Category Archives: advertising

Face it, Facebook isn’t even close to being worth what’s going to get paid for it

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Like many frothing at the mouth online analysts and social networking ravers, Pete Cashmore suggests that Zuckerberg is right to act like he’s in no rush to sell Facebook, but this is silly. Zuckerberg is playing high stakes poker and he has a LOT to lose – certainly hundreds of millions if Facebook hits any major snags or if some newer and hipper online community takes root. I suspect he knows this but is loving the game, and I certainly admire this young whippersnapper for that and for creating such a magnificent web community. Magnificent, but only “worth” a fraction of the 1+ billion Cashmore suggests Facebook is now worth as an independent business.

But then what do I know, I traded my Apple for WCOM back in the day.

I do think Google will now scarf them up as part of their “empty the lake of big fish” marketing strategy, and I predict they’ll pay about 1.1 billion, but this is the luck of timing by Zuckerman, not a market based assessment of the value of Facebook as an independent entity, which everybody seems to be wildly overestimating. YouTube’s the same situation, where it’s value is not in streaming 100,000,000 crappy videos per day, rather in the fact that it helps Google, now awash in high valued stock, consolidate their position as the key online advertising leader.

The funny thing is that the *same rationales* used in 1999 are rearing their silly heads again, and only a handful of investors are noticing this. Unlike 1999 there are now many *real companies* out there with moderately long and profitable online histories, but ironically they appear to be very undervalued compared to the more speculative plays.

Myspace to Facebook migration underway. Next Facebook to ?

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Washington Post piece suggests Myspace may be in trouble as teens migrate from there to Facebook, which until a month ago was a college socializing website but now covers the globe. I’m not sure Facebook will be the endpoint though. Seems to me that the ‘need’ for a social network separate from the internet network is a transitional thing. What we’ll see eventually are socializing applications/gadgets/routines that will collect information from everybody’s online activities and disperse the info in ways over which we will have a fair amount of control.
For example as I write this blog entry (or do anything online) I should be able to click a button and have all the content dump into all my other web “spaces”. (This actually happens at Facebook already and kudos to them for the blog import feature).

Seems that any writing I want to make public should be placed in any and all appropriate places and be completely searchable from many search engines within minutes. We are a long way from that but I see social networks as a transitional form, not a final form, of online socializing, content creation, and content distribution.

Complicating the commercial analysis of the migration is the fact that users of Myspace are getting older, and probably are less likely to shift once they have established themselves on a social network.

However, it would seem to me that the most profound aspect of social networking has not really surfaced yet and that’s the fact that people will become increasingly frustrated with the fact that their Myspace / Facebook web pages and web views are primarily and overwhelmingly benefiting those companies rather than the content producers.

Heavy online users often don’t even realize that simply surfing around online and composing new and original content is a key component of all those juicy ad dollars flowing to many in the food chain like Google and Myspace and Facebook, but not to the owner of a Facebook or Myspace page.

Google Farts. Stock up 13%

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Google’s doing a great job and putting out some good stuff such as customized search. Earnings for Q3 were better than expected, but that should already be reflected in the stock price.

Since Google already has a huge portion of all internet searches, and given that they just spent 1.6 billion for YouTube with marginal current revenues, and given that we are in a very uncertain time where online revenues could go down or other companies could spring onto the search scene with something great almost overnight and threaten their dominance ….
What exactly is driving this stock price through the roof? It kind of smells like 1999 to me, but what do I know?

Measuring internet “engagement”

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Robert Scoble’s asking a great question today about how to measure “engagement” at a website as opposed to just a visit. This issue was recently addressed at some length in the big debate over Comscore metrics for Myspace that Danah Boyd challenged as questionable.

As I suggested in that debate and Scoble is saying now, there’s an important difference between a user who simply loads a page and leaves the site immediately vs a user who engages with the site.

Experiments are needed, since it may be as simple as taking a ratio of total unique visitors to total time online to get a sense of how engaged the visitors are.

Of course that does NOT necessarily translate into somebody who’ll buy from advertisers which is the type of metric that sponsors are most interested in. We wouldn’t see much Golf on network TV if traffic was the metric, but when you count the fact that golf watchers come from a great demographic for big ticket items it works out for the networks who can sell to a key group (e.g. sell Lexuses, Diamondses, and ringses …..my precious!…..)

Even more complications with metrics are here in the form of RSS syndication, extensive duplication of information (e.g. this blog is auto duplicated over at Facebook), and the new gadgetification of the desktop where mini applications are going to run wild all over the place, making a “page view” less relevant, or irrelevant, for many websites and advertisers and measurers.

Re-Ze-lated:
Funny – ZeFrank on “Rocketbooming” your metrics
RocketBoom says Zefrank is full of Zeerrors.

Zune Video

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Robert Scoble’s got the Zune Scoop direct from Microsoft in the video over at Scobleizer.

Assuming that the Zune is as good or somewhat better than the IPOD, as appears to be the case, this is shaping up to be a very interesting test of whether Microsoft can overcome the branding “momentum” of Apple and IPOD, nothing short of a spectacular success.

I’d think timing will matter a lot.  If Zunes, coming out November 14, sweep into the Christmas scene with a bang and lots of positive press it’ll bode  well for the long term prospects.

If the Zune song sharing  feature takes off it could signal a turning point in how the big players change the way they integrate the consumer into the process of selling to other people.   I predict that the company that most effectively integrates user content and user revenue sharing will be the big winner this decade, and that it’s still anybody’s game.

Kevin Rose to Newscorp: Digg this $150,000,000 price tag?

