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Social and Online Media Need Privacy Plan Now October 25, 2010

Posted by David Card in Uncategorized.
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Privacy isn’t just Facebook’s problem. In fact, the whole consumer Internet and media industry had better get its collective act together on the privacy front or get ready to face serious consumer backlash and, perhaps worse, government regulation.

For the second time this year, Facebook is at the center of a privacy controversy. Many apps on the network have been transmitting Facebook user IDs to third parties, some of which are data aggregators or miners that create profiles of users or groups and sell them to marketers. This user ID leakage was the same problem Facebook “fixed” in May.

Although wiser heads pointed out that both times represented fairly common practices online, and that personal email addresses are potentially much more dangerous in terms of identifying and exposing consumers, the stuff hit the fan. “Is Facebook evil or merely incompetent?” asked one critic. Has it “lost control of its platform?” wondered another.

Consumers Care — At Least They Say They Do

Regardless of their behavior as consumers, many say they care about privacy. A Zogby poll showed that 87 percent of respondents were concerned with the security of their personal information online, and 80 percent were bothered by advertisers tracking them. In another survey, 96 percent said online companies shouldn’t be allowed to share or sell personal information to third parties without permission — though nearly half admitted they don’t read privacy policies. And if they’re annoyed enough, consumers will take action: The Federal Trade Commission says that 200 million phone numbers have been registered in its Do Not Call registry that clamps down on telemarketers.

What’s at Risk for the Industry?

Social media companies should be wary of potential government regulation. If legislators were to impose strict rules on information sharing or opt-in practices, the usefulness for consumers and companies of social graphs could be drastically reduced.

And then there’s advertising.

Alcohol advertising on television, for instance, is self-regulated; it’s the TV networks’ own standards that kept booze off the non-cable airwaves until recently. It’s not illegal to promote liquor, just the networks playing it safe. In contrast, advertising on kids’ TV shows is a matter of law, as is the tobacco advertising ban that’s been in place since 1971.

Members of Congress are questioning Facebook on its current snafu. They’re the same ones that went after the “zombie cookies” highlighted by the Wall Street Journal. Even before that, online privacy bills had been proposed in the House, and European regulators are passing fresh proposals around the European Commission. I doubt the online media industry wants to rely on congressmen understanding the nuances between zombies and other cookies — a ban on cookies would completely destroy ad targeting and optimization.

How Should the Industry Respond?

The online media industry needs to rev up its lobbyists (Google spent $1.2 million on lobbying this quarter; Facebook $120,000), explain what’s going on to legislators and to the public, and seriously consider self-regulation. Additionally, social media companies should:

  • Explain what they’re already doing with consumer information, and not just on developer blogs. These stories need to be on home pages and in ad campaigns.
  • Go after real bad guys publicly. Facebook, for instance, is suing spammers.
  • Use the publicized information outlined in the first two points to create a set of best practices and an audited seal of approval.
  • Use an organization like the Online Publisher’s Association — rather than the Internet Advertising Bureau or the Direct Marketing Association — as a hub for public campaigns. It would be better PR coming from the publishers, who shouldn’t be afraid to play the “democracy needs a viable press, and the press needs viable advertising” card.

It would be too hard for Facebook to “give up on privacy” and expose all existing posted information everywhere, with the idea that its users would gradually move that info into a new, “private Facebook.” Longer-term, we may see consumers evolve private and public identities, but the industry can’t count on that right now.

Question of the week

How can social media solve its privacy problem?

Real-Time Advertising: How to Get in Early October 18, 2010

Posted by David Card in Uncategorized.
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Even if you don’t believe real-time feeds will become the dominant content consumption paradigm, it’s clear they’re a growing force. Consumer-paid access to real-time feeds is largely constrained to paid mobile apps today, so advertising would appear to be the immediate payoff. With that in mind, let’s look at how social media companies can best cash in.

