Posts on Online Economy



January 8, 2010

Widget Media
Category: Online Economy

After a year of extensive development, Enclick has launched the following information services for social networks, blogs and individual web sites.

Keeping with the current vogue for the free price policy, all the web sites have free widget services. Needless to say the services have quickly found social traction with 100,000 webmasters taking a widget

April 14, 2008

2009 the Year of Online Brand Marketing
Category: Online Economy

The UK spent €3500 in online advertising during 2007, according to a recent study by PricewaterhouseCoorpers and the World Advertising Research Centre (WARC). Online advertising grew 38% during 2007, taking a market share of 15.3% of all UK ad spend. Online advertising is the biggest advertising medium save Television. The study shows that online advertising should top TV advertising during 2009.

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]

Technorati Tags: , ,

January 4, 2008

Ad "receptivity" High for Online Video Advertising
Category: Online Economy

Brand marketing has different metrics to online sales marketing. Brand recall and engagement measure the first, sales conversion rates measure the second. New web2.0 web sites, social networks and video sites, are notorious for low conversion rates. New surveys are, however, showing excellent brand marketing results.

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.]

Technorati Tags:

November 8, 2007

tu.tv launches in video advertising
Category: Online Economy

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.


www.Tu.tv

Technorati Tags:

August 17, 2007

Over 24 Hours Outage at Skype
Category: Online Economy

skype
Mr Skype, you have over 200m users world-wide, an eight figure yearly revenue and then allow a bug in your network software? The Skype blog explains
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.

Technorati Tags:

May 3, 2007

Correos Stand at Internet World 2007
Category: Online Economy

correos

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.

Technorati Tags:

March 12, 2007

Electronic Marketplaces Coming to Advertising

aaaa
aaaa

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.

ebaymedia

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.

city open outcry trading

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.

Technorati Tags: , , , ,

February 24, 2007

Lycos Europe: Still Trying to Find Traction
Category: Online Economy

lycos

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

Technorati Tags:

February 19, 2007

Electronic Buying and Selling Coming to Online Advertising

ADECN

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.

Technorati Tags: ,

December 25, 2006

Quaero, the French Challenger to Google Bites the Dust

eu
As is the usual form for a high profile publicly funded projects with dubious political motives as its driver, Quaero has died at the hand of its own politicians. Germans and French politicians have fallen out over undisclosed issues, and are parting ways. Unsurprisingly the high rhetoric and principals which launched the project have not survived the self interest of the politicians running the program.

A spokeswoman at the French Agency for Industrial Innovation said it was continuing with the project to build a search engine called “Quaero” that would be able to index not only text but also photos and videos.

Some German firms would still be involved in that project, despite the withdrawal of others to work on the separate German-developed engine called “Theseus” that would be more focused on analysing text. “There will be a French project and a German project, and as they are not working in the same areas, they will not be rivals but complementary to each other —there will be two programmes instead of one,” she said Friday. Germany to work on their own search engine called ?Theseus?

Let me stand on my soap box and say again: Publicly funded projects have good intentions, bad politics and bad economics. Private, market funded projects have "bad" profit motives for intentions, good politics and good economics.

In my opinion, entrepreneurs and venture partners, with a profit motive, are a better vehicle to improve Europe's competitiveness in technology. the €600m assigned to Quaero are being wasted by this committee driven project.

Technorati Tags: ,

October 10, 2006

Google Acquires YouTube at $82 per Unique User
Category: Online Economy

youtube google

Staggering price paid by Google, way over average current portal valuations. Youtube has 20 million unique users a month, so the acquisition price is $82 per unique users, which is high compared to most portals. Yahoo, a high value brand company, only achieves an $86 per unique user valuation.

At the $1650m the YouTube acquisition on its own will not provide Google with a Return On Investment. Though they declare they will keep the Youtube brand separate, extensive "synergies" will have to be found and exploited for the acquisition to create value for Google.

Brin, Schmidt and Page must have a specific monetisation strategy in mind to extract some positive ROI from this acquisition. Straight forward adsense has difficulty achieving high CPMs from the current YouTube design given the lack of effective context for Adsense to detect the right keyword phrases or traffic segmentation.

In spite of extolling the virtuous of internal innovation, Google has succumbed to buying a successful service. As ever, acquiring a successful business comes with a price tag; it is now up to Google to improve Youtube and generate value. This is not the first time Google has found ways to monetize a superior service though; Google Search had no superior business model, originally.

