Yahoo Stores User Data for 90 Days, Max
In the interest of trust
With aspirations to set a new industry standard, Yahoo has executed a global 90-day data retention policy.
According to the company, this stance "strengthens Yahoo!'s relationship of trust with its 500 million users world-wide and enhances its longtime leadership on privacy."
Search engines like Yahoo and Google typically store user log data for 18 months — a sticking point for institutions that worry about how search firms could manipulate that data, or give it to governments that could may use it to prosecute innocent queriers.
Earlier this year, Google surrendered personal information about an Orkut user to Indian authorities. The user, accused of posting vulgar comments about a politician online, was imprisoned.
But Yahoo's hardly leading the race in privacy's arena. In September, Google honored privacy advocate concerns by reducing its data retention time to nine months. Bowing ever lower, Ask.com launched Ask Eraser in December 2007. The feature lets searchers anonymize their data in real-time.
Yahoo's new policy will anonymize user log data in three months, "with limited exceptions for fraud, security and legal obligations." The policy will apply to pageviews, clicks ad views and ad clicks, in addition to search.
"In our world of customized online services, responsible use of data is critical to establishing and maintaining user trust," VP-Policy/Head of Privacy Anne Toth pontificated.
But trust is tough to earn once lost. Earlier this year, former CEO Jerry Yang of Yahoo was suspected of squashing a potential Microsoft takeover on account of his personal feelings, all the while asserting the liaison was outside the best interests of shareholders.
Many shareholders expressed contempt about the deal's failure, and a number of key executives left voluntarily at that time. Yang himself vacated his CEO position at Yahoo last month.
Wednesday, December 17, 2008
Monday, December 8, 2008
Apple was 5th busiest retail site on Cyber Monday
Apple was 5th busiest retail site on Cyber Monday
Apple.com was the exception in comScore’s report on retail sales for Cyber Monday 2008, the biggest online shopping day in a year marked by global financial meltdown.
While its competitors were offering deep discounts to pull in recession-battered customers, Apple (AAPL) had already ended its Black Friday sale and by Monday was back to charging its usual premium prices for laptops, desktops and MP3 players.
Yet its online store still managed to grab the No. 5 spot in comScore’s ranking of the top 20 most visited retail sites on Monday Dec. 1, handily beating not only Dell (DELL) and Hewlett Packard (HPQ), but such full-fledged retail outlets as Best Buy (BBY), Toys “R” Us and Circuit City (CC).
Apple.com drew nearly 3.7 million visitors that day, up 43% from November’s somewhat depressed average. The big winner for Cyber Monday was eBay (EBAY), with nearly 13 million visitors, followed by Amazon (AMZN; 9.2 million), Wal-Mart (WMT; 6.7 million) and Target (TGT; 4.8 million).
Overall, according to comScore, online spending was up 15% from 2007, driven by a 22% increase in the number of buyers. But those buyers made 9% fewer purchases than last year, and they spent 5% less.
Below the fold: comScore’s top 20 chart, its breakdown of e-commerce spending and, perhaps most usefully for tight-fisted shoppers, its ranking of the top 10 comparison shopping sites, in which Shopzilla.com was the big winner.
Apple.com was the exception in comScore’s report on retail sales for Cyber Monday 2008, the biggest online shopping day in a year marked by global financial meltdown.
While its competitors were offering deep discounts to pull in recession-battered customers, Apple (AAPL) had already ended its Black Friday sale and by Monday was back to charging its usual premium prices for laptops, desktops and MP3 players.
Yet its online store still managed to grab the No. 5 spot in comScore’s ranking of the top 20 most visited retail sites on Monday Dec. 1, handily beating not only Dell (DELL) and Hewlett Packard (HPQ), but such full-fledged retail outlets as Best Buy (BBY), Toys “R” Us and Circuit City (CC).
Apple.com drew nearly 3.7 million visitors that day, up 43% from November’s somewhat depressed average. The big winner for Cyber Monday was eBay (EBAY), with nearly 13 million visitors, followed by Amazon (AMZN; 9.2 million), Wal-Mart (WMT; 6.7 million) and Target (TGT; 4.8 million).
Overall, according to comScore, online spending was up 15% from 2007, driven by a 22% increase in the number of buyers. But those buyers made 9% fewer purchases than last year, and they spent 5% less.
Below the fold: comScore’s top 20 chart, its breakdown of e-commerce spending and, perhaps most usefully for tight-fisted shoppers, its ranking of the top 10 comparison shopping sites, in which Shopzilla.com was the big winner.
Wednesday, December 3, 2008
Web Marketing That Hopes to Learn What Attracts a Click
Web Marketing That Hopes to Learn What Attracts a Click
By STEPHANIE CLIFFORD
Published: December 2, 2008
ONLINE advertisers are not lacking in choices: They can display their ads in any color, on any site, with any message, to any audience, with any image.
Top, an ad for Sears by Tumri, with changing pictures and type. Bottom, a version of the same ad with additional pictures.
Now, a new breed of companies is trying to tackle all of those options and determine what ad works for a specific audience. They are creating hundreds of versions of clients’ online ads, changing elements like color, type font, message, and image to see what combination draws clicks on a particular site or from a specific audience.
It is technology that could cause a shift in the advertising world. The creators and designers of ads have long believed that a clever idea or emotional resonance drives an ad’s success. But that argument may be difficult to make when analysis suggests that it is not an ad’s brilliant tagline but its pale-yellow background and sans serif font that attracts customers.
The question is, “how do we combine creative energy, which is a manual and sort of qualitative exercise, with the raw processing power of computing, which is all about quantitative data?” said Tim Hanlon, executive vice president of VivaKi Ventures, the investment unit of Publicis Groupe.
“I think it’s clear that the traditional process of agencies is clearly not going to survive the digital era without significant changes to our approaches,” Mr. Hanlon said.
•
The push to automate the creative elements of ad units is coming from two companies in California, not Madison Avenue.
Adisn, based in Long Beach, and Tumri, based in Mountain View, are working both sides of the ad equation. On one, they are trying to figure out who is looking at a page by using a mix of behavioral targeting and analysis of the page’s content. On the other side, they are assembling an ad on the fly that is meant to appeal to that person.
Both companies assume there is no perfect version of an ad, and instead assemble hundreds of different versions that are displayed on Web sites where their clients have bought ad space, showing versions of an ad to actual consumers as they browse the Web.
That might lead to finding that an ad for a baby supply store is more popular with young mothers when it features a bottle instead of diapers.
(Adisn and Tumri both measure the ad’s effectiveness based on parameters the advertiser sets, like how many people clicked on the ad or how many people actually bought something after clicking on it. They compare those with standard ads they run as part of a control group.)
Adisn’s approach has been to build a database of related words so it can assess the content of a Web site or blog based on the words on its pages.
Adisn then buys space on Web sites, and uses its information to find an appropriate ad to show visitors to those sites. If a visitor views pages about beaches, weather and Hawaii, it might suggest that the visitor is interested in Hawaiian travel.
Based on that analysis, Adisn’s system pulls different components — actors, fonts, background images — to make an ad. For example, it might show an ad with a blue background, an image of a beach, and a text about tickets to Hawaii. “Once we’ve built this huge database of hundreds of millions of relationships” between words, said Andy Moeck, the chief executive of Adisn, the system can “make a very good real-time decision as to what is the most relevant or appropriate campaign we could show.”
Simple Green, the cleaning brand, began working with Adisn this year to advertise a new line of products called Simple Green Naturals.
“If it’s a woman looking at a kitchen with a stainless steel refrigerator, they can show a stainless steel product,” said Jessica Frandson, the vice president for marketing for Simple Green. While Ms. Frandson gave Adisn a general idea of what she wanted, she also let the agency do almost random combinations with about 10 percent of her ads to see which of those combinations had the highest click-through rates.
“If it wants to be purple and orange, if that’s going to be appealing to my customer, then so be it,” she said.
Even Mr. Moeck said he was often surprised by the success of certain ads. “Some of it, I just scratch my head and say, ‘I have no idea,’ ” he said.
Tumri’s approach is slightly different. It creates a template for ads, including slots for the
message, the color, the image and other elements.