I haven’t come across a forecast for real-time advertising spending, but it’s a nascent market that’s fairly concentrated: Facebook and Twitter represent the largest audiences. Market researcher eMarketer projects Facebook will collect $1.3 billion in ad revenues globally in 2010; presumably, most of that will be spent on Facebook’s news feed. Twitter is only just beginning to embrace advertising. But clearly, we’re talking about a business that will be measured in billions rather than millions of dollars.

The current audience concentration — and the resulting ad dollars — could diffuse. Already, a lot of tweets get viewed on third-party Twitter clients, as well as on Facebook. Somewhat similarly, Facebook is syndicating its content through initiatives like Facebook Connect and Instant Personalization, as well as arrangements that allow companies like Skype to show Facebook users’ updates and presence within its own application. So it might not be just Facebook and Twitter who can cash in on those audiences.

Could Real-Time Ad Networks Jump-Start Spending?

Advertisers demand a certain scale of audience before they start spending big money. As with other media — social or otherwise — ad networks can alleviate audience fragmentation, giving advertisers access to eyeballs across a number of sites or apps. The big ad networks from AOL, Google, Microsoft or Yahoo aren’t doing anything in the real-time space. Meanwhile, a handful of startups have emerged. That includes 140 Proof and OneRiot, who sell inventory on Twitter clients and apps, as well as Tweetup, which also makes its own destination site. Ad.ly will construct celebrity-sponsored updates and insert them in Twitter and Facebook streams.

I spent some time with OneRiot this week; its experiences are good indicators of the state of the real-time ad marketplace:

  • Tapping test budgets. OneRiot’s business is divided evenly between publishers (New York Times, ESPN, Guardian) who are promoting its stories or marketing their apps in feeds and more traditional marketers like Zappos and Stella Artois. OneRiot is getting part of the test budget of bigger campaigns, so advertisers are only spending tens of thousands of dollars with it. The company can charge 12 to 25 cents for click-throughs, or $2 to $3 CPMs.
  • Relatively simple targeting. OneRiot usually sells an audience type rather than target by demographic or content context. Its analysis shows that Twitter client users are a highly engaged audience; when they click through to a story or site, they’re likely to hang around twice as long, generating 7 or 8 pageviews.
  • Ad format experiments. OneRiot serves up text ads that look like search engine marketing, but its architecture can handle banners and richer formats. It says some advertisers have experimented with dynamic content that is contextually related and inserted into the text creative.

Ad Network Realities

Right now, the ad networks in real-time are ahead of most of the feed sites in sophistication, and could help move the market forward. But in most media markets, it’s the company with the eyeballs that commands the vast majority of ad spending. Not long ago, observers who probably over-interpreted Google’s success thought online ad networks could reverse this. But that hasn’t turned out to be the case.

Publishers and other content companies like to hold onto the best ad inventory and sell it directly to their best advertisers and ad agency clients. That leaves low-priced remnant inventory for the networks. NBC dropped Google’s TV ad network recently; Microsoft is shutting down its in-game ad network because its biggest customer, Electronic Arts, pulled the business in-house.

As with other media, the real-time ad network ecosystem will have to deliver targeting and measurement to capture advertiser spending. Companies like Klout and Gravity may help marketers identify influencer audiences. Kantar Media, a unit of ad agency holding company WPP, tracks offers competitive intelligence on ad networks, but hasn’t aimed at the real-time space yet.

Related Research: Social Media in the Enterprise

Question of the week

Could ad networks accelerate real-time advertising?

Why Facebook “Groups” Matters October 11, 2010

Posted by David Card in Uncategorized.
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The digerati’s reaction to last week’s Facebook announcement was entirely too focused on privacy. That’s partly Facebook’s fault, as the company presented the three new offerings under the headline of returning control to the user. But one of those offerings, Facebook Groups, is less about keeping secrets than it is about making the Facebook experience more relevant, and thus valuable.

Groups is the big deal in this three-pronged announcement, even if its initial implementation is very basic. Facebook CEO Mark Zuckerberg called Groups a “fundamental building block of the social web” because it’s so much more like reality. The resulting blocks could have a big impact on communications and identity management, and on viral application and content distribution as well.

