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June 28, 2006

Is Electronic Trading the Future of Advertising Buy ?

Jonathan Wall, Marketing Director at the top online electronics store in the UK dabs.com, explained at Internet World 2006 that his marketing team is now composed principally of web analytics experts who are constantly trading on the screens for the best prices and return on investment for their advertising spending.With revenues in excess of €300m and an online marketing budget rumoured to in excess of €25m, can the dabs.com web analytics team be the future model of marketing teams?

Jonathan's vision could not be more different from the traditional marketing department, with its one-stop-shopping of TV upfront and the big-media lunch circuit. Compared to the accountability forced onto internet marketing, the TV advertising industry is wasteful, untargeted, irrelevant, and ultimately damned irritating to your customers.

advertising screen web analytics trading

The change has similarities with the modernisation of financial market trading. Traditional buying and selling of financial assets was based on open outcry system. The prices at which customers were able to sell their assets depended on a chain of human interaction which ended in the open outcry buying and selling trading pit.

city open outcry trading

The open outcry system was plagued by inefficiencies, trader cartels which pre-arranged price and articificially increased price spreads and margins for the traders and banks. As a result the price spread, difference between the buy and sell price for the clients and suppliers was large.

Talented traders could read their fellow traders and manipulate larger spreads for themselves.

Most of these human intermediaries have been taken out of modern financial trading. Open outcry trading has become mostly extinct, replaced by electronic trading. The buy sell spreads, and the cost of trading have dropped dramatically.

The inefficiencies and huge cost of face to face trading has been replaced by zero overhead direct screen trading. The client has real-time access to real prices and can trades directly with suppliers.

technical trading desk

Google Adwords bidding is a copy of financial screen trading. Though the spread, the margin retained by Google is still a large inefficiency, that will come down as other online advertising networks, like Yahoo Search Marketing start to compete on more level basis.

The world of advertising is heading towards a big change. Gone are the days of inefficiency and un-accountable media channels. The new trading in advertising buy is electronic and transparent, and completely accountable.

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June 24, 2006

Lord Saatchi:"Ruthless Clarity in Branding"

Maurice Saatchi

For decades, Lord Saatchi has been an icon of the advertising and marketing industry in the UK. The company he co-founded with his brother, Saatchi & Saatchi, is notorious for managing the conservative government comeback in the 80s and 90s. Baron Maurice weighs in on the death of the TV-industrial complex with insightful tips for brand owners

  • TV Advertisign at its worst will be killed off by the internet
  • With the fragmentation of media, TV adverts are no longer having any impact, only the efficient, the brutally concentrated thought will survive.

  • Only the most brutally simple ideas will be survive in the complexity and confusion of the digital marketplace.
  • Its the modern equivalent of having the best site on the high street, except the location is in the mind.

  • Precision is better than greed The strongest brands are defined by their ownership of one thought; it is best to be unique and precise in owning one word than overlapping in concept with others through greed.

  • Favorite word: Simplicity

  • the new generation of digital consumer multi-tasks and has a brain programmed to edit ruthlessly
  • Biggest marketing problem in the 21st century, people's protective filtering from media intrusion; Malcom Gladwell's "Blink", Seth Godin's "All marketers are liars".

  • Media fragmentation can be navigated by Unifying your Brand Concept and Meaning. It doesnt matter what the medium is that carries the message.
  • Advertising agencies struggling with ever fragmenting media and demographics can use the "One Word" Simplified-Brand as a Unifying concept which clarifies, redefines and re-unites their target audience again. Demographics is about meaning, a Word, a Concept and less about channels and age-groups.

    Reminds me of the Daniel Pink's "The Concept Age"

  • Broadcast advertising will remain a dominant feature of the overall advertising landscape provided
  • Simplicity will save TV advertising. Strong simple concept will punch trough the media noise and save TV advertising.

    Mmmm....not sure about this one.

Damn, he is good; there is life left in the old dog yet. Maurice's "one-word" branding and strategy has similarities with Seth Godin's uniqueness, "subsubsegmenting" and nicheing thesis. Lord Maurice is a little unclear on the mechanics and detail of how to segment the demographics. But he states that select the word and meaning right, and segmentation takes care of itself.

For an old dynasour of the TV-industrial complex, with an estimated $600m made from TV advertising and marketing, he is not resting on his laurels. Seth Godin should make him an emeritus member of his fabled Big-Moo-33 for evolving above and beyond any need to.

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June 22, 2006

Jack Welch: "Anyone Can Squeeze a Company"

The debate between long-term and short-term concerns never stops in a company, specially in growth industries. Google is already having "The Debate", in its "we are a technology company rant".

