Thursday, July 19, 2007

Whole Wild Forums

By this time, you've probably heard about the fiasco with John Mackey's forum posting on Yahoo! Finance and other message boards. Using the pseudonym Rahodeb (backwards for his wife Deborah), he posted positive things about not only Whole Foods but about himself and negative things about Wild Oats (the company that they are purchasing). The SEC Chairman Harvey Pitt says that its "bizarre and ill-advised, even if it isn't illegal."

I'm sure this isn't the only time that a CEO has jumped onto the message boards to pump up their stock but I think the bigger issue is one that has plagued the Internet since its existence, Anonymity. As that famous cartoon said, "No one on the Internet knows that you're a dog." Anyone can be anyone else. And that I think was not only frustrating for someone like Mackey but a way to fight fire with fire. I'm sure he encountered many anonymous posters that said negative things about his company that had no basis.

What can we do about this? I think within a year a social network like MySpace will have dropped in value significantly because of all of the anonymous bands, movies, porn cameras, and fake profiles on it. On the other hand, Facebook will continue to grow because of the verification standards that it has and the networks that you have to join. (Don't change this, Mark!) If I recall correctly, eBay has immense value because it is difficult for you to change your screen name (so I can't go rip someone off and then re-open and then rip another person off, etc).

If you realize, the networks with the most value that people come back to time and again are the ones where you can really verify who you are. This minimizes spam, threats, violence, anything that will detract from the true goal of the site! Perhaps this means linking a credit card to your site (even if you are not charged!). This is a tactic that eBay employs. Have other people vouch for you (like LinkedIn or Facebook). But I really believe that the anonymity of the web has to be curbed otherwise the value there will really diminish. (I hope that I don't eat those words when I find an example otherwise!)

Wednesday, July 18, 2007

Could YouTube be in Big Big Trouble?

The official numbers on YouTube's dominance in the video sharing space are out. Online video as a whole attracted 75% of US Internet users according to ComScore (via Mashable) that watched 158 million minutes of online video in May. The average stream is about 2.5 minutes. 35% of users use YouTube and YouTube accounted for over 20% of the online video stream total. Wow.

And now the bad news. Dailymotion a large French video sharing site was ordered by French courts to pay $32,000 in damages to a French director (along with the producer and distributor) who's CLIPS were on the site. After the clips were uploaded did Dailymotion begin to use Audible Magic which is seemingly becoming the standard in detecting copywritten clips. But what does this mean? Is this the end of the DMCA as we know it? (As an aside the DMCA stands for the Digital Millennium Copyright Act, and basically says that a Web site has no jurisdiction over what its users do, hence YouTube has been claiming as one of its defenses against Viacom). Will YouTube have to give up its users private information if they are caught infringing? Were all those Zidane Mashups from last summer considered copyright infringed?

We saw earlier this year how Digg went down with users posting the HD encryption key on its site. Will YouTube users also contribute to the backlash by posting copyrighted clips, causing massive lawsuits against YouTube and its parent, Google? And while $32,000 is small change for Dailymotion the video in question were clips. Was this fine some type of relative measure?

Lots of questions here. We're digging to get to the bottom of this and what this means for the future of online video sharing. But we do know one thing. Video sharing no matter what is here to stay.

Tuesday, July 17, 2007

Commercials as Entertainment

AdAge's AdReview talks about the Sonic commercials and the well executed jokes and humor in them. The Sonic commercials are an example of commercials that you might not want to fast forward just because they are actually entertaining. (If you TiVo everything, then you might not know that..) But as I've been saying for a while now, the 30 second commercial is dead. So what do you do? allows one advertiser to purchase the entire ad portion during its commercial breaks. It really pains me when I see the advertiser using that time poorly, meaning it simply shows the same non engaging commercial every single commercial break. However, Fidelity had an interesting ad where they asked you very simple questions and showed a simple animation based on your answer. And thus you could do the same with your commercials. Depending on the ad time (still 30 seconds), why not shoot a variety of different commercials that all wove together into one story line?

Interruption advertising is no longer working. It could actually detract from the brand. However, we've all grown up watching commercials so we actually tolerate them. But our recollection is virtually zero. Don't think that commercials have to inform. Look at the buzz created by JJ Abrams new film tenatively titled Cloverfield. It didn't tell us anything about that film yet people are Googling and speculating about what it could be. Let the audience decide whether they are interested enough to find out more from the quick teaser that you give them. If we can make our commercial actually become water cooler talk we've done our jobs.

