Category Archives: social media

The slow death of CPM on the web.

The CPM model is changing dramatically (duh). Long tail ad inventory will trend to $0 while premium inventory may actually increase.

Here’s why:

The impression pricing model (CPMs) depends on scarcity (of channels, pages, broadcast spectrum). The internet destroys the CPM model assumptions as new content comes online each day, thus destroying scarcity in the CPM model. Inventory on the web is infinite, so non-premium inventory will price lower. While more content (ad inventory) comes online, attention remains FINITE. Any single blogger now competes with the likes of the NYT or WSJ. Performance pricing and direct response will in the end rule the web media buy.

Also, while this is occurring, publishers are self cannibalizing pricing by using ad networks that reduce their inventory to fungible goods.

The outlook seems bleak for the firms that depend on impression based pricing. Digg is a great example of how massive amounts of new inventory can hit the market quickly. Digg instantly competes with their dugg destination posts. Look for more moves like yesterday’s Yahoo’s APT accommodation of performance pricing and look for the other quality performance networks to realize more revenue.

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What the Macro-economic contraction means for young online media firms

The best piece advice I have received from a friend working in media private equity was this:

“If you have the model and the means to get through an economic contraction with growth, don’t sell now…  keep your head down, execute and grow. On the other side of the contraction, your business will be worth MUCH more”

Also, Jason Calacanis, a serial successful entrepreneur opined recently (paraphrased) on TWIT that the best time to make a move in this market is during a contraction because you have less competition. If you are executing, you’ll grab more market share, you will be a more valuable property, and attract better talent. Jason speaks from experience…he has started businesses in downturns.

The trends look good for online media: there is a flight to more measurable and agile online media because online media consumption time is increasing its share of the (finite) user media consumption pie. Also, the dollars that leave radio, TV and Print will move into the online space to gain on the 20% user consumption time of online media.

Smart marketers are slowly levering up the ~7% of thier budgets in online media to get closer to matching the 20% number. They also know that the trackabilty and ROI equation works in their favor, as they can deliver faster, more direct and meaningful results with online media (especially as performance-based pricing becomes more popular).

In the end the “wheat will be seperated from the chafe”, but the firms with focus and resources to capitalize on the opportunity a contraction presents will come through a downturn stronger and more resilient.

How to make the most out of the user generated content conversation

Engage in the conversation as EA did when a glitch was discovered in their software. Brilliant rebuttal and a great reputation and character builder their brand. Enjoy.

A test post from iphone

So this is a post from on the road. (And a great example why the iPhone will win as a plaftorm for developers)

Nice Social media Illustration

This is a really nice illustration of how social media changes the economics of media production and consumption. Plus its about ice cream too.

The War over Data and Other Short Stories

After reading and digesting Publishing 2.o’s Scott Karp’s comprehensive piece on the forthcoming war over data, it seems to me there is an obvious component to the “debate” of data ownership that should be considered here: principally that the war will be over as soon as users realize just how much this data is worth to them (in other applications and directly to their bank accounts).

Today there are many reasons a user might want to remove or move data: use in another app, privacy and security, fatigue with a “platform” that no longer provides utility, etc. But in the not-so-distant future there will be even more reasons to move data.

A model or application will come along that shows users the real value in this data about them and how they spend their attention. It may be the next logical evolution of advertising (think Discover Card Ads: “the advertising that pays you back”), or some other such incarnation. As sure as innovation and capitalism live and breath, its coming…and users WILL get their data.

Most of the TOSs of the prominent web gateways (search engines, social networks and productivity tools) state that they own the data and Scoble’s “scraping” of the data isn’t lawful.

So today the conversation looks like this:

USER: I am spending my attention on your site. My attention creates data stored in your environment. I should be able to move the data I have created to another site so I don’t have to replicate the time I took to create it in a new environment. My data should follow me around.

SITE OWNER: Yeah right! you agreed to the TOS. We provide this service for free. The data belongs to us and we use it to make money so we can provide you with the service without charging you for it.

In the future, it will be more like this:

USER: Hand it over.

SITE OWNER: What format? XML? APML? OPML? RSS?

Data Portability.org is seeking an open standard for APIs to talk to one another so a user’s data can be moved from one site to another with out a lot of fuss. Many web 2 apps and even Microsoft have joined. From this move to join DataPortability, its clear that the issue of portability is technically nearly solved, and that there is a financial reason to be a part of the solution — many of the firms that have joined are those who would benefit greatly to giving their users the ability to grab data from other sites and port it to their own properties to create a stickier site where users will spend more of their attention.

Many of these joining firms also recognize that in order to have the honor of being a “holder” of someone’s data they will need to offer the option to collect that data and use it elsewhere. If users cant move their data, they will take their attention somewhere else.

While many will never actually port their data elsewhere, they will certainly want to know that its theirs to do so, should they desire. Its critical to the element of trusting the vendor you spend attention with. To quote Fred Wilson of Union Square Ventures:

Why does this matter? Because trust is going to become a bigger issue going forward. I realize that many people trust Google and others to safeguard their data. But the best way to garner trust is to tell people that they “own their data” and they have the right to put it anywhere they want. The simply act of doing that will garner even more trust.

Control will ultimately be with the user (they can and will join hands and fight to be able to move their data—there are more of them and no shortage of lawyers in this country). People will want to pull data out of Facebook when they graduate and have a job (and less attention to waste on Facebook) and put it to use in a more productive environment that enhances their career, bank statements, social life, etc.

Users will find a way.

Oh, and Open always wins.

This post originally appeared here 

2008 Predictions

  1. Design and user experience will continue thier progression to the front of the classroom when the lecture turns to technology adoption and digital lifestyles. Apple will reap the rewards from this trend due to its product-centric design principles.
  2. “Meta” Social networks such as Facebook and MySpace will lose popularity as other more focused niche social networks come to market that specifically address the needs of thier users.
  3. As the recssion hits, more marketers will push more of thier budget into measureable online media at the expense of radio, print and TV. The trend will be toward more revshare and CPA marketing and less brand advertising.
  4. Marketers will adjust thier budgets to more accurately capture the 20% of user time spent on online media (today ~7.5% of thier budgets are allocated to online media). The gap will close even more rapidly in ’09.
  5. The volume of content uploaded to the web will create a Faustian Bargain…users will have a more difficlt time finding relevant content and seek solutions to help them filter through the crap.
  6. More of the mainstream web userbase will earn revenue from thier activities on the web and realize the financial benefit of contributing to the conversation.
  7. Google will make more money. Steve Balmer will get angry again.
  8. HBO’s Flight of the Conchords will redeem thier poor season finale episode with an all star performance of the Rolling Stone’s smash hit Monkey Man

This post originally appeared here.