It takes place between the operations and the strategy teams. Between the Chief Operations officer and the Visionary founders. For a successful company, they are the two faces of the same coin. Long term can't survive without short term. The daily grind can't succeed without the long term investment. It is a bad sign when the debate stops.

Corporate managers, with the rational black-hat, excel sheet approach rarely push the creative, disruptive agenda. So it is refreshing to get Jack Welch weighing in on the creative class side: he states that "anyone can squeeze a company".

"Look, anyone can manage for the short term just keep squeezing the lemon. And anyone can manage for the long just keep dreaming. You were made leader because someone believed you could squeeze and dream at the same time. They saw in you a person with enough insight, experience, and rigor to balance the conflicting demands of short- and long-term results. Performing balancing acts every day is leadership

from Jack Welch on leadership, in his new book "Winning".

Corporate class warriors are no longer solely central to corporations. A healthy company needs creative and disruptive skills, not just an admin and management team. The mix is not easy though; corporate culture has difficulty with uncertainty, risk, irrational decisions, volatility, disruption, and continuous change. Takes strong corporate management to be continuously challenged in this way.

Watch a video Jack speaking at an MIT lecture

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June 19, 2006

World of Warcraft Smartmobs

World of Warcraft has hit the creative class hardcore, as detailed by Joi Ito, creative class guru. Joi's latest obsession is his World of Warcraft guild in which he is the mayor of a 300 strong collective of enthusiast soldiers.

Joi describes how he has learned to stay connected to his Virtual Reality world, without necessarily being absent from the real world. Real life enhanced by virtual reality. Rheingold's Smartmobs becoming a reality.

It is easy to dismiss Joi, and his antics. I recently heard a respected technology academic say jokingly "at least Joi has not gone into pornography". But Joi works bottom-up, the appearance of a thing does not deter him; he is not hamstrung by corporate class prejudice. And his description of the real-time remote coordination of 100 strong raid should make any technologist sit up and listen.

Dont miss the video of Joi Ito et Loic Le Meur, les jeux en ligne

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June 17, 2006

Is Google a media or technology company ?

When asked recently, Eric Schmidt's answer to the question was

It's better to think of Google as a technology company. Google is run by three computer scientists, and Google is an innovator in technology in our space. We're in the advertising business, 99% of our revenue is advertising-related. But that doesn't make us a media company. We don't do our own content. We get you to someone else's content faster.

The question is central to many web service companies. What is our core competency ? What is a must for our future ? Are we technical, are we media, or are we marketing & sales deal makers ?

Choosing advertising and selling is extremely tempting. Operationally and day-to-day these skills and departments have the biggest impact on the bottom line.

But time again technology disrupts the market. Your core competency must be in whatever disrupts your market most. One constant, in words of innovation guru Seth Godin, is that safe is risky; you innovate or you die.

For web service companies, it is technology that is disrupting the market. You miss the boat in technology, even when your revenue is from advertising, and you are sunk.

from LA Times inteview of Eric Schmidt.

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June 14, 2006

Net Neutrality fight continues

The war between large telecom corporation interest and society interests continues. Battles are joined on a wide front, principally in the states where the commercial and society interests are most salient.

The week opened with a set back House rejects Net neutrality rules . But the effort on public interests behalf is widening. Google, MSN, Yahoo and now eBay are but a few of the players who have joined the fight.

As the final House vote earlier this week drew closer, lobbyists and CEOs from both sides began stepping up the pressure. eBay CEO Meg Whitman e-mailed more than a million members, urging them to support the concept, and Google CEO Eric Schmidt on Wednesday called on his company's users to follow suit.

The fight continues however. Net neutrality's crowded field


Bill number Lead sponsor(s) What it proposes Status
S.2360 Wyden (D) No two-tier Internet Still in Senate committee
S.2917 Snowe (R) and Dorgan (D) No two-tier Internet Just introduced
HR5417 Sensenbrenner (R) and Conyers (D) Antitrust extended to Net neutrality Awaiting House floor vote
HR5273 Markey (D) No two-tier Internet Still in House committee *
HR5252 Barton (R) and Rush (D) FCC can police complaints Net neutrality rejected
S.2686 Stevens (R) and Inouye (D) FCC will do a study Senate committee vote expected in June

Source: CNET News.com research

While the initial debate was on whether broadband providers could block certain Web sites, it has moved on to whether they should be permitted to create a "fast lane" that could be reserved for video or other specialized content. But as Google's Brin stated, there can't be a fast lane without a slow lane.

