Category

Widgets

Time for something new in online advertising

By | Advertising, Consumer Internet, VRM, Widgets | 17 Comments

My buddy Paul Fisher of Advent published some research last week showing that venture capital investments into ad technology are over $580m so far this year.  Moreover Europe counted for 45% of the total in this sector, which is a lot when you consider that we only account for around 20% of venture investment across all sectors (by any sensible long term measure we should be nearer half, but that is another story).

There are some interesting looking businesses on Paul’s list, many with the general idea of pushing the web models to new areas – widgets, video and so on.  I’m sure lots of them will go on to be very successful (including DFJ’s contextWeb) but I can’t shake the thought $580m is a lot of money to invest in companies that are largely chasing extensions to a market that is already largely consolidated – albeit a very large and fast growing market.

Which is why my thoughts have been turning to ideas and models that are more revolutionary, and I have become interested in permission based marketing/VRM and more recently publisher based tools for ad optimisation.  What the online ad industry needs more than anything is a way to drive much higher eCPMs, and both VRM and publisher based tools offer the possibility of much, much, tighter targeting, based on the availability of a higher volume and quality of data than has been available to most current approaches.

The future of the desktop will look very different from today

By | Business models, Enterprise2.0, Social software, Widgets | 4 Comments

There is good, if rather long, piece on ReadWriteWeb this morning about the future of the desktop. This topic is of wide ranging significance, particularly for anyone with an interest in cloud computing, desktop apps and the browser.

I would highlight these points the article makes:

  • None of the webtop services around today have really nailed it
  • The browser will swallow up the desktop – it is a classic embrace and extend story
  • We will see a shift from information to attention – and the focus of apps will move from organising information spatially to organising information temporally
  • The webtop will be more social featuring shared spaces collaborative working – this is the natural human condition which has been stifled by the desktop and file mentality
  • This will be portable and federated with open policies and permissions

Services like Friendfeed are today giving us the first glimpses of how the future might look across a wider range of applications.

VRM – vendor relationship management

By | Advertising, Business models, Online retail, Widgets | 23 Comments

VRM is CRM flipped on its head.  Instead of vendors collecting data in systems like Siebel and managing customers the idea is that customers start storing and managing their own data and using it to manage suppliers.

At the moment this is little more than concept stage stuff, championed by Doc Searls and being talked about and promoted by the likes of JP Rangaswami, Alan Patrick, Adriana Lukas and now Ian Delaney at NMK.

I think there is a lot of potential in this idea for a couple of reasons:

  • Traditional advertising is increasingly broken – people are less and less tolerant, they have more tools to avoid it, and they are increasingly spending their attention in places where advertising doesn’t work for one reason or another
  • VRM is a much more elegant solution to matching supply and demand than traditional advertising.  At the moment their are inefficiencies on both sides of the equation – advertisers waste a lot of money with machine gun campaigns and as consumers we have to put up with a lot of irrelevant ads.  VRM potentially eliminates both these problems.

So what is VRM?

These posts by Delaney and Lukas spell it out in detail, and this is the main Project VRM site.  For the quick version here are some excerpts from Delaney’s post.

VRM as an implementation of the Cluetrain notion that markets are conversations (finally):

Searls views the VRM project as unfinished business from the Cluetrain Manifesto. The central insight there, ‘markets are conversations’, has struck many people as true and right, but the technological implementation and management of that remains frustratingly tricky.

The basic idea:

Individuals record their preferences and the personal data that you normally need to use an ecommerce site …. So you have got all these details and preferences recorded in your online strongbox. Then – if you want – you let Amazon or Waitrose or whoever have access to the parts of that that you chose. The consequences might be that (a) you never have to fill in online forms again; (b) companies get to submit tenders for whatever it is that you want. I need to buy a new laptop – these are my preferences – I’m letting that information out to vendors. What have you got? (c) companies have access to rich data about what their customers actually want from them.