Monday, July 16, 2007

The Way Things Work

Another wild weekend with things that we thought that worked not working and things that we thought would never work working. First off - Second Life is dying. At least in a corporate way. Corporations are leaving in droves because the CPM is just way too expensive. While there is a higher CTR the CPM is not justifiable. Secondly - The TiVo numbers are out. And...Direct response commercials are the least fast forwarded commercials out there. Strange. Thirdly - Why aren't people clicking on those Facebook ads?

So those three points are some interesting issues that are going on in today's tech beat. But I think the more interesting thing is the growth and spread of these networks like Second Life. (or un-growth). Why is Facebook so large and ConnectU the company suing Mark Zuckerberg not? So advertising as we know it is changing. Things aren't spreading the way we think they are. A virtual 2D world like Barbie has more users than a Second Life and will soon rival World of Warcraft.

A new world of thought has emerged that is rivaling Malcolm Gladwell's Tipping Point strategy of Influentials well influencing people. It's from Columbia Professor Duncan Watts who believes that its not the influentials but the easily influenced people that make a difference. BzzAgent utilizes this strategy as well. I think though that when it comes to viral marketing and the way that it works it really depends on what you are trying to market. If you are marketing Coke and Pepsi then sure, you should go with the Watts School of thought. After all, everyone needs to drink a soda every so often. And when you're thirsty do you really care if Paris Hilton is drinking a Coke (although you would care if she was drinking a Vitamin Water, which is arguably, a reason for its great rise)? I think fashionable products and name brands work better through Influentials (like Paris). Products where you can charge a premium because its the celebrity's choice, etc. That works. But I think when you are going after mass merchandising buzz (let's say you have a website that let's you create a profile and all you care about is number of profiles, all right let's just say you have MySpace) its a better deal to go after the lowest common denominator (hence the simple yet poor design of the site).

As we've seen before, we've been wrong, but we'll be keeping our eye out on how things grow in this new viral economy.

Thursday, July 12, 2007

Jackson's Back - Fortune 500 Beware!

Eric Jackson is back! He's the activist shareholder behind Yahoo! Plan B and perhaps one of the reasons that Terry Semel was ousted from office. His tools: MySpace, YouTube, a blog, a wiki and never ending energy. Now he's back and has set his sites on Motorola, the fledging cell phone manufacturer. He specifically states on his Motorola Plan B website that Ed Zander of Motorola has led to 13.5% returns for the stock versus 35% for the S&P and 37% for Nokia. Through another social media tool,, he's been able to aggregate 422,430 shares of stock so far (the campaign is 3 days old). Dominic Jones from IRWebReportDaily has some interesting insights into the evolution of the web and how Jackson is taking things to the next level. With low commission online brokerages popping up, ownership in stock has risen to all time highs. Similarly, the web has brought together like minded folks in a type of shareholder activism. However, while people like Jackson are targeting the tech savvy, Jones still believes that true power lies in the "soccer moms" that can pull money out of their mutual funds as the ones with the true power. He cites the Disney debacle a few years ago as the first and strongest of these showings.

Wow. From an IR perspective this could be a logistical nightmare. Before all we had to worry about were the few fund managers and maybe now a few hedge fund managers that owned our stock. Now how do we answer every question out there that every mom and pop shareholder want answered yesterday? While most of these individual investors are not Eric Jackson, we don't know who will be and that's scary. So what's the answer to this?

I think transparency is the key to effective communications with the public and especially to the masses. Apple did it with their defective iPod battery and folks realized that although Steve Jobs is sometimes a god, he's still human. Dell didn't do it with their firey laptop batteries and they paid the PR price. Yahoo didn't admit its mistakes in losing Google, then Facebook, and Semel paid the price. Is blogging the way to go? Perhaps. Johnathan Schwartz from Sun Microsystems keeps a blog that sometimes gets him into trouble.

I think the general public will accept mistakes but they won't accept dishonesty or cover up. Admit mistakes and let your investors know about them before they leak out and there's a PR nightmare....

Wednesday, July 11, 2007

Interruption Advertising

There are just some moments in your life when for once, you just don't want to be marketed to. And for Greg Verdino its when he's updating his blog. In his marketing blog, he makes a good point about interruption advertising and how it sometimes brings about bad will to a given sponsor and media outlet.

We've seen that the most successful advertising and media company out there Google lets you choose when you want to be marketed to. And that is the model of the new millenium. With all of the tools that we have to bypass commercials (i.e. Tivo), with all of the conditioning to ignore that we've grown up with, we need to find times when people want to be interrupted with a certain ad.