[Via Google Press Center: Press Release]

[Via John Battelle]

Technorati Tags:

October 5, 2006

UK Online Advertising to Top €3000m for 2006
Category: Online Economy

Internet advertising nears £1 billion (€1500m) for the first six months of 2006. Though the figure is lower than the US $7900m for the equivalent period, UK spend is higher on a per capita basis than the US. The figure below shows online advertising revenue growth for the US

ad revenue

On a per capita basis, the UK leads the way with €50 per capita, followed by the US and France with around €40 per capita. Scandinavia follows with high €30 values. But online advertising has yet to reach the tipping point in southern Europe; Italy, Portugal and Spain have single digit per capita online spend values, typically €5 per capita. But growth is 30-50 percent in all countries.

The UK growth has been 40 percent year on year, taking online advertising to 10.5 percent of the UK's advertising market, almost equal to the National Press' market share. UK advertising is now shared among the different medium as follows

  1. TV 22.7% market share
  2. National Press 11.4 %
  3. Online 10.5 %
  4. Outdoor 5.1%
  5. Consumer magazines 4.6%
  6. radio advertising 3.4%

The study by IAB and Price WaterHouse shows online advertising is split as follows

  1. Paid-for search takes 57.9%
  2. Online display (banners and skyscrapers) 23.5%
  3. online classified advertising 17.7%
  4. Interruptive formats, including 'pop ups', declined to 0.7%
  5. Email marketing and others taking the remaining 0.8%
CPA vs CPM stats

The US IAB study shows that performance based advertising, the Cost-per-Action (CPA) model is rising over the Cost-per-Click (CPC) models, as shown in the table left.

The sector ranking in online advertsing spend is as follows:

  1. Recruitment and finance account for over half the spend
  2. Automotive 13.8%
  3. Entertainment and Media 8.9%
  4. Consumer Goods, which includes FMCG, rose to 4.6%,
  5. Retail increases to 3%

The trend is for adspend to even out across categories, retail increasing its share by 30% as ecommerce takes off.

Technorati Tags:

October 3, 2006

Tesco.com Online Retailer Increases Sales by Another 30%
Category: Online Economy

The number one online supermarket has announced 28.7% growth for the first half of 2006. Having topped £1000m in turnover in 2005, growth is down slightly from 32% for the year ending 2005, but profits are now over 6% as economies of scale have a bigger impact. Likely sales for 2006 are £1300m (topping €2000m), only behind Amazon for the UK. With full company revenues being £22.7billion, online sales contribute 6% to overall sales.

Tesco has piloted specialized order fulfillment centers, which use state of the art Operational Research Software to optimize a order filler's pick up route along specialized pallets and shelfs. In addition to advanced automation to manage shelf stock. Order filler staff follow instructions on a wrist worn PDA, to fill several orders at the same time, with a minimum of movement along ailes.

Tesco is rivalling shops like Argos and Ikea by offering home delivery in two-hour slots, instead of half-day ones, and also the option to collect directly from stores.

Tesco has increased the number of CDs and DVDs it offers online to 280,000. With an additional 8,000 products in the lucrative electronics and household appliances sectors. In fact, Tesco is the highest selling household appliances retailer on the Enclick price comparator site. With close to 300,000 products, Tesco has one of the most comprehensive product data feeds on offer among online merchants.

[Via Guardian Online]

[Disclosure: EUCAP is invested in Enclick Ltd]

Technorati Tags:

September 21, 2006

Extra $600m for Google's State Funded European Competitor
Category: Online Economy

eu
Fed up with Google's dominance of the European market, the German and French governments add another 400m EUR funding to their state funded search engine, Quaero.

The search engine has been contracted to a consortium of 25 companies, Thomson, France Télécom, Siemens AG, Thales, Bertin Technologies, Exalead, Jouve, Synapse Développement, LTU Technologies, Vecsys, and a host research institutes such as INRIA, CNRS, Clips Imag, RWTH Aachen, and Karlsruhe.

Wolfgang Wahlste, director of one of the consortium partners, states that Google is web 1.0 search engine, while Quaero will be a web 2.0 based service, relying heavily on Semantic Web standards for their crawler and processing spiders.

Given the immaturity and lack of achievable goals of the semantic web relative to the bulk of internet web pages, Quaero might be long time in the coming.