Unlike Adisn, it does not buy ad space, but lets clients — like Sears and Best Buy — choose and buy space on sites themselves. And rather than building a contextual database like Adisn, Tumri uses whatever targeting approach advertisers are already using, whether it is behavioral or contextual or demographic, and assembles an ad on the fly based on that information.
“It’s reporting back to the advertiser and agency saying, ‘Guess what? The soccer mom in Indiana likes background three, which was pink, likes image four, which was the S.U.V., and likes marketing message 12, about room, safety and comfort,” said Calvin Lui, chief of Tumri.
•
Some advertisers are using that information just to see which version of the ad works best, but Mr. Lui emphasized that the appropriate ad is not static, and changes all the time as content on the page changes.
While the planners and buyers in advertising agencies are intrigued by the idea of measuring each part of an ad, the creative staff that designs ads is less focused on measurement and more focused on the overall effect.
“I think the creative community has to get very comfortable with results-based outcomes in marketing,” said Mr. Hanlon, whose company has an interest in Tumri. “There are a lot of creative people who didn’t sign up for that kind of world.”
Bant Breen, the president of worldwide digital communications at Initiative, the Interpublic Group media buying and planning firm, had a similar view. “The traditional creative process right now is not structured to essentially deliver hundreds of permutations, or hundreds of ideas for messaging,” said Mr. Breen, whose firm is using Tumri to determine which ads are working.
“There’s no doubt that there will be a lot of data that can be collected that could be applied to the creative process.”
But, he said, “that’s not necessarily an easy discussion to have with great art directors.”
By STEPHANIE CLIFFORD
Published: December 2, 2008
ONLINE advertisers are not lacking in choices: They can display their ads in any color, on any site, with any message, to any audience, with any image.
Top, an ad for Sears by Tumri, with changing pictures and type. Bottom, a version of the same ad with additional pictures.
Now, a new breed of companies is trying to tackle all of those options and determine what ad works for a specific audience. They are creating hundreds of versions of clients’ online ads, changing elements like color, type font, message, and image to see what combination draws clicks on a particular site or from a specific audience.
It is technology that could cause a shift in the advertising world. The creators and designers of ads have long believed that a clever idea or emotional resonance drives an ad’s success. But that argument may be difficult to make when analysis suggests that it is not an ad’s brilliant tagline but its pale-yellow background and sans serif font that attracts customers.
The question is, “how do we combine creative energy, which is a manual and sort of qualitative exercise, with the raw processing power of computing, which is all about quantitative data?” said Tim Hanlon, executive vice president of VivaKi Ventures, the investment unit of Publicis Groupe.
“I think it’s clear that the traditional process of agencies is clearly not going to survive the digital era without significant changes to our approaches,” Mr. Hanlon said.
•
The push to automate the creative elements of ad units is coming from two companies in California, not Madison Avenue.
Adisn, based in Long Beach, and Tumri, based in Mountain View, are working both sides of the ad equation. On one, they are trying to figure out who is looking at a page by using a mix of behavioral targeting and analysis of the page’s content. On the other side, they are assembling an ad on the fly that is meant to appeal to that person.
Both companies assume there is no perfect version of an ad, and instead assemble hundreds of different versions that are displayed on Web sites where their clients have bought ad space, showing versions of an ad to actual consumers as they browse the Web.
That might lead to finding that an ad for a baby supply store is more popular with young mothers when it features a bottle instead of diapers.
(Adisn and Tumri both measure the ad’s effectiveness based on parameters the advertiser sets, like how many people clicked on the ad or how many people actually bought something after clicking on it. They compare those with standard ads they run as part of a control group.)
Adisn’s approach has been to build a database of related words so it can assess the content of a Web site or blog based on the words on its pages.
Adisn then buys space on Web sites, and uses its information to find an appropriate ad to show visitors to those sites. If a visitor views pages about beaches, weather and Hawaii, it might suggest that the visitor is interested in Hawaiian travel.
Based on that analysis, Adisn’s system pulls different components — actors, fonts, background images — to make an ad. For example, it might show an ad with a blue background, an image of a beach, and a text about tickets to Hawaii. “Once we’ve built this huge database of hundreds of millions of relationships” between words, said Andy Moeck, the chief executive of Adisn, the system can “make a very good real-time decision as to what is the most relevant or appropriate campaign we could show.”
Simple Green, the cleaning brand, began working with Adisn this year to advertise a new line of products called Simple Green Naturals.
“If it’s a woman looking at a kitchen with a stainless steel refrigerator, they can show a stainless steel product,” said Jessica Frandson, the vice president for marketing for Simple Green. While Ms. Frandson gave Adisn a general idea of what she wanted, she also let the agency do almost random combinations with about 10 percent of her ads to see which of those combinations had the highest click-through rates.
“If it wants to be purple and orange, if that’s going to be appealing to my customer, then so be it,” she said.
Even Mr. Moeck said he was often surprised by the success of certain ads. “Some of it, I just scratch my head and say, ‘I have no idea,’ ” he said.
Tumri’s approach is slightly different. It creates a template for ads, including slots for the
message, the color, the image and other elements.
Unlike Adisn, it does not buy ad space, but lets clients — like Sears and Best Buy — choose and buy space on sites themselves. And rather than building a contextual database like Adisn, Tumri uses whatever targeting approach advertisers are already using, whether it is behavioral or contextual or demographic, and assembles an ad on the fly based on that information.
“It’s reporting back to the advertiser and agency saying, ‘Guess what? The soccer mom in Indiana likes background three, which was pink, likes image four, which was the S.U.V., and likes marketing message 12, about room, safety and comfort,” said Calvin Lui, chief of Tumri.
•
Some advertisers are using that information just to see which version of the ad works best, but Mr. Lui emphasized that the appropriate ad is not static, and changes all the time as content on the page changes.
While the planners and buyers in advertising agencies are intrigued by the idea of measuring each part of an ad, the creative staff that designs ads is less focused on measurement and more focused on the overall effect.
“I think the creative community has to get very comfortable with results-based outcomes in marketing,” said Mr. Hanlon, whose company has an interest in Tumri. “There are a lot of creative people who didn’t sign up for that kind of world.”
Bant Breen, the president of worldwide digital communications at Initiative, the Interpublic Group media buying and planning firm, had a similar view. “The traditional creative process right now is not structured to essentially deliver hundreds of permutations, or hundreds of ideas for messaging,” said Mr. Breen, whose firm is using Tumri to determine which ads are working.
“There’s no doubt that there will be a lot of data that can be collected that could be applied to the creative process.”
But, he said, “that’s not necessarily an easy discussion to have with great art directors.”
Thursday, November 6, 2008
Google’s Green Agenda Could Pay Off
By MIGUEL HELFT
Published: October 27, 2008
SAN FRANCISCO — Google, the Internet search and advertising giant, is increasingly looking to the energy sector as a potential business opportunity.
From its beginning, the company has invested millions of dollars in making its own power-hungry data centers more efficient. Its philanthropic arm has made small investments in clean energy technologies.
But in recent weeks, Eric E. Schmidt, Google’s chief executive, has hinted at the company’s broad interest in the energy business. He also joined Jeffrey R. Immelt, General Electric’s chief executive, to announce that they would collaborate on policies and technologies aimed at improving the electricity grid. The effort could include offering tools for consumers.
Meanwhile, engineers at Google are hoping to unveil soon tools that could help consumers make better decisions about their energy use.
And while the company’s philanthropic unit, Google.org, has invested in clean energy start-ups like one that uses kites to harness wind power, Google is now considering large investments in projects that generate electricity from renewable sources.
“We want to make money, and we want to have impact,” said Dan W. Reicher, director for climate change and energy initiatives at Google.org.
The timing could be off. With a recession looming and oil prices dropping, investors might pressure Google to curtail its clean energy ambitions.
Google’s shares have lost more than half their value in the last year, and some analysts complain that the company has a long history of dabbling in new initiatives with mixed results. It still relies on one business — small text ads that appear next to search results and on other sites — for the bulk of its earnings.
And Google’s online success does not guarantee success in the energy business.
But none of this has deterred Google from going deeper into the alternative energy business. To support its efforts, it has hired a growing number of engineers who are conducting research in renewable energy, former government energy officials, scientists and even a former NASA astronaut, whose hands-on experience with all sorts of electronic gadgets is being put to use to develop energy tools for consumers.
