Category Archives: advertising

Facebook worth more than YouTube? Don says “yes”

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Don Dodge over at Microsoft has a great little thumbnail analysis of the business prospects of YouTube and Facebook, and concludes both are way overpriced at current valuations and Facebook is more valuable at 700 million. He cites Scoble’s latest thinking on the topic as well though it seems to me Robert seems too supportive of buying anything that even smells like Web 2.0 and is still feeling a bit hostile toward his ex employer.   I don’t blame him for that since he was way ahead on the new web and blogging and Microsoft’s failure to “get it” must have been really frustrating.

He’s not doing an extensive analysis but this is the best actual math I’ve seen regarding these deals, which as Don indicates with his little summary, appear to be valued more like Granny’s china than businesses. Given the uncertainties I think he’s generous to go 20x expected earnings. The landscape is changing daily and it’s not clear people will stick to favorite sites the way they stick to favorite brands (I predict we the people will not show much in the way of online brand loyalty, and this will shake it all up a lot in the coming years).

Ballmer on YouTube Google “transferring the wealth out of the hands of rights holders into Google”

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This is a great interview by Business Week of Microsoft’s CEO Steve Ballmer on Web 2.0 valuations and the competitive landscape up at the top of the heap, where Ballmer suggests only companies like MS, Google, Yahoo, and EBAY can even afford to think about doing the billion dollar deals. It’s a key point often lost on those who like to see valuations based more on financials and profits. Ballmer is noting that the competitive landscape can change these values.

But most interesting is this assertion:

The truth is what Google is doing now is transferring the wealth out of the hands of rights holders into Google. So media companies around the world are all threatened by Google. Why? Because basically Google is telling you how much of your ad revenue you get to keep.They better get some competition. Us. Yahoo!. Somebody better break through or you can short all media stocks right now. As long as there are two, you can hold onto media stocks. Google understands that. And that’s one reason why they’re willing to lose money up front.

Fascinating. He’s saying that Google’s trying to *monopolize* the media market. I certainly think there is some truth to this though we are way past the good old days where barriers to entry could let a big, rich, clever company – let’s say Microsoft – really do a good monopoly play on things everybody needed to use with computers. Part of the Google advantage he’s leaving out is that they really do intend to share most of the revenues with the producers and they have become so good at monetizing that, Google could argue reasonably, you’ll make more sharing revenues with Google than building your own advertising networks. My experiences comparing adsense returns to “roll your own ads” are fairly extensive and I can say that it’s very hard to beat adsense returns by creating your own advertising streams *even excluding the potentially huge cost of a sales staff*.

I think the main exception to Adsense as the best choice is what we see at super targeted niche sites like TechCrunch.com where they can charge about 10k monthly for a modest sized graphical advertisment.    Battelle’s Federated Media is hoping to bring this targeting advantage to a broader network of sites but I remain guarded in my optimism that Google’s highly automated and calibrated approaches won’t do a better job than humans do in most advertising spaces.

So, I think Ballmer’s right that competition will help publishers, but Yahoo and MSN sure better strap on the thinking caps and get their contextual advertising networks working much better than they currently work at providing revenue to all of us hard working internet small time publishing people out here.

Also, and this advice to MS and Yahoo is free and will knock Google out of the driver’s seat in a few months:  Launch your contextual ad networks with a 100% revenue share as an incentive for publishers to switch over.    At 43% of Google’s revenue Adsense is a huge factor at Google.

Google may not be evil, but their advertisers often are. Facilitators of illegal ads should be held accountable

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Although I think Google really tries to follow the “don’t be evil” mantra I think it now rings fairly hollow (ha – especially if it’s ringing up a ringtone ad scam at Google Adwords).

The problems are click fraud and downright illegal advertising which is running rampant all over the internet. This is a great set of PPC fraud advertising examples displayed at Google from a Harvard Law researcher, a proverbial drop in the online bucket of fraud.

Google, as the 800 pound gorilla, is the major beneficiary but this is an area that is simply ripe for legislation to prevent the plethora of PPC fraud schemes, ringtone scams, false advertising, and many, many more from polluting the online advertising space.

