Scoble to Zuckerberg “Say Something!”

Robert’s got a post wondering what a lot of people are wondering right now.  Why is Facebook handling the beacon advertising fiasco so quietly, poorly, and stupidly?   However, I think they are right to lay low and wait for this to die down, then suck up with their advertisers and be back at the bank within a week.

1)  Sure, overall there is arrogance here, though Facebook has some reason to puff out their chest given the number of takers at their recent 15 billion valuation (well, it was only 2 takers, but …) 

2) Mark Z is a young buck, and Facebook is a young company.    They went from handling the claims they were the next big thing and would beat out Google to claims they are the antichrist company, stealing users souls.   They are neither, they know this, and it’s hard to react to all that crap so they are not reacting much.

3) BlogOsphere exaggerates problems to a degree that is absurd, and this will mostly go away soon unless users leave Facebook in droves.    Users leaving is unlikely.   Bloggers forgetting about the beacon fiasco is … less than 10 days away.

4) Advertisers don’t really care much about this.  Credibility is an issue but that will be addressed privately.   Probably Zuckerberg will need to step down as commander given this, and that may be a significant development.     If Facebook wants an IPO they’ll want to pull a Google and hire an old guard CEO to manage the kids in the office.    If they don’t – sell that puppy short.

OMG – Facebook scandals are totally boring already.    Can’t we talk about interesting things in Technology?

Who is clicking at your online business door?

Back in July I missed this great post by Dave Morgan at AOL but thanks to Danah Boyd’s post it has surfaced again.    The findings are very surprising and very relevant to anybody running click or online advertising campaigns.   Dave summarizes the findings very concisely as follows:

We learned that most people do not click on ads, and those that do are by no means representative of Web users at large.

Ninety-nine percent of Web users do not click on ads on a monthly basis. Of the 1% that do, most only click once a month. Less than two tenths of one percent click more often. That tiny percentage makes up the vast majority of banner ad clicks.

Who are these “heavy clickers”? They are predominantly female, indexing at a rate almost double the male population. They are older. They are predominantly Midwesterners, with some concentrations in Mid-Atlantic States and in New England. What kinds of content do they like to view when they are on the Web? Not surprisingly, they look at sweepstakes far more than any other kind of content. Yes, these are the same people that tend to open direct mail and love to talk to telemarketers.

What does all of this mean? It means that while clickers may be valuable audiences, they are by no means representative of the Web at large

Indeed, this means that many online marketing campaigns may need to dig a lot deeper to obtain a positive ROI, and for some campaigns positive ROI is not attainable.    If, for example, irrelevant clickers (not to be confused with click abuse) mean you’ll have to spend a few dollars to reach a single prospect, and your margin on your product is only a few dollars, you may be fighting a losing PPC battle for online hearts, minds, and pocketbooks.    On the other hand if your target audience is, say, midwestern stay at home soccer moms, you may want to up your PPC spend dramatically because your nickel or dime per click could be worth many times that in prospective sales.

Obviously Dave’s post is only the beginning of the big story which has yet to be written,  and I’m not clear how representative this sample was of all PPC activity (I think it was broadly representative though – they looked at billions of data items).  However this helps me understand why some of my PPC experiments have failed to yield much of a return.     A good travel experiment given these findings would be to look at midwestern travel patterns and try to advertise popular packages to Mexico  or other commonly travelled points south in the winter.   Since women are the main travel planners this match could work well to increase the normally very low conversion I have seen on travel related PPC spends.

Make Ads, Not War

As I’ve noted many times here I believe that our massive US defense spend is unwise, returning a fraction of the return we’d get by putting most of the annual approximately $500.000.000.000 spend into high ROI global and national development projects, pro USA marketing campaigns, and other infrastructure improvements.

Interesting to me was the number just cited for the 2008 global advertising spend –
486 billion, just shy of what we’ll probably spend on US military.   Global military is about 2x the US number, or approximately one … trillion … annually.   

For you  bogus-fiscal-conservatives-who-call-themselves-conservatives-but-believe-in-huge-military-spending you owe the world at least a 250 billion per year apology, because this military spend is so ineffective at obtaining the desired objectives that no business would ever tolerate it going into the future.  It’s tolerated out of ignorance and mathematical stupidity – the same foolishness that drives huge social spending.  I think the flawed logic generally spawns from the assumption that projects that *might* work to bring stability (e.g. war) actually will work.    Since many such projects often bring a negative or low return rather than the desired one, the ROI on our military spend is spectacularly low.   Vietnam, for example, was left in worse shape than if we had spent zero on that war, and it now appears that Iraq may wind up suffering the same fate.

