All About Brand Marketing

Advertising managers have tested the online medium with harsh conversion campaigns, where campaigns are measured in terms of new customers subscriptions or sales. The next phase is to start using the medium to build brand awareness.

Formerly the preserve of Television, brand marketing is increasingly resorting to rich media and online video to reach target groups. According to the head of the IAB

It’s clear marketing directors now recognise the value of online to drive their business, and more and more are using rich media and video to build their brands, just as they do on TV, Guy Phillipson, Chief Executive, IAB

Catch up TV - Launch of services such as BBC iPlayer and Channel 4’s 4oD are breaking the barrier between video entertainment and the internet as a communications or shopping tool. We are all consuming more video online, rather than Television.

Though brand based advertising, CPM advertising is hardly present on video sites at present. The premium channels such as MySpace Music and MySpace Film are leading the way, selling at a higher CPM rate. The IAB expects to see a greater contribution to online spend in 2008.

In the next few years, User Generated Content sites are set for the highest advertising growth rates

[Disclosure: We are invested in video USG site, tu.tv] ]]>

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The first tendency is lack of loyalty to comrades. Startups require strong leadership, and great faith from the staff. Startups have great uncertainty, no guaranteed results, little rational assurances. The entrepreneur must offer a great vision, and a sense of a life altering opportunity. The entrepreneur must give of himself and the company (equity). He must be loyal above and beyond, to expect loyalty back. The usual corporate paycheck and pension plan are not enough.

The second tendency is lack of task orientation. Executives are used to large scale service delivery and product improvement operations, where a portfolio of services must be cultivated, maintained and optimized for volume and maximum margins. The resulting inability to learn and see to the detail and finish of individual tasks makes for poor execution and finish of tasks. The cliche is their total reliance on delegating to staff in order to operate.

The third tendency is lack of conviction and single mindedness. Typically and executive will insist on guaranteed results. "But that is not guaranteed" is the cliche phrase. Without a high likelihood of results, the ultra rational executive finds it hard to commit; you need faith here. Startups create businesses where corporations dare not go; the zones of uncertainty.

Fourth and last is the inability to work in isolation. Executives excel through their negotiation, their team leading, their excellent communication and administration. In typical 10 staff startups, these same skills are secondary. The executive is unable to be productive without somebody sitting next to him.

As a former executive, used to directing business units with hundreds of staff, I can vouch that the four deficiencies are valid and representative of the corporate class. The deficiencies are due not just to lack of experience and training, but also prejudices, mis-conceptions and an unflexible value system. "you are too technical" often being the ultimate insult from one executive to the other. It has taken me a lot retraining, and some soul searching, to be a fully useful player in a startup.

For enterprising MBAs who know that it is at the founding of a business that equity is divvied up, I recommend a post by Jeremy Liew at Lightspeed Venture Partners, to give a balanced view of the skills a business founder needs. For corporate executives looking for more fulfilling work with startups, John Smithson's "The role of the non-executive director in the small businesses" is good.

It takes more than good administration to create a business. I find entrepreneurial and creativity training is still poor at most schools and universities. A tolerance for uncertainty and volatility is hard to teach; rational administration is still the core of most entrepreneurship courses.

As for John Hamm's HBS article on the limitations of entrepreneurs, it is easier to criticize the flaws of an entrepreneur, than to identify, praise and teach entrepreneurial skills.]]>

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The next 5 years hold more disruption for the advertising industry than the previous 50 years, according to Big Blue. Apparently open advertising exchanges will replace traditional media wholesalers and agencies.

A strong concensus opinion, according to IBM's industry poll, is that open advertising exchanges will take 30% of revenues currently won by traditional media. The figure must be in the 5% to 10% range currently. With Google's adsense leading among exchanges with around 50% of online advertising. Yahoo and Microsoft are desparately trying to muscle in.

The big looser will apparently be the 30 second TV spot.

IBM's solutions for traditional marketing agencies? If you cant beat them, you join them. Buy yourself a new business model and infrastructure (preferably from IBM), and hook into these open exchanges. This is not the first market that has succumbed to electronic trading. ]]>

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A cross-media study, by Experian Research Services, found that viewers are 25% more engaged in the content of TV shows that they watch online than on a TV. John Fetto, product manager at Experian, said that TV ads online are especially effective at reaching consumers.