“They are a high-profile actor in the energy field,” said Daniel M. Kammen, a professor in the energy and resources group at the University of California, Berkeley, and an adviser on energy to the Obama campaign. “Google is in the lead in terms of human resources as well as money.”
Last year, Google unveiled an ambitious initiative called RE C, denoting its goal to develop renewable energy that is cheaper than coal. Since then, much of the public focus on the initiative has been in the approximately $45 million in investments that Google.org has made in wind, solar and geothermal energy start-ups.
That effort now also includes a small but growing group of engineers at Google who are conducting their own research and development in those technologies, which Google said it might commercialize in the future.
Google.org also announced a project last year to develop plug-in hybrids. To make them widely available, the electrical grid would have to be upgraded so that cars could be plugged in at multiple locations, where they could be recharged and consumers billed.
Google now says it is interested in developing technologies to support some of those upgrades, as well as other tools at the intersection of energy and information technology, like “smart” electrical meters. The partnership with G.E. is aimed in part at exploring some of those opportunities.
Google has also increased its lobbying in Washington on energy issues. And the company is looking at larger investments in renewable energy projects that would be primarily motivated by their profit potential, not their environmental promise.
How far Google plans to go with its energy efforts, the company does not yet know, or at least is not willing to say.
“We have been debating, ‘What are the business opportunities for Google in this area,’ ” Mr. Schmidt, Google’s chief executive, said recently. “And I think right now, we would answer the question that our primary mission is one of information.”
Mr. Schmidt said that Google would be active in “information businesses or communications businesses” related to energy. Speaking more broadly about the energy sector, he added, “As to whether we will be in these other businesses, we will see.”
Google is known for stealth. The search engine company kept its advertising ambitions under wraps for years, a strategy that helped it become the dominant tech company in Silicon Valley. And with $14.5 billion in cash in the company’s coffers, it has plenty of resources to keep making further investments in new energy ventures.
Google’s efforts in the energy area remain relatively modest. The company has long said it assigns 70 percent of its resources to its core search and advertising business, another 20 percent to related business, like various Internet applications, and 10 percent to long-term, strategic projects. Its energy work falls in the last group.
But even that may be too much for some investors.
“With the stock cut in half and shareholders becoming increasingly frustrated, a lot of these initiatives are going to be called into question,” said Ross Sandler, an analyst with RBC Capital Markets. “Google is a search and advertising company. We are in a belt-tightening period. They should focus on the core business.”
And others still are raising questions about some of the company’s goals.
“The Silicon Valley guys have this idea that we are going to make solar cheaper than coal,” said John White, executive director of the Center for Energy Efficiency and Renewable Technologies. “To me that’s the wrong idea. I don’t think it needs to be cheaper than coal to be successful. The focus needs to be on the investment and deployment of the technology.”
Google’s commercial and philanthropic interest in energy emerged, in large part, from the intersection of its idealism and its business goals.
“The issue globally, and particularly in the U.S., is that renewable energy is hard to come by and is expensive,” said William E. Weihl, Google’s green energy director. “But as a competitive business, we can’t afford, anymore than anyone else, to say we are going to pay more.”
Google has gone to great lengths to conceal how much electricity it uses in its data centers. For instance, Google agreed to build a $600 million data center in Oklahoma only after the State Legislature passed a law exempting public utilities from disclosing the energy use of their largest customers. Google has also vowed to be carbon neutral, but unlike its rival Yahoo, for instance, it has refused to reveal its overall carbon emissions.
Google said that its power use was information that could be used by rivals to learn secrets of its operations, which it considered a competitive advantage.
Still, a picture of the scale of its data center operations has emerged through various reports. The company is believed to have about two dozen data centers around the world of various sizes.
Some, like the one it built in The Dalles, Ore., which is largely powered by hydroelectricity, are among the largest in the industry. Two people familiar with that facility, who spoke on the condition of anonymity, said that it was operating at about 50 megawatts — enough to power 37,500 homes — but was built to handle even more capacity.
Google’s desire to better align its idealism and business interests helped motivate the REC project.
“For us to clean our energy supply, we need renewable energy available more broadly and more cheaply than it is today,” Mr. Weihl said.
Google does not maintain a strict divide between the energy work of the corporation and Google.org. A recent status meeting included employees from both sides. Google.org was set up not as a traditional philanthropy, but rather as a Google unit that could profit from its investments and that, unlike traditional nonprofit organizations and foundations, was allowed to lobby.
Google’s business development executives, as well as some company engineers specializing in energy, work with Google.org to make investment decisions. Mr. Reicher, a former assistant secretary of energy for conservation and renewable energy in the Clinton administration, said that Google.org investments were primarily aimed at pushing an environmental agenda. But Google itself is eyeing more capital-intensive projects, including some to generate renewable energy on a commercial scale.
"If we make those investments,” Mr. Reicher said, “it would be largely from a profit motive rather than an impact motive."
Published: October 27, 2008
SAN FRANCISCO — Google, the Internet search and advertising giant, is increasingly looking to the energy sector as a potential business opportunity.
From its beginning, the company has invested millions of dollars in making its own power-hungry data centers more efficient. Its philanthropic arm has made small investments in clean energy technologies.
But in recent weeks, Eric E. Schmidt, Google’s chief executive, has hinted at the company’s broad interest in the energy business. He also joined Jeffrey R. Immelt, General Electric’s chief executive, to announce that they would collaborate on policies and technologies aimed at improving the electricity grid. The effort could include offering tools for consumers.
Meanwhile, engineers at Google are hoping to unveil soon tools that could help consumers make better decisions about their energy use.
And while the company’s philanthropic unit, Google.org, has invested in clean energy start-ups like one that uses kites to harness wind power, Google is now considering large investments in projects that generate electricity from renewable sources.
“We want to make money, and we want to have impact,” said Dan W. Reicher, director for climate change and energy initiatives at Google.org.
The timing could be off. With a recession looming and oil prices dropping, investors might pressure Google to curtail its clean energy ambitions.
Google’s shares have lost more than half their value in the last year, and some analysts complain that the company has a long history of dabbling in new initiatives with mixed results. It still relies on one business — small text ads that appear next to search results and on other sites — for the bulk of its earnings.
And Google’s online success does not guarantee success in the energy business.
But none of this has deterred Google from going deeper into the alternative energy business. To support its efforts, it has hired a growing number of engineers who are conducting research in renewable energy, former government energy officials, scientists and even a former NASA astronaut, whose hands-on experience with all sorts of electronic gadgets is being put to use to develop energy tools for consumers.
“They are a high-profile actor in the energy field,” said Daniel M. Kammen, a professor in the energy and resources group at the University of California, Berkeley, and an adviser on energy to the Obama campaign. “Google is in the lead in terms of human resources as well as money.”
Last year, Google unveiled an ambitious initiative called RE C, denoting its goal to develop renewable energy that is cheaper than coal. Since then, much of the public focus on the initiative has been in the approximately $45 million in investments that Google.org has made in wind, solar and geothermal energy start-ups.
That effort now also includes a small but growing group of engineers at Google who are conducting their own research and development in those technologies, which Google said it might commercialize in the future.
Google.org also announced a project last year to develop plug-in hybrids. To make them widely available, the electrical grid would have to be upgraded so that cars could be plugged in at multiple locations, where they could be recharged and consumers billed.
Google now says it is interested in developing technologies to support some of those upgrades, as well as other tools at the intersection of energy and information technology, like “smart” electrical meters. The partnership with G.E. is aimed in part at exploring some of those opportunities.
Google has also increased its lobbying in Washington on energy issues. And the company is looking at larger investments in renewable energy projects that would be primarily motivated by their profit potential, not their environmental promise.
How far Google plans to go with its energy efforts, the company does not yet know, or at least is not willing to say.
“We have been debating, ‘What are the business opportunities for Google in this area,’ ” Mr. Schmidt, Google’s chief executive, said recently. “And I think right now, we would answer the question that our primary mission is one of information.”
Mr. Schmidt said that Google would be active in “information businesses or communications businesses” related to energy. Speaking more broadly about the energy sector, he added, “As to whether we will be in these other businesses, we will see.”