Can Facebook Jump-Start Groups Adoption?

Before Groups makes a big impact, people will first have to use it. I agree with Zuckerberg: Most people don’t want to interact in the exact same way with all 135 (or 250 or 1,000) of their “friends.” In the real world, individuals belong to multiple groups based on things like shared interests, geography and family; if Facebook users put their online friends in groups, more relevant communications and experiences are likely to result. This would increase Facebook’s value, and with that, its usage. That’s the theory anyway.

Prior to Groups, Facebook users organized their friends by creating lists. But only 5 percent of Facebook users make lists; most make only one, according to the social network. In contrast, the company says, while the majority of users don’t upload photos regularly, 95 percent have a photo of themselves that’s been tagged. The “power taggers” do most of the work. And while many of the tagged remain passive, the point is that they’re included in the dialogue. Facebook believes Groups will repeat this pattern, eventually leading to 80 percent coverage of users. That’s also why Groups invitations are opt-out — to the consternation of some — at least in the service’s initial implementation.

What Groups Is Really About

If Groups’ adoption becomes widespread, those aforementioned “building blocks” could generate powerful results inside and outside of Facebook. Groups are woven into the Graph API; apps can make use of Groups. And Facebook intends membership and interaction to be syndicate-able outside of Facebook, similar to its Like button or log-in.

So where could Groups make real waves?

  • Feed filtering and curation. Users will filter their Facebook news feed — that includes aggregated updates from Twitter, Foursquare, and others — by Groups. This could prove more efficient than using search or topical taxonomies. It could also give Facebook more advertising inventory that’s targetable by highly relevant information.
  • Identity management. Users will be able to engage in social media interactions in the appropriate contextual modes. Imagine Groups for shopping, entertainment recommendations, professional communications, etc. Groups could essentially offer federated authorization (among members) to different apps and services.
  • Unified communications and presence management. Groups could enable better presence management — you’re available only to after-work friends, for example — than we’ve seen in email or IM applications.
  • App interaction and distribution. Facebook recently changed its social gaming policies to better direct relevant updates to gamers instead of non-gamers. Similarly, Groups could filter and enhance social commerce and other applications.

Who Should Pay Attention?

Marketers can’t make Groups, just Pages. But don’t think Facebook won’t develop appealing promotions and targeting techniques for its own advertising platform. I doubt advertisers will ever be able to target individual Groups. The contextual information within the content of Groups, however, should produce topics and keywords that would be a very accurate representation of interest — catnip for advertisers.

Companies that provide content aggregation (Yahoo, Digg, Yelp) and/or real-time information streams (Twitter), or add value on top of those streams (Google, TweetDeck, Seesmic) may need to counter or support Groups. Otherwise they risk being just one less-useful and less-monetizeable feed in a Facebook viewer.

Facebook does not offer robust enough security or content/communication management features to threaten enterprise collaboration players like Microsoft, Salesforce.com, or Box.net. Lighter-weight services like Yammer should keep alert, though.

Related Research: Four Ways Facebook can Conquer Mobile

Question of the week

Where will Groups have the biggest impact?

Could a Social Strategy Save Yahoo? October 4, 2010

Posted by David Card in Uncategorized.
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The turmoil at Yahoo may be reaching crisis proportions. Stagnant sales growth was one thing, a lack of strategic clarity another. And now, senior executives are leaving in droves and there are calls for drastic action that include merging with AOL immediately.

But could a healthy dose of social networking be the cure to what ails Yahoo?

Possibly. The search giant appears to be missing out on social and mobile, the current twin drivers of consumer tech. I’ll leave mobile for another analyst, but here’s how Yahoo could gain some momentum in social media.

Recognizing Yahoo’s Assets

A prime reason for Yahoo’s social sluggishness was its inability to integrate its existing assets with a social flavor: Flickr, Delicious, Answers and its communications products like Mail and Messenger. These properties could still be put to use, but what are truly Yahoo’s powerful assets?

