Mashable's Stan Schroeder expounds an interesting theory: that Google's current (and expanding) dominance in web search, at least in the English-speaking world, has trained websites to do all they can to show up high on Google - to such an extent that no upstart search engine can hope to do better than Google for broad horizontal search.
Stan's review of recently launched, well-funded search startup Cuil, as also the TechCrunch review, are lukewarm at best and support Stan's thesis - but this thesis assumes that Google has the best possible knowledge of a user's intentions, and since websites will compete to match Google's algorithm that expresses that intention in a query, Google is by default the winner in any search competition.
The flaw in this argument is that Google has very little information about a user's intention - indeed, Google doesn't even seem to use all the information it could have about the user, because of privacy and latency considerations (for instance, I doubt if Google looks up my interests in my Facebook profile when I search as a logged-in Google user, to discover that by typing the search term "kayak" I probably mean a watercraft and not a travel search engine). Google is constantly refining its approaches to divining intention, of course ... and the masses of data generated by user searches help it get better every day.
But web search is far from perfect today, and it stands to reason that Google's own momentum - and success - will lock it into the innovator's dilemma of doing little more than tweaking its existing algorithms. And some enterprising startup will bring a refreshing new take to searching the web. Wonder what it could be?
The inconvenient truth is that for all its new-media spin, display
advertising is "old" media -- a commercial message to be placed next to
editorial or entertainment content.
part of why large companies such as P&G spend so little on the web
is because of the feedback they get from the marketing-mix models they
still use to determine media outlays: TV and other old media still
work. (P&G increased its magazine budget by 7% last year.)
For all its glory, the internet still has not proven itself capable of
being a primary branding medium. Most ads online are response-based and
work best for brand marketers when they complement a branding campaign
in other media.
"The biggest gating factor to internet ad growth is the
obsession of the players, the [venture capitalists] and the press with
'bottom of the funnel' marketing in a world where the big money is
spent at the top," said Rob Norman, CEO of Group M Interaction. [OUCH!]
It's pretty well known that Amazon Web Services' EC2 and S3 initiatives have taken off and are gaining users not just in startup land but in Corporate America as well. Amazon provides a compute and storage cloud, and the rush of companies big (e.g., Google) and small (e.g., Nirvanix) beginning to compete with Amazon in providing clouds has spawned a term and a movement - Cloud Computing.
Dealmaker Media is offering readers $100 off the Under the Radar Social Media and Entertainment event on June 3rd in Mountain View, CA.
Click here or on the image below to register with the discount.
Here's the conference description (I'm a judge, btw):
Under the Radar: Social
Media and Entertainment June 3, 2008
| 8:00am – 6:00pm Microsoft Campus |
If you can't beat 'em, buy 'em. No
longer is big media trying to compete with the content companies that were
stealing the show - instead, they're offering them a premium channel. From
YouTube to Bebo and MySpace to Club Penguin, every media mogul, Hollywood tycoon
and Silicon Valley innovator wants a piece of this pie. But even Toto knows
we're not in
anymore - technology has changed,
business models and ad metrics are being reinvented, and the pressure to turn
millions of eyeballs into billions of cash is on. Blink once and they just might
get side-swiped by a startup with a better product, a smarter model and, even
worse, nothing to lose.
Radar will uncover 32 startups in the entertainment and social media space
that have launched within the year. Covering social networks, advertising, casual gaming, virtual
worlds, measurement tools, video, commerce, publishing and more,
Under the Radar is the only forum that empowers its audience to discover
tomorrow’s leading tech companies. PRESENTERS:
33Across - Identifies
influential online users Animoto - Create
personalized, professional-quality videos from images and music, offering a new
alternative to traditional online photo slideshows AudioMicro - Stock music and sound effects licensing platform Aviary -Suite of web-based
applications for people who create and a marketplace to sell that content Dizzywood - A virtual world that allows kids to dress up 3D avatars,
play games, explore worlds and meet new friends in a safe environment Comedy.com - aggregated comedy entertainment site CrowdSPRING - crowdsourcing of creative talent. ffwd - Organized, multi-platform, video
content delivered via a browser, with social network awareness, and predictive
recommendations. Jygy - mobile social networking GumGum - A licensing and distribution platform for online content
Hollywood Interactive Group - A mass casual mmo based on reality TV
stardom. Jacked - Browser-based “second screen”
for TV viewers, which provides synchronized content and a real-time interactive
experience that complements what they’re watching on TV Keibi - moderation and classification of user generated content
(UGC) Kosmix - Categorization engine that
crawls billions of Web pages in a unique manner to create algo-generated home
pages Loomia - Social recommendations bridging established social
networking sites with media websites Mochi Media - Provides
