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Consumer & Media Strategeries at Microsoft January 31, 2007

Posted by David Card in Media.
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This FT interview with Microsoft’s Steve Ballmer is a must-read. The NY Times did a really good piece on Ballmer last weekend, but this one is straight from the source. Some good clues on what Microsoft thinks is (most) important, and how it plans to get there.

    Today, the big phenomenon that we can embrace – the big fat thing for us to think about, embrace, endorse, compete with – is what does ad-funding mean? Whether it is for search, or whether it is for business-services, or whether it’s for other online services, what does that funding mean as a competitive business model and do we embrace it as is? Do we modify it? Do we just compete with it, with more of a transaction or subscription model? But how we deal with that is a Job One issue.

    So rather than say search which is important (and search will be the way people think about it), I would say across the product line, thinking about that business model and how we embrace, extend, change or compete is very important.

Yeah, I think it’s safe to say they still have smart guys running things in Redmond.

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I Guess a Stanford MS Doesn’t Count Outside the Colonies January 31, 2007

Posted by David Card in Media.
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Quoting the Guardian: “Google, launched in 1998 by two Stanford University dropouts, Sergey Brin and Larry Page…” Ummm, actually, they were PhD candidates. Bill Gates, Steve Jobs — now they were dropouts.

Super Bowl Ads As Cheap Creative? I Doubt It January 31, 2007

Posted by David Card in Media.
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This is a pretty silly interpretation of the consumer-created ads that are going to run on the Super Bowl. It’s not about lowering the cost of creative — it’s about engagement, and, of course, riding the hype tide. I suspect the marketers spent as much on creating the contests as they would have on traditional creative. But they’re getting a big bonus in marketing and PR, as evidenced by the story. And who knows, maybe they’ll get a cool ad…

    For advertisers, consumer-created content is a cost-savings bonanza. Advertisers are paying more than $2.6 million for the most expensive 30-second spot in this year’s Super Bowl, up from $2.5 million last year. Just to produce a top-level 30-second ad can easily cost more than $1 million. A commercial produced by an amateur, by comparison, can be had for the price of a plane ticket and a trip to the game for the winner and some post-production cleanup for the ad itself.

Best Search UI — Yes, It’s from Ask January 28, 2007

Posted by David Card in Media.
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Ask’s AskX experiment is the best UI from a mainstream search engine I’ve seen in years. If the results are good, it’s enough to make me switch. Try the “apple” experiment (Google’s first page of results have nothing to do with fruit, only computers and iPods; Microsoft’s Live Search does better). Woo hoo, faceted results. Why, oh why did AOL abandon using Teoma atop Google results?

I’m not sold on AskCity yet, but this is another great sign of life. But guys, if it’s so “secret,” why is it in the Journal?

New Home for Jupiter Research January 28, 2007

Posted by David Card in Media.
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We’re moving. To the Cathedral of Commerce. The tallest building in the world till 1930. Woolworth_Building.jpg

When you come to visit, don’t get lost.

foggy.jpg

MSN Tidbits from Microsoft 4Q06 Earnings Call January 26, 2007

Posted by David Card in Media.
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Microsoft doesn’t spend a lot of time talking about MSN on its earnings calls, but here’s the gist. Online services revenues — meaning MSN — grew 5% year over year to $624 million. But that’s dragged down by the dial-up access business MSN has been exiting longer than AOL has. Advertising was up a solid 20% year to year, and 24% sequentially, to $462 million, according to financial filings. Microsoft said display was healthy, and paid search grew “modestly,” but actually grew for the first time since MSN dissolved its Yahoo/Overture deal. Microsoft hopes to have revenue per search figures back where they were a year ago by the end of the fiscal year (June).

It lowered its guidance for the year, to growth of 3% to 8%, but said ad revenues should be up “in the mid-teens.” Remember, MSN is already halfway through its fiscal year — that ad outlook is comparable to what Yahoo is looking for, but for the calendar year.

Access lost another 100K subscribers from Q1, for a total of 1.8M. MSN ended this quarter with 8.9 million subscribers to other paid content and services.

For those keeping score, MSN’s 20% advertising growth rate was faster than Yahoo’s 15%, but its revenues are less than half the size. Google and AOL results to come next week.

More on Oscars and Long Tail January 25, 2007

Posted by David Card in Media.
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Per my prior post, I got this from my Box Office Mojo newsletter. Invaluable site, btw, bookmark it now.

    As a whole, this year’s crop of Best Picture nominees had grossed $243.7 million when nominations were announced. While it was a rise over last year’s $186.4 million–which was the least popular group on record–the tally was still relatively low in attendance. For the third year in a row, the Academy did not nominate a true blockbuster, but one movie had crossed the $100 million mark (‘The Departed’) unlike the previous two years.

And if you think the Best Pictures are “obscure,” check out where the Best Actors and Actresses come from. I’m thinking this — and Ellen DeGeneres — means lousy ratings for Oscar night. Memo from ABC to Hollywood: Thanks a bunch, guys.

One More Reason Portals Still Matter January 24, 2007

Posted by David Card in Media.
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Google can’t do this. Not yet anyway. Yahoo, AOL, and MSN can. Can MySpace?