Unfortunately, institutional innovation has a poor record compared to market driven innovation. Being an entrepreneur, I am skeptical of the entrepreneurship and creative skills of publicly funded committees. Few creative class capabilities are being harnessed by the Quaero consortium:

  1. No user base from which to test different ideas - Google's beta servers trial thousands of solutions every year, to see what internet users like best
  2. Rigid top-down, rational, central design innovation - as opposed to a darwinian test of many ideas from many, diverse and independent contributors
  3. No strong online marketing capability amongst partners and institutes- specially viral marketing - (they do not even own the quaero.com domain)
  4. Ultra-centralized development - opposite of linux style distributed development
  5. No Open Source technical or marketing support - as the development is secret and centralized; the worldwide hacker community responsible for free international alternatives, like Linux and Firefox, cannot contribute either technically or marketing
    Open Sourcing should be the ONLY way forward for this project, given its public funding
  6. Political wranglings amongst the 25 institutions competing for the public funding
  7. French nationalist overtones - thanks to Jacques Chirac trumpeting of the European identity - bad marketing
  8. Public funding Euros have little business potency relative to VC Euros - a proven fact when comparing public and privately funded startups

Loic LeMeur, a top European entrepreneur and strong EU supporter, lists his disappointments with the Quaero project.

Mr Jacques Chirac's project is a snub to European entrepreneurs. If the project had been assigned to a free market, entrepreneurs and VC general partners would create ten times the value with the 500m EUR already spent on this project.

[Via » EUR 400 million to the European search engine Quaero]

Technorati Tags: ,

September 19, 2006

Youtube: Waiting for Adsense for Videos
Category: Online Economy

youtube

Youtube, the leading video clip sharing service, is creating a lot acquisition rumors with much of the debate centered round its valuation.

youtube

Looking at reach and page view alone, with 10,000m page views a month and double digit growth rate, a billion dollar valuation range, like MySpace's, is not out of the question.

Fred Wilson offers a $150M estimate for revenues with $15 CPMs. But other opinions are much less optimistic.

The debate of Youtube revenues highlights problems with monetizing video clips. Jason Calacanis touts a low value for the likely youtube revenues, with only $20M from junk CPM advertising. Jason's estimates a $2 CPM for Youtube contextual advertising, arguing that the "dorky" video clips with very little segmentation or keyword context will not earn the higher range $15 CPM's for quality full context and full segmentation video content.

Similarly Mike Cuban predicts a a dramatic decline from major problems with copyright owners

Considering the RIAA will sue your grandma or a 12 year old at the drop of a hat, the fact that Youtube is building a traffic juggernaut around copyrighted audio and video without being sued is like.... well Napster at the beginning as the labels were trying to figure out what it meant to them

I think the biggest issue is the difficulty of using the Adsense advertising model on Videos. Given that Google's algorithm works only on text, identifying keywords from video content is ineffective, and hence advertising no longer targets intention or demographics. Categorizing videos manually is not a viable solution, when you have tens of millions of video clips. The only way forward for YouTube is good user tagging.

Technorati Tags: ,

August 30, 2006

Eric Schmidt Joins Apple's Board
Category: Online Economy

Nothing but bold moves in Silicon Valley. According to Steve Job's, Apple's cofounder

“Eric is obviously doing a terrific job as CEO of Google, and we look forward to his contributions as a member of Apple’s board of directors,” said Steve Jobs, Apple’s CEO. “Like Apple, Google is very focused on innovation and we think Eric’s insights and experience will be very valuable in helping to guide Apple in the years ahead.”

“Apple is one of the companies in the world that I most admire,” said Eric Schmidt. “I'm really looking forward to working with Steve and Apple’s board to help with all of the amazing things Apple is doing.”

Clearly, an axis of innovation forming in California.

[Via GigaOM » Apple Google = Worries For Everyone]

Technorati Tags: ,

August 24, 2006

Build It, Blog It, and They Will Come

Traditional Marketing

According to traditional marketing professionals, the "build it and they will come" attitude leads many entrepreneurs to their ruin. The full quote is:
"If a man can write a better book, preach a better sermon, or make a better mousetrap than his neighbor, though he build his house in the woods, the world will make a beaten path to his door", [Ralph Emerson]

Allegedly wrong, wrong, wrong. Apparently, many entrepreneurs suffer and fail because they overlook the over-arching importance of Marketing..

Or so they say.

ken olisa

Ken Olisa, one of the more eloquent traditional technology marketeers, presents traditional marketing beautifully at his Marketing as a Science? seminar at a Cambridge Entrepreneurship center.

