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Facebook gifting hardly revolutionary September 28, 2012

Posted by David Card in Uncategorized.
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There is a lot of gushing over Facebook starting to roll out the fruits of its Karma acquisition. Gift cards are high margin, but if Facebook is just taking an affiliate fee off a retail product, that will make for slim pickings, even if you make outrageous assumptions on buy rates. Hardly enough to “completely transform” the company, or disrupt e-commerce.

Social networks have been a tough sell for commerce. We’ve written about Facebook stores before, and Facebook hasn’t knocked anybody over with Offers. Gifting could be a piece of a Facebook mobile play, but I suspect coupons and offers will pay off better. In fact, it might be wise to think of gifting as a data play, with Facebook gaining a few insights and lots of credit card numbers.

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Social, mobile media increase news role for mainstream September 28, 2012

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Pew’s latest large-scale survey analysis on news consumption confirms the trend towards digital. Social media and mobile are the new kids on the block, and both are catching on among the mainstream. Well, sort of. I’d echo this interpretation: Twitter is not a source of news for mainstream consumers.

Pew does really good, solid consumer surveys. If you’re in the news business, the report is a must-read. I’m a believer in consumer survey-based research, but I’ll offer my usual caveats. Consumer surveys are better for detecting attitudes than closely monitoring actual behavior. Digital behavior is highly measurable by other means, and comparisons of meter-based metrics versus survey-based ones will show things like actual TV usage surpassing online time. Self-reported data is a good barometer of consumer interest — people report what they think they’re doing, and what is catching their attention. But comScore and Nielsen et al. will do better at the actual consumption figures.

One more caveat. Some behavior is age-based, and some is truly generational. By that, I mean that for every generation, teens and young adults age into many adult patterns. When you have a job and a family, you don’t have time for all-night sessions of World of Warcraft. On the other hand, Millennials growing up with ubiquitous access and social media probably will continue to use them at the expense of traditional media. Low news consumption by 18-24 year olds is age-based; social news is likely generational.

 

Manufacturing Yahoo strategy news September 28, 2012

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Does it strike you as a cheap trick to release a year-old strategy document created by an exec who’s no longer there for a CEO who’s long gone and say, Hey, this might be what Yahoo’s going to do, or, Uh-oh, Yahoo doesn’t have a strategy because what’s leaked hints at this old one? I guess that’s what happens when a company cracks down on unofficial communications. And Yahoo’s no Apple.

A revived text-ad contextual display network wouldn’t be high on my priorities list for a Yahoo turnaround. At best, it might be a complementary effort to what Yahoo needs to really focus on: brand advertising. This new initiative from Time Inc., that uses glitzy AOL ad formats that blend advertising and content from name brands like People, Real Simple, Sports Illustrated, and InStyle is the kind of thing that Yahoo should be inventing.

Yahoo content categories like news, sports, finance, and women may not give advertisers that automatic warm brand-y feeling, but they just happen to be online category leaders. That’s not boring. It’s reach and target-ability.

Photo-sharing market lock September 27, 2012

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Instagram had more mobile average daily users in August than did Twitter, according to comScore. 7.3 million average versus 6.9 million in the U.S. Month-to-month movements in comScore data aren’t really indicative of anything until they add up to a trend, so don’t over-interpret. Still, that’s not particularly shocking, as photo sharing is more of a mass market phenomenon than is microblogging. So don’t assume Twitter has reached some sort of plateau. And Twitter is still working hard on photos, anyway.

But that may be a false hope. It’s pretty clear that Facebook’s acquisition of Instagram really did lock up mainstream photo-sharing. Shutterstock released documentation today saying it was looking to raise $50 million in its IPO – half the amount it was seeking prior to Facebook’s IPO. Some of that value loss is from social media stock performance disappointment, but you can bet market share plays a role, too.

Here’s some GigaOM Pro analysis on Facebook-Instagram’s likely impact on the market sector. At that point, we said Facebook was still committed to an HTML5 mobile strategy, but likely to offer single-function apps. It did that, and more, and has soured a lot on HTM5. And here’s a little more on overall social media and social tech merger patterns.

