MySpace Revenue Down Because Banner Ads Suck
Posted on May 8, 2008
Posted by Mike Berkley | Leave a Comment
Fox Interactive Media (FIM) revenues are down by 10% last quarter, and FIM also missed their revenue target for the fiscal year by 10%.
From Techcrunch:
The culprit: There is too much inventory and not enough clickthroughs. As a result both brands (and, more importantly, “friends” on MySpace) remain skeptical. Dumping ads on MySpace without targeting them simply doesn’t work.
True… but I would argue that even highly targeted banner ads won’t solve the problem for MySpace. Click through rates are miserable not so much because advertisers can’t differentiate between a 14 year-old girl versus an 18 year-old boy… but because:
- Teens are generally not in an “ad receptive mode” when they are socializing and communicating on MySpace or Facebook, and
- Teens have learned to block out force-fed advertising, such as display ads. This is why opt-in, social advertising is becoming such a compelling alternative for advertisers.
Twitter Stream from Digital Hollywood
Posted on May 7, 2008
Posted by Mike Berkley | Leave a Comment
Those of you who follow me on twitter endured quite a barrage of real-time notes / observations from Digital Hollywood, streaming from my BlackBerry on Monday and Tuesday. [Yes, my fingers bled.]
As an experiment, I am posting all those tweets below in this blog. I realize a blog is a very different storytelling / communication medium than Twitter, so it may not translate well. But this does create an archive of my notes that may also be helpful to you.
Panel #1: Deconstructing Advertising
Making choices in a universe of limitless choice: broadband, social networks, mobile, TV, cable, games, VOD, and ITV.
- Adam Stewart is the “vertical director for media and entertainment” for GOOG. Huh? Google has vertical content? Where besides YouTube?
- Future of advertising: moving from “ad buying” to “experience making”, so says Stephanie Sarofian, Digitas.
- Everyone on panel agrees that consumer interaction with brand is primary focus of advertising going forward.
- Accountability / tracking / metrics will become more important in this new world of advertising.
- Gary Hebert from MSFT: branded entertainment is MSFT focus. Really?
- MSFT: ultra targeted ads will be delivered based on what user is doing at that very moment on his/her PC (which web pages, apps are open, etc)
- Discussion has shifted entirely to future of targeting.
- Lack of standards is biggest road block in the value chain of digital advertising.
- Google: advertising is currently in an “evolution”, not yet a “revolution”.
- Biggest challenge for agencies is how to charge for “good ideas”.
- Agencies: how to charge in a post-commission world? Agencies need to figure out how to monetize ideas.
- From brand perspective: too many choices to connect with audience. Overwhelming.
- David Wolf from Accenture: “Facebook has figured out that banner ads aren’t working, and is changing strategies.”
- Wing Pepper of MRM Worldwide: “media technology platforms need to listen to agencies and cooperate more.” Translation: agencies know what brands want, tech companies don’t.
- Google: “media platforms need to find balance between user needs and brand needs. But the user is more important.”
- Wing Pepper (MRM) on widgets-as-ads: the more utility the widget, the better for brand.
- MSFT: give users ability to “save ads” for later consumption to minimize interruption, lessen intrusiveness.
Panel #2: Advertising NEXT
Social networks, user generated video, search, blogs, IMs, podcasts, broadband and mobile — it’s the breakthrough year!
- “Advertising NEXT” panel. McCann Worldwide, Kosmix, Starcom, Quantcast
- “Search engines aren’t smart, they’re mathmatical. They don’t really understand context or intent”. Yet.
- This panel is too heady, non tactical, and a bit pretentious. I’m bored.
Panel #3: Deconstructing Advertising
Making choices in a universe of limitless choice: broadband, social networks, mobile, TV, cable, games, VOD, and ITV.
- Switched rooms to “Monetizing UGC Video” panel with MySpace, YouTube, and Heavy.com. Much better.
- YouTube focusing on more devices for greater distribution. And on maximizing vid quality, based on device.
- The Onion: offsite distribution deals (myspace, youtube, etc) is NOT canabolizing their onsite traffic.