A tool that I saw last night is really cool. It's called UpNext and right now only works in Manhattan. But its Google Maps on steroids and while it basically launched last night, it is addictive. I surfed around the virtual streets and buildings of Manhattan for a few hours last night looking at all of the buildings and finding out all of the restaurants and bars that I never knew about in my neighborhood. I was happy to entertain that there was a Cuban restaurant a few blocks from my apartment and actually clicked on it to learn more.

Interruption advertising doesn't work. It's an annoyance. If we click on it, its an accident. I read an AdAge article this morning about relevance. Why is Netflix blanketing the world with its pop ups? Sure everyone watches movies, but don't you think real movie buffs would want the 10 discs at a time plan? Why not advertise on IMDB, Yahoo! Movies and other relevant sites? As this blogger said, its virtually riskless in this online space where there's lower production costs and media buys are not as expensive as television. Take a risk, go out there and find a niche and appeal to them. Or else feel the result....Since by now we already know about Netflix and as they continue to interrupt folks like Greg Verdino, they may lose more and more subscribers.

Tuesday, July 10, 2007

Death to the Page View

How do you track the popularity of web pages? It used to be that every page that was loaded into the system would be counted as a "view." From here, the sites with the most "views" would be counted as the most popular. However, with new technology like Ajax (think Google Maps, where you are not reloading the page) and streaming video, the page view is no longer accurate. Nielsen/NetRatings one of the bigger ratings agencies online is changing its metric from the page view to time spent on the site (via PaidContent). Right off the bat, we know that Google known for redirecting other people to the sites that they want will drop in ranking. Yahoo with its Ajax filled pages will rise and MySpace will most likely fall as well (poor HTML design forces users to visit new pages). Video sharing sites where users are spending a whopping amount of time will likely increase and crack the top 10.

What does this new measurement mean for marketers? Well, sites are able to use these new metrics to increase their CPM. However, I think we will all know which tactics work best given our demographic. The new measures also don't take into account widgets, which I think given Facebook's API opening will be essential for marketers to know (although technically we could go by number of subscriptions). So once again measurement is all over the place.

Google is going to continue to drop in terms of time spent at least with their flagship search product but I still think that contextual search and SEM are the best ways to bring folks into your online store and convert them (since they are looking for you anyway). We all know the addictiveness of social networks and email but if you leave your email open all day (as Mashable suggested) are you really engaged with the banners on there as well? Does Yahoo or Gmail have the right to charge more for these pages? Similarly we also know that sites like YouTube will rank higher but is anyone watching the ads?

I don't think the new metrics are going to tell us anything that we don't know already. It may give media companies a way to charge us a higher CPM, but I think that we know (hopefully) the ways that our target demographics use the Internet. Whether its through banners, Facebook widgets, etc, I think the best way to measure is by ROI ....

Monday, July 9, 2007

When You Pay For Something That's Free

There's been a lot of techie hype over Kevin Rose's lastest start up. (Kevin Rose is the founder of Digg). Pownce is a P2P way to send "messages, files, links, and events" to your friends. But outside of this, is the fact that Pownce is still in Beta. Not much different than other Web 2.0 companies and to limit their testers Pownce is only letting folks with invites join. Again, not much different. What is different is the artificial marketplace that has surfaced because of this. Remember Gmail? Gmail invites at one point were hitting $200 on eBay. Now Pownce invites are ranging from a starting bid of 1 cent to a buy it now of $9.99.

I'm not sure who is posting these invites for sale, but could it be Pownce's own team? While Pownce cannot charge (it would be against the Internet's business model), folks with invites can create an artificial market and therefore make each free invite somewhat valuable. If they can do this demand is going to outstrip supply, which will create a buzz around this "free" product.

I don't think that Pownce has the name recognition that Gmail did at this same point for it to work. Also, how many people are willing to pay for this? It's not the same as Gmail which is interoperable with other email addresses. Right now there were 3 bids for Pownce invites and other sites like Mashable and Techcrunch give these invites away for free.

We'll see how this strategy works, I wouldn't be surprised if it backfired, although some blogs have picked up on the artificial marketplace....

Friday, July 6, 2007

Piracy Crackdown

Yesterday in New York City, Kalidou Diallo was arrested under the city's new anti-piracy laws when he was caught recording the Transformers on his handheld camera. It's definitely a move in the right direction to protect copyright but is it enough? Lawrence Lessig has been moving towards a copyright free world with his Creative Commons effort and in the Internet world it appears that this is the only way to enforce things: by not enforcing things.