Ryanair bargains built by the guys at Nooked is an example of VRM working, but only with a single vendor.  You download their widget to your desktop, tell it which airports you are interested in and it sends you special offers for the places you have said you are interested in.

The bigger idea is that from the same widget you solicit offers from all airlines, and you do so using more parameters than are available in the Ryanair gadget.

Going back to the big picture, to me it all sounds very cool.  VRM will be an amazing tool/service, if and when, it is implemented successfully.  The challenges I forsee include buidling a service that really adds value from a consumer perspective, figuring out who hosts and pays for it, getting vendors to interact with the system responsibly.

If these problems (and doubtless many others) can be licked the opportunity is BIG here – the market you are going after is, um, all of the advertising in the world.

Advertising broken
Improved efficiency of system

Quotes from Ian’s post on what it is
And maybe Adriana

Question – will it work….

Widget monetisation

By | Business models, Widgets | 4 Comments

Reporting on Slide‘s rumoured $500m valuation Ivan on Snipperoo looks again at the question of widget business models.  Apparently the valuation is based on Slide turning itself into an ad network.  Ivan isn’t too thrilled and says:

It looks like all widget companies are trying to turn themselves at one level or another into ad networks – pace Clearspring and Netvibes and others. And while I wish them all the best of luck with this, it will be a bit sad if the promise of widgetization just turns out to be another way to build an ad network.

All the companies he mentions have big audiences and if they are to succeed they need to start monitising.  For me that means either advertising or subscriptions.  I.e. they either turn themselves into an ad network and put ads in their widgets or people start paying to use the widgets (without ads).

I don’t see much evidence of people paying for widgets (I’d love to hear about examples though) which explains why everyone is going down the ad network route.

Even that will be a little challenging though.  Given that a widget takes up only a fraction of the screen it will need to have many many more users/page views/widget views than a traditional site to have the same monetisation potential.  And that is before you consider that in the limited real estate of a widget it is hard to place ads without compromising the user experience.

As the Business Week article, for the ad network strategy to work, Slide will have to build a ‘jaw droppingly huge audience’.  They are on their way though, a bunch of the more famous Facebook apps are from their stable, including FunWall and SuperPoke, and according to their website they have 144 million uniques a month globally and 84 million apps installed on Facebook.

Union Square invests in a virtual virtual business

By | Facebook, Social networks, Widgets | One Comment

Fred Wilson announced today his “first investment in a company that has no website”. Hot on the heals of yesterday’s announcement that Flip is becoming a widget only social network Union Square invests in Zynga Game Network – which exists only as widgets inside social networks (Fred says they will probably get a website today, but the point is that the traffic and functionality will reside elsewhere).

Zynga is a games business that lives within social networks, largely Facebook, but also Bebo and others. There is the usual quality post on the Union Square blog explaining why they made the investment, which is worth a read if you are in this space.

One of the cool things about Zynga is that you can log in to your account on Bebo and play e.g. Texas Hold’em against your friends on Facebook. If they can get a lot of people playing games across networks then there will be liquidity (and value) in Zynga that is independent of the underlying traffic. The cross network play makes it harder for the competition (e.g. a competing Texas Hold’em game would need to be successful simultaneously in multiple networks) and also gives them negotiating power vis a vis their network host.

On widgets, social networks and the nature of existence

By | Business models, Facebook, MySpace, Social networks, Social software, Widgets | 7 Comments

I haven’t written much about widgets for a while, but Ivan Pope’s Flip widgetises itself caught my eye this morning.  (And Ivan, the respelling of widgetises is deliberate – if we’re going to make up words let’s do it in  English…. lol)

Ivan wrote:

paidcontent.org reports that Conde Nast‘s teen site Flip has decided to loose these earthly bonds and become a site that exists purely on other network

As Ivan also says, I think we will see more and more of this.  I have been banging on about atomisation of content for a while now – and this is part of the same trend.  Different types of content will atomise in different ways – for pure content like blogs atomisation is coming via RSS, but for sites which offer functionality too then RSS won’t cut it and widgets are necessary to control the user experience in a window in someone else’s site.