Why is this such fertile ground? It’s the new and fascinating combination of young users, young advertisers, young and old scammers, anonymity, global reach, and more that make this a complex and growing problem. Google et al are taking a “let the buyer beware” approach which is both evil and ignores the fact that many of the buyers are kids who wouldn’t know a scam from a treasure trove.

Ironically the solution to the scam ads is very simple. One new Law: If you run an advertisement you are responsible for any refunds in the event of a dispute with the advertiser. Make the publisher deal with their friend the advertiser who they are implicitly endorsing by showing the ad. This would clean it up very fast.

PPC fraud solution is not as easy, though I’d consider this:

1) Have teams of objective ombudsman researchers evaluate the fraud component at the different search engines.

2) Engines must refund to each account this average fraud component.

This incentifies the SE’s finding out and killing off the fraudulent clicks quickly, rather than the current lackluster efforts to root out the problems.

NYT summarizes the Google Youtube deal

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Here’s a good summary of the Google YouTube deal from the New York Times.    They note that one analyst suggests this is not a spreadsheet valuation as much as a way to keep competitors away from all the juicy eyeballs at YouTube.

I still just don’t understand how any big player could not put the money to better use and grow their own.  I was under the impression that many used YouTube rather than Google Video because the latter took longer to post – presumably because they screened content more aggressively -I would have thought that Google Video would have tried the same configuration as YouTube before spending so much, but this also supports the idea that this was a way to keep MS and Yahoo (who is currently the video stream leader), from gaining the market share Youtube will now provide to the Google family of sites.

I don’t think this is a shark jump by Google, but I think this may go down as the most expensive “junk content” site aquisition in history.

Danny Sullivan says he does not have much to say about it over here at Search Engine Watch.  (Hey, I thought you left SEW Mr. King ‘o Search Optimization?!)

Mark Cuban to Google – you are crazy! JoeDuck to Google – just show me some money!

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Mark Cuban, no stranger to online video having made about a billion in that field, challenges Google’s sanity in the YouTube deal here.

It seems to me Cuban’s been the most insightful of those reviewing this deal and my first reaction is “brilliant stuff from an insider”, but I also respect how clever Google is and will continue to be at re-railing the online train.

Big producers will do big deals with Google as they are right now.   The growing community of small time content producers (e.g me) is a lot more willing to share and forget about copyright encumbrances *as long as you cut me in on the action*.

If Google can monetize my stuff better or close to as much as I can then more power to Google.   I’m rooting for Yahoo! winning the monetizing battle though because …. I like them better and have stock.   But there’s room for both, and I think we’ll see in the coming years that the rising tide of online ads will lift most of the ships.

I’m confident I’m speaking for 80%, and probably 98%, of the long tail when I say that the long tail, especially in video, is going to attach to the entity that can best monetize their work be it professional full length movies or stupid cat trick clips.

Can the other 2% of content people sue them?  Sure, but not painfully enough to stop the online video train o’ progress, a train that’s sure to bring us the most garish, irrelevant, superficial, and poorly produced video yet seen on earth and then find a way to turn a few bucks on showing it off to people.    God bless America!

Web 2.0 Metrics? Aren’t we still trying to figure out Web 0.1 metrics?

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Jeremy often asks the questions people will be asking next year. Here, Zawodny notes the difficulties as Web 2.0 brings a lot more than pageviews to the browser table and cites this article about how pageviews are problematic as a measure of online success.

There are challenges galore as we move to Web 2.0 analysis. The YouTube deal alone showcases how irrelevant a ‘page view’ may become to full analysis. There, advertisers will probably want a small clip inserted before the video as well as pay per click or aquistion modes of advertising – at least until all advertisers start demanding cost per sale terms.

I think commercial metrics will (must) trend towards firmly establishing costs per sale and/or customer aquisition. At the point where that gets good the advertiser really does not need more detail. Much of the current advertising mis-analysis industry is based on analysis of things that only indirectly lead to sales.