Google is known for stealth. The search engine company kept its advertising ambitions under wraps for years, a strategy that helped it become the dominant tech company in Silicon Valley. And with $14.5 billion in cash in the company’s coffers, it has plenty of resources to keep making further investments in new energy ventures.
Google’s efforts in the energy area remain relatively modest. The company has long said it assigns 70 percent of its resources to its core search and advertising business, another 20 percent to related business, like various Internet applications, and 10 percent to long-term, strategic projects. Its energy work falls in the last group.
But even that may be too much for some investors.
“With the stock cut in half and shareholders becoming increasingly frustrated, a lot of these initiatives are going to be called into question,” said Ross Sandler, an analyst with RBC Capital Markets. “Google is a search and advertising company. We are in a belt-tightening period. They should focus on the core business.”
And others still are raising questions about some of the company’s goals.
“The Silicon Valley guys have this idea that we are going to make solar cheaper than coal,” said John White, executive director of the Center for Energy Efficiency and Renewable Technologies. “To me that’s the wrong idea. I don’t think it needs to be cheaper than coal to be successful. The focus needs to be on the investment and deployment of the technology.”
Google’s commercial and philanthropic interest in energy emerged, in large part, from the intersection of its idealism and its business goals.
“The issue globally, and particularly in the U.S., is that renewable energy is hard to come by and is expensive,” said William E. Weihl, Google’s green energy director. “But as a competitive business, we can’t afford, anymore than anyone else, to say we are going to pay more.”
Google has gone to great lengths to conceal how much electricity it uses in its data centers. For instance, Google agreed to build a $600 million data center in Oklahoma only after the State Legislature passed a law exempting public utilities from disclosing the energy use of their largest customers. Google has also vowed to be carbon neutral, but unlike its rival Yahoo, for instance, it has refused to reveal its overall carbon emissions.
Google said that its power use was information that could be used by rivals to learn secrets of its operations, which it considered a competitive advantage.
Still, a picture of the scale of its data center operations has emerged through various reports. The company is believed to have about two dozen data centers around the world of various sizes.
Some, like the one it built in The Dalles, Ore., which is largely powered by hydroelectricity, are among the largest in the industry. Two people familiar with that facility, who spoke on the condition of anonymity, said that it was operating at about 50 megawatts — enough to power 37,500 homes — but was built to handle even more capacity.
Google’s desire to better align its idealism and business interests helped motivate the REC project.
“For us to clean our energy supply, we need renewable energy available more broadly and more cheaply than it is today,” Mr. Weihl said.
Google does not maintain a strict divide between the energy work of the corporation and Google.org. A recent status meeting included employees from both sides. Google.org was set up not as a traditional philanthropy, but rather as a Google unit that could profit from its investments and that, unlike traditional nonprofit organizations and foundations, was allowed to lobby.
Google’s business development executives, as well as some company engineers specializing in energy, work with Google.org to make investment decisions. Mr. Reicher, a former assistant secretary of energy for conservation and renewable energy in the Clinton administration, said that Google.org investments were primarily aimed at pushing an environmental agenda. But Google itself is eyeing more capital-intensive projects, including some to generate renewable energy on a commercial scale.
"If we make those investments,” Mr. Reicher said, “it would be largely from a profit motive rather than an impact motive."
Wednesday, November 5, 2008
Yahoo back in the game
By Scott Moritz
Yahoo (YHOO) moves back to the deal market as its controversial advertising partnership with Google (GOOG) is now dead.
As Fortune’s Legal Pad blogger Roger Parloff outlined last month, the legal footing was never very solid as the No.1 and No.2 Internet advertisers explored plans to work together on search advertising efforts.
The plan was first introduced in June as Yahoo was trying to fend off an unsolicited takeover bid from Microsoft (MSFT). Yahoo stubbornly resisted Microsoft’s early offers, including a $33-a-share bid in May. Microsoft then walked away and in July, activist investors like Carl Icahn started pushing for a shakeup of the Yahoo board and a more deal-friendly line up.
Yahoo shares, which had fallen to a five-year low of $11.25 last month, surge up 9% on Wednesday after news that the Google partnership was killed.
Investors apparently like Yahoo’s options a lot better without the antitrust battle that seemed to be looming with its Google ad plan. Microsoft and Time Warner’s (TWX) AOL unit - Time Warner is the parent of Fortune and CNNMoney - are among the potential deal partners.
On a conference call with analysts, Time Warner executives said that the news was positive for AOL. “The opportunity remains open for this business to rebuild itself,” the executives said.
Yahoo (YHOO) moves back to the deal market as its controversial advertising partnership with Google (GOOG) is now dead.
As Fortune’s Legal Pad blogger Roger Parloff outlined last month, the legal footing was never very solid as the No.1 and No.2 Internet advertisers explored plans to work together on search advertising efforts.
The plan was first introduced in June as Yahoo was trying to fend off an unsolicited takeover bid from Microsoft (MSFT). Yahoo stubbornly resisted Microsoft’s early offers, including a $33-a-share bid in May. Microsoft then walked away and in July, activist investors like Carl Icahn started pushing for a shakeup of the Yahoo board and a more deal-friendly line up.
Yahoo shares, which had fallen to a five-year low of $11.25 last month, surge up 9% on Wednesday after news that the Google partnership was killed.
Investors apparently like Yahoo’s options a lot better without the antitrust battle that seemed to be looming with its Google ad plan. Microsoft and Time Warner’s (TWX) AOL unit - Time Warner is the parent of Fortune and CNNMoney - are among the potential deal partners.
On a conference call with analysts, Time Warner executives said that the news was positive for AOL. “The opportunity remains open for this business to rebuild itself,” the executives said.
Thursday, October 23, 2008
Five reasons to buy Yahoo stock
The struggling Internet company may look like a basket case but now's the time to jump in.
By Adam Lashinsky, senior writer
Last Updated: October 23, 2008: 4:02 PM ET
With billionaire activist Carl Icahn on Yahoo's board,
CEO Jerry Yang's tenure may be cut short.
SAN FRANCISCO (Fortune) -- Here's why you should buy, not bail, on Yahoo.
1. Eventually, management will get tossed.
Starting with the least scientific or analytical reason for owning Yahoo, there's every reason to believe the days are numbered for CEO Jerry Yang and President Susan Decker. By all accounts fine people, they simply haven't led Yahoo well.
The former excelled as Chief Yahoo, dabbling in deals and motivating the troops. But Yang hasn't been a decision leader and is "lurching from crisis to crisis," as The New York Times aptly phrased his tenure. Decker, in turn, is widely derided in Silicon Valley as too much the finance chief, not enough the operations guru.
Yahoo's doormat board tolerated Yang's ascension to CEO as a way of appearing to not have fired his predecessor, Terry Semel. Now that raider Carl Icahn - who has been quiet of late regarding Yahoo (YHOO, Fortune 500) - is on the board, though, action is far more likely.
Were the board to dump Yang and Decker it's an easy bet the stock would pop, even if they didn't immediately name a successor.
2. Microsoft will return.
Microsoft (MSFT, Fortune 500) continues to deny that it's interested in bidding again for Yahoo. It is forced to make these protestations because Steve Ballmer can't seem to stop talking about why such a deal would make sense.
The math is pretty straightforward here. Microsoft offered to buy Yahoo for $31 per share. Yang thought his company shouldn't fetch a dime less than $37. Microsoft said it was willing to pay $33. Today, Yahoo has been nosing below $12. Microsoft, instead, has been talking about buying back more stock.
Just wait. Microsoft likely is waiting to see what the Justice Department has to say about Yahoo's search-advertising deal with Google. When that's all done, a Microsoft-Yahoo tie-up makes as much sense as ever, especially considering that Microsoft, amazingly, still can't make money in its online business. It needs Yahoo's scale to get profitable.
There is another Microsoft option that could benefit Yahoo and its stock price. "We believe Microsoft is waiting in the wings to replace Google (GOOG, Fortune 500) as a search outsourcing partner," writes Marianne Wolk of Susquehanna Financial Group, "which could afford Yahoo some upside lift to [its] earnings forecasts, assuming there is a minimum guarantee from Microsoft to exceed Yahoo's internal figures as incentive to get the deal done."