"Web sites that are extensions of properties that exist in other media channels have great potential to funnel audiences that are highly engaged in the first place," he said

The Simmons study was based on 74,996 interviews with U.S. adults about the TV programs, magazines and Web sites that they watch, read and visit. The survey was conducted online and via telephone between October 2006 and September 2007.

[Via Meadiapost Publications]

[Disclosure: Yes, we are invested in a video and a social networking site. My views may be biased.] ]]>

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• tu.tv launches in video advertising - Nov 08, 2007
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Thirty servers and over ten Gbits of bandwidth later, we are approaching 10 million unique users a month. The tu.tv team has hit the perfect viral storm, check out the traffic graph below.

The systems department has responded heroically. Even though it occasionally came down to me driving a van full of servers to our London datacenter, capacity has always been ahead of the viral whirlwind's demand. Nobody says incubating is easy.

Not to be outdone, the Sales team has sold its first major brand campaign for Nokia. Unlike straight banners on the site, video overlays have great impact on viewers. Given its similarity with TV advertising, clients and agencies are rapidly accepting the format. All good news on the profit & loss side. It is all looking good for a great second year.

Happy birthday and congratulations to Jon, Felix and company. Have a great second year.

Related Posts:

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The trend continues; managers-administrators are being squeezed out of the value chain by the "talent", the creative class. Sports agents no longer make more money than their sportsmen, as was prevalent in the early days of football. Script writers in Hollywood are following suit with the WGA strike, pushing the film and TV entertainment value chain for a bigger percentage of earnings.

The internet is touted as the catalyst for this dis-intermediation. Mark Andreessen paints a convincing scenario of how the creative class will distribute their work directly, without the need to go through the big studios. Thanks to new video technology, the cost of productions is dropping; no need for extensive fund raising. And great material is picked up and distributed rapidly by the social filtering sites, like youtube or digg; no need for massive marketing and distribution budgets.

"Make it, blog it and they will come"

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Such a stream of cash trickles down to everybody in the online sector. Online advertising prices and revenue naturally goes through the roof, as etailers vie for customers. A rough figure is that 10% of this revenue is respent on online advertising.

The enclick team will shortly unveiling a social shopping experiment, just in time for the Christmas frenzy. It will be interesting to see wheter it attracts a community or not.

All I am saying is that continental etailers dream that mainland Europe fall prey to this dementia too.
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Even mighty Google needs to pay bandwidth fees and is moving to offer marketing agencies a platform to advertise on youtube videos. Tu.tv has been the first to offer in video adverts to its advertising clients in Spain. This is what a in video advert looks like.

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When going through periods without a hot viral startup project from our stables blitzing up the traffic rankings, we have consoled ourselves by saying well it is so difficult in Europe, fragmented market that it is...blah, blah, blah.

All the while Jyri and his partners had a vision of a community tool for sharing presence. As you would expect in Finland, they team used smartmob fundamentals in the product, and was very mobile phone based. Jaiku is mobile phone oriented version of twitter. It is nicely engineered, though does not have the enthusiast following of twitter.

The team is well versed in the mobile smartmob field. Jyri's presentations are entertaining, conveying ideas with depth and clarity. He is on course, in fact, to single handedly make black cardigans a cool clothing apparel.

While there have been occasional acquisitions in the European tech market, the GYM trio have shopped mostly in the United States. So it is tremendously annoying to have one's complacency shattered so.

Congratulations and best of luck. ]]>

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Quite an achievement for a web service that has avoided writing a blog. Who says engineers cannot communicate? The tu.tv team had a bit of a chuckle over this.

I guess it is not what they say, it is what they do.



]]>

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• First Year Anniversary for tu.tv - Dec 20, 2007
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Some of you may be having problems logging into Skype. Our engineering team has determined that it’s a software issue. We expect this to be resolved within 12 to 24 hours. Meanwhile, you can simply leave your Skype client running and as soon as the issue is resolved, you will be logged in. We apologise for the inconvenience. , Skype login problems - Skype Blogs

Guess the lesson is not to skimp on software testing for business critical systems. You are no longer a startup; you are a grown up now.