So, I propose this:   Let’s try to corner the advertising market for a year with out half-trillion.   Instead of weapons, lets see how effectively a global advertising campaign  would sway global public opinion in our favor.    Think about it.   Every TV, every billboard, every radio, and all online ads are featuring themes favorable to the USA.   For every propaganda piece against us, our almost Orwellian media dominance would counter with wine and roses and happiness in the USA.   Maybe we could just corner half the global ad market but reserve a hundred billion to include lots of giveaways and promotions to butter folks up.   Free turkies, cheeseburgers, and flat screen TVs …

Oh, and then that last hundred billion would come close to solving all the major pressing infrastructure problems on earth.

A disclaimer –  I guess I’m only partly serious here.  We need to maintain an adequate defense, but current pork barrelling, inefficiency, and bad strategy have bloated the defense budget out of proportion with its return on the huge investment.   I’d guess we could cut it by at least 60% with no appreciable dilution of our US security, and we could *certainly* do this for a limited time with very little dilution in security but a huge benefit to infrastructure projects all over the world, which would create incalculable good will.   No, this would not solve all our problems.   My point is that it would solve more problems than our current use of the funds.  

Yahoo! WAKE UP!

It’s very frustrating being a Yahoo shareholder.

Not because Yahoo isn’t a good company, in fact Yahoo is a *great* company.

Not because Yahoo doesn’t seem to “get it”, Yahoo arguably “gets it” better than almost all other companies in terms of Web 2.0, the social networking space, and in terms of the importance of open architectures and developer support.

Not because Yahoo doesn’t have any of the lucrative search market share. They are the clear 2nd place in search with huge search activity and over 20% of global internet search traffic.

It’s frustrating because despite all the advantages, Yahoo just can’t seem to capitalize on all these advantagesto turn a good buck, monetize the site to full potential, and increase my share price. Google, with total traffic levels about the same as Yahoo, has a stock capitalization some *FIVE TIMES* that of the company with arguably very similar potential for profits.

Little internet companies and even many very big ones have a good excuse for failing in profitability – online biz is a cold and cruel world and for all the but the huge players everything can turn on a dime. Yahoo, on the other hand, has no good excuse for failing. They are a market maker in terms of online search, global internet reach, online video, and …. this just in for me …. they are HUGE in the Social Networking space. Yes, that would be the social networking space everybody is so excited about. What do I mean by HUGE? Let’s review this graph from via TechCrunch.

First we need to note that is not even remotely a perfect measure, and also adding “unique visitors” in this fashion is counting some folks twice. Also, they are listing sites like Geocities that are arguably not social sites, though I’d argue they could be “open socialed” quickly with an effort in that direction. Since the overlap at these traffic levels is probably not a very big deal, and also assuming they spend time as if the Yahoo properties are separate sites their ad potential may be the same as if they were different folks, these numbers are important and relevant.

So, the big players first:

Myspace: 72 million unique visits in October

Facebook: 33 million

Yahoo: 38 million …..

<screeching reverse halt noise here>

What? Yahoo has more social traffic than Facebook?! Yes they do if you add Flickr and Geocities and Yahoo Groups.

Aside from the fact that Caterina and Stuart and the Flickr gang are probably thinking they sold out a bit too cheap at only 20 million, Flickr is an astounding success with some 14 million users and growing. Personally, I’d rather hang out at Flickr than Facebook anyway.

So, where does this huge number of users in the Yahoo social networking juggernaut leave us?

Frustrated baby, frustrated……

Print Media Future – so dim, you won’t need to wear shades.

Two articles today suggest how tough it’s becoming to turn a buck in the print media world.   Jeff Jarvis at BuzzMachine and founder of eWeek, notes in “Whither Mags”, that major print efforts require a huge capital outlay before they can even hope to be profitable, and that the current high risk associated with print publications means we probably won’t see nearly as many new big magazine efforts.   