Debate will no doubt rage on evolving issues.

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June 12, 2006

The next Google will come from outside the US

A great quote from Danny Rimer, the EU venture capital partner behind the Skype company. But, if not from the US, will the next Google come from Europe ?

Danny is getting a huge amount of mainstream press coverage. And well he should, the skype investment has netted his family VC firm in excess of £300m. The limited partners of the last fund recouped 100% return with the skype deal alone.

Judging by the amount of PR, Index Ventures must be fundraising again. I would wager that the majority of their fundraising will come from US investors, who are keen on the strong European technology base. The "capital preservation" culture among fund managers in Geneva, Index Ventures home town, wll not encourage great uptake from banks in their neighbourhood.

Some of Danny's observations on Europe are:

To be an entrepreneur in Europe, there is a stigma attached to it," he explains. "There's a reason why England is known as a nation of shopkeepers. Part of it is the idea that it's better to have a shop and keep it up and running than close the doors and try to do something much more significant.

Steady personal income is pretty much a must in Europe. The idea of embracing greater volatility and uncertainty is an alien one. A disastrous attitude if you are to encourage serial entrepreneurs. To quote Stelios Haji-Ioannou, founder of EasyJet, there is no such thing as easy money; all great returns are paid for with risk and volatility.

Danny goes on to say,

"The environment in Europe these days is a brutal one, as huge private equity houses pull in billions while smaller venture groups struggle. Index is one of the few to have had little trouble attracting big investors."

Unfortunately, Index Venture's success is almost an anecdotal statistic in Europe. Even after the 2002 bust among VC firms, established VC funds have been unable to raise finance. Many talented venture fund managers have been struggling to raise a minimum size fund. Julie Meyer has been trying to close a fund since she exited from "First Tuesday" 6 years ago. Similarly Jon Snyder and Marting Bloom at Cambridge Accelerator Partners, and Marc Goldberg at Occam Partners.

Danny concludes with

Innovation is not a problem in Europe. But the lack of a unified market to sell that innovation, or even give it away, is a problem - and so is the paucity of investors willing to back it. "The next Google is more likely going to come from outside the US," says Rimer. "Whether it's in Europe, I am not sure. A lot of things have to change

European entrepreneurs will have to work extra hard if the next Google is up to them.

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June 8, 2006

Net neutrality impact on startups is being overlooked

Net neutrality effect on online media startups is being overlooked. In Susan Crawford's latest analysis on Explaining net neutrality, she argues that net neutrality will be better for society as a whole. The issue is more critical because it impacts on the seed bed of economic growth; startups, company creation and entrepreneurs.

Small company creation is the biggest contributor of economic growth. Additional telecom fees impact small startups most, and will be a real growth killer for media and technology startups. Net neutrality has a direct impact on this most delicate and important part of society.

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June 7, 2006

Guy Kawasaki on - How to create the next Silicon Valley


Guy has come up with a great article on How to Kick Silicon Valley's Butt. Guy's extensive experience advising Apple's independent software partners, and years of advising startups shines through. If only politicians would listen. Here are my favorite pointers


ON ATTRACTING AND HARNESSING THE CREATIVE CLASSES

  • Beautiful, but not gorgeous, surroundings California is beautiful. The weather is good. It s fun to live here. No matter how great an entrepreneurial environment Cleveland creates, it s always going to have people wanting to move away.
  • High housing prices. If houses are cheap, it means that young people can buy housing sooner and have kids. When they have kids, they can’t take as much risk and don’t have as much energy to start companies.
  • Cities, crowds, and high- if not over- population. The pressure of these conditions make people jealous of each other; this in turn makes them compete. Cities also bring people together to work. People can’t telecommute to a startup. People need to get together to bounce ideas off one another, argue, and cajole.
  • Absence of multi-national companies, especially the finance industry. If your companies have to compete with conglomerates or banks like Goldman, Sachs throwing money at people, it’s going to be hard to get anyone for a startup. Pity the startups in New York, London, and Singapore.
  • Focus on educating engineers.The most important thing you can do is establish a world-class school of engineering. Engineering schools beget engineers. Engineers beget ideas. And ideas beget companies. End of discussion.

    If I had to point to the single biggest reason for Silicon Valley’s existence, it would be Stanford University—specifically, the School of Engineering. Business schools are not of primary importance because MBAs seldom sit around discussing how to change the world with great products. Mostly they care about how to get interviews at multi-nationals and consulting firms.

