Monthly Archives

February 2007

CPA advertising for mobile and video

By | Advertising, Mobile | 15 Comments

I haven’t talked as much about affiliate networks and our investment in buy.at as I expected when I started this blog, but I’m going to re-dress that balance slightly today.

As a refresher affiliate networks provide internet marketing services that are analogous to real world below the line direct marketing – i.e. they are more about driving transactions than building brand.  They operate on a cost per action (CPA) model and act as a broker between merchants who want to drive sales by offering a commission per transaction and affliates who can find those sales for them.  Mobile network operator ‘3’ is one of buy.at’s biggest clients at the moment and they pay up to £70 for each new subscriber our affiliates find for them.  The £70 is paid to the affiliate and an additional over-ride is paid to us (the network).  Many of buy.at’s clients and the deals they offer are listed here.

This is a CPA model because ‘3’ only pay when there is an action – a customer is acquired.

It’s a great model for merchants because it is a no-lose deal.  They only pay if they get new customers.

That has made it a great and fast growing market.

So far though it is only wired-web and static page based.  As I wrote yesterday mobile is a hot new area for advertising, and online video advertising is also opening up.  So far these have been purely on CPM deals – advertisers pay per impression.  This is standard for new media – it is easier to experiment with CPM and the owners of the limited inventory are able to get high CPMs without worrying too much about downstream conversions.  As these markets mature CPA will become a large part of the mix – it is a better deal for advertisers and owners of high quality inventory often get better returns this way too.  We have seen this move on static wired web pages and so it will be with mobile and video.

But it won’t necessarily be straight forward.  The CPA affiliate model works on the wired web because people can click through to sites and complete transactions.  That is still difficult on mobiles – tracking innovations will be required or the mobile internet experience will need to improve to make this work.  CPA/affiliate ads round the edge of video needn’t be complicated, but if the real action turns out to be in in-stream ads then enabling and stimulating click throughs will be the next challenge.

Answers to these questions on a postcard…..

Mobile advertising is hot hot hot

By | Advertising, Mobile, Venture Capital | 10 Comments

Mobile advertising 

I have been wondering if the mobile advertising sector has been overfunded by VCs, and indeed whether at the end of the day it will be a separate category, but on the back of 3GSM, one thing I know for sure is that the mobile advertising market is HOT.

ScreenTonic are buzzing and Admob have gone from 500m ads served when I posted on this topic on November 27 to 1.2bn today.  Think about that for a second – 140% growth in under three months.

Adinfuse was a new one for me – over from the States and being run in Europe by Stephen Upstone (formerly of behavioural targeting firm TouchClarity which was acquired yesterday by Omniture for $52m).  Stephen couldn’t have been more excited about the market opportunity in front of him.

These are all mobile banner advertising businesses and I am still of the belief that CPMs will drop off as inventory grows and the cool factor of doing mobile campaigns wears off – but think about all the inventory that is coming on-line.  If half of the mobile content plays at 3GSM do half as well as they hope that will offset any declines in CPMs – and then some.

The separate category question is a good one though.  The FT are using DoubleClick to serve ads on their mobile platform – they are doing this in a simplistic fashion, but DoubleClick and the other adserver vendors (Atlas being the other large one) have mobile on their roadmap and will be in this market before too long.  Admob and the other start-ups in this space need to be in a race to get scale before that happens.

The other complicating factor is the role of the operators.  They have great data about subscribers that could be used to target ads, but the opportunity will be complicated to execute on and they haven’t exactly got a good track record.  They see the potential of this market though, so expect a lot of activity.  Telco2.0 blog explains the complexity really well.

Mobile search advertising will also be big (at some point) and I am also thinking about how at Buy.At we might cut the wires for the affliliate model.

Content labels another answer to the growing search problem?

By | Content, Google, Social software | 10 Comments

I wrote yesterday that Google and others are trying to make the search problem more manageable by carving it into smaller chunks – be it vertical search or splitting the problem horizontally.

Another approach for cutting out the dross and getting quickly to the right pages is content labelling.