According to traditionalists, marketing is a core capability of a company without which your enterprise is doomed to fail. Many investment consultancy firms, like Ken Olisa's Interregnum plc, charge high fees and equity percentages for providing this marketing and fund-raising to entrepreneurs.

Innovation is the New Marketing

seth godin

The new school of thought is that traditional marketing is dead. In Seth Godin's words, All marketers are liars. The best marketing is an exceptional added-value product or service.

We live in an increasingly efficient market. Information flows more and more perfectly. Marketing, the art of promoting your product in the market, is a commodity accessible to all. Disintermediation between client and supplier is prevalent. Successful differentiation of your company is about your product and service, not about your marketing plan.

You only have to note the lengthening queues of un-employed facilitator, coordinator, administrator management consultants. Advisory help for entrepreneurs is still a good idea, perhaps through an experienced non-exec director. But, the corporate skill set has ceased to be a differentiator; communication technology has made it a commodity.

guy kawasaki

In words of another entrepreneurship guru; "it is about engineers, not MBAs". Guy Kawasaki has a novel company valuation method; add $500K per fully employed engineer, and then subtract $250K for fully employed MBA

The partners at EUCAP are increasingly focused on core technology and service capabilities. Deep sector knowledge. An un-graceful total obsession with your client base, product and service. An Otaku cult of your market. That is the core capability of succesful company.

Build it, blog it, and they will come

Technorati Tags: , , , , , , ,

August 12, 2006

Europe's Online Advertising Should Top €10 billion by 2008
Category: Online Economy

europe

Forrester Research's Jaap Favier predicts €100 billion will be spent online in 2006, growing to €263 billion in 2011:

In the coming five years, the number of Europeans shopping online will grow from 100 million to 174 million. Their average yearly Net retail spending will grow from around €1,000 to € 1,500, as UK Net consumers, who currently spend €1,744 each year, outspend even their US counterparts online. Overall, this will cause European eCommerce to surge to €263 billion in 2011, with travel, clothes, groceries, and consumer electronics all above the €10 billion per year mark.

As expected the growth is fueled first by early adopters, or technology optimists, half of the current body of internet users, who are broadening their spending into clothing and electronics.

But the bulk of the growth is to come from the mainstream users, who comprise 90% of the retail customers, are starting to have an impact in online spending. As broadband becomes widespread, the non-techie customers are being won over by convenience and price advantages offered by online retailers. Favian told ZDNET that

"Consumers take about a year after going online before they will purchase something online. The first thing they purchase is either a book, a CD or a trip.

All welcome news for all online businesses, including online publishers. Using the traditional 10% of sales is the marketing budget rule-of-thumb, the online marketing spend for Europe should top €10 billion in 2006. The prediction is below Jupiter Media Metrix's forecast of €4,014 million by 2008. A reflection of the online advertising struggle to gain its proportinoal share of the overall advertising spend.

Technorati Tags:

July 14, 2006

Nick Denton Struggling to Monetise with the Early Adopter Market
Category: Online Economy

Nick Denton's closure of two of his blogs in his blog media network has caused outrage among some of the blogosphere purists. A classic response from early adopters, who often ignore profit-loss concerns in the object of their affection.

We have had similar responses among our online communities, for instace the enthusiast members of our online financial information forum.

Many web2.0 companies, blog networks, and even A-list bloggers are struggling to monetise their brand asset. But, being popular among the early adopter consumer segment rarely generates the wished for revenues. Early adopters are too few, notoriously fickle, and do not buy everything they sample.

Crossing the chasm between the enthusiast and the mainstream users is an exercise in targeting, sub-segmenting and lots of patience.

It may take a year or two for blogosphere early adopters to be outnumbered by arriving mainstream users. Then the blogosphere will cease to be shocked by the reality of a profit-loss statement. Even smartmobs need to eat.

Technorati Tags: ,

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.

Technorati Tags: , , ,

June 24, 2006

Lord Saatchi:"Ruthless Clarity in Branding"
Category: Online Economy

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.

Technorati Tags: ,

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.

Technorati Tags: ,

May 27, 2006

Google strikes distribution deal with Dell
Category: Online Economy

The deal, reported by The eStrategyOne Buzz, Dell will bundle Google Desktop software on its PCs, the open source Firefox browser and the Google toolbar. Under its terms, Google pays Dell an undiclosed sum per PC sold, and will last three years.