After getting use to skype calls between the guys in Madrid, Barcelona, San Sebastian and London, we are scrambling back to using landlines and Mobile. Ouch. ]]>

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AdECN independent advertising exchange is independent no more. Microsoft has acquired it. AdECN was aiming to be for banner advertising, what AdWords is to text based advertising, as I described a few months ago when AdECN was prospecting the UK. William Urschel, founder and chief executive officer, AdECN states:

"Joining forces with Microsoft will provide the capital and resources to enable AdECN to scale the exchange at a much faster pace, making it more attractive to the advertising networks and other traffic aggregators looking to better serve their advertisers and publishers.

The move adds to pressure on traditional marketing agencies margins. Microsoft now joins Google in dis-intermediating agencies out of online advertising. A great move for publishers and advertisers.

And The Bad News

With a dependent exchange, where the exchange is also a publisher, other publishers inevitably compete on unequal terms. Google's Adsense advertising platform shows little of how campaigns are sold to different web sites, and the margins it makes on the sale are secret. William Urschel, nevertheless, pledges to continue with his vision of transparency,

All of us here are thrilled to join a team that shares our commitment to neutrality for the exchange and also believes that creating liquidity and intelligently matching supply and demand will be two of the most important roles for a technology provider to play in this rapidly growing and evolving market , William Urschel

Microsoft also states that it will maintain the Exchange's independence and transparency

Rather than an ad network, a true ad exchange is the neutral, transparent, automated connection between multiple ad networks. Both groups will benefit from the exchange’s neutrality and transparency, enabling them to make more informed decisions about their bid and ask decisions. Microsoft on AdECN

I remain skeptical. It would require exceptional governance for Microsoft to respect this statute at the expense of profits. The press release mentions the term "ROI" five times. Most likely prices, buy/sell margins and volume allotments will become as opaque as Google's.

We are down to American Association of Advertising Agencies (AAAA) and their subcontractor arbinet, to create an independent exchange where publishers have equal rights, and the market has visibility over how inventory is bought and sold.

[Via Read/Write WEb: Microsoft Buys AdECN Ad Exchange] ]]>

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Free video site tu.tv traffic keeps on growing. It has broken into the top 100 sites for Mexico, according to Alexa Ratings. It is number two video site after youtube.

Talking with the tu.tv team reminds me that "When you grab a tiger by the tail, it is all about hanging on. Fortunately, the hispavista team has ten years experience of launching and sustaining online services; it is not their first time.

tu.tv traffic accoding to Alexa Ranking

Nevertheless, feeding the beast is a challenge. Video sites are resource hungry projects, and the team needs to exercise ingenuity and flair in maintaining the service. It is a good thing the company has an engineering and technical background.

[Disclosure: We are invested in tu.tv]]]>

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Free video site tu.tv is in the throes of viral uptake. Since launch Christmas, traffic has grown to millions of unique users a month.The service is currently the number two free video service in Spain, behind youtube.com.

Jon Elosegui, head of innovation, is no stranger to viral growth; with half a dozen viral growth services to his credit in the 1990s and early 2000, he has detailed insight into how to create a thriving online communities. One of his salient themes is that it is about the product, not the promotion. The tu.tv service has had little uptake in the mainstream press, or among the blogosphere elite, the A-listers. Viral marketing has other vectors with which to access the target internet users.

When you have a hit product, promotion is often not necessary, and sometimes undesirable. The world is getting smaller. In the rush to improve the product and infrastructure in the face of ferocious uptake, marketing must take a backseat.

The innovation team is currently incubating new projects. You will see no press release, nor blogosphere comment on launch. Just straight launch into the young spanish internet user segment. A somewhat perplexing view of PR and "how to influence internet users", but you cannot argue with the traffic numbers.

[Disclosure: We are invested in tu.tv]]]>

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Orange mobile, together with other UK mobile networks, have launched flat tariff for internet browsing in the UK. The orange offer is £5 a month, or £8 to be able to browse during the day too. An improvement on Vodafone's offers flat rate of £30 a month. Orange's tariff extends to pre-pay customers for the first time.

Both offers have capped total daily data consumption to 30 and 15Mbytes respectively. Bandwidth quality remains uncertain, which impacts VOIP applications and skype-mobile, but email and texting should not be affected. In spite of the initial limitations, once users start browsing on their mobile, the mobile flat rate fight will no doubt drive prices down.