Content labels are machine readable metadata attached to sites that operate as an official stamp.  Verisign operates a content labelling system where sites that pass security standards are allowed to show a Verisign trustmark which can give people enough trust in a site to enter their credit card details.

Other prominent areas for content labelling are accessability – sites that are suitably set up for the visually impaired can carry an appropriate trustmark – and trustmarks indicating suitability for children and readiness for mobile.

Trustmarks/content labels help with the search problem if browsers or search engines can be set to only return search results which carry a certain content label.

Breaking that down, for the system to work the following elements are required:

  • An agreed standard
  • A certification authority
  • An effiicient process by which sites can get certified
  • A content label registry where trustmarks can be looked up and verified
  • Browsers which can read and check the trustmarks

Ireland/UK start-up Segala run by Paul Walsh is looking to deliver the last three parts of the equation.  They have a technology that enables efficient certicication of sites, a web service for trustmark look-up and verification and a Firefox plug-in that solves the browser part of the equation.

It is early days yet, but I like this because it is a solution to part of the search problem – it would be cool if a search on my mobile phone only returned sites that were certified as mobile ready – and in theory this could be extended in almost any direction.  Cites could be certified as “business” or “blogs” for example, which would really help weed out the unwanted from search results.  It might even be possible to include socially generated metadata in some way.

I also like it because it is a potentially huge play – it could be pennies on almost every website on the planet as a charge for certification – and there are now 45 billion of those.

But it all hangs on standards being agreed, and bitter experience tells us what that means – it will certainly take forever and it may never happen.  There are lots of encouraging signs though – with dotmobi pushing their mobileOK standard, the W3C getting in on the game and and ICRA and Ofcom are promoting content labels as a method of parental control. 

Vertical search – property

By | Consumer Internet, Real estate, Search | No Comments

For me vertical search is becoming an increasingly important part of the mix as the web gets bigger and more multimedia.  One search box doesn’t give enough information any more.  Google is carving the problem into horizontal slices – traditional search, image search, news search etc.

The other approach is verticals – of which property is probably the most developed.

We have already had one generation of successful property vertical search sites – of which RightMove has emerged as the biggest and best.

I think the second generation cometh. 

It was interesting yesterday to see that Hugo Burge‘s HOWZAT Media have invested in Zoomf.  I think they are in an exciting position because to my mind RightMove is vulnerable.  There are a couple of key reasons for that:

  1. Estate agents are starting to get tired of paying RightMove to be listed.  There was 7% churn last year and that could go higher if someone really comes to challenge RightMove.
  2. The second generation players have much better sites – adding Google maps, local information and social features makes for a much better user experience

In addition to Zoomf in the UK Nestoria, OnOneMap and Extate are all interesting.

Just like the first time round this will be a winner takes all game.  Scale of property coverage, consumer brand recognition and favourable organic search rankings all favour the leader.  RightMove (or one of the other first generation players) could adapt and win too.  Overhauling their website and reducing estate agent charges whilst finding other ways to monetise traffic is definitely possible for those guys.  Not many companies have the vision and strength of conviction to change their business model like that though.

3GSM – in search of the next big thing

By | Mobile, Social networks, Video | No Comments

3GSM

I have just arrived in Barcelona for 3GSM. 

I will be checking out  developments in mobile advertising and mobile search, looking for interesting mobile communities, and taking a status check on mobile TV – all the while of course wondering the extent to which these are separate categories i.e. if there is one internet or two?

My other reasons for coming are to visit the stands of our portfolio companies (and their competition….) and to have a bit of geeky fun with gadgetary on display.

Social software for the enterprise and “edge in” adoption

By | Enterprise2.0, Social software | 6 Comments

I have said before that I think adoption of social software by the enterprise will be edge in.

the more I think about it, the more sure I am that this will be the model.  Imposition from the centre won’t happen much because:

  • Even if they see the value CIOs will resist the loss of control
  • Cultural change is necessary to get the best out of social software – you can’t force that through software implementation, companies need to empower their people to take decisions and let a culture of collaboration emerge

And collaboration is what we are talking about – through wikis, blogs, social bookmarking and other messaging tools.