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It now appears that Digg probably won’t be sold to Newscorp and may simply go for another round of financing. If so Rose and Zuckerman over at Facebook may be sharing some pizza in a few years thinking “wow, we turned down HOW MUCH?” One uncertainty with Digg appears to be traffic. Comscore shows a small fraction of what Digg claims and Alexa traffic seems to support. However Alexa is notoriously unreliable, often showing huge swings where none exist and seeming to favor tech sites, probably because the toolbar Alexa uses to count visits is more often on the computers of tech people. For Digg, itself a high page view high tech site, Alexa is a questionable measure.

The Comscore traffic discrepancy is so huge that either Digg or Comscore’s credibility should be at stake. Not so in this new bubbling time where nobody seems to care much about the facts, just the hype. Like YouTube, Digg offers little of substance, a lot of page views, and not much revenue. They are lucky the pockets are so deep and the rationale so thin for these megabuck deals.

Zune song sharing can be summed up in two words. Brilliant, and Finally!

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Rumor has it that Zune will encourage song sharing with revenue share to the “user song promoter” who sends a song to friends to listen to free and then gets some money if they buy it. MS certainly would be wise to cut the users in on the profits.

As I recently noted it’s surprising how users still don’t demand more of a piece of the action, though not surprising how Google, YouTube, Myspace, Yahoo, MSN, and other user content collection points, the key beneficiaries of this arrangement, have not done much to innovate in that direction.

Good for MS to break that ice. Users, collectively, hold all the *future* revenue streams in their wallets. Therefore they could hold most of the power. It’s about time they used it.

More at CrunchGear

Danny I was hoping for more – how about a Search UNconference?

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I don’t know Danny Sullivan personally aside from comments at his blog and forums, but all reports say he’s a fine guy and easily one of the top search specialists in the world.

When it looked like Danny would be leaving Search Engine Strategies earlier in the year I was optimistic that he might break those of us in the publishing and search marketing fields out of the ‘same old speakers’ and ‘same old pitches’ one tends to hear at the two main search conferences: SES and WebmasterWorld’s “PubCon”.   However he’s not leaving yet, so I’m happy for him I guess but disappointed he won’t come up with something new.

I think many would agree that Danny’s the guy who could bring something really new and powerful to the growing, global, search marketing human (and information) network. Something that would capture the spirit of “Web 2.0” which is far more collaborative, information rich, virtual, and unstructured than the internet of the 1990s.   Also, there are a HUGE number of case studies now that reflect all the common problems websites have.  Simply examining all these in a conference environment would be far more helpful than listening to yet another SEO guy talk about how he gamed Google’s Algo five years ago.

I don’t want to be too critical of SES and WMW because these are good conferences all things considered. However after attending some UNconferences such as MashupCamp I’m convinced that the UNconference format (or things like Yahoo’s Hack Day) are vastly superior to the old standard where speakers, often with less experience than many in the audience, struggle to speak clearly and make with their weak powerpoint presentations relevant.

UNconferences, like Startup Camp in a few weeks, tend to unleash the power of the audience and ironically the lack of structure creates far more cohesive sessions. I think this is because your brain goes into active vs passive mode.

So Danny after you make your deserved big bucks back at SES over the next year, how about shaking things up for 2007?

The Gadget Revolution. Gadgets of the world, UNITE!

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A nice ZDnet interview with Google’s Adam Sah suggests the increasing importance gadgets will play in the online landscape. I met a brilliantly enthusiastic Adam at Mashup Camp back in February when all this was just starting to take off and it’s great to see Google is now allowing the gadgets to be used on any website.

In March, at Microsoft’s MIX06, the innovative LIVE team was also very bullish on their LIVE Gadgets which clearly are destined to become a major focus over there as well.

Gadgets create some very interesting complications in terms of website stats and monetization. Google has not focused on monetizing this environment yet and it will be interesting to see how they approach that, though it’s easy to predict they’ll create some revenue share with the gadget publisher to keep everybody happy.

The legal fun may come from compatibility issues with IE7 and Vista. Microsoft would have some incentive to prefer their own sidebar gadgets, which will run on the Vista Desktop, to whatever Google gadgets are developed for that same niche. Yet Google as always is ahead of the marketing curve. Pushing gadgets to be compatible with websites, and not just those with Google desktop installed, may diminish what would have been a big MS advantage with Vista.

Hey – that’s a bit too cynical on my part – I think as they often have done Google is just expanding on a great concept that happens to be a good marketing route as well.

Google Gorg replacing Microsoft Borg? Don’t be P/E vil?

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Chris “Factory Joe” Messina of Flock has a provocative post about how Google is …. continuing to take over the internet world.

Although I’m more concerned about the virtual monopoly on search rather than Google’s assualt on Microsoft’s virtual monopoly on operating systems and office applications, everybody is well served to start thinking, as Voltaire sort of suggested hundreds of years ago “Is an all-Google world the best of all possible worlds?”

The answer, of course, is NO. Google’s brought great stuff and should keep on bringing great stuff. Google’s been rewarded with almost unimaginable riches and that’s fine. It may even be true that the Google juggernaut has some juggernauting to do before it needs to be brought in check. Sometimes it’s great to let super clever people just run with things until they run out of steam.

But like Chris I think it’s now clear that stock prices and commercial considerations have considerable influence on Google and their decisions and operations. You don’t have to think Google is running around intentionally doing monopolistic things to worry that if the going gets tougher and they no longer have so much of the search market and are fighting to maintain the stock Price Earnings ratios and options values the “don’t be evil” mantra may be interpreted more as “don’t be P/Evil-keep Google on top”! Wait. I think that Mantra change is already under way.

Google is a great company, but as Chris suggests that doesn’t mean we should stop keeping our eyes on them.

Disclaimer: I’m hardly a market mover but should say I do have stock in Google competitor Yahoo and puts on Google because I thought it was overpriced.