For me this move by Flip and others is all tied up with the rising popularity and increasing open-ness of social networks.

The popularity is all about footfall – the apps and functionality need to be where the traffic and personal information is.  This last point is increasingly important for social apps – my social graph only exists in a couple of socnets so if you want to take advantage of it you need to work in the place where the data is held.  Three great examples from my Facebook profile are Blogfriends, Visual Bookshelf and Who Has the Biggest Brain?, and Flip’s first widget incarnation will be a Facebook app.

The open-ness is important from two perspectives – functionality and dependency.  Clearly you need a good API to have good apps, and Facebook has been leading the way in this regard, with Google’s OpenSocial now providing powerful support.  The dependency point talks to how much your business can ultimately be worth.  It looks like we are heading towards a world where the socnets will be sufficiently open that companies like Flip can exist only as (connected) islands in Facebook, Myspace, Bebo, the next great thing etc., etc., and therefore not be critically dependent on any one other company.  That is important if you want to sell your company for a lot of money.  Events like Myspace’s $250m acquisition of Photobucket are very much the exception rather than the rule.

So we find ourselves in a situation where internet companies might not even need their own website.  A kind of virtual, virtual company if you will….

The uncanny valley – from robots to behavioural targeting

By | Advertising, Widgets | 9 Comments

I attended Ivan Pope’s Widgety Goodness conference in Brighton yesterday – and I had a great day.  There were lots of interesting speakers and I returned to London more educated than ever before on the widget-sphere.

As I checked my notes this morning though I found myself wanting to write not about widgets, but about Russell Davies’s idea that the uncanny valley concept from robotics might have application in the ad world.

From Wikipedia:

The uncanny valley is a hypothesis about robotics concerning the emotional response of humans to robots and other non-human entities. It was introduced by Japanese roboticist Masahiro Mori in 1970.

Mori’s hypothesis states that as a robot is made more humanlike in its appearance and motion, the emotional response from a human being to the robot will become increasingly positive and empathic, until a point is reached beyond which the response quickly becomes that of strong repulsion. However, as the appearance and motion continue to become less distinguishable from a human being, the emotional response becomes positive once more and approaches human-to-human empathy levels.

This area of repulsive response aroused by a robot with appearance and motion between a “barely-human” and “fully human” entity is called the uncanny valley. The name captures the idea that a robot which is “almost human” will seem overly “strange” to a human being and thus will fail to evoke the empathetic response required for productive humanrobot interaction.

The diagram below is an attempt to capture the idea diagramatically.


Russell’s idea is that we have a similar emotional response to targeted/personalised advertising.  According to this school of thought when an advertiser knows a little bit about us we get slightly more relevant ads and that seems fine, but when they start to know a lot about us it freaks us out.  Interestingly enough that takes us to the point marked ‘zombie’ on the graph above.  What is unknown at this stage is whether if the advertiser gets still more information about us we will get over our aversions and come out the other side of the uncanny valley.

I think there is a lot of merit in this idea.  Personalised ads run the risk of being like people who pretend to know you, but don’t really, and constantly betray that fact by making little mistakes.  If they didn’t make the mistakes (and I would include sending me too many ads in this) then I can see how the experience could come out of the depths of the valley and into positive territory.

There are two forces at play here though – the first and most obvious one is whether the advertisers will ever get it right enough that the personalisation will stop being annoying and start feeling useful.  The second is whether the populace at large will give them enough time to do so.  My view is an emphatic yes on the first point and that it is a close call on the second.