For edge in adoption to work it will help if services are:

  • value add for single users in an enterprise and then add more value when colleagues are invited (in the same way that it helps if consumer internet services offer personal value as well as social value if they are to get off the ground – the del.icou.us lesson)
  • Fully hosted – even a toolbar download can be impossible for employees of large corporations – particularly banks
  • Free to sample and cheap for small numbers of users
  • Quick and easy to get started with

37signals is doing this awesomely with their simple collaboration apps.

Similarly I have been playing with Socialtext recently.  I set up a free trial and used their wiki to organise my thoughts on a deal and now I am using it to collaborate with lawyers and the company.  It added value for me as a single user as a workspace, is fully hosted and I was able to get started v. quickly (initially using it as a place to capture due diligence questions and thoughts on the deal).  I haven’t started paying anything yet though…..

Enterprise2.0 and the dangers of listening to customers in a new paradigm

By | Enterprise2.0, Social software | 11 Comments

Social bookmarking

I met with an enterprise social bookmarking company yesterday.  They have been building their product since last year and plan to launch shortly.  They correctly identified that search is taking more and more time and working less well in a business environment – and that shared bookmarks can provide part of the answer.

They have been out talking with customers and heard two messages:

  • The importance of privacy/security – bookmarks made by employees need to stay within the enterprise (or be capable of staying there)
  • Enterprises are afraid that a user controlled system like this might spiral out of control

Talking to customers is a great thing.  There is no insight like customer insight – in a former life I was a management consultant and this was my gospel.  I stand by that today.

But listening isn’t always enough.  Small tech companies often need to lead their customers – this is what being a visionary is all about.

Of the two messages above one strikes me as useful, and the other not so useful.

Knowledge and information is an increasingly important source of competitive advantage for companies these days, so it is right and proper that they are careful about who they share it with.  In my opinion people are often too concerned about this and miss out on the benefits of collaboration because they are afraid to share, but without doubt there is a balance that needs to be maintained.  So enterprise social bookmarking software needs to be able to control the sharing of bookmarks within the company and outside it.

IMHO fear of loss of control by the IT department will slow the adoption of social software in many enterprises.  The power of social bookmarking and other enterprise2.0 applications is that they put the user in control – this is part of a wider shift in the culture of management from control to co-ordination – and many managers will resist it.  Understandably they fear what might happen if/when they delegate true authority to the edge of the enterprise and it will only be those with courage and vision who lead the way in the short term.

So building taxonomies and other control-from-the-centre structures into a social bookmarking service risks undermining the very thing that makes social software powerful – that control sits with the user.  In this area I would trust my instincts as a visionary and target customers who could be brought round to my way of thinking.

For a definition of enterprise2.0 check out this earlier post.

DRM – music and film industries going in different directions?

By | Music, PCTV, Video | 2 Comments

Down with DRM 

It was interesting to read on page one of the Financial Times this morning that Steve Jobs is saying the record industry should ditch DRM and then on page twenty one that Jeff Zucker new CEO of NBC is going the other way and attacking YouTube over their refusal to protect copyrighted content.

(The irony of not being able to link a post on DRM to the source material in the FT because of their DRM is not lost on me.)

Unprotected music will help Apple sell more iPods (which is where they make their money) and taking this position will help Jobs in his battle with Europe over iTunes compatibility with rival MP3 players – so he has an interest in taking this position.  None the less there is a growing momentum towards DRM free music in general when you take this alongside the recent announcement from indie labels and musings from the majors on the same subject.  (Although I accept that the devil will be in the detail and there is a long way to go from announcement to DRM free service.)

Owners of video content are firmly sticking to their copyright guns though. 

This might be a question of timing.  When Napster was in it’s heyday the music industry was sounding very much like the TV/film industry is today, and I’m sure I’m not the first to suggest that YouTube might be the Napster for video.  If this line of thought is correct then we can expect the TV media world to pursue the application of digital rights aggressively until the evidence they have failed is overwhelming.  For the music industry illegal downloads outnumber legal downloads by over 10:1 – and the major labels are only just starting to wake up to the impossibility of imposing DRM.