As with home connections, mobile flat rate internet changes mobile usage. Myself, for instance, I use my browser and web bookmarks more, plus I download application like free text messaging, hotxt, and other Instant Messaging services to replace my SMS.

Mobile operators, stand to loose significantly if users bypass their voice and SMS services. Just like land-line operators are loosing to skype and VOIP services. In an attempt to control mobile usage, operators pre-install their own web services on phones, the same way Microsoft pre-installs Internet Explorer on windows. Google's mobile department has been fighting to get Google mobile search pre-installed on phones, with mixed success.

[The Register] ]]>

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Chris Dibona keynoting Google Developer day in London. Open Source program manager at Google, Chris is ambassador at large among the Open Source and Free Software community. He is in charge of the Google's summer of code program, and also the legal framework of licenses under which the Google releases and uses FOSS code.

As expected, the Semantic Web (with capitals) came up during Questions & Answers; Chris is candid regarding the intellectual ambition and scope of SW, and is skeptical of its practical application and adoption among web developers. Given the volume of content and wide-ranging approaches to developing the web, he thinks standards will evolve organically rather than be dictated top-down. A widely held view considering Tim Berners-Lee's difficulty in forging concensus even within working groups at the W3C.

Google Maps Platform

Ed Parsons, Andrew Eland and Peter Birch, geo-spatial technologists, gave a sweeping view of the geographic data in corporate networks and User-Generated data waiting to be collected and exploited. Excellent work integrating Google Earth and Google maps through KML files, the new standard for encapsulating geographic and viewing data together with the multimedia information.

Mapplet is the term for Google map widgets. A mapplet deploys data and functionality on a users' Google map. Users can submit and select mapplets from Google's mapplet open directory. The same as Google gadgets. Google Maps is fast becoming the platform to render and present geographic multimedia information AND functionality. With 200m downloads of Google earth and the strong Open Standards emphasis, the commons community seems to be adopting the platform rapidly.

Google Maps Mashups

Mike Astle, from online estate-agent Nestoria, was forthcoming about working and organizing a Google mashup company. Nestoria's added value is geo-locating and processing estate agent information, either scraped or XML fed, onto Google Maps. Mashup business models are inherently fragile, as they depend on the whims of Google's rapidly evolving Map/Mymap/Mapplet platform, and Mike sternly fielded the inevitable questions during the Q&A.

Whether Google's creative commons ecosystem can also support businesses is still an open question. Only a few of the 50,000 Google mashups have revenues at present. Tellingly, Nestoria has built a buffer interface to Google maps, so as to allow swapping it out for Yahoo's map service.

Google Mobile Search

Gummi Hafsteinsson described the ease with which mobile web can be developed nowadays. The new converging xhtml standards allow a KEEP IT SIMPLE approach which eases targeting a particular mobile device/mobile user for a particular service. Google's mobile index is becoming the focus of conversation, as it is central for accessing mobile internet users. Gummi described how the newly relaunched index combines so-called transcoded and true mobile web sites to provide optimum results for the mobile user.

Google Gears

The big announcement was Google Gears. The ability to use Google spreadsheet, Google documents, Gmail and Google Reader while not connected to the internet. Google's office suite can now be used in lieu of Microsoft's Office suite. Google has stepped out onto the desktop software arena, no question.

Members of the Hispavista innovation team were present, with their boss Jon Elosegui, to hear the latest update on Google's APIs for the various mashup projects in incubation. User Generated content is increasingly geo-tagged and Google maps renders such tagging best at present. With Google Developer day ongoing in 10 cities, we were not alone.

[Ian Forrester provides a good interview of Chris Dibona over cubicgarden.com... ]]]>

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I was surprised to come across the Spain Post Office (Correos) stand at London Internet World 2007 yesterday. Apparently, cross-border trading in Europe is catching on quicker than I thought; "we reach any place in Spain" is their message.

Correos is offering standard Direct Marketing services for Spain

1. Direct Mail: dispatch of volumee promotional mail into Spain; leaflets, catalogues magazines
2. Quality databases both acquiring and cleaning the list
3. Parcel services already used by the likes of Amazon when shipping into Spain
4. Registered post an alternative to the UK Post Office service for Spain

I applaud the move on behalf of Correos to open up cross-border online market further. I just hope businesses in Spain are taking note and planning to export into northern Europe in return. Certainly good news for Spanish online publishers since northern Europe merchants exploit online advertising fully in their ad mix.

