million revenue bump, which is nothing compared to the $1.65 billion Google paid for the site. Meeker has been covering this space for a long time, so it's hard to imagine that she really didn't know what CPM meant. Perhaps she was just trying to rush out a quick report on the topic and didn't take the time to look it over. But you'd still think that such a huge figure would give her some pause and make her question some assumptions before coming out with such a bold pronouncement.

Filed Under: advertising, henry blodget
Companies: google, youtube

Will Google Face Patent Battle Over YouTube's New Ad Format?

from the pssst,-Google,-buy-us...-sincerely,-VideoEgg dept

Google and YouTube got a ton of press coverage for releasing their new video ad overlay program on Tuesday evening. However, despite some amount of fawning from some tech publications, many people noted that the ads were remarkably similar to the format the startup VideoEgg launched nearly a year ago. The folks over at VideoEgg are trying to figure out what to do in response -- which apparently includes potentially filing a patent lawsuit against Google. VideoEgg has apparently applied for patents on just such an advertising system -- though the patents haven't been granted yet, so there's not much VideoEgg can do on that front for the time being. Of course, you could argue that what they're doing isn't all that different than ads that have been on TV for years... but we'll let the patent office sort that out. So far, however, VideoEgg seems to have figured out the best strategy: using this to get much more attention for itself. It's been making sure that people know it had the idea first, and (as of right now) changed its website to say in HUGE letters "Welcome, YouTube. Seriously." Then it notes that it's nice to see the rest of the market catch up. Hopefully this won't descend into a patent battle -- as VideoEgg is right. It is nice to see the rest of the market catch up, and hopefully this will drive many of the players in the market (including VideoEgg) to improve upon the offering even further. That's what competition is all about. Update: In the meantime, it looks like plenty of others are out there claiming that they came up with the idea first, once again showing how many different "inventions" are really just the next obvious step, as so many different parties come up with the same thing at once. Hopefully, that's evidence enough to deny a patent.

Filed Under: advertising, online video
Companies: google, videoegg, youtube

Mobile Advertisers Recognizing The Benefit Of Not Spamming People

from the it-took-them-this-long? dept

For many years, there's been talk about the mobile advertising opportunity, with some advertisers practically drooling over the possibility of sending ads directly to users' mobile phones. It wasn't that long ago that the standard example used at many conferences and trade shows was how you'd be walking by a coffee shop and it would send you a text messaging offering you 20% off on a cup of coffee or a free bagel or something. Of course, that ignored the fact that probably 99% of the people hit with that message would consider it intrusive spam, especially if they were on the go. Luckily, though, some early complaints about such services (and the general anger towards spam, popup ads and other intrusive ads) has made it so many mobile advertisers have realized the focus needs to be on pull, rather than push. That is, as people are using mobile phones more and more for local information, there's tremendous value in putting advertisements that might be relevant to users as they're searching -- rather than simply bombarding them at random. The article does note some experiments with more intrusive push advertising, but set up in a way where the end users have a lot more control and say over the conditions under which they actually receive ads, in an attempt to keep them relevant. For once, it's good to hear of some restraint in the ad industry. Hopefully, it remains.

Filed Under: advertising, mobile, spam

Are Video Ad Overlays The AdWords Of YouTube?

from the something-different... dept

Many people have been wondering how Google would better monetize YouTube -- as there was a lot of concern that pre-roll or post-roll advertising wasn't particularly effective. The company, instead, has announced an "overlay" offering, where certain videos will contain a small, semi-transparent overlay across the bottom of the screen, similar to what you'll often see during TV shows. The ads show up 15 seconds into the videos they're on and only last for 10 seconds. Viewers can click to close the ads, or they can click on them, at which point they stop the video in the background and open up a "player within the player" that can include more advertising content. After the viewer is done with the ad, they can close it, and the original video picks up where it left off.

Most of the press reports say that the ad is a video within a video, but the one ad I saw was a lot more interactive. The ads are only showing up on the videos of YouTube's "media partners" and the revenue from the ads gets split between the media partner and Google. While plenty of people will talk about how innovative this is on Google's part, others, like VideoEgg have been offering something similar for quite some time. However, obviously, Google can help make it the standard type of video ad out there. Expect to see many others shift to this model pretty quickly. Of course, Google is hyping up how much higher the clickthroughs are on these types of ads -- but it's tough to tell if that will last. You can expect higher clickthroughs initially simply because it's different and viewers aren't used to seeing it. But, over time, ad blindness is likely to creep back in.

In the meantime, though, it's nice to see that Google didn't just default to the easy (and most likely ineffective) route of going pre/post-roll. One of the key reasons for the success of Google's AdWords advertising was that it recognized that ads were a lot more effective if they were both relevant and non-intrusive. It's not clear if these new video ads qualify completely on both accounts, but it's better than just assuming you had to force people to sit through something else before they could see the content they want to get to. The other question, however, is how widely this will be spread within YouTube. The other key reason for AdWords' success was that it was incredibly easy for anyone to start advertising quickly and have their ads appear in relevant spots. That might not be true in this case if ads will only show up on "partner" videos. My guess is that they'll have to open the program up to others relatively quickly -- though not force it on people who just want to upload videos for fun.

Filed Under: advertising, online video
Companies: google, youtube

NBC Universal Realizes That Ads Are Content Too

from the good-for-them dept

For years, we've been trying to convince people to stop thinking of ads and content as two separate things. Ads are content and content are ads. This doesn't mean that content needs to be infused with product placement, but just that you recognize that any bit of content advertises something. At the same time, it also should make companies rethink how they view ads. After all people will actively seek out good commercials because they enjoy the content. As has been pointed out repeatedly, people don't hate advertising, they hate annoying, intrusive and irrelevant advertising since it wastes their time. But good advertisements are content and people seek out good content.

NBC was actually one of the earlier entertainment companies to at least grasp this concept, and have experimented with a variety of attempts to make commercials more entertaining and interesting, from turning them into mini-movies with plots of their own to even doing product placement within commercials. Now, NBC Universal has announced plans to set up a new site called Didja.com, which is going to make tons of old commercials available online. The NBC execs quoted in the story seem a little too giddy about the prospect of people swarming to the site to see old commercials (and also in the semi-ridiculous idea of social networking around what commercials you like), but it does show yet another glimmer of realization that the barrier between "ads" and "content" went away a long time ago.

Filed Under: advertising, content
Companies: nbc universal