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Time Warner no longer believes in “invisible network” February 14, 2013

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Back in the day, I used Time Warner as an example of an “invisible network.” That is, a reader of Time magazine or Sports Illustrated – or a user of their web sites – might not know that they were both owned by Time Inc., but big advertisers and sponsors did. The Wall Street Journal is reporting that TWX is considering spinning off most of its magazine titles, possibly into a joint venture with Meredith. It would keep Time, Fortune, and Sports Illustrated, whose brands complement its TV business better, but People would find a comfier home next to Better Homes and Gardens.

It’s fairly obvious, but branded visible networks that try to drive audiences across related properties work best when the audience is common. Disney can cross-promote entertainment to families, but its audience and ESPN’s rarely need to meet. Meredith could create a good visible network for People. Yahoo’s making noise lately about zeroing in on fewer content topics itself, a refinement of its classic broad-reach, very visible portal strategy.

Time Warner used to be the biggest media company in the world. It never really exploited the potential of its invisible network in the physical or digital media era. As predicted, the invisible media networks like Google and Facebook changed many of the rules, but Time Warner never learned them.

Get an early heads-up on how the media industry will change next at our paidContent Live event in the media capital of the world, NYC,  in April.





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?

Groupocalypse: Groupon loses its way August 20, 2012

Posted by David Card in Uncategorized.
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In my last few Weekly Updates, I’ve written about Zynga and Facebook, two companies whose business models I’ll continue to defend. But right now they make up a pair of the Horsemen of the IPO Apocalypse. I might as well add a third. Groupon’s second quarter results were about in the middle of its guidance, it showed a profit, and it cut way back on marketing expenses as a percentage of sales. The result? Its stock is at an all-time low. Can Groupon turn it around?

The opportunity

Unlike Facebook — a digital media leader and core technology platform provider — and Zynga — on a cold streak but with a plan — I’m pretty sure that Groupon is headed in completely the wrong direction. I have written that Groupon’s scale would be a huge competitive advantage as social commerce shook out. I thought its massive sales force, customer base, and merchant relationships would produce a terrific combo.

In theory, Groupon should be able to analyze its customer data to help it target and improve deal conversions and feed insights back to its merchants. Groupon should be building out other marketing offerings for those merchants, so that it could move beyond new customer acquisition into loyalty programs, and sell them services like paid listings and SEO. Groupon could be a local merchant’s one-stop marketing supplier in a way that even Google would have trouble matching.


Instead, Groupon’s revenue in actual retail is growing faster than its high-margin deals business. It envisions itself as an e-commerce technology platform provider. CEO Andrew Mason says he wants Groupon to become the “operating system for local commerce.” And the company is bragging about being a leader in mobile commerce.

Does Groupon really want to build warehouses and compete with Amazon in multi-category online retail? Perhaps it wants to get into payments – no, that’s not a crowded field at all. Or how about in-store point-of-sale hardware for small business? Madness.

Yes, mobile commerce is promising. Groupon says that in July nearly one third of its North American transactions were completed on mobile devices, a figure that’s up 35 percent from the year earlier. Groupon’s mobile app has just as much adoption as those of Amazon and eBay, but does that mean Groupon could become a mobile transactions platform for local merchants and retailers?

Perhaps. But I expect big, national retailers that sell through local stores and affiliates are better equipped to handle sophisticated technologies like geofencing and real-time inventory liquidation than the local small businesses that are Groupon’s strength. Remember, airlines are the leaders in yield management. Your typical local restaurant or gas station is probably not thinking about balancing discounts versus empty slots that might go unsold via complex algorithms and business rules. Lots of Groupon merchants couldn’t even handle volume discounts profitably.

There’s no shame in being a force in local marketing. BIA/Kelsey projects that digital advertising will only comprise 11 percent of a $150 billion U.S. market by 2016. There’s plenty of opportunity – and plenty of competition already – for Groupon to offer services to support local merchants’ marketing needs. Make no mistake, there are some positive signs for Groupon’s core U.S. business:

  • Groupon’s targeting is starting to improve efficiency in cities where it has been using it longest
  • Nearly 20 percent of its merchants are increasing their use of Groupon’s other services.
  • Its Groupon Rewards loyalty program is gaining traction.

What momentum Groupon has is in marketing services. Once it embraces this, and shifts its development and sales assets accordingly, it will start to claw its way back towards prosperity.

Question of the week

How could Groupon turn itself around?