Worst case scenario is that southern Europe becomes a consumer nation for value-added services and technology. ]]>

Related Posts:

• 2009 the Year of Online Brand Marketing - Apr 14, 2008
• Ad "receptivity" High for Online Video Advertising - Jan 04, 2008
• tu.tv launches in video advertising - Nov 08, 2007

• €63billion will be spent online by UK shoppers
• 860 million parcels will be shipped to the UK's 26 million internet shoppers, 33 each on average
• Online shoppers will each spend €2400 on average
• 10% of all retail now online, rising to 20% in three years time

Online retail will grow in quality too, becoming an integral part of mainstream consumer's habits

1. Inclusivity people of all abilities will use online shopping
2. Normalisation online shopping will become integral to normal everyday life
3. Diversification online shopping will extend to a wider range of products and services
4. Shophistication online shopping services to become easier, quicker, safer and more valuable
5. Exclusivity a rise in specialist boutiques, offering more niche and exclusive products

Cross-border Shopping

Cross border retail is gaining traction, as shoppers look for and find better deals across borders. Shoppers in Europe have forever shopped across borders, specially when located in towns near frontiers. With online shopping and international postal delivery, cross border shopping for better deals is about to take off.

Already, Spanish book purchasing relies heavily on Amazon UK deliveries, as no strong contender exists in Spain. Amazon UK has in the past purchased advertising from hispavista.com, our parent company. Bargain hunting is about to extend across borders; and the bargains are considerable, even in spite of delivery cost across Europe. ]]>

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Panda software, one of top antivirus software companies in the world, has been purchased by a Venture Capital Syndicate. Panda software founders have sold 75% of the company at a reported €133m valuation. Oddly, Panda has not issued an official press release. The valuation is a sales multiple of less than times one last reported revenues. An inexplicably low sale price for a world player in the antivirus market.

Local hero, Mikel Urizarbarrena, has always been a reference to EUCAP partners in northern Spain. Mr. Urizarbarrena has created a world leading software security company, while retaining 100% of founder equity. A staggering entrepreneurial feat.

As recently as 2005, Panda was ranked number four in market share, as shown in the table below.

Worldwide 2005 Total Antivirus Software Revenue for All Software Segment Types (Millions of Dollars)

Source: Gartner Dataquest (June 2006)

Currently, Symantec has a market cap of €12b, and McAfee €4b. F-Secure, a recent European entrant to the top 5 antivirus products, has a €380m market cap on the Helsinki stock exchange.

On these 2005 sales multiples, Panda should have been valued in the €700m range.

The speculation is that recent Panda revenues have come under pressure from smaller entrants like Sophos, F-Secure and Bitdefender (SOFTWIN), in the race for new hardware platforms like mobile, and the lucrative corporate market.

As the market consolidates further, it is clear capital is the key to funding the marketing and sales drive required to maintain market share. One can speculate that Panda was under-capitalized during 2006, as the founders were reluctant to accept new shareholders.

Hopefully, the supposed €100m injected in the company will provide the impetus to consolidate its market share, and see Mr Urizarbarrena through to a successful public offering at a billion € valuation.

[Via Investindustrial y Gala Capital compran Panda Software - CincoDias.com]

A press release has been issued]]>

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Google's pursuit of the advertising marketplace continuous relentless. Though radio advertising is unrelated to organizing the world's information, their Audio Adwords is looking to impact the advertising agency sector hugely.

More businesses are trying Google radio Ads in their Adwords account. The reviews from testers seem generally positive.

The air time available has now been extended to a supposed 675 radio stations. Though, like for Adwords, Google will not reveal its media list. Given what Adwords and Adsense have done for online media publishing, Google's Audio Adwords could revolutionize radio station economics, be it traditional air-wave or podcast radios.

I am impressed by Google's solution to the problem of creating the audio spot. Composing an audio spot is harder than making an Adwords text box. Writing, composing and recording requires experience, training and a technical setup. Google provides a crowdsourcing marketplace tool, where you can invite audio industry professionals to bid for the design and recording project. The electronic job board allows up to five professionals to bid on your audio project.