independent game developers with analytics, distribution, tools and monetization
while providing advertisers with turnkey opportunities to reach the one in three
Internet users who play online games. MovieSet -Platform that brings behind-the-scenes
filmmaking online, giving fans authentic access through its proprietary toolkit
for Producers. Mytopia -Social gaming community for Web,
, Smartphone and TV
Overlay.tv - video commerce platform that overlays contextual
information directly onto online video content PlayCafe - Online game show
network PutPlace - Media storage all the way from
I moderated a panel today on go-to-market strategy for Social Media startups. The panelists - Sergio Monsalve from Norwest Venture Partners, Charlene Li from Forrester Research, Jason Oberfest from MySpace and Social Media Evangelist Deborah Schultz did an excellent job of keeping the audience both entertained and informed. A few highlights from the panel: - yes, you can get a million users trivially for an app on Facebook or MySpace ... but a million is a pretty small number nowadays for a social media app, and these are hardly sticky users - all the panelists stressed engagement as being more important than simple viral growth ... advertisers, particularly brands, want users who hang around - bleak times could be ahead for the CPM ad world ... CEOs, hunker down, focus on alternative business models, and start thinking about freemium strategies - one thing missing (brought out by a question after the panel) was an emphasis on partnering for traffic acquisition, so much a feature of Web 1.0. With the exception of a few sites like Zillow that have proprietary information they can syndicate to portals such as Yahoo Real Estate, traffic acquisition is either through viral invitations (including widget embeds) or SEO/SEM.
The panel was streamed live on ustream.tv and is recorded here.
So why aren't P&G, Clorox, Nestle, et al, pouring money into sites like YouTube and Facebook, whose reach and engagement are indisputable? And how and when will brand dollars move online? I've been debating these points with Cheryl Tam Cheng, who joined BRV recently after several years in brand management at Clorox. Her insights, after having managed ad budgets bigger than most Web 2.0 companies' revenues, opened my eyes to the challenges - and opportunities - as online advertising tries to take a bigger chunk out of the multi-hundred billion TV ad market.
M-Media plans are put together through an
integrated process that includes the agency, the media buyers, the brand team
and other cross functional marketing people such as online, PR, in-store and print, with the brand manager giving direction on messaging,
creative strategy and budget splits. Startups trying to extract ad dollars from brands should remember that:
- Brand managers are smart. Very smart. And conservative, but not unreasonably so, given that they are nurturing product franchises developed over decades and worth hundreds of millions, if not billions, in annual revenue. These folks have to deliver growth in fiercely competitive markets while dealing with fickle consumers who have many choices; they need measurable results to engage with a new advertising channel
- CPG companies are very metrics driven. Ironically, the typical CPG company might have more and better quant jocks analyzing consumer data than all except the biggest Internet companies.
- TV has worked quantifiably well for brand advertisers: TV has mass reach, great recall, and well-segmented viewer demographics. The long-form content on TV allows for ads that are mini-stories that appeal to consumers' emotions. Most CPG brands sell offline, and must either create an emotional connection that persists between viewing the ad in the morning and driving to the store in the evening, or advertise at the point of decision, i.e., at the store.
- CPG ad budgets are relatively inflexible: Perhaps 80% of a typical brand manager's budget is allocated to TV, with the remaining 20% split across in-store, print, outdoor - and online. The brand manager controlling this mix has a tenure of 18-24 months, a number of short to medium term imperatives, and little interest in experimentation without relatively quick payback. Scaling from a 50K experimental buy to a 2M campaign requires a fundamental shift in how the brand is marketed, and will only happen if there's a clearly demonstrable ROI.
- Brand ads are bought for well-defined campaigns, not as part of an almost infinitely elastic lead-gen budget. Andrew Chen explains that well here, and the savvy startup will realize that they should be chipping away at brand budgets, selling small campaigns and delivering ROI, rather than hunting elephants.
- Startups are better off appealing to new, hip brands like Method than tilting at windmills (pitching to giants like P&G). Edgier brands with smaller footprints, like Method, that are still establishing themselves and target a younger, hipper, urban consumer are more likely to experiment with online marketing. Their budgets are much smaller, but only after these early adopters succeed in building a brand online will the giants follow.
One of the cardinal canons of Silicon Valley is that startups must focus ... and focus, and focus some more. Indeed, Sequoia Capital enshrines it as one of their guiding principles for building sustainable companies. Historically, this has also meant that startups expanded markets very cautiously beyond their home geographies.
Enterprise players first got to big Valley companies, then perhaps to Financial Services behemoths in New York City, then to the rest of Corporate America. Once they were big and profitable, they might have funded a London sales office to explore the European market. Asia was usually an afterthought for post-IPO expansion.