More platforms than the spice girls

By | Consumer Internet, Facebook, Google, MySpace, Social networks, Widgets | 2 Comments
Look at those shoes!  Now look at the rush of social networks looking to follow Facebook’s lead and by offering API’s and turning themselves into platforms for third party applications.  This is unlike the shoes, in that this type of platform is not useless and I’m betting it is no fad.
It is of course true that Facebook was first to market with this initiative back in May and that everyone is now jumping on the bandwagon and copying them, but for my money that is more because the last 4-5 months have shown what a great move Facebook made, rather than a case of everyone following the latest fashion.
You probably know this already, but just in case, there are now 5,500 third party applications running on the Facebook platform.  It is understandable that other social networks want to emulate that success.
Myspace has announced that they will launch their platform next week, rumours are that Google will follow suit in November, Ivan Pope reports that hi5 has similar plans, I have heard Michael Birch say that Bebo has similar plans and finally LinkedIn is also heading in the same direction.
All of which is great.  It is great for consumers who will get more apps and a better experience out of their social networking and online time, and it is great for entrepreneurs and VCs as the wave of innovation that is coming from Facebook spreads to other platforms.
In particular I am thinking that if a successful Facebook app can build audiences in other social networks then they will eliminate the problem of being dependent on Facebook.  That will a) increase their value, and b) give them leverage in any negotiations they may need to have with Facebook (or any of the other networks).
People mean lots of different things by the word ‘platform’ though.  Marc Andreessen wrote a great post on this a couple of weeks ago.  He defined three different types of platform, rising in complexity to code and utitility for developers.
  1. The Access API – developers can pull data out of the application and mash it up in their own apps running on their own servers which users access from the developers own site.  E.g. Flickr.
  2. The Plug-In API – developers can write apps to run on their own servers but which users access from inside the parent platform/site.  E.g. Facebook
  3. The Runtime Environment – developers write apps that run on the servers of the parent platform/site and which users access from inside the parent/platform.  E.g. Andreessen’s Ning and Second Life.
This brief summary doesn’t even get 10% of the way into what is a very complicated subject, and if you are interested you should read Andreessen’s post in full.
That said, I am starting to question his view that level three platforms are the way of the future.  (Not something I do lightly given that his accomplishments and mine wouldn’t get on the same chart, even with a logarithmic scale.)
My question comes from the observation that if I am running the same application on a number of different platforms (say inside Facebook, Myspace, Bebo, hi5 and maybe even a social network running on Ning, or even Second Life??) then wouldn’t I want to run and host that in one place centrally, on my servers?
That way I can have one set of code for the application logic which is translated for the different social network platforms by a layer of presentation logic (and as Arrington points out providing that presentation layer might be a big opportunity in its own right).
All of this is becoming important as Myspace has said that their API will let developers run apps on their servers, which sounds like a Runtime Environment as per Andreessen’s definitions.  I haven’t seen any details about how the other networks plan to implement their ‘platforms’.

Monetising Facebook apps

By | Facebook, Social networks, Widgets | 8 Comments

I missed this Techcrunch post on monetising Facebook apps back in July. It describes three companies that are experimenting with differing monetisation models:

  • fbExchange which allows Facebook app owners to trade space with each other – basically a cross promotion scheme
  • Lookery founded by Scott Rafer of Mybloglog fame – he is building an ad network comprised solely of real estate on Facebook apps
  • Rockyou which is essentially a CPA network of Facebook apps dedicated to finding new users for other Facebook apps

If this is still state of the art thinking then I would say this issue is far from being cracked. As the comments on the Techcrunch post point out the first and third of these don’t get us anywhere – they are like pyramid schemes. Until someone has figured out a way to monetise this real estate other than from other Facebook app owners there is ultimately no value being created. Apparently Facebook app owners are paying up to 30 cents to acquire a new user – that is crazy when the monetisation is still in doubt – IMHO anyway. You could spend a lot of money that way and end up with nothing more than a lot of users to support. As I’ve said before, and I’m paraphrasing Ben Holmes of Index here, it only makes sense to start paying to acquire customers when you have got a clear view on their lifetime value. Otherwise you had better find a way to acquire them for next to nothing. This is the situation most social networks find themselves in and if you look at all the successful ones they have cracked the viral nut and users have come flocking for free. (It can make sense to bend the rules in the early days before you get to critical mass though.)