  • Send the best and brightest to Silicon Valley. I can hear the complaints already: “This will lead to a brain drain which is exactly what we are trying to prevent.” This attitude misses the essence of entrepreneurship: it’s not about preventing bad things, but fostering good things.

    The goal is to infect them with the disease called entrepreneurship and show them that there can be more to life than “a job;”. Sure, some people will never return—like me. But those who do return come back with a much broader perspective on what life and a career can be. Maybe they will build another Silicon Valley because they’ve seen it done before. Here’s a dirty little secret: Silicon Valley is more a state of mind than a physical location, and you can’t alter a state of mind by staying a home.



  • Celebrate your heroes.Every region needs its heroes. These folks take role modeling to an extreme; they have names like Steve Jobs, Bill Gates, Ted Turner, Steve Case, Anita Roddick, and Oprah Winfrey. Kids need heroes, so that they can say, “When I grow up, I am going to be the next Steve Jobs.” In many places, a successful person is pulled back down because of jealousy. Sure, there’s jealousy in Silicon Valley, but our way of dealing with it is to try to outdo the person, not pull her back down.


ON THE GOVERNMENT NOT MEDDLING

  • The short answer is that the government should not do much except provide more funding to the engineering schools.Unfortunately, that probably won’t seem like enough to most people.


  • Dont create a venture capital fund. The thinking here is that a government created venture capital fund would kickstart entrepreneurship because of the influx of money. However, if there’s one thing you can depend on in venture capitalists, it’s greed. If you show them good engineers with good ideas for good companies, they will appear by (private) plane, canoe, dogsled, and camel. Such a region doesn’t need to create a fund. A supply of capital does not create demand from entrepreneurs--at least not the kind of entrepreneurs that you want.



Guy has definately burnt his bridges with European politicians. Most European politicians know that you cannot delegate entrepreneurship and economic growth to the market and the masses. All you get is creative destruction, market disruption, and upset all the old encumbent monopolies. You bad boy !

Jacques Chirac, the french president, is so upset with these Google upstarts, his government is funding a French alternative. The state knows best.

A case in point are the entrepreneurs that have been successful in continental Europe. Disrespectful, unpredictable, and irreverent. Why do these individuals always try to beat "The System"?. How is a career politician supposed to work with individuals so outside the established network. They don't even wear suit and tie!

Joking aside, the proportion of successful EU entrepreneurs that secured their funding from US and UK sources rather than EU sources is sadly high. Obviously, there is nothing quite like greedy money.

Guys definately pulled his punches on labour laws. Mr Paul Graham seriously let rip on the need for labour flexibility at the recent Amsterdam XTech conference. Not a popular view in France.

Guy has my vote for EU president.

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June 6, 2006

European VC investment increasing

European venture funds increased 44 percent in 2005 and are nearly at the same level as 2001, according to figures compiled for the European Private Equity and Venture Capital Association. The amount of money raised for high-tech companies in particular doubled last year to €5.59 billion from €2.47 billion.

Although restrictive market environment still hobble growth of small companies, Europe is competing more evenly with Silicon Valley.

One of the reasons is vastly improved productivity. Cheap hardware, free open-source software and cheap broadband reduce the need for staff recruitment. One of the big achilles heels of European startups. A technology based business can be efficiently created with few staff. Sidestepping the labour law overheads of potential layoffs down the line.

Neither does Geography matter as demonstrated by Indian IT and call-center outsourcing. Internet and the telecoms infrastructure allows cheap global distribution regardless of where the company HQ location. In contrast to US startups, most European companies suffer from poor local markets before accessing a stronger US and UK markets. Companies more frequently plan for an international presence right from the start. Counting on a strong demand market from the start makes investment easier.

Danny Rimer a rennaissance Venture Capitalists at Index Ventures, happy talking about Linux Kernel details and term sheet minutae, points out that the Open Souce advantage is also European. Linux, the open-source computer operating system, was created by Linus Torvalds in Finland. Last month, Trolltech, a Norwegian company that markets its software on the open-source model, said it was taking its shares public. MySQL the Linux of the database world is Swedish. Open Souce based business models are being used by startups all over Europe.

Another particularly European niche is peer-to-peer computing/ The Kazaa network, over which copyrighted song files are exchanged freely, began in Sweden. After that success, its founders turned right around and started Skype Technologies, the Internet phone company that eBay bought last year for $2.6 billion, or $3.4 billion. A third European specialty is community-building networks, like Lunarstorm of Sweden or Habbo Hotel, which is likely to reach €60 million in revenue this year.

Let's hope for a good spring and summer, they have been a long time coming.

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