  • A large, loyal audience. According to Compete, Yahoo’s still in the top three in terms of online audience reach and user time on its sites. And as recently as a year ago, it was still consumers’ second-favorite online brand, behind Google.
  • Leading content and communication properties. Yahoo has leadership positions in important, ad-friendly online content categories like news, sports, women’s content and entertainment, as well as those communications services, according to Compete data.
  • Advertising expertise. Yahoo is a leader in online display advertising and has a large, experienced ad sales force with solid relationships at agencies and advertisers. Yahoo is especially good — for an online media company, at least — at brand advertising.

Building Out the Feed

Just about every company online should add some social spice to its site, but in Yahoo’s case, an aggressive dose could help the company maintain its huge audience and advertising leadership position. It’s too late for Yahoo to build a new social network from scratch. Rather, Yahoo should try to regain the momentum of its original portal role as the entry point or start page for the Internet by playing an aggressive role in the emerging age of feed-based user interfaces.

  • Integrated interface. Yahoo should continue and accelerate its feed and update aggregation strategy, but move it beyond just surfacing connections on the homepage or near content and email. Once upon a time, along with AOL, Yahoo taught mainstream users how to use directories and search for web navigation. Now it must more aggressively offer a feed to its audience — one that may be more familiar with traditional, search-heavy ways of  content discovery. Facebook is mainstream, but Twitter is not. Yahoo could help move mainstream audiences back and forth across search, browse, and stream consumption styles. A medium-size acquisition, say, TweetDeck or Seesmic, could help.
  • Ads around feeds. Yahoo should then apply its content, relationships and targeting capabilities atop or near the resulting UIs and experiences to create unique “advertorial” around that aggregation. Yahoo’s content farm acquisition, Associated Content, can work here, too, in addition to creating SEO bait. Yahoo has long worked with creating customized content experiences for brand advertisers and promoting marketing case studies and benchmarks.
  • Social ad network. Yahoo’s already in the ad network business (although there is concern about its publisher efforts) and it should rent out its resulting social ad platform to other sites. Most social media startups can barely spell “advertising” and might welcome the assistance. True, Facebook is already building out an ad platform with social targeting and a home for advertiser content. But it doesn’t have the richer store of seasonal and evergreen professional content that Yahoo has, nor its trusted content brand. And Facebook says it’s not building an ad network. At least not yet.

Related Research: Four Lessons From Yahoo’s Slow Demise

Question of the week

How could Yahoo use social media to get its mojo back?

But It’s Not Even About Facebook… October 3, 2010

Posted by David Card in Media.

Besides being the best live-action movie I’ve seen this year, “The Social Network” is attracting commentary along the lines of “captures the zeitgeist,” “portrait of the decade,” and all sorts of pondering about what it says about our digital society. The thing is, “The Social Network” is more about old-fashioned, meat-world style social networks than it is about Facebook.

Sure, the movie is aware of the irony that Facebook was created by a guy with no social skills and no network of his own. That’s why it’s titled as it is, and not called “The Accidental Billionaire.” It’s a really well-told tale about class, obsession, and betrayal, but it’s not about Internet social networking. That’s just the MacGuffin.

Still, how you react to the movie – and to its portrayal of (anti-)hero Mark Zuckerberg – probably depends a bit on what you already felt about Facebook before you bought your ticket. David Denby suggests in the New Yorker that there’s a creative tension between writer Aaron Sorkin and director David Fincher:

In this extraordinary collaboration, the portrait of Zuckerberg, I would guess, was produced by a happy tension, even an opposition, between the two men—a tug-of-war between Fincher’s gleeful appreciation of an outsider who overturns the social order and Sorkin’s old-fashioned, humanist distaste for electronic friend-making and a world of virtual emotion.

Personally, I believe that Facebook is a hugely important force in online media, and probably in modern society. When Justin Timberlake – no way is Sean “Napster” Fanning Sean Parker that cool – seduces Zuck with his vision of start-up greatness, well, count me in.

I’m willing to forgive a lot of asshole-ness in pursuit of such grand goals. I suspect a lot of nerds will agree. Though it’s not about technology, this movie will launch a thousand start-ups.