That's a good thought: If Google can't help Yahoo make money, Microsoft will.
3. Investors are looking for reasons to buy this stock.
In the initial hours after Yahoo reported a generally atrocious third quarter and a bleak outlook Tuesday, its stock popped. The various reasons postulated by observers were amusing when taken as a whole. The San Francisco Chronicle guessed this was due to "relief that Yahoo's fourth-quarter financial guidance wasn't as bad as feared."
Others chalked it up to the cost reductions associated with announced layoffs of 10% of Yahoo's workforce - even though the layoffs were widely expected and therefore shouldn't have affected the stock price. One analyst, Mark Mahaney of Citigroup, praised Yahoo for having had the foresight to avoid stock buybacks until now - and then prognosticated the positive impact of future buybacks. "We note that the company ended [the third quarter] with about $3.3 billion in cash and no debt," he wrote, adding that buybacks were likely.
4. Long-term trends favor Yahoo.
Yes, Yahoo is losing share to Google. Yes, Yahoo is barely growing. Yes, it's a tired argument that Yahoo is one of the strongest brands in the media world. Yes, this argument for owning its stock hasn't worked in a long time. Yet the argument still holds water. The company global page views grew 17% in the third quarter. It's part of an industry, online advertising, that will continue to grow (or at least take share) no matter the economy. Compared with The New York Times, a sterling brand in a declining industry, Yahoo is a powerful brand in a growing industry.
5. It's cheap.
There's always that. Morgan Stanley's Mary Meeker figures that given the value of Yahoo's cash and its publicly traded Asian assets (even taking into account the difficulty in selling stakes in other companies), investors value Yahoo's core business at just $6 per share, or eight times Wall Street's estimates of 2009 profits. That's an extraordinarily low multiple for any company with the opportunities in front of it that Yahoo has. Yahoo's management thought Yahoo was cheap at $30, of course. Today, investors would do quite nicely for a fraction of that amount.
Wednesday, October 8, 2008
Still 'Woo-Hoo' Over Yahoo
This fall, Yahoo will start handing out to more than 500 newspapers across the country the keys for its new ad-management platform. The gift could not have arrived at a more a desperate time: Strapped by plunging advertising revenue — including online, which fell for the first time in Q2 since the Newspaper Association of America started tracking it in 2003 — newspapers need something to drive revenue back into positive territory.
The new platform is called APT for now, although Yahoo said it plans to announce a new name (Yahoo's press machine declined to reveal it before the official launch during Advertising Week in New York). But regardless of what it's called, APT is the linchpin of the Yahoo alliance.
Expectations are high: APT promises to open up more online inventory and help papers dramatically increase reach in designated market areas (DMA). It gives newspapers — once severely challenged in aggregating across multiple markets — the ability to offer advertisers one common platform on which to make multiple buys. It also helps publishers offer advertisers a much more precise way to influence potential customers.
"It greatly increases our ability to match advertisers with reaching their customers in the local marketplace," says Charlie Chance, director of digital and recruitment platforms at The Atlanta Journal-Constitution. The AJC used DoubleClick's system for ad management in the past. "This is an ability the newspaper industry has not had before," he adds.
The Cox Newspapers daily is one of dozens of papers that have been using the platform in what the alliance calls "stage one." It's not a full-blown rollout: Since October '07, Yahoo has been giving the AJC access to limited ad inventory in the Yahoo Atlanta channel. Once that inventory is sold, it is manually entered into the system.
If stage one is a test drive in first gear, Chance says that the AJC still has reaped benefits even from the scaled-back offering. The paper sold seven figures worth of advertising on the Yahoo Atlanta site. Across all the stage-one sites, which now number more than 50, newspapers brought in $10 million in Yahoo advertising revenue, confirms Lem Lloyd, vice president of Yahoo's newspaper consortium.
Chance tells E&P how his paper hooked a large advertiser that had left the paper a number of years ago. Now it's back — and was impressed enough to spend six figures and sign an annual contract. "That revenue came from an existing budget transferred over because of the size and quality of the audience," he says.
That's because with Yahoo's Atlanta channel, the AJC's market reach expands threefold. Along with the daily's print and online versions and Yahoo Atlanta, the partnership covers 80% of the Atlanta DMA. Prior to that, the AJC could only offer a third of that coverage. In conservative terms, says Chance, the partnership tripled the AJC's audience.
Breaking it down To put it simply: The alliance brings more online inventory and audience to news- papers and more local salespeople to Yahoo.
"Yahoo extends our reach significantly," says Tim Lott, vice president/digital media at the Austin American-Statesman. The Statesman is also one of the early news- papers to try out the ad platform, and is planning for a full-blown launch some time late this month. "We are not naive enough to believe that we have every single visitor that Yahoo has," he admits. "I think Yahoo is smart enough to know we reach people that they don't. They are sure smart enough to know our local sales force has authority and relationships."
There are rough boundaries that both sales teams — those who work for the newspapers and those for Yahoo — must adhere to, in order to prevent channel conflict (too many people from different cAPTs selling to the same advertisers). For the most part, Yahoo reps cannot sell one newspaper alone, and a newspaper cannot sell into multiple Yahoo channels. Explains Chance: "Yahoo has a sales force charged with Fortune 1000 companies. They have pretty significant revenue goals, and they can't afford to take one-market buys for advertisers. It's not in their best interest."
Likewise, newspapers in the alliance can strike regional deals since they have one common ad platform with their own online properties.
The old notion of how newspapers go about selling to advertisers is also turned on its ear. Newspapers are used to pitching by sections, even online. But with the help of Yahoo and the industry's emphasis on total reach, newspapers are finally learning to sell audience. Yahoo is conducting sales seminars in which representatives from the Internet giant come to the property and work with everyone from the publisher and vice president of advertising to the sales teams. "We go deep selling audience, versus sections," says Lloyd.
This they can do because Yahoo's new ad platform is giving newspapers the capacity to target consumers based on behavior, a capacity aptly named behavioral targeting (BT). Classified Intelligence reports that BT advertising spend is advancing at a quick clip. eMarkter forecasts it will reach more than $1 billion in 2009, quadrupling by 2012.
APT tracks a user's behavior through cookies on Yahoo and the partner news- paper, but nowhere else. For instance: A 28-year-old user does a search for ski equipment on Yahoo, does another search for ski resorts, and then reads an article on AJC.com about hitting the slopes in Keystone, Colo. Yahoo surmises based on that person's "behavior" that he is planning a ski trip: The next time he goes back to Yahoo or the AJC.com, in this exAPTle, the two properties can serve him skiing-related ads — whether he's reading the sports pages online or checking his stocks on Yahoo financial page. In other words, the newspaper can offer a ski-related advertiser more pertinent ad positions than just the travel section.
"The real beauty for us, and a limitation for us in the past," Chance says, "is that we have always had the ability to zone [print]. On the Internet we haven't had that ability. In the Yahoo environment, we segment behavior and location."
He explains with another exAPTle: "Say you're looking for a female looking for shoes in the Northeastern portion of Atlanta. Now we will be able in the digital world to segment audience appropriate to the advertiser."
Think of it as digital zoning.
Leon Levitt, vice president of digital media at Cox Newspapers, says, "What that means to us is our CPM" — cost per thousand — "will go well north," somewhere in the range of a 50% lift. "Most of us have been pretty successful selling premium inventory — the homepage. BT takes that third click in the sports section and turns that into a premium ad. Those ads today are selling in remnant for a buck or two per CPM." BT could turn that same inventory in sports into $20 to $30 CPMs, he says.
"Another piece of this," Levitt continues, "is that Yahoo can sell into our inventory." Cox's paper in Greenville, N.C., for exAPTle, might not see so much national advertising. But with Yahoo and BT in the picture, they could in theory cut a deal with General Motors to target people looking to buy Chevy pickups. "Greenville will get some of that," he adds.
The Statesman's Lott says that before Yahoo's platform, ad sales staffers were limited in their ability to segment the audience. They pitched sales based on such information as age, ZIP code, and gender, collected when users registered to access online content. "You can sell, let's say 25- to 34-year-old males in a certain part of Austin, but that relies on the accuracy of the information provided. I think Yahoo offers much more reliable behavioral information," he says.