The tariff rate for airing the radio spot is the same as Adwords; CPM, cost per thousand listeners. Plus, testing is easy and cheap. You can try different stations, zip codes, demographics, airing times and find the slots that best work for you. Split testing becomes feasible for small merchants.

The possibilities for the new radio ads marketplace are dizzying. Just like Adwords catalyzed a whole online publisher industry, the potential for economic growth in complemeting sectors are great investment areas.

The only stakeholders loosing out are the creative advertising agencies who currently hold a near-monopoly on mediating between advertisers and radio stations. The creative added value provided will be crowdsourced out; brand design and innovation will be the only added value left to them.

[Via Nick Piggott] ]]>

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"It's going to be very interesting to see how it shakes out. We buy about $200m of their media and that's up from about £150m last year. Google is a short-term friend and a long-term enemy and probably the shorter term just got a little bit shorter and the longer term got a bit closer as a result of the DoubleClick acquisition,"

"It raises issues as to whether we are happy to let Google have our clients' data and our own data, which Google could use for its own purposes in contextual and targeted advertising."

Doubleclick is one of advertising agencies preferred banner campaign management tools. Its software pioneered the start of banner advertising in the late 1990s. Its current DART version, which we use at Enclick and Hispavista, allows advertising managers to optimize banner servicing per a demographic and per user.

Doubleclick also provides value-added services like email marketing and search engine marketing, ppc and data feed campaign management. Essential value added services for marketing agencies.

Though Doubleclick also offers its own in-house marketing agency service, it has nowhere near the level of threat and reach of Google's Adwords advertising. Google has deftly acquired one of the top online advertising management tools. With Google's clear intent to dis intermediate the online advertising value chain, the Doubleclick software is now a sword hanging over the inefficient advertising agency market.

Google can now clear a path for merchants to plan, deploy and manage the lucrative CPM-banner advertising, directly onto publisher websites, just like Adword campaigns. The move is inline with Google intention of creating a transparent and efficient advertising marketplace.

Unfortunately, as with much of the search engine marketing, this largely bypasses the advertising agencies, leaving them without the high-margin brand-CPM campaigns. Nevertheless, Google is disingenuous in denying the increased conflict; Dennis Woodside, the managing director of Google UK, Ireland and Benelux, says

"We are talking about a competitive market. Users have a huge choice about how they search information. There are a lot of ways an advertiser can get out to market. There's nothing stopping them going to any number of online companies.

Yes, the market is competitive, but if Google offers the Doubleclick services for free like its Urchin/Analytics, the market just got a hundred times more competitive for advertising agencies. The market will become a lot more transparent; the end-of-year kick-backs that publishers must pay advertising agencies to be included in their media buying might disappear altogether.

[Via Google is a long-term enemy says Sorrell - Brand Republic News - Brand Republic] ]]>

Related Posts:

• Advertising Market Disruption According to IBM - Jan 29, 2008
• Microsoft Acquires AdECN Electronic Advertising Marketplace - Jul 29, 2007
• Google Aiming for the Radio Advertising Marketplace - Apr 21, 2007

Startup companies where Google's services are central live dangerously. Today Google launched customisable maps, with an aggregation and social filtering. Companies like

• revmap.com,
• trustedplaces.com,
• tagzania.com,
• qype.com, or
• yelp.com

which offer maps of interesting places submitted and reviewed by their community observe with apprehension. Google has only introduced a simple sharing function for the maps; social aggregation and filtering or tagging are, so far, absent.

Google should offer assurances to companies collaborating and cooperating through Google's web services and APIs. Google should signal it will refrain from entering their space, otherwise Google's open commons community, and crowdsourcing ecosystem will vanish.

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Google has finally unveiled its Cost Per Action tariff model for its Adsense network. What was the exclusive domain of affiliate marketing networks is disrupted by Google's huge publisher and merchant base, and its superior system. In one move, Google becomes the biggest affiliate network in the sector.

The impact on the online advertising ecosystem will be considerable. Not only to affiliate networks, but also to the community of market makers - affiliates, which have thrived on arbitrage opportunities around CPM, CPC and CPA advertising. CPM (Costs per Thousand banner impressions), CPC (cost per click) and CPA (cost per action). The different tariff models provided enough market inefficiency for price imbalances to arise.