- Broadcast networks actively using YouTube to pilot/test TV shows. Hugely helpful.
- YouTube: leveraging AdSense heavily for distributing video onto blogs, as a service for content creators.
- When agencies create killer content for a brand, who owns that content? Agencies are starting to consider license models — they want to retain ownership of content they create for brands.
- YouTube pre rolls send 40-50% of viewers away. Overlay ads only a tiny bit better.
Panel #4: Personalized Media Platforms
Widgets, user generated media, news, music, and blogs.
- “Personalized Media Platforms” panel. Pandora, Userplane, NowPublic.com, JD Lasica, CNET.
- Washingtonpost.com: “we’re on the Chumby”. Hey, I love the Chumby!
- Washingtonpost.com: “we have to be everywhere: every mobile device, facebook apps, youtube, etc…”
- Washingtonpost.com: “we are no longer a destination; we are everywhere where the audience is.”
- NowPublic.com: “two types of personalization: content I like, and brands I like.”
- Pandora: “personalization still requires too much upfront investment on the part of user”
- Userplane: “over personalization can lead to an environment when no one learns anything new.”
- Has social media fatigue set in? Do we really care that your cat drank from the toilet?
- Discussion of twitter comes up. Is it valuable? I raise my hand to tell panel I am live tweeting them right now.
- After I speak, the panel shifts attitude and begins talking about twitter with a different spin: it “can” be helpful. Funny!
- Your current physical location in the world is going to be a new layer on top of all these web services…
- …It will be a killer feature that truly connects people in the real world, not just on the web.
- Mobile is going to be primary platform for identity, communication, content, engagement… everything.
- Is privacy dead? No, but we need to move from opt-out culture to opt-in culture. Including ads, I think.
- NowPublic on UGC: people are generally lazy about creating content; don’t package stories well.
- Gotta say that the panels are interesting, but really no new thinking is emerging.
- We are at the “sorting it out” stage in the media evolution, as opposed to “innovation” stage.
Cocktail Party
Where the real social application is applied.
- Cocktail party at Digital Hollywood. Drinking with guy named “Lover”, porn star agent, and guy named “D”, snoop dogg agent.
- Update: networking with who’s who in hip hop. Meeting all the hustlers who pair artists with brands.
- OK, I’ve positioned SplashCast well in adult vertical through cemented relationship with “Lover”. Work done. Bed time now.
Panel #5: Contextual Media & Advertising
Transforming and redefining the relationship between the consumer, advertising, and media platforms.
- First panel of the day: “Contextual Media & Advertising”
- Panelists include Saatchi &Saatchi, NBC Digital, Glam Media, moderated by dude from Ogilvy & Mather.
- Discussion of Glam transformation from vertical content play to vertical ad network.
- Glam focusing on brand advertising rather than performance-based ads.
- Saatchi+Saatchi blah blah blah blah… puleeese, say something new!
- Saatchi one of the last agencies to keep creative and media under same roof.
- TV2.0 is distributing the entertainment to consumers, where they want it in both time and place.
- Discussion on data collection by advertisers.
- What are consumers desiring at a particular time, place, context, etc? Deep data analysis can answer this.
- Data collection by advertisers will provide so much benefit to consumers that it will ultimately win out over privacy concerns.
- Intelligent, personal, friendly ads are better for users than the current state of display ads.
- Saatchi working on tech that not only reads your mind, but can make purchase decisions for you.
- Ha! That was a joke.
- Ah, now talking about the topic of “engagement”.
- These guys just talked for 10 minutes on “engagement” and said absolutely nothing!
- Engagement is more about the creative than the media buy. Engagment is about emotional response.
- “Ad technology does not create engagement, content does.” [I, for one, do not totally agree with that.]
- Glam: syndicates content to their 500 sites, not just ads. Glam editors pick best stories to syndicate.
- (My comment) Glam focused 100% on editorial content to create engagement, rather than creating more compelling advertising units.
- Saatchi: fresh, always changing content is critical. Big task! (This we know at SplashCast)
- In-video, contextual ads is holy grail.
- Meta tagging of video is hella big task that no one still has an answer to (GOOG as well?).