He's jazzed about the potential to reap national ad dollars. The big guns tend to focus on the top 10 or 15 markets across the country. With the BT ads, Austin could make some progress with the national category.
A new way of thinking Lott, who came up through the newsroom and admits he retains a reporter's natural skepticism despite his positive outlook on the Yahoo partnership, calls it a "silver lining for newspapers." He described a set of meetings the day before he spoke with E&P in September: A conference call with Yahoo to set up the rate card; a meeting with the CFO of the paper and the financial team to go over some of the reporting and analysis features of the new system; and a third meeting with the publisher and vice president of advertising to discuss how the new platform is different from the old system (the Statesman used DoubleClick).
To borrow a popular word in the political sphere, it's going to require newspapers to change — change from within, and change in communicating the message to local advertisers.
Says Yahoo's Lloyd: "When you are selling luxury car buyers as an audience, you are not going to car dealers and saying your ads are appearing on the front page of the sports section. What you say is that you've figured out that if X is a luxury car buyer, she is going to see that ad regardless if she is reading a financial story or checking her e-mail. We deemed through her actions that she is in the market for a luxury automobile. That is an important, critical, different way of thinking."
With that comes insight that newspapers have valuable audiences and should price their inventory accordingly. It's time to think large. "Newspapers really need to make their reps ask for big buys," says Lloyd. "The sales force needs to feel confident and understand there is a significant marketing budget even locally for online. The reach you have is huge. It's exciting stuff. We're really bullish."
It will require a significant amount of energy that will be especially needed on the ad side, but the effort could pay off handsomely in the future. Take it from Lott, who adds: "If I had to say one thing, it feels good to be playing offense."
The new platform is called APT for now, although Yahoo said it plans to announce a new name (Yahoo's press machine declined to reveal it before the official launch during Advertising Week in New York). But regardless of what it's called, APT is the linchpin of the Yahoo alliance.
Expectations are high: APT promises to open up more online inventory and help papers dramatically increase reach in designated market areas (DMA). It gives newspapers — once severely challenged in aggregating across multiple markets — the ability to offer advertisers one common platform on which to make multiple buys. It also helps publishers offer advertisers a much more precise way to influence potential customers.
"It greatly increases our ability to match advertisers with reaching their customers in the local marketplace," says Charlie Chance, director of digital and recruitment platforms at The Atlanta Journal-Constitution. The AJC used DoubleClick's system for ad management in the past. "This is an ability the newspaper industry has not had before," he adds.
The Cox Newspapers daily is one of dozens of papers that have been using the platform in what the alliance calls "stage one." It's not a full-blown rollout: Since October '07, Yahoo has been giving the AJC access to limited ad inventory in the Yahoo Atlanta channel. Once that inventory is sold, it is manually entered into the system.
If stage one is a test drive in first gear, Chance says that the AJC still has reaped benefits even from the scaled-back offering. The paper sold seven figures worth of advertising on the Yahoo Atlanta site. Across all the stage-one sites, which now number more than 50, newspapers brought in $10 million in Yahoo advertising revenue, confirms Lem Lloyd, vice president of Yahoo's newspaper consortium.
Chance tells E&P how his paper hooked a large advertiser that had left the paper a number of years ago. Now it's back — and was impressed enough to spend six figures and sign an annual contract. "That revenue came from an existing budget transferred over because of the size and quality of the audience," he says.
That's because with Yahoo's Atlanta channel, the AJC's market reach expands threefold. Along with the daily's print and online versions and Yahoo Atlanta, the partnership covers 80% of the Atlanta DMA. Prior to that, the AJC could only offer a third of that coverage. In conservative terms, says Chance, the partnership tripled the AJC's audience.
Breaking it down To put it simply: The alliance brings more online inventory and audience to news- papers and more local salespeople to Yahoo.
"Yahoo extends our reach significantly," says Tim Lott, vice president/digital media at the Austin American-Statesman. The Statesman is also one of the early news- papers to try out the ad platform, and is planning for a full-blown launch some time late this month. "We are not naive enough to believe that we have every single visitor that Yahoo has," he admits. "I think Yahoo is smart enough to know we reach people that they don't. They are sure smart enough to know our local sales force has authority and relationships."
There are rough boundaries that both sales teams — those who work for the newspapers and those for Yahoo — must adhere to, in order to prevent channel conflict (too many people from different cAPTs selling to the same advertisers). For the most part, Yahoo reps cannot sell one newspaper alone, and a newspaper cannot sell into multiple Yahoo channels. Explains Chance: "Yahoo has a sales force charged with Fortune 1000 companies. They have pretty significant revenue goals, and they can't afford to take one-market buys for advertisers. It's not in their best interest."
Likewise, newspapers in the alliance can strike regional deals since they have one common ad platform with their own online properties.
The old notion of how newspapers go about selling to advertisers is also turned on its ear. Newspapers are used to pitching by sections, even online. But with the help of Yahoo and the industry's emphasis on total reach, newspapers are finally learning to sell audience. Yahoo is conducting sales seminars in which representatives from the Internet giant come to the property and work with everyone from the publisher and vice president of advertising to the sales teams. "We go deep selling audience, versus sections," says Lloyd.
This they can do because Yahoo's new ad platform is giving newspapers the capacity to target consumers based on behavior, a capacity aptly named behavioral targeting (BT). Classified Intelligence reports that BT advertising spend is advancing at a quick clip. eMarkter forecasts it will reach more than $1 billion in 2009, quadrupling by 2012.
APT tracks a user's behavior through cookies on Yahoo and the partner news- paper, but nowhere else. For instance: A 28-year-old user does a search for ski equipment on Yahoo, does another search for ski resorts, and then reads an article on AJC.com about hitting the slopes in Keystone, Colo. Yahoo surmises based on that person's "behavior" that he is planning a ski trip: The next time he goes back to Yahoo or the AJC.com, in this exAPTle, the two properties can serve him skiing-related ads — whether he's reading the sports pages online or checking his stocks on Yahoo financial page. In other words, the newspaper can offer a ski-related advertiser more pertinent ad positions than just the travel section.
"The real beauty for us, and a limitation for us in the past," Chance says, "is that we have always had the ability to zone [print]. On the Internet we haven't had that ability. In the Yahoo environment, we segment behavior and location."
He explains with another exAPTle: "Say you're looking for a female looking for shoes in the Northeastern portion of Atlanta. Now we will be able in the digital world to segment audience appropriate to the advertiser."
Think of it as digital zoning.
Leon Levitt, vice president of digital media at Cox Newspapers, says, "What that means to us is our CPM" — cost per thousand — "will go well north," somewhere in the range of a 50% lift. "Most of us have been pretty successful selling premium inventory — the homepage. BT takes that third click in the sports section and turns that into a premium ad. Those ads today are selling in remnant for a buck or two per CPM." BT could turn that same inventory in sports into $20 to $30 CPMs, he says.
"Another piece of this," Levitt continues, "is that Yahoo can sell into our inventory." Cox's paper in Greenville, N.C., for exAPTle, might not see so much national advertising. But with Yahoo and BT in the picture, they could in theory cut a deal with General Motors to target people looking to buy Chevy pickups. "Greenville will get some of that," he adds.
The Statesman's Lott says that before Yahoo's platform, ad sales staffers were limited in their ability to segment the audience. They pitched sales based on such information as age, ZIP code, and gender, collected when users registered to access online content. "You can sell, let's say 25- to 34-year-old males in a certain part of Austin, but that relies on the accuracy of the information provided. I think Yahoo offers much more reliable behavioral information," he says.
He's jazzed about the potential to reap national ad dollars. The big guns tend to focus on the top 10 or 15 markets across the country. With the BT ads, Austin could make some progress with the national category.
A new way of thinking Lott, who came up through the newsroom and admits he retains a reporter's natural skepticism despite his positive outlook on the Yahoo partnership, calls it a "silver lining for newspapers." He described a set of meetings the day before he spoke with E&P in September: A conference call with Yahoo to set up the rate card; a meeting with the CFO of the paper and the financial team to go over some of the reporting and analysis features of the new system; and a third meeting with the publisher and vice president of advertising to discuss how the new platform is different from the old system (the Statesman used DoubleClick).
To borrow a popular word in the political sphere, it's going to require newspapers to change — change from within, and change in communicating the message to local advertisers.