    The deal calls for each of the three series — “Cooking with Tyler Florence,” “Home Entertaining with Michele and Gia” and “Home Improvement with Eric Stromer — to incorporate a GMC vehicle in the action. In addition, AOL will run pre-roll GMC ads during half of the shows’ streams and static banner ads will be fitted into each show’s home page.

Highlights from Yahoo’s 4Q06 Earnings Call January 24, 2007

Posted by David Card in Uncategorized.
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Highlights from Yahoo’s Q4 earnings call yesterday. As usual, I’ll focus on industry rather than financial things. The slides are here.

Ad revenues (search and display) ex-TAC (that means, minus the revenue-sharing that Yahoo pays out to its search partners) were up 11% sequentially compared with the miserable Q3, and up 15% year over year, to $1.02B. Fees paid by consumers, small businesses, and broadband partners were up 1% from Q3 and 15% from a year ago, to $213M. Its outlook is 8% ex-TAC revenue growth for Q1, and 14% for the year.

After a re-org and a lousy quarter, a lot of the talk on the call was on focus and strategy, as well as “we’re doing better than you think we are,” which, in fairness, is true. The big news is that Yahoo is ahead of its own schedule on transitioning US advertisers to its new search platform, known as Project Panama. US search results will incorporate the new algorithm (not just the highest bid, but also a click-through factor, something Google’s been doing for years) beginning Feb 5. And oh by the way, though nobody really said this before, lo and behold, Panama is not just about search but will also handle other ad formats and platforms, and work within Yahoo properties as well as off-network. Hey, isn’t that Microsoft’s strategy? Why, yes it is.

Big Picture

Similar to last quarter, Yahoo said its strategy is to focus on 1) fixing search, 2) opening the gap in display and 3) capture new opportunities in social media, video, and mobile. This makes perfectly good sense, peanut butter be-damned. There’s nothing wrong with Yahoo’s strategy that a little execution can’t fix. In fact, ceo Terry Semel sounds the same theme that I do about Yahoo: it’s the best-positioned online media company to tap into the broadest trends in behavior and advertising.

That said, this seemingly real-time expansion of the scope of Panama is suspicious. “We have a roadmap, we’re just not willing to discuss it yet.” That’s weak, guys. And if I hear another word about Yahoo Answers without a solid explanation of why it matters… Actually, it’s supposed to affect search. That’s the line. Okay. Still waiting. How come Wall Street doesn’t hammer Yahoo on its so-far lame social media efforts the way they attack revenue per search?

Advertising and Search

– The advertisers that represent the “large majority” of US search revenues are all on Panama now, a little ahead of schedule. The transition in the US will be done by the end of 1Q07.
– As noted, the new ranking model will kick in on Feb 5.
– Panama will start to roll out in international markets in 2Q07. Japan will be the first market.
– Yahoo’s top 200 US display advertisers grew just under 30% in the quarter. CPG, Financial Services, and Pharma were very strong. When asked about FS, which was blamed in part for Q3, Semel called Q3 an anomaly, not a trend.
– While display is up nearly 30%, search is up high single digits. Revenues per search is still declining; Q1 should be the trough.
– Yahoo is playing with “audience-based selling” across demographics, geographies, and behavior — across search and display.
– Business with Right Media, which Yahoo took a 20% stake in, is still immaterial. Yahoo is looking to sell its own remnant inventory more efficiently, but also to buy inventory from the Right Media exchange, and package that with its own inventory — both premium and remnant.
– Yahoo says it gets over 100M UV on its social media properties (Answers, FlickR, delicious) and that 50% of that audience is under 35, so take that, MySpace and Facebook. Yawn. Page view growth is from e-mail and that social media stuff. Again, why aren’t people asking about $$?
– There’s a strong underpinning of behavioral to many of Yahoo’s comments and answers. It’s unclear to me whether this means “true” behavioral (super sophisticated targeting) or the usual application, i.e., following someone who’s just been to the autos page to use “remnant” inventory better. Not that there’s anything wrong with that.
– Mobile and video are both gonna be HUGE, but not anytime soon. Yahoo seems to think mobile means “graphical” — it says nothing about SMS, which is where all the money is right now.
– Asked directly, Yahoo responded that the opportunity for Yahoo to leverage its advertising network off its own properties — regardless of all the “clean up the affiliates” and rising TAC talk — is equally important. Not just search, either. Can’t say I’ve heard them say this before.

Paid Content and Services

– As usual recently, almost no color on fees. 16.3 million paid relationships, up 29%.
– Yahoo has added roughly the same number of paying customers for the past two years, and expects to do so again. Forecasts 19M by year-end 2007.
– ARPU should be $3 to $4 per month per relationship. Yahoo said “trending toward the low end” of that figure for the first time.

Outlook Assumption Detail

Four factors:
– Rising pay-outs (TAC rates) to network affiliates
– MSN relationship totally done (it represented $75M in 05 and $25M in 06)
– Revenue per Search effects: the ranking algorithm should start paying off on Yahoo’s own sites in late Q2
– The impact of Panama on affiliates will be varied: no benefits in 2007

Allegories? Uh, No, They’re Journalism January 24, 2007

Posted by David Card in Media.
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Sigh. Ryszard Kapuscinski was a very, very good (New?) Journalist — does anyone call them that anymore? — and a brilliant writer. Read The Soccer War. Not sure what the Times obit headline writers are thinking.