Even more ominous is the New York Times report today showing circulation declines almost across the board for US Newspapers.  The  NYT Article “More Readers Trading Newspapers for Websites” has a great graphic showing how circulation has fallen at most newspapers since last year with an average drop of 2.4%.    Given the relatively thin profit margins at many papers and the fact many costs are fixed this does not bode well at all for the future of newspapers.   The future of news?   That is a far more complex question and I think the answer is not knowable at this time.    Blogs are picking up some of the journalistic slack, but I’m not convinced they can pick up all of it. 

Bad News for Good Newspapers

Nick Carr summarizes a study in the UK that suggests more perils for news organizations as they move online.    The online editions appear to be “cannibalizing” the offline edition readership.   A university study looked at how online news readers are less likely to buy a newspaper from the same company they read online.

If this proves true across the newspaper landscape it presents newspapers with the twin challenges of needing to beef up the online portal to keep up market share even as their total advertising revenues are tending to go down.   Offline readership generally gives a better ad return per reader, so even as online advertising increases that extra revenue is not likely to keep pace with the offline losses. 

Paid Content has a great article about online advertising and how the concentration of online advertising in the hands of so few websites is becoming a problem. 

They note this remarkable stat from Zenith regarding distribution of online ad revenue:

So the big problem is not that ad spending is drying up, it’s that the bulk is concentrated in a few sites. Citing the IAB, Reuters points out that the top 50 websites in the U.S. took in more than 90 percent of the revenue from online ads in H107, while the top 10 sites sucked up 70 percent of internet revs for the same period. 

They also quote Zenith as suggesting that even as late as 2009 online advertising will remain a fraction –  under 10% – of the total global ad spend of some 495 billion.     I’m skeptical of that estimate – very skeptical – because online ROIs remain vastly superior to offline, though this advantage is not as obvious as it should be because so much of the spend is done in foolish “old media” ways with large, expensive, poorly targeted campaigns.  As PPC campaign sophistication improves, people continue to move online, video continues to move online, and advertisers increasingly continue to insist on positive ROI we should see online buys approach offline – I’d wildly guess there will be online / offline ad parity by 2015, though interactive TV and video clip advertising may blur the distinction between a TV ad and an online ad.

Online advertising juggernaut rolls on.

This Internet Advertising Bureau report notes that online advertising is still showing explosive growth.    Interesting is the fact that the types of online advertising – with search ads at the top – seems to have stabilized somewhat with “pay for performance” one of the few categories that has clearly increased from last year.   

 I don’t think this stability reflects the “optimal” mix of ads, rather it is more an indication of how the big players take some time to get comfortable with innovations in advertising, and still stick to more traditional CPM style approaches rather than the clearly superior PPC and pay per performance models.   Clearly even many of the big advertisers and agencies still have fairly weak SEM and SEO departments so they’ll choose to use big CPM campaigns that are easy to analyze rather than the more productive – but more complicated to manage – PPC and performance approaches.

Online ads are now a mainstay of any good campaign, but it’ll take some years before advertisers realize the foolishness of many online advertising approaches which generally include bloated CPM impression campaigns.   Much more effective are targeted organic and PPC ad campaigns, but these require more analysis and a newer perspective.

The most conspicuously stupid type of campaign – still extremely popular in travel – is to use expensive print advertising in an attempt to boost online visitation.  I studied this *extensively* across many print ad types during my work marketing southern Oregon several years ago and despite the clear results that showed print ads lead to only a tiny number of online visits, many travel marketers still think print is an effective way to promote online.    It’s not, but it will continue until the incentives and simplicity of squandering money on ineffective print advertising go away.   The lack of research in this area is odd to me given the huge total travel advertising spend, but most travel research is self-serving and often sponsored or conducted by the very agencies or entities that benefit from certain results, so stupid biases remain intact for a long time.

Google + Doubleclick? Microsoft cries “Advertiser Monopolizer!”

Dana Baran over at WebGuild blog has a great short article summarizing Microsoft’s case against a Google takeover of Doubleclick.   The chart (from the MS legal team?) has what appears to be an excellent summary of the total online advertising spend.  I assume this is for 2006 but not sure.   It shows approximately a 20 billion total ad spend with Google scooping up 30% followed by Doubleclick at 22%, Yahoo at 19%, Microsoft at 17%, and all the rest at 12%. 

Microsoft’s point seems to be that Google and Doubleclick should not merge because, as the two leading recipients of online advertising revenue, this would create a player with more than half the market and thus too much power over the marketplace and advertisers.