- How to monetize social networks? How do advertisers take advantage of this? Is there an economic model?
- YES! Social network advertising “must be user initiated”. Opt-in ads.
- “Social ads need to provide utility or entertainment to users”
- “Contextual Media & Ads” panel grade: C-
Panel #6: Social Media & User Generated Media Economy
The content, personalization, lifestyle, and advertising phenomenon.
- New panel “Social Media & UGC”: metacafe, kickapps, aol, youtube, redpoint ventures
- Metacafe: 30 million uniques, largest indy video sharing site.
- KickApps represented by my buddy, the VP BD, who shared the panel with me at Innotech last month.
- YouTube thinks it is a platform, not a destination. Lots of video inputs, from all over the web, and lots of distribution outlets.
- That is, youtube doesn’t think of themselves primarily as a destination.
- Redpoint was early investor in MySpace.
- Have social sites replaced portals? Yes. But more importantly: home pages in general are dead.
- Users come to content sites not via home page, but directly to content sub pages via search / sharing.
- This limits the site’s ability to program content and direct flow of usage.
- Redpoint: brands are still uncomfortable with social media, but they know they have to take the leap.
- Redpoint is really interested in platforms that enable users to become ambassadors for brands.
- Redpoint guy is essentially saying SplashCast’s positioning / value prop is the future of advertising.
- “Is there an ecommerce biz model for social sites?” yes, virtual goods / micro payments is interesting.
- Metacafe: people don’t pay for content on the web. [earth shattering news]
- YouTube in-video overlay ads are so-so performers.
- Redpoint: video ads need to evolve into interactive experiences, rather than static 15 or 30 sec spots.
- Brands can buy UGC contests on YouTube.
- Metacafe got 3K users to embed a metacafe contest widget, which they call a success. Received 3M views.
- Redpoint: “Google would admit that they are NOWHERE with brand advertising. Market still wide open.”
- Social sites have huge audiences but can’t monetize. AOL can help them, hence their buying spree.
- Facebook and MSFT struggling to make money from huge Facebook audience. Banner ads aren’t the solution.
- I believe Metacafe is in trouble. Not enough differention and still no solution to UGC monetization.
- Someone will buy Metacafe for their 30 million users , but Metacafe has no future on their own.
Panel #7: Widgets as a Platform
Content, advertising, communications
- Sorry for the break in the stream. Here we go again: “Widgets as Platform”.
- RockYou, Newsweek, Gydget, Clearspring, Mochila, Slide.
- Discussion about difference between a widget and an application. Boring. Who cares?
- The panel is acting very defensive, arguing why widgets are not a fad.
- What are the widget business models? CPM, fixed sponsorship, cost per install.
- ..Widget-as-ad is the newest model, possibly most promising.
- What about MySpace risk? They have the control. Slide says risk is mitigated because MySpace needs Slide.
- Slide: widgets need to do more than just give content; they need to enable communication between friends.
- RockYou: the more simple, the more viral. The more universal the audience, the bigger the audience.
- Clearspring: measure success based on realistic expectations. If widgets outperform web site traffic: win.
- WidgetBox: development and analytics of widgets will become commoditized.
- RockYou: highest CPMs go to apps with most engagement, and most vertically targetted.
- “Slide is never going to develop branded widgets for brands.”
- “Slide is going to let brands insert themselves into Slide apps.”
- RockYou: selling installs to other app developers is primary biz model.
- WidgetBox business is their consumer-facing widget directory. Different type of distro than Clearspring.
- Gydget leverages existing fan-bases for providing their clients widget distribution.
- I like the Gydget guy (vp of biz dev). Geniune person. Refreshing.
- None of the widget panelists are investing in mobile. They don’t see the viral potential of mobile.
- All panelists agree: use traditional CPM to sell widget distribution. Can’t charge for viral, it’s bonus.
- Widget panel over. I will be on the Advertising 2.0 version with same panelists in NY in June.
Panel #8: Hollywood 2.0 (I was a panelist)
- I was on a fantastic panel last night: “artists vs. suits”, discussing tensions between creative and $$.