Over the last few years entrepreneurial affiliates have been acquiring traffic from Google's adsense at the minimum 0.01 per click, and driving it directly to an affiliate network merchant's site under the CPA tariff model, and got paid when and if the customer converted. The arbitrage actually resulted in positive margins. And many other similar arbitrage moves.

Google's offer of the CPA tariff model to advertisers adds new price transparency, as clients can now work out the ROI of all three tariff models on one simple user interface. The arbitrage opportunities will invariably dissappear.

Clear winners are advertisers; CPA tariff model pushes the onus of conversion onto the publisher. The advertising merchant only pays if the clickthrough actually makes a purchase. CPA is the solution for advertisers with click-fraud problems.

[Official Inside AdWords: Pay-per-action beta test] ]]>

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• Advertising Market Disruption According to IBM - Jan 29, 2008
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In eBay's media marketplace, buyers will be able to submit Web forms akin to requests for proposals specifying what dates they want to run ads, what their budget is, target demographics they seek in the audience and other information. They then invite networks to review their proposal. Sellers also will have the option to initiate auctions, following the eBay model, where they specify the ad space they have available to sell and choose the highest bidder. The same model as ebay's main buying and selling model.

A model similar to the unregulated over-the-counter marketplaces in banking.

The AAAA has contracted Arbinet to structure the marketplace more. Using the financial regulated exchanges model, the AAAA is creating a registry of buyers and sellers and their respective needs to structure the marketplace with formats and standards. A standardised market allows easier and confident trading, which leads to much higher volumes, higher liquidity and market makers. ]]>

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The American Association of Advertising Agencies (AAAA) is creating an electronic platform for trading ads across media. The Association is bowing to the inevitable and modernizing ad space buying and selling.

Advertising agencies have historically leveraged their personal relationships, privileged access to clients and media, and poor price and inventory information to generate large buy-sell margins. The practice of end of year kick-backs from media publishers to ad wholesalers to ensure continued patronage is still rampant.

Incumbent agencies and institutions will fight to retain their place and margin in the value chain, in spite of the dis-intermediation alternatives.

"The world is changing faster than we can keep up with it," said Ray Warren, president of ad agency Carat Media Group Americas.

"Phones will still work....It's just a way to communicate electronically." said Peggy Green of ad agency Zenith Media USA.

Electronic trading is the natural solution for such inefficient markets. AdECN, an independent trading exchange platform for advertising is already online. Google and eBay are deploying the private marketplace platforms into adverting media buy and selling. Google is introducing radio ads onto its Adwords platform, in addition to ads in magazines, and ads in newspapers.

eBay, in turn, has its private marketplaces; eBay Media Marketplace is to go live in a few weeks. While marketers like Lexus, Hewlett-Packard, Microsoft and Home Depot are participating in eBay Media marketplace, no cable networks have signed on yet.

As ever, volume on these trading exchanges is an all or nothing proposition; community of buyers and sellers tip from one market platform to another en mass. Similar migration of buy/sell volumes have been occurring between trading exchanges in the financial market since the first electronic exchanges appeared in the 1990s.

I lived through just such a loss of trading volume while at the London Financial Futures and Options Exchange during the mid-1990s; 30% of our trading volume deserted from our trading pits onto Frankfurt's electronic trading platform. The automated platform fees were 10% of our trading fees and the buy/sell spread margins were narrower. Our response was to close the open-outcry trading pits with their 3000 colourful pit traders, and launch a competing electronic exchange, CONNECT (TM).

The only alternative left to media agencies is to own and host the new electronic marketplace. ]]>

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Shadow Chancellor George Osborne has promised that an incoming Conservative (UK) government would create a level playing field for open source software in the UK, in a move which could save taxpayers more than £600 million a year. Mr Osborne stated that

"What it is about is better and more effective government. The problem is that the cultural change has not taken place in government. There isn't a level playing field for open source software. As it stands, too many companies are frozen out of government IT contracts, stifling competition and driving up costs."

"All too often, a government IT system is incompatible with other types of software, which stifles competition and hampers innovation. Looking at the litany of IT projects that have collapsed or spiralled over budget, it's clear too that this has meant billions of pounds wasted and public service reform being hampered

Mr Osborne reckoned that opening up the market in software would enable the Government to slash 5 per cent off Whitehall's annual IT bill, because open software allows users to read, change and improve its code, in contrast to proprietary software where a company controls the source code.