Yahoo leaks give few strategy hints September 26, 2012

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The impressions that are leaking out of Yahoo’s strategy presentation to its employees are pretty vague. Om is probably too harsh in reacting to their lack and to other sources, but there’s not a whole lot that seems new or counter-intuitive. Business Insider seems oddly better sourced than AllThingsD, but take it all with a grain of salt. Personalization seems to be the main theme, but with little on product or implementation of it. Projects will have to hew to a “rule of 100 million” (dollars or users?), which is perfectly sensible for a company of Yahoo’s girth. Acquisitions will be for talent rather than tech or businesses.

As I’ve written before, Yahoo has significant assets and should be salvageable, if not returned to a high-growth superstar. It has a big, still-loyal audience that uses it quite regularly for a broad mix of content and communications. It has the potential to be an advertiser or agency’s good friend in targeting mass-reach audiences in a variety of contexts. It should focus on quality content and brand advertising. It should use search primarily in support of its display advertising business. If Google comes a-knocking, it should answer the door, but Microsoft might still be a good partner, especially if Yahoo can get an even sweeter deal of of Redmond.

Yes, Yahoo’s ad targeting should be much better than it is, given the amount of data it should have been collecting about its users. Yahoo historically applied its personalization skills better on content than on ad support. There’s no way its home page will look like this. And if its premium content efforts result in corrections like the one in this NY Times story (confusing YouTube for Yahoo video), then it has a lot of work to do in getting the news out.

 

HootSuite should plug in, not replace September 26, 2012

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Not every application should be a communications hub. HootSuite has done a great job positioning itself as the social media marketing dashboard for medium-sized operations or smaller teams at big companies or agencies. And it makes total sense for it to integrate its dashboard with other communications tools. But “getting you out of your mail inbox” into Hootsuite seem overly ambitious. There’s tons of other listening platforms and work media tools it needs to support.

I expect big social communications platforms like Yammer, SocialCast, and Chatter can bolt on to and even become the main thread for other marketing technology effectively. I’m not so sure this is where HootSuite will shine.

Shoes and subscriptions September 26, 2012

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ShoeDazzle’s switch from its original shoes-as-subscription business model to a more conventional e-commerce approach has cost CEO Bill Powers, ex of ProFlowers, his job. Om thinks that the company will have a hard time regaining its customers’ love, even as it puts original founder Brian Lee back in charge. (He notes that the board must have approved the business model change, so it’s not all Powers’ fault.)

Om observes that “joy and love were the two emotions ShoeDazzle’s customers associated with the company.” It’s hard for a retailer to establish that kind of relationship, but it doesn’t have to be dependent on the business model. This is a banal observation, but the usual pitch to a consumer for a subscription business focuses on things like:

  • Value. For one low monthly fee, you get access to all these TV networks or music, instead of paying separately.
  • Utility. Think magazine and newspaper delivery without the reader having to do the work.
  • Revenue alternative. Skip the ads by signing up for a subscription.
  • Replenishables. Similar to utility, but subtly different: re-stock your razorblades automatically.

For some customers, shoes are replenishables, or such a frequent purchase that the utility kicks in. And like the old book or record of the month club, there’s a value pitch, too. Or at least an “I already paid for it” benefit. Do those values apply to a big enough audience?

How Yahoo could re-boot search September 24, 2012

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Yahoo is scheduled to describe its latest turnaround strategy on Tuesday, and reportedly search is high on its priorities list. Search is the engine that drives online advertising, accounting for half of U.S. spending by most estimates, and twice as big ($15 billion) as the next category, banner ads ($7.6 billion). Big players in display ads like Yahoo and Facebook, both of which use Microsoft for core search technologies, tinker with their offerings to try to steal share from Google. So far they’ve had little success.