Bundling google software benefits the users. Microsoft's Internet Explorer and msn landing site are acknowledged to be poorer than their google counterparty. Firefox browser and the google desktop search and particuarl favorites among converted users. The only reason for Microsoft's dominance of the browser market is the precisely this pre-bundling its of the software. Dell users are unlikely to look back.

Technorati Tags: , ,

May 26, 2006

One in ten UK retail sales now online
Category: Online Economy

The UK's "Office of Fair Trading has launched a fact-finding market study into online shopping Around 130,000 UK businesses now sell online. Internet sales are on a rampant growth curve. Further figures have been published by the IMRG, Netimperative - One in ten UK retail sales now online

The results show that 10% of all sales are now influenced by the internet, the breakdown is as follows:

  • £30bn of retail spending is online, while £20bn of non-traditional retail such as gambling and banking is online.
  • a further £30bn of offline retail sales is influenced by information gathered online
  • in other words, £80bn of consumer spending is either online or influenced by the Web

Furthermore, the trend is growing faster, more than half of shoppers said they are planning to reduce their High street spending in 2006 while 45 per cent say that they are willing to increase their spending with online shops.

In addition, nine in ten (90%) shoppers researched goods online before buying them on the high street.

Technorati Tags: , , ,

May 22, 2006

Early Adopters of Technology Do Not Make a Market
Category: Online Economy

Web 2.0, the current frenzied trend in online technology is having difficulty attracting the majority of the market. In spite of the success with technology enthusiasts and early adopters, their share of the total online market remains low. Hitwise has just published market share statistics for internet search, email and news, which throws up a few surprises.

Note that the older services like, mapquest mapping services, get 10 times the traffic of google maps. Another surprise is that Yahoo Mail gets 20 times more traffic than Google's Gmail, in spite of the more rudimentary features.

Many blog authors, who are a success among these early adopters, still need to attract mainstream visitors to make a living from their blog. Similarly, the popularity of web2.0 services like youtube and flickr is limited to early adopters , blog-users, causing the referred blog echo chamber effect. But, as the hitwise statistics show,
no impact on the mainstream so far.

The big mistake for web2.0 startups is that they are ignoring the mainstream market, not realizing that early adopters are a fickle customer segment when it comes to building profit. The rule of thumb among VCs is that the first 25,000 subscribers are irrelevant.

The big threat for web2.0 startups are that the mainstream online players like Microsoft, Yahoo and Google, who already have one foot on the mainstream market. They can adapt web2.0 ideas, make them easily understandable for the pragmatist, skeptical mainstreamers and make an easy introduction to their existing subscribers. A classic set piece scenario in Crossing the Chasm between early adopters and the pragmatist mainstream market.

May 10, 2006

London Internet World Exhibition - Internet Boom is Back
Category: Online Economy

London Internet World exhibitors have filled three quarters of London Olympia 2 hall for the first time since the 1999 and 2000. That is 171 exhibitors, and a projected 10,000 visitors. With no less than three mapping services in attendance; streetmaps.co.uk, multimap.com and mapsolute, compared with only mapquest.com in 1999.

The figures touted by most presenters today were

  • 28m UK online shoppers
  • £30bn in online UK sales
  • 30% yearly growth rates
  • 65% of car owners to re-insure online
  • Amazon.co.uk set a record of 480,000 shipped in one day, on the 18th of December 2005

Heady stuff. The rumor is that boo.com, the £185m disaster the UK internet bust flagship, will be resurrected this year.

April 26, 2006

Top UK ecommerce site tops £1000m in sales
Category: Online Economy

In 2005, Tesco.com averaged 28,500 orders a day, with the average order coming to £97. With 750,000 active users, the supermarket giant's online store contributes 3% to its total sales.

Online sales growth continues with 32% growth in sales for the year ending 2005, while profit margins increase by 55% relative to 2004, as economies of scale kick in.

Tesco.com's nearest UK rivals achieve nowhere near these volumes. According to web traffic statistics site Alexa, Tesco has approximately 67 % of the market reach when taking account other retailers. Both Waitrose and Sainsbury's opted out of the online channel in 2003-2004.

Tesco pursues an aggressive technology development program aimed at reducing costs and improving service to customers. An estimated 200,000 customers a day use the self-scan checkout, which eliminates waiting times at queues.

About Eucap

Online Economy

Some rights reserved
Creative Commons - Some rights Reserved

Save the Net