The motion makes adoption of Open Document Format (ODF) standard a likelihood for the UK government.

Conservative Party - News Story ]]>

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Lycos is one of the leading European based general portals, with 31m unique internet users a month; a "European yahoo" whose American arm was sold to Asian premier portal www.daum.net. Lycos has released 2006 results, which are sobering when compared to Lycos' american counterparts. Christopher Mohn, Lycos CEO, is eager to emphasize his first net profit ever, EUR 1.7 million. Unfortunately, this pales against Yahoo's EUR 577m and Google's EUR 2,366 million.

More worrying is Lycos Europe's inability to stem its cash drain. Lycos was Europe's most successful IPO in 1999, raising EUR 1.6 billion in cash. The cash reserves are now under EUR 100m, in spite of the sale of Lycos-America and the Swedish Spray network.

The market versus book value ratio for Lycos-Europe has hovered around 1.3 for four years now. Though market valuation of the company is now above its liquidation value (market/book ratio of less than one), the market still signals skepticism as to Lycos' future.

Lycos' board keeps the faith though, not stepping back into an exclusively cost reduction strategy. Spend on research and business development has remained strong over the last four years, in spite of their effect on cash reserves.

Company management can easily fall into an exclusively cost reduction strategy, specially when the innovation drive and talent is gone. I think of it as leaning back when skiing an excessively fast downhill - lethal. Keep a balanced lean, and repeat the mantra it is never too late, it is never too late.

Fortunately for Lycos shareholders, the board has retained some of the original founders who have domain knowledge enough to be creative, and innovate new defensible revenue streams. Lycos' new revenue streams includes its shopping channel notably, Pangora, which they have white branded across Europe.

Lycos annual report ]]>

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I find the openID whitelisting for spam elimination the most exciting. Finally, a viable mechanism to eliminate email and comment spam. OpenID finally adds one of the key pieces to the online reputation mechanism. This in turn fills a big hole in building communities online.

There remains Google's endorsement ]]>

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Though long time in coming, electronic buying and selling enters the Online Advertising sector. Just as electronic trading revolutionized financial markets, eliminating middle-men and reducing the buy-sell spread, so electronic trading has finally entered the advertising market.

Google braved the way with its electronic bid based buy and selling of pay per click advertising. Now AdECN Exchange has introduced bid based buying and selling of straightforward advertising, page view based advertising.

Upto now the market for banner based advertising was illiquid and inefficient. Advertising agencies commandeered a large percentage of the fee, widening the buy-sell spread for publishers and advertisers. Worse, the bulk of the inventory beneath a publisher's home page remained unsold. Now AdECN exchange brings visibility and efficiency into buying and selling page-view inventories; the buy-sell spread will come down from its current 30% to single digit percentages, just as in financial markets. Plus a much larger percentage of unsold inventory will be visible to advertisers. Good news for the markets, not so good for the advertising market intermediaries.

Sophisticated advertisers will embrace the new electronic market by adding analytic and technical capabilities to the buying team. Just as investment banks added quantitative and analytic trading PhDs to their investment teams. Electronic trading is already used to buy search based, pay-per-click advertising; extending electronic purchasing into pay-per-view (CPM) advertising should not be a stretch. ]]>

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Laurent Haug, Lift conference organizer, has surpassed himself again. He has crafted a meeting where creativity and ideas flourish like nowhere else. It may be that the presenters and attendees take center stage; may be the new media art present all through the conference; maybe the place and the time for attendees and presenters to talk and mingle; or the quality of the presenters and attendees he attracts. I just know I had some great conversations.

See David Brown and Ivan Pope at the fondue dinner in the picture. David is cofounder and CTO of a top affiliate network in the UK, buy.at. Ivan Pope, founder of netnames plc and Sniperoo widget factory, veteran of a dozen years of online entrepreneurship. Between them they directly impact tens of millions internet users with what they have created. In hard currency, they have created value in excess of £100 million in todays valuation. I was much humbled. Needless to say, the conversation was excellent; war stories, insight, and laughter.

And many other presenters, attendees and conversations, all humbling in their merit. If you need help with your lateral thinking, head over to the next LIFT conference, you will get nothing but great conversations. ]]>

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