Says Yahoo's Lloyd: "When you are selling luxury car buyers as an audience, you are not going to car dealers and saying your ads are appearing on the front page of the sports section. What you say is that you've figured out that if X is a luxury car buyer, she is going to see that ad regardless if she is reading a financial story or checking her e-mail. We deemed through her actions that she is in the market for a luxury automobile. That is an important, critical, different way of thinking."
With that comes insight that newspapers have valuable audiences and should price their inventory accordingly. It's time to think large. "Newspapers really need to make their reps ask for big buys," says Lloyd. "The sales force needs to feel confident and understand there is a significant marketing budget even locally for online. The reach you have is huge. It's exciting stuff. We're really bullish."
It will require a significant amount of energy that will be especially needed on the ad side, but the effort could pay off handsomely in the future. Take it from Lott, who adds: "If I had to say one thing, it feels good to be playing offense."
Monday, September 22, 2008
A New Kind of Venture Capitalist Makes Small Bets on Young Firms
By CLAIRE CAIN MILLER
Published: September 21, 2008
From the day he founded Etsy in 2005, Rob Kalin refused to raise money from venture capital firms to expand his company, which hoped to bring the sale of handmade crafts from small local fairs to the international marketplace of the Web.
Chester Higgins Jr./The New York Times
Union Square Ventures’ partners are, from left, Brad Burnham and Fred Wilson, the
co-founders, and Albert Wenger. The firm has become a magnet for Web entrepreneurs.
He met with several top firms, but they all wanted a 20 percent stake in his start-up company, and he was hesitant to give an investor that much. When one of his board members advised him to visit Fred Wilson at Union Square Ventures in 2006, he went grudgingly, certain the meeting would turn out like the others.
Instead, Mr. Kalin was impressed when Mr. Wilson said he would settle for less than 5 percent of the company in the first round of fund-raising.
Union Square Ventures has built its portfolio making small bets on young companies.
“We say, ‘Let’s go on this ride together,’ and if we do get great traction, we’ll try to invest in a second round as well,” said Brad Burnham, who co-founded the firm with Mr. Wilson.
As Mr. Kalin soon discovered, the small initial stake was not the only thing that distinguished Union Square from its competitors. Grounded in a philosophy of discipline and openness, the three-partner firm focuses on services that use the Web to change a market rather than simply make it more efficient.
The partners become active in the management of their portfolio companies, and they make a point of personally using the products of those firms, which currently include the Web darlings Twitter and Meetup.
“It never feels like they’re doing this for someone else’s money,” Mr. Kalin said. “They love the challenge.”
Union Square’s nurturing approach and keen eye for promising ideas have made it a magnet for Web entrepreneurs. At the Web 2.0 conference in New York last week, Mr. Wilson drew excited whispers — and more — from participants.
“I waited as if he was a very good-looking girl,” said Fabio De Bernardi, a London entrepreneur who slipped him a business card and hoped to pitch a shopping site.
Mr. Wilson has a particular celebrity in technology circles because of the blog he has written since 2003, A VC, which gets 25,000 visits in an average week, according to Sitemeter, a research firm. In addition, readers of TheFunded.com, a social networking site for entrepreneurs, rated him their favorite venture capitalist in 2007.
“In New York, Fred has got a following like John Doerr or Michael Moritz on the West Coast,” said Moshe Koyfman, a principal at Spark Capital. Mr. Doerr and Mr. Moritz are two of Silicon Valley’s most successful venture capitalists.
Union Square’s reputation has been burnished by its track record of helping entrepreneurs sell their companies in a tough environment. Three companies financed by Union Square have already been sold for big profits. Yahoo bought Del.icio.us, a Web bookmarking service, in 2005 for a reported $30 million, returning Union Square seven times its investment after only nine months. In 2007, Google bought FeedBurner, a service to help bloggers track their R.S.S. feeds, for a reported $100 million, and AOL bought Tacoda, a behavioral focusing service for online advertisers, for a reported $275 million.
The Union Square partners are quick to tamp down hype about their magic touch. The firm is just four years old, and their first fund is less than halfway through the typical life of a venture capital fund, which means losses in some holdings could still offset some of the early gains.
“It could easily turn around,” Mr. Wilson said.
His caution comes from experience. During the dot-com boom, Mr. Wilson was a partner at Flatiron Partners, which invested in high-profile start-ups like Kozmo.com, TheStreet.com and the Industry Standard.
“We got successful very quickly. People were saying we were the best V.C. firm,” Mr. Wilson recalled. But when the boom ended, many of the firm’s companies flamed out, and Flatiron wrote off one-third of its investments.
In 2003, over breakfasts at French Roast, Mr. Wilson and Mr. Burnham, formerly with AT&T Ventures, discussed quitting the venture business. Instead, the pair decided that what they really needed to do was form a different kind of firm geared to the special needs of the new crop of Web companies.
Mr. Burnham had spent his career investing in companies that made chips and routers, which differentiated themselves from competitors through groundbreaking technology.
Web services start-ups, on the other hand, use simple, off-the-shelf technologies and cost very little to get up and running. Their business advantage comes from their Web sites’ artistic design and ease of use, and their challenge is attracting and retaining users.
“That’s a different business than the historical bread and butter of the V.C. industry,” said Mr. Burnham. “So we had to change.”
Mr. Wilson and Mr. Burnham decided to make very small initial investments, often less than $1 million in a first round of financing, in exchange for 5 to 12 percent of the company, instead of the usual 20 percent. Then, if the company did well, the firm would invest more in future rounds.
Because they join companies so early, they take a hands-on approach to building them and seeing them through the growing pains of start-ups. They have kept their team small, adding just one partner, Albert Wenger, and they must all agree before they make an investment, so no one can point fingers when they make mistakes.
In the case of Etsy, Union Square has taken an active interest in the company through four rounds of financing. Mr. Wenger, an engineer who made a personal investment in Etsy before joining Union Square, essentially served as Etsy’s chief technology officer until the company hired one, running all tech-related meetings.
Mr. Wilson coined Etsy’s slogan, “Buy Handmade.” At one board meeting, when Mr. Kalin presented a long list of fancy new features he wanted to add to the site, Mr. Wilson stood up and crossed each one off the list. Instead, he advised Etsy to focus on creating a bare-bones site that worked well.
Although Etsy had a business plan when it came to Union Square Ventures, the partners are sometimes willing to take a chance on a team with a good idea but no clear path to making money — which does not seem so different from the anything-goes investing of the Internet bubble.
Twitter is one example. The service, which lets users send short messages with updates on what they are doing, is popular with a tech-savvy crowd but crashes frequently and has not figured out a way to earn significant revenue.
“People are too impatient,” Mr. Wilson said, defending his investment. “I’ve made more money in my career investing in very early-stage companies where the business model was not clear. No revenue, just a product, but it was clear people would use it.”
He and his partners are avid users of the Web 2.0 technologies in which they invest, which they say is essential to understanding how the services work and why people use them. They also embrace the values of openness and sharing that drive these services. The firm has invited entrepreneurs to submit pitches via podcast, which are then put up on Mr. Wilson’s blog, giving competitors easy access. Mr. Wilson’s blog posts receive 20 to 200 comments from readers, which the partners mine for investment ideas and research. One-third of their investments grew out of these comments, including Twitter, FeedBurner and Zemanta, Mr. Wilson said.
Union Square’s investment strategy will continue to be tested. It is much harder to find promising Web start-ups now than three years ago. There are so many services and so much more capital financing them, and users have less time and attention for new offerings.
The partners said they planned to look at how Web services might transform sectors not yet touched in a big way, like education and the environment.
“We have only begun to investigate the impact of information technology on behaviors, habits, needs. We believe it can be profound,” Mr. Burnham said.
Published: September 21, 2008
From the day he founded Etsy in 2005, Rob Kalin refused to raise money from venture capital firms to expand his company, which hoped to bring the sale of handmade crafts from small local fairs to the international marketplace of the Web.
Chester Higgins Jr./The New York Times
Union Square Ventures’ partners are, from left, Brad Burnham and Fred Wilson, the
co-founders, and Albert Wenger. The firm has become a magnet for Web entrepreneurs.