- I was a “suit”. I’ve been on both sides throughtout career, sometimes at the same time.
- I got to share the stage with LonelyGirl15 creator and grammy-winning rapper Chamillionaire.
- @mashable was in attendance (for free dinner?). Good to finally meet Cashmore face-to-face.
Advertising 2.0 at Digital Hollywood (Live Blogging)
Posted on May 6, 2008
Posted by Mike Berkley | Leave a Comment
FYI, I am live blogging via Twitter the panel sessions at Digital Hollywood. I am covering all discussions relating to advertising 2.0.
Get all the updates via Twitter; follow me here: mike_berkley.
Cheers,
Mike
Microsoft, Yahoo! and French Boredom
Posted on May 5, 2008
Posted by Tom Turnbull | Leave a Comment
We’ve been closely following the developing Microsoft/Yahoo! deal over here at SplashCast.
This is a HUGE story. It’s the digital media story of the year.
Oh, and it’s not boring as charming French blogger Loic Lemeur asserts (with a few under his belt). 
I’ve been hearing all kinds of convoluted theories about what is happening. My guess is that the simple answer is probably correct: Microsoft isn’t done. Microsoft realizes that it represents the best option for Yahoo! and can certainly out wait them.
As expected, YHOO is down big, big, big on this sunny Monday morning. This is what Microsoft wants to see. It’s a big stock market “I told you so.” Microsoft let go of the rope and Yahoo! fell.
So my guess? Microsoft will jump right back in three to four months down the road and pick up a Jerry Yang-less Yahoo! up for a much lower price.
That’s what I think.
It’s a lot more fun to speculate about other scenarios, however.
Microsoft needs traffic and advertisers. They are proven experts in software development. They haven’t been able to create the other two big pieces: massive traffic and advertiser relationships. There are some interesting non-Yahoo! traffic options for Microsoft.
The most obvious ones are the mega social networks: Facebook and MySpace (less interesting would be AOL/Bebo).
Yahoo! is last year’s hot restaurant. MySpace and Facebook represent the future (as far as anyone in this business can see the future). Traffic and engagement metrics point to the social networks as the place for advertisers to be.
Of course, it’s not as simple as saying Microsoft should pick up Facebook or MySpace. They would have to do some serious wrestling to pull the MySpace (or AOL/Bebo) away from Google. Perhaps it is possible, but it seems highly unlikely.
Facebook might be Microsoft’s next best option. Microsoft already owns a chunk of equity and owns the display advertising real estate on Facebook. So, why not play this out sooner versus later and purchase Facebook now?
There are several reasons why Microsoft might rather wait. First of all, the valuation will be crazy. However, that’s likely not enough to scare off Microsoft (especially if Facebook is viewed as one of the last great traffic sources).
Secondly, advertisers have not yet figured out a way to effectively generate revenue in the social networks. CPMs are very low. Banner ads have performed horribly there. That being said, there are other ways to generate advertising revenue (e.g., sponsored applications). This feels like a challenge that Microsoft might well be up for.
All that being said, my guess is that Microsoft will be standing by ready to scoop Yahoo! up off the playground asphalt on the cheap. If, however, Ballmer has seriously walked away from Yahoo! I’m guessing that Microsoft makes a play to acquire Facebook. If so, things will get even more interesting in terms of the ongoing effort to effectively generate revenue in the social networks.
Interesting times in digital media. Well, when hasn’t it been interesting in this business?
Update: In my belief that the Microsoft/Yahoo! deal will still happen (and at a lower price) I’m in the 15% camp.
Creative Marketing is Not a Band-Aid
Posted on April 29, 2008
Posted by Mike Berkley | 3 Comments
The term “authenticity” is something that we social media types toss around like a baseball. Here’s a story to illustrate its meaning:
Seen the ads for the much-anticipated, sexy and action-packed TV series “Scarlet”? The ads are all over the web, as well as on broadcast TV. Check out the ad on the Onion News Network (”Scarlet” is currently the sponsor). The ads seem to be everywhere I look.
Well, guess what? It’s all a big hoax, thought up by Agency.com.