Internet and New Media players were a little more nimble, but they too thought of global markets as icing to be applied to the cake of the US market.
Such an incremental approach to market penetration seems quaint in today's flat world. A chip company based in China might get its first customers in India or Korea, and Internet companies like Facebook, hi5 and Orkut might see much of their growth coming from outside the US. Very early in your company's lifecycle, you are faced with the gnawing question of whether to explore distant markets - are they tantalizing merely because they are far away, or is that glitter really a pot of gold? And how should a 20-person company target Asia or Europe anyway?
It's usually not difficult to figure out if your product or service has as much, or more, appeal outside home base. Maybe you meet a prospect a trade show that attracted a worldwide audience, or maybe the social graph of your users, superimposed on Google Maps, looks uncannily like the highway map of the Philippines, or maybe your investors have a global perspective and can point you to promising international markets (shameless plug - we at BRV have done this more times than I can remember). Far earlier than you might have assumed, anyway, you're faced with the opportunities and challenges of globalizing your company.
Before you panic (or after you recover from it), remember that going international is no longer as expensive as it used to be. It's really much more about mindset than expensive offices in downtown Tokyo or Seoul. In our experience, following a few basic guidelines can smooth your overseas expansion:
Be ready to take an order from anybody, anywhere, anytime: simple though it might sound, one of the companies I'm involved with got a lot of international customer interest very shortly after they started selling, and had to scramble to be able to take customer calls outside US office hours and to process non-US forms of payment. Be prepared for success earlier than you might expect, and build your processes and systems for a world where at any given time somebody, somewhere isn't asleep but is, instead, ready to buy your product or watch an ad on a webpage you serve.
Treat all your customers equally well, wherever they may be: when the US economy was the only engine pulling the world, Silicon Valley companies built products or services for the home market and when they went international, most customers had to buy the US-centric product - or buy nothing at all. That attitude just won't fly in a world where buying power, and innovation, are increasingly diversified. Yes, the Orkut team might sit in Mountain View, but if Brazilian users want a certain feature and US users don't, then the Brazilians should probably get it - after all, they're the largest user bloc on the site!
Remote offices shouldn't just be sales offices: let's say you bit the bullet and employee #21 in your small startup was the head of Asia-Pac, based in Singapore. His primary job might be Sales and Business Development, but he is also valuable eyes and ears on the local market, and your Product teams must be attuned to what he tells you. Otherwise you'll be pushing a Valley product onto a distant customer who will feel ignored and disregarded - and might well leave you.
Re-activate your frequent-flyer programs: even if you run a website, and never meet your users face to face, there's no substitute for immersing yourself in the culture from which they come. In any case you can always meet local advertisers on your trips to distant lands filled with your users. And if you're an Enterprise play, then, by all means, get on that plane and meet those remote customers.
It's no secret that food prices are rising drastically, and for the foreseeable future, worldwide. According to CNN,
However, consumers still face at least 10 years of more expensive food, according to preliminary FAO projections.
Among the driving forces are petroleum prices, which increase the cost
of everything from fertilizers to transport to food processing. Rising
demand for meat and dairy in rapidly developing countries such as China
and India is sending up the cost of grain, used for cattle feed, as is
the demand for raw materials to make biofuels.
What's rare is
that the spikes are hitting all major foods in most countries at once.
Food prices rose 4 percent in the U.S. last year, the highest rise
since 1990, and are expected to climb as much again this year,
according to the U.S. Department of Agriculture.
As of December, 37 countries faced food crises, and 20 had imposed some sort of food-price controls.
Affluent Silicon Valley consumers probably don't feel the pinch, and probably never will, because they spend such a tiny fraction of their income on food. But for the world's poor, food is usually their second largest expense, after shelter, and a 10% increase in food prices could well push them from subsistence to starvation.
The Christian Science Monitor examines the role of biofuel crops in raising food prices. Predictably, the biofuels industry, supported by farm-state driven legislation and buoyed by subsidies, has produced studies that minimize their impact on commodity prices. Says the Monitor,
In a counterpoint study last month by corn growers and the biofuels
industry, higher corn prices were found to be only a small element in
rising food costs overall – although higher energy costs for fuel to
transport crops and grow them were a larger factor.
There is still much doubt about the sustainability of biofuels, i.e. whether they are a net positive in terms of energy production vs. consumption, and in terms of carbon emissions. With so much uncertainty about the cost-benefit ratio of biofuels, and the very real need for more arable land for food crops, shouldn't policy makers and land stewards be focusing on increasing food production and not artificially subsidizing biofuel production?