Which leaves Lookery – this makes sense as a model provided there is enough real estate to work with. The Facebook apps I use (mostly Blogfriends) don’t have the space to show ads – although they might be getting to the point where they could change that. The other obvious question here is whether Facebook apps are different enough to traditional display advertising that Doubclick et al won’t just scoop up this extra inventory.

The great news on this front that I hadn’t quite twigged before is that the Facebook apps have all your profile information, so it should be possible to target ads extremely effectively and drive CPMs to high levels. As Deep Jive Interests pointed out

Facebook applications seem like a fantastic opportunity for advertisers (and Facebook app owners) because many Facebook users have not altered their privacy settings, and therefore many applications have access to demographic drill-down type data that advertisers crave.

but

The problem is that many Facebook users, have, in fact, not yet noticed that they are being targeted in this fashion — and I suspect that many, when they will, will not like it.

The old privacy chestnut again. This debate is getting so boring now that I can’t wait for someone to start using personal data to highly target ads so we can finally gauge the reaction.

The last point to consider is (again from Deep Jive Interests)

Furthermore, many Facebook users, particularly users of applications — are also probably not fond of the whole idea of applications trying to sell ad space on *their profile*, essentially monetizing their activities (and in a circular way, their friends) absolutely gratis.

In a way if an app is showing ads in your profile it is your traffic they are monetising, but you could make the same argument about Facebook itself showing ads on your profile so I’m not sure this is a killer point. Some people are bound to get pretty fired up about it though.

As I read this post back I was hit by the realisation that this is a re-run of the widget monetisation discussion we had earlier this year. The lesson there (mostly from Photobucket) was that once the widget got sufficiently functional users were willing to put up with ads even though the real estate is very limited. I guess it will be the same here.

Rate this blog – sidebar widget

By | Blogging, Widgets | 10 Comments

One of the challenges in writing a blog like this one is knowing which of your posts are the good ones – ie the ones that you, dear reader, enjoy the most. The comments and Technorati’s list of blogs that link to mine help a lot – but they are both blunt tools. By that I mean you have to feel pretty strongly about something I wrote, and have something to say, and be prepared to do it in public before you will leave a comment or write a post of your own that responds to mine.

My hope with the feedback widget I have just installed from SexyWidget is that it will lower the barriers to leaving a quick bit of feedback, so I will get more of it and can tweak what I write accordingly. Unfortunately you have to log in/register before the feedback will be accepted. You can do that in widget, but it is still a bit of a hurdle. The widget is in the top left sidebar. It isn’t perfect, but hopefully it is good enough.  One smallish issue is that it assumes you have a US keyboard – which means if you register you will need to press Shift+2 to get an @ for the middle of your email address.
I’m interested in all thoughts/comments from style to content. E.g. the post was ‘too long’, ‘a little confusing’, ‘brilliantly written’ (?!?), ‘boring’, ‘original’, ‘repetitive’ etc.

Beyond the primary objective of improving what I do here the general notion of feedback direct to site and lowing the barrier to participation in ‘the conversation’ is an interesting one. As we more into the age of participatory media it is a big deal to know whether we will move much from the 1% create, 10% comment and 89% consume passively that people estimate is the situation today. We will have to if the ‘age of participatory media’ is going to be genuinely participatory.

My feeling is that there is a generational issue at play here. For the Myspace generation leaving comments on people’s walls and profiles is second nature in a way it never was to me as a kid and that in itself might be enough to move the percentages above. Another thing that will help is tools like the feedback widget I have just installed which make it less of a big deal to make your first contribution.

What might be better than a sidebar widget would be an in-post widget that worked inside RSS feed readers. Roughly 70% of my readers access TheEquityKicker via a feed reader so something that worked in-feed would make it easier still to leave feedback.