From the Wall Street Journal today:
On Monday night, about 500 people planned to gather at the Pacific Design Center in Hollywood for a swanky screening of “Scarlet,” a new TV series from director David Nutter that stars Natassia Malthe.
It looked like a standard new-show screening, right down to the 32-foot-long red carpet and Wolfgang Puck catering. But the event, part of a $100 million global advertising and marketing campaign for LG Electronics, was actually an elaborate ruse. Attendees were expecting a screening of a new TV series called “Scarlet,” but “Scarlet” was in fact “a new series of TVs” with a red back panel.
The marketing hoax is an attempt by the south Korean electronics company to overcome the commoditization of the television business.
As part of the public relations plan for the show, LG has had Ms. Malthe drum up publicity b attending red-carpet events, including Fashion Week in New York, the Bafta awards in London, and several film premieres in Los Angeles. The result: plenty of online, TV and magazine stories about “Scarlet”.
When I read this, I first thought: “Rock on! Now that’s some bold, creative marketing! We could use some of that!”
Yet… no. This is stuff that PR & marketing people get all giddy over. But it’s stuff that consumers hate. Breaking news, folks: consumers do not like to be lied to by corporations. Even worse, they hate to be manipulated by advertising.
We live in an age where brands have to be honest, because the truth is too easily exposed. This is where authenticity, a favorite buzz word of social marketing pundits, comes into play. Consumers generally want to drink the Cool Aid; they want to believe in the brand message. And by doing so, they are placing their trust in the brand, often putting themselves at risk (most of the time it’s social risk, but in some cases it can be physical risk). If the brand betrays that individual’s trust, they’ve lost him/her forever.
If a brand is concerned that being authentic might expose a flaw or weakness, then those are deeper issues that need to be fixed on the back-end (ie, within the product or in the board room), not on the front-end. Creative marketing no longer works as a band-aid; consumers have gotten too smart and too resourceful for that.
Youth Marketers: Get Social or Fade Away
Posted on April 26, 2008
Posted by Mike Berkley | Leave a Comment
Yo, youth marketers: LISTEN UP! Online marketing is in the midst of a major transformation - one that is quickly changing the way businesses connect with target demographics and build brand loyalty. There is mounting evidence of the growing ineffectiveness of traditional online marketing, especially on sites that attract youth and young adults, like social networks. Those not embracing newer strategies will be left behind.
Banner ads, pop-up displays and other traditional online advertising strategies have proven to be disappointing in their ability to reach users of MySpace, Facebook and other social network sites. This has created growing demand for an entirely new category of marketing called social advertising. Those who ignore this technology-driven phenomenon will be left behind in efforts to reach young consumers.
Social advertising uses techniques specifically designed to reach the millions of active users of social network sites. Unlike intrusive online advertising, social advertisements are based upon opt-in strategies that attract and engage its target audiences rather then frustrate them.
A key feature of SplashCast technology is it’s three-way communications capability. Not only can companies push new content out to their splashcast viewers, but the viewers can send digital content back to the brand or to each other.
Social network sites are all about community and SplashCast makes it possible for advertisers to be a part of that community. In fact, splashcasts create a conduit connecting users from one social network site to another.
Folks, the trend is clear: today’s young consumers are watching far less TV and spending an increasing amount of time on the Internet. If advertisers hope to reach this key demographic, they must understand that their marketing strategies need to address the changing viewing habits of their target audience. The recent explosion in social advertisement technology has created new possibilities for reaching this audience. Those that ignore these changes will surely be left behind.
Yes, Banner Ads Also Suck On Application Pages
Posted on April 23, 2008
Posted by Mike Berkley | 2 Comments
Earlier this afternoon TechCrunch published a summary and analysis of the Web 2.0 Expo panel discussion, “The Facebook Platform: Finding Success in the Facebook Economy”. The general consensus among the panelists is that Facebook application developers are struggling to generate meaningful revenue via advertising and that there isn’t much hope on the horizon.
All panelists agreed that CPM rates on Facebook are miserably low, perhaps averaging 15 cents. Developers have begun experimenting with other sources of revenue, such as the sale of virtual goods and premium services, but advertising still generates more than 80% of the platform’s revenue.