Diallo was caught recording the Transformers and his plan was most likely to sell the "bootleg" on the street for 100% profit. His business model would have him, the retailer, winning, you, the consumer, winning (because you would pay a reduced price to see the film), and the producer, Dreamworks, losing (they don't get to collect a fee for entrance). In essence this equation is shifting power toward the retailer. But if we think about traditional television the equation is also changing. Previously it was: the user pays (with his time), to watch commercials that the sponsors create, in order to get to the content. Thus the brands get your attention, and for that attention they pay producers to create content that you want to watch but will put up with commercials to get to. Now the equation is changing with TiVo and DVRs. Now the user doesn't pay, but brands are still paying. Content is still being made so there's an imbalance. Who's losing? It's the same case as Diallo - the guy footing the bill. In TV its the sponsors.

I think that pay per entrance still works. After all, you get the luxury (at least in some theaters) of comfortable seats, big screen, shared movie going experience, and last but not least, new cutting edge content. It's worth $9 ($12 in Manhattan). But TV? In the comfort of your own home you can do anything...including stealing content. There are legitimate tools out there that make this easy for you to do. In the old days you could just tune your brain out but now you don't even have to do that. And with tools like Apple's ITV how can we continue to justify television broadcast and more importantly, costly national media buys?

True, there are some events out there like the Super Bowl, and other sports, awards shows like the Oscars, and other "events" out there (last episode of Sopranos for example) that are worthy of getting a large audience together at the same time. But for the most part we want to watch what we want when we want. I've been an advocate of product placement for some time and I'll put this one thought in your head of cross generation product placement with a strange product known as the female sponge. In yesterday's AdAge the mention of the contraceptive sponge as used by Elaine in Seinfeld, demonstrated the power of perfect product integration. The product had recall among every generation and with the power of Seinfeld's syndication network, even stronger. Now are you Tivo-ing through that?

One last thought: the folks that paid for the production, namely GM, although I haven't seen the movie yet, would probably want this movie to get around as much as possible, although now that I think about it, if you are bootlegging a $10 movie, you probably can't afford a $30,000 Camaro.

Thursday, July 5, 2007

The Hype

Well even if we have been living under a rock, we would have known about Apple's iPhone release last Friday at 6pm. In fact that was single handedly the only piece of news out there in the tech community. But some of the stats are in (via TechCrunch). As of Sunday, Apple and AT&T moved 700,000 iPhones. Apple sold out in 95 of its 164 stores. The larger phone which was calculated at a cost of $220 and sold for $599 and the cheaper phone at a cost of $200 selling at $499 gives Apple somewhere of a $200 million + weekend IN PROFIT (less marketing costs, we'll talk about this later).

It's an amazing phenomenon. People were in line as early as 5am on MONDAY, a whopping FOUR days before the iPhone went on sale. How much marketing was done? Very little. If memory serves me correctly, a Super Bowl ad. That's it. The rest was Jobs talking at various conferences and user generated hype. How sustainable is this? If the iPhone promises to change the way we do telecommunications...a lot.

But what really interests me is the artificial hype that was created about this phone. Sure its a beautiful phone and this past week, when I noticed someone with the phone it made me turn my head, but never before has a phone really made this much impact. A phone as status symbol. Only Apple could do it. The Sidekick went for the young hipsters, the Razrs went for the mainstream, but the iPhone did it right. I'm not sure why but it did.

There are many Apple evangelists out there that support anything that Jobs does. I don't know if its a function of that fact that he's going up against the evil empire in Redmond led by evil Bill Gates and that in a way he's still David versus Bill (Goliath). But there is no other brand that has much loyalty as the Apple heads. And I cannot figure out why. You'd think that there'd be diehard Yahoo guys against Google, but there aren't. Wii versus Playstation. Nope. The only one that comes close and this is very distant are MiniCooper owners who seem to have formed a click. And for that fact other rare car owners (see Larry David's Prius episode).

But these supporters came out and did what Steve wanted them to do without him asking them. They just read his mind. They blogged about it, they created mock commercials about it, they waited in line for days, they thought about it, they drooled about it. Over a phone. Over an IPHONE. The fastest selling gadget of all time - people are trading off weeks of food for a $600 phone! And I bet you if it weren't for all of the mumbo jumbo that you have to deal with when you go to a cell phone service contract they would have to sold more. Which leads to my final point of sustainability. Sales will be sustained....but now the ball is in AT&T's court (which so far have not been positive)....