In many cases I’ve been floored by how mathematically unsound so called “objective” conversion studies can be. In Travel and economic development this relates to the fact that those sponsoring the studies typically benefit from high ROI numbers so a cottage industry of “impact inflation” studies and firms has developed that serves the vested interests rather than the taxpayers.

Non commercially focused website metrics are even more complex than commercial, since many bloggers would probably rather be read by a handful of movers and shakers who provide thoughtful commentary than by legions of regular Joes.

A blog read by all G8 world leaders would be about 1000x more influential in terms of changing history than one read by American Idol fans, but would probably have limited commercial value. How do you measure that? Perhaps Yahoo or Google need a “BigWhig Rank” that pulls in personal data and assigns importance to the … person?

Hmmm – they already have been nabbing your search streams so maybe next they’ll take your … soul! I think that is OK with me as long as it’s …. measurable!

Google and Youtube

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Deals with Youtube and Google are flourishing today in the fertile ground of a 1.6 billion dollar aquistion of the online video leader* by the online money and search leader. The announcement is expected this afternoon or evening that Google’s bought Youtube for 1.6 billion. If Yahoo picks up Facebook (rumored but I think unlikely) it’ll signal an interesting consolidation of key Web 2.0 sites by the more established huge players. This consolidation seems to support the idea that the big guys see it as cheaper to wait until the rich and creamy high traffic sites rise to the top and then buy them up (Microsoft made an early and successful habit of doing that as well).

However at these billion+ valuations I’m skeptical the strategy can work as effectively as buying smaller companies to consolidate niche traffic. ie Flickr=good deal for Yahoo, Facebook=bad deal.

CORRECTION:  Really, Yahoo is the online Video leader, Myspace second and Youtube third.  Google video added to Youtube will probably push them to number one, but as usual Yahoo!’s doing it right but not getting credit for their leadership.

Google to buy Youtube for 1.6 billion

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It’s now almost official that Google will buy Youtube for a whopping 1.6 billion. They’ll announce it after the close today.    Here’s the NYT take on things. I’d have listened to Mark Cuban because it seems to me he’s in a very unique position to analyze the prospects here, but they didn’t and soon Google will have a huge video footprint. Google Video has about 1/4 the traffic of Youtube. Combined I think they’ll dwarf the competition – at least initially, though this market, which should really be called “American’s stupidist and most mundane home videos” is still in it’s infancy.

It’s not clear to me that people will continue to spend hours and hours surfing and watching for the few gems in an ocean of crappy short clips but Google seems to think so, and it’s also true that there is an enormous amount of advertising money now spent on network TV that may flow to this venue. Google’s recent talk about NOT producing their own content and moving into offline advertising venues may relate to this decision – they want to become a key source to soak up as much of the dumb money now spent on extravagant, low ROI offline campaigns.

Carnival of Marketing … the 7 Weekly Wisps of WWW Wisdom are …

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Here are my choices of the seven best of eleven entries in this week’s Blog Carnival of Marketing. Please give your feedback here and/or to the authors. If YOU have an article to submit for NEXT week’s carnival send it on in via the form or to jhunkins@gmail.com. This site is hosting the Carnival of Marketing again on October 15.

* Tam Hanna presents BenqSiemens pushes the nationalism button
posted at TamsPalm-the Palm OS Blog.

* Jim Cronin presents No Time To Blog? Bloggers’ Block? 6 Strategies To Developing Quick and Beneficial Blog Content
posted at The Real Estate Tomato.

* David Maister presents davidmaister.com > Passion, People and Principles > What Would the Client Say?
posted at Passion, People and Principles.

*Eliot presents Rise of the Niche: Survivor, Web 2.0, Feminist Blogs
posted at Red Inked.

* David Lorenzo presents Five Keys to Sales Leadership
posted at Sales Intensity.

* Adnan presents Pay Per Product – Make Your Own or Affiliatise
posted at Blogtrepreneur | Entrepreneur Blog.

* Todd presents Have you ever considered that you are not good enough?
posted at Aridni.

All posts are here