Yes, $0.15 CPM is absolutely hideous, borderline criminal! That’s $150 bucks for 1,000,000 ad impressions.
But folks, understand this: whether they appear above an application or in a side column, BANNER ADS SUCK ON SOCIAL NETWORKS. Period. The issues that developers have in monetizing applications is the same problem that Facebook itself has monetizing all their other pages. Banner ads are unwanted, irrelevant, anti-social, and essentially blocked out by teenagers and young adults.
Application owners, just like Facebook and MySpace themselves, need to think beyond the banner ad. In social networks, ads need to “become part of the conversation” (the new social media cliche). The line between content and ad needs to blur, or vaporize altogether. Ads need to become personal, social, and dynamic. And ads need to provide immediate value to the consumer, either in the form of utility or entertainment. Yes, ads must work harder in social networks to be accepted by this incredibly discerning audience.
Otherwise 10,000 application views might buy you a pack of Hubba Bubba bubblegum.
The 3 Reasons AOL is Interested in Widgets
Posted on April 22, 2008
Posted by Mike Berkley | 2 Comments
In February AOL acquired Goowy Media, a widget platform with great technology, but not a tremendous audience when compared to competitors Clearspring and Widgetbox. This morning Jenn Van Grove published a great post documenting Goowy’s history and details behind its acquistion by AOL.
Here’s a snippet from that post, highlighting the primary reasons why AOL acquired Goowy and why AOL is bullish about widgets:
AOL is interested in widgets because they’re desirous, now more than ever, to allow users to spend their time online wherever they choose. Secondly, AOL is focused on driving the AOL brand to areas outside of AOL web properties. And, AOL is extremely interested in using widgets as advertisements (don’t forget about Platform A, AOL’s ad-buying platform). Essentially, AOL wants to leverage Goowy’s expertise around widget tracking to serve widgets as ads in traditional 300×250 ad space. With widgets as ads, the possibilities for creating more engaging content are limitless; widgets can be micro applications that play trailers, or allow users to download ringtones, widgets (as ads) can also be embedded anywhere, making the advertisers return on the investment increase exponentially if the content is good enough that users decide to take the particular ad/widget and share it elsewhere.
The widget-as-ad model is a concept we believe very strongly in, and is a critical component of SplashCast’s business model. In fact, I believe it is going to transform how brands think about advertising within social platforms, especially where ads can access the social graph. Peer-distributed advertising is a killer app. But social distribution is more “art” than “science”. How to leverage the social graph most effectively? How to hook and engage consumers? And most importantly, how to compel them to pass the ad along to all their friends? These are the questions we ask ourselves every day. It is where SplashCast has invested most deeply over the last year. I do not know how well Goowy’s widget platform performs in the context of social distribution, but the track records of other widget platforms (the one’s mentioned above) are not stellar in this regard. These widget platform companies have invested most their attention and resources on data tracking and reporting, rather than optimizing social distribution. In the end, we believe data reporting and tracking will be a commodity (easily built or bought), while social distribution is a “secret sauce”. We believe this is a primary difference between SplashCast and other widget platforms like Goowy.
By the way, Goowy’s CEO Alex Bard is a really great guy and deserves a ton of accolades for what he did with Goowy.
Earth Day: “Green Content”
Posted on April 22, 2008
Posted by Mike Berkley | 1 Comment
We are seeing a trend of “green content” becoming an important media category. We have been pleasantly surprised by how much “green content” there is out there, how how much demand there has been over the last 6 months for green SplashCast channels.
Below are three of our favorites.
| Add Riverwired to your page |
| Add Green Biz Channel to your page |
| Add PBS Nature to your page |
Congratulations, Marshall!
Posted on April 20, 2008
Posted by Mike Berkley | 1 Comment
According to Techcrunch our former director of content, Marshall Kirkpatrick, is the 5th top tech blogger. Congratulations, Marshall!
This ranking was calculated on the degree of presence on the news tracking web site TechMeme, in the last 30 days. Conveniently, three of the four top spots went to TechCrunch bloggers. Huh.
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