New CEO Marissa Mayer ran Google’s search business at one point, so she knows what works. How could Yahoo – whose Overture acquisition actually invented paid search before Google – return its search business to past glories? It could start by working on the following:

  • Microsoft. Yahoo’s decision to outsource search technology to Microsoft has never really paid off. The combination has not gained share versus Google. Microsoft is still paying Yahoo a guaranteed bonus because it can’t match Google’s revenue per search figures. The contract for that bonus ends next year. Yahoo will likely renegotiate the deal. Although Microsoft has seen tiny increases in its own search share, that’s mostly been at the expense of Yahoo. But it would miss Yahoo as a distribution partner; there simply aren’t that many places where big audiences do general-purpose searching. Yahoo could threaten to switch over to Google, though that might raise antitrust concerns.
  • Attribution. One reason for Yahoo to stick with Microsoft is the potential to use search to increase the value of the display ad businesses of both companies. Big agencies don’t need Yahoo to integrate their display and search campaigns, but they could use help in what the industry calls “attribution,” i.e., understanding the influence of and attributing the proper value to different ad units instead of just giving search all the credit as the “last click” before purchase. With the threat of privacy regulation looming over ad networks and third-party data collectors, the value of consumer behavioral data collected on one’s own site could increase dramatically. As portals with large audiences consuming a broad variety of content and communications, both Yahoo and Microsoft could gain some competitive advantage in attribution analysis and behavioral targeting over Google, that depends on an ad network of third-party sites.
  • Social search. Regular readers know I’m pretty skeptical of the impact of social media on the kind of directed shopping search that pays Google’s bills. Still, social signals are valuable inputs into search results, and Microsoft has done a better job presenting them to users than Google has. Yahoo has minimal social data, so sticking with Microsoft – that has data sharing arrangements with Facebook and Twitter – is its best chance of tapping into social search.

Yahoo is not in a great position to go after mobile search, though neither is it particularly disadvantaged. Google has caused some Wall Street concern that lower mobile search costs-per-click could drag down its overall average. But Yahoo and Microsoft don’t have much to lose. Unfortunately, Yahoo’s Axis search-browser hybrid gives a better demo on a tablet than on a phone. While it’s an interesting example of how a search user interface doesn’t have to be blue links, it’s not likely to have any significant impact on mobile search. Phone-based search may ultimately depend on voice input, and will certainly benefit from presenting coupons and offers among results.

No, Yahoo’s best chance at search is on bigger screens. Its prowess in selling glitzy display ads to brand advertisers remain one of its remaining assets. So connecting the dots for advertisers and agencies via attribution and behavioral and social inputs is Yahoo’s most promising search strategy option.

Question of the week

What else should Yahoo do to gain share in search?

Google implements Do Not Track. Now what? September 17, 2012

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Google became the last of the big browser companies to support the Do Not Track privacy initiative by adding it into its latest developer version of Chrome. While this adds momentum and a little clarity to the movement, it leaves key questions unanswered. Will Do Not Track ease user privacy qualms, fend off restrictive government regulations, and prove a major disruption for digital advertising? Perhaps. Strict Do Not Track adherence could shift the balance of power in online advertising.

A quick refresher: Do Not Track is an HTTP header-based scheme to enable users to essentially set a beacon via their browser informing web sites that they don’t want to be served ads via third-party tracking mechanisms. Do Not Track is explicitly aimed at behavioral ad targeting based on a user’s web browsing habits. The major browser providers have now all committed to supporting Do Not Track, but their implementations vary.

But that’s not surprising. Remember, the final details of exactly how Do Not Track works aren’t finished. U.S. government regulators are dancing around the issue, hoping the industry can come to a comfortable self-regulating scheme. Neutral industry bodies like the W3C and IETF are circling efforts from advertising and publisher site groups. There’s still a debate over whether Do Not Track should cover cookies and tracking, or just advertising served based on them. Microsoft’s aggressive intent to implement Do Not Track as an opt-out option was seen by some as taking the privacy high ground but by others as going too far: both the Mozilla and Apache organizations think Microsoft has overstepped the bounds on user intent.