The trouble with this is that it ignores a major difference between the music and tv/film industries.  A substantial part, possibly the majority of music industry profits come because people who listen to music and love also buy merchandise and go to concerts – so losing music sales doesn’t decimate the industry.  TV and film is different – if their is no payment at the point of consumption (via advertising, subscription, or pay per view) then there is nothing.  (I have posted on this in the past.)

For this reason I think that Hollywood will need to find a way to protect it’s digital rights.

As an aside IMHO, the Walmart movie download service will not be game changing.  I say this because they are pricing their movies at “near DVD prices”.

YouTube struggling with monetisation?

By | Google, Video | No Comments

I wrote last week that I hoped YouTube would be successful in monetising their traffic and building a profitable business.

News that Viacom, parent company of MTV, has asked YouTube to remove 100,000 clips does not bode well.  This statement from Viacom and some more detail on the issue is reported on e-consultancy.

 “It has become clear that YouTube is unwilling to come to a fair market agreement that would make Viacom content available to YouTube users.”

“Filtering tools promised repeatedly by YouTube and Google have not been put in place, and they continue to host and stream vast amounts of unauthorized video.’

Mobile Search

By | Mobile, Search | 4 Comments

Mobile search 

I was at a great MobileMonday event last night where the topic was mobile search.

There was some really forward thinking discussion about what mobile search is and the challenges of delivering a solution that will be compelling for consumers.  To much of the dialogue on this subject focuses on the big upside story (billions of mobile phones that are very personal devices) and ignores the reasons why mobile search hasn’t really gotten off the ground so far.  In fact Nic Newman of the BBC was honest enough to say that usage of the BBC mobile internet properties is “disappointingly low”.  Other estimates through the evening were that approx 1% of searches are on mobile.

The most important reasons for that, from Nic’s point of view are:

  • Low awareness – most people still don’t realise they can get BBC content on their mobile
  • Findability – even if they know it is there, they can’t find it easily enough
  • Small screen
  • Limited input

Two of those we can do something about in the short term, but two we can’t.

In his opinion the reasons to be optimistic are the success of the mobile internet in Japan and Korea, and research that shows there is a huge untapped need for access to information on the move.  I buy that.  After porn the most common searches on mobile are for taxis, restaurants and take aways – which seems to back up this point.

There were no forbidden topics last night when Martin Wilson from Yell took the floor – I liked his style – particularly  his focus on delivering a good service on mobile without getting distracted by a lot of the noise that can drown out many good initiatives in this space.  For example Yell mobile is a local search play and Martin was quick to draw out what people want – results delivered to maps, simple services, flat rate tariffs – and what they don’t care about – location based services.  It was refreshing to see someone in his position prepared to move the debate forward publicly by pointing out that 98% of the time we know where we are and 75% of the time we want information for somewhere other than where we are.

One piece of advice Martin had, which I echo, is not to try and bring in different business models just because something is mobile.

There was also a lot of interesting talk about what needs to be done to improve the mobile search experience.  This comes down to

  • query disambiguation using context – lots of good ideas discussed here, none of them new, and all of them quite hard to implement IMHO
  • better delivery of results – the mobile interface makes clicking through multiple links prohibitively painful (some research was presented showing that people give up after 10-12 clicks or scrolls) so improving the speed and putting more info in the search result itself sounds like an intelligent answer – this is where the impressive Steve Ives or Trigenix fame is headed with his new start-up Taptu

Mobile search is a big prize – potentially bigger than desktop search, which would make the winner bigger than Google – always assuming that Google doesn’t win of course.  The challenge for Taptu and the more advanced mobilePeople will be seeing off the competitive threat of the wireline search giants (Google, Yahoo! and Microsoft) whilst finding a way to navigate around operator inertia.  Getting the right balance of white label and own brand strategy will be critical for these companies as they balance the benefits of short term distribution and revenues against long term value creation.