Advertising apocalypse?

Online advertising doomsayers like to characterize the worst-case outcome of Do Not Track as an online advertising apocalypse. Proponents point out that behavioral targeting represents less than 20 percent of today’s online ad revenues, and that brand-name publishers with desirable audiences can continue to go about their business. Long-tail sites are the most at risk, they say.

Indeed, cynics have some circumstantial evidence to help make the case that privacy hype-mongers like the Wall Street Journal might be happy with the contextually-targeted status quo. And Microsoft insists that its implementation is not a sign that it’s giving up on the advertising business.

True, search and pay-per-click direct advertising could thrive even under strict Do Not Track implementations and wide adoption. But even CPC ads – where no one pays unless a user explicitly expresses interest by clicking – would waste impressions, potentially crowding out more effective ads. And re-targeting, that is, serving up relevant ads based on previous behavior like clicks, searches, or browsing, would be devastated. Facebook’s real-time bidding “exchange” depends on re-targeting to add value (and raise Facebook’s pitiful CPMs). And the still nascent mobile ad space would benefit greatly from re-targeting.

Shifts in ad data value

Should Do Not Track derail third-party targeting, it might end up putting targeting power back in the hands of sites that collect interest information gathered on their own sites. Draft legislation seems to protect Facebook’s info on its users, gathered via profile data and Likes. Facebook’s own ad inventory would gain relative value, even if Facebook couldn’t build out the ad network we all expect it to. Likewise, Do Not Track wouldn’t seem to affect info gathered by sites with big audiences that visit lots of home-grown content – Yahoo’s fingers are crossed. Data derived from users expressing interest via explicit posting within a network like Twitter’s would also gain value.

It’s never clear whether users say they’re more concerned about privacy than their actual behavior supports. Meanwhile, it’s an election year and the ad industry hasn’t even played the jobs card. Mainstream legislators hope the industry can come up with its own solution for privacy concerns. Browsers are now moving more or less in the same direction. The next milestone to watch for is whether and how third-party ad networks fall in line.

Question of the week

How can online advertising thrive without wrecking user privacy?

Small steps forward for social media advertising September 10, 2012

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Last week, Yahoo executives told several news outlets that, counter to earlier speculation and rumor, it was not going to sell its Right Media online advertising exchange, and that it was recommitting to ad technology investments. For all the product-focus talk surrounding new CEO Marissa Mayer, Yahoo appears to be continuing on a content plus ad network strategy similar to that of Aol. Or to MSN, for that matter. While not quite in the category of re-arranging the deck chairs on the Titanic, these machinations are peripheral to the real engine of online advertising – search – and the potential ad growth accelerator – social media.

Google comfortably dominates search right now, but Facebook is getting hammered for not growing social media ad revenues fast enough. A few months ago, I pointed out some of the realities of social media advertising: its volume comes from cheap inventory, big advertisers often spend more on their Facebook pages than on Facebook ads, and spending hasn’t exploded because the industry hasn’t really figured out how to harness social media for brand advertising.

But there has been some recent progress on the social media ad front. Nothing like a major breakthrough, but some promising steps forward, including:

Still not search

Social media has something of an inferiority complex. Much of the advertising that runs on social media is pay-per-click direct marketing that, even with targeting, suffers in comparison with search. It always will, as search is such a powerful indicator of active intent. Facebook knows that, but its search dabbling is just that – dabbling. Marketers can’t buy keywords yet, and unlike its display ad business, Facebook search advertising doesn’t offer scale.

App makers and brand page marketers are figuring out a few ways of getting value out of Facebook’s first paid search efforts, but Facebook is no threat to Google. While social signals can be a useful input into search results ranking, they’re no substitute for the heavy lifting of indexing and analyzing the content of the web. Facebook is smart to experiment with search, but it’s even smarter to focus its technical and support resources on brand advertising.

Question of the week

What else should social media companies do to accelerate ad revenue growth?