He met with several top firms, but they all wanted a 20 percent stake in his start-up company, and he was hesitant to give an investor that much. When one of his board members advised him to visit Fred Wilson at Union Square Ventures in 2006, he went grudgingly, certain the meeting would turn out like the others.
Instead, Mr. Kalin was impressed when Mr. Wilson said he would settle for less than 5 percent of the company in the first round of fund-raising.
Union Square Ventures has built its portfolio making small bets on young companies.
“We say, ‘Let’s go on this ride together,’ and if we do get great traction, we’ll try to invest in a second round as well,” said Brad Burnham, who co-founded the firm with Mr. Wilson.
As Mr. Kalin soon discovered, the small initial stake was not the only thing that distinguished Union Square from its competitors. Grounded in a philosophy of discipline and openness, the three-partner firm focuses on services that use the Web to change a market rather than simply make it more efficient.
The partners become active in the management of their portfolio companies, and they make a point of personally using the products of those firms, which currently include the Web darlings Twitter and Meetup.
“It never feels like they’re doing this for someone else’s money,” Mr. Kalin said. “They love the challenge.”
Union Square’s nurturing approach and keen eye for promising ideas have made it a magnet for Web entrepreneurs. At the Web 2.0 conference in New York last week, Mr. Wilson drew excited whispers — and more — from participants.
“I waited as if he was a very good-looking girl,” said Fabio De Bernardi, a London entrepreneur who slipped him a business card and hoped to pitch a shopping site.
Mr. Wilson has a particular celebrity in technology circles because of the blog he has written since 2003, A VC, which gets 25,000 visits in an average week, according to Sitemeter, a research firm. In addition, readers of TheFunded.com, a social networking site for entrepreneurs, rated him their favorite venture capitalist in 2007.
“In New York, Fred has got a following like John Doerr or Michael Moritz on the West Coast,” said Moshe Koyfman, a principal at Spark Capital. Mr. Doerr and Mr. Moritz are two of Silicon Valley’s most successful venture capitalists.
Union Square’s reputation has been burnished by its track record of helping entrepreneurs sell their companies in a tough environment. Three companies financed by Union Square have already been sold for big profits. Yahoo bought Del.icio.us, a Web bookmarking service, in 2005 for a reported $30 million, returning Union Square seven times its investment after only nine months. In 2007, Google bought FeedBurner, a service to help bloggers track their R.S.S. feeds, for a reported $100 million, and AOL bought Tacoda, a behavioral focusing service for online advertisers, for a reported $275 million.
The Union Square partners are quick to tamp down hype about their magic touch. The firm is just four years old, and their first fund is less than halfway through the typical life of a venture capital fund, which means losses in some holdings could still offset some of the early gains.
“It could easily turn around,” Mr. Wilson said.
His caution comes from experience. During the dot-com boom, Mr. Wilson was a partner at Flatiron Partners, which invested in high-profile start-ups like Kozmo.com, TheStreet.com and the Industry Standard.
“We got successful very quickly. People were saying we were the best V.C. firm,” Mr. Wilson recalled. But when the boom ended, many of the firm’s companies flamed out, and Flatiron wrote off one-third of its investments.
In 2003, over breakfasts at French Roast, Mr. Wilson and Mr. Burnham, formerly with AT&T Ventures, discussed quitting the venture business. Instead, the pair decided that what they really needed to do was form a different kind of firm geared to the special needs of the new crop of Web companies.
Mr. Burnham had spent his career investing in companies that made chips and routers, which differentiated themselves from competitors through groundbreaking technology.
Web services start-ups, on the other hand, use simple, off-the-shelf technologies and cost very little to get up and running. Their business advantage comes from their Web sites’ artistic design and ease of use, and their challenge is attracting and retaining users.
“That’s a different business than the historical bread and butter of the V.C. industry,” said Mr. Burnham. “So we had to change.”
Mr. Wilson and Mr. Burnham decided to make very small initial investments, often less than $1 million in a first round of financing, in exchange for 5 to 12 percent of the company, instead of the usual 20 percent. Then, if the company did well, the firm would invest more in future rounds.
Because they join companies so early, they take a hands-on approach to building them and seeing them through the growing pains of start-ups. They have kept their team small, adding just one partner, Albert Wenger, and they must all agree before they make an investment, so no one can point fingers when they make mistakes.
In the case of Etsy, Union Square has taken an active interest in the company through four rounds of financing. Mr. Wenger, an engineer who made a personal investment in Etsy before joining Union Square, essentially served as Etsy’s chief technology officer until the company hired one, running all tech-related meetings.
Mr. Wilson coined Etsy’s slogan, “Buy Handmade.” At one board meeting, when Mr. Kalin presented a long list of fancy new features he wanted to add to the site, Mr. Wilson stood up and crossed each one off the list. Instead, he advised Etsy to focus on creating a bare-bones site that worked well.
Although Etsy had a business plan when it came to Union Square Ventures, the partners are sometimes willing to take a chance on a team with a good idea but no clear path to making money — which does not seem so different from the anything-goes investing of the Internet bubble.
Twitter is one example. The service, which lets users send short messages with updates on what they are doing, is popular with a tech-savvy crowd but crashes frequently and has not figured out a way to earn significant revenue.
“People are too impatient,” Mr. Wilson said, defending his investment. “I’ve made more money in my career investing in very early-stage companies where the business model was not clear. No revenue, just a product, but it was clear people would use it.”
He and his partners are avid users of the Web 2.0 technologies in which they invest, which they say is essential to understanding how the services work and why people use them. They also embrace the values of openness and sharing that drive these services. The firm has invited entrepreneurs to submit pitches via podcast, which are then put up on Mr. Wilson’s blog, giving competitors easy access. Mr. Wilson’s blog posts receive 20 to 200 comments from readers, which the partners mine for investment ideas and research. One-third of their investments grew out of these comments, including Twitter, FeedBurner and Zemanta, Mr. Wilson said.
Union Square’s investment strategy will continue to be tested. It is much harder to find promising Web start-ups now than three years ago. There are so many services and so much more capital financing them, and users have less time and attention for new offerings.
The partners said they planned to look at how Web services might transform sectors not yet touched in a big way, like education and the environment.
“We have only begun to investigate the impact of information technology on behaviors, habits, needs. We believe it can be profound,” Mr. Burnham said.
Microsoft Plans to Buy Back $40 Billion in Shares
By THE ASSOCIATED PRESS
Published: September 22, 2008
REDMOND, Wash. — The software giant Microsoft said Monday that its board had approved a plan to buy back up to another $40 billion of its shares.
The program expires on Sept. 30, 2013, Microsoft said.
The company said it had completed its previous $40 billion stock repurchase program.
Microsoft also raised its quarterly dividend to 13 cents, from 11 cents. The dividend is payable Dec. 11 to shareholders of record on Nov. 20.
The company’s board has also authorized debt financings of up to $6 billion. As part of this authorization, Microsoft has established a $2 billion commercial paper program. The company plans to use the proceeds for general corporate purposes, including buybacks and financing for working capital.
Hewlett-Packard said on Sunday that its board also had authorized an additional $8 billion in share repurchases.
H.P. intends to use the additional authorization as part of its program to manage the dilution created by shares issued under employee stock plans and to repurchase shares opportunistically.
Published: September 22, 2008
REDMOND, Wash. — The software giant Microsoft said Monday that its board had approved a plan to buy back up to another $40 billion of its shares.
The program expires on Sept. 30, 2013, Microsoft said.
The company said it had completed its previous $40 billion stock repurchase program.
Microsoft also raised its quarterly dividend to 13 cents, from 11 cents. The dividend is payable Dec. 11 to shareholders of record on Nov. 20.
The company’s board has also authorized debt financings of up to $6 billion. As part of this authorization, Microsoft has established a $2 billion commercial paper program. The company plans to use the proceeds for general corporate purposes, including buybacks and financing for working capital.
Hewlett-Packard said on Sunday that its board also had authorized an additional $8 billion in share repurchases.
H.P. intends to use the additional authorization as part of its program to manage the dilution created by shares issued under employee stock plans and to repurchase shares opportunistically.
GE and Google Partner for a Smart Grid and Green Power
By GreenBiz Staff
Published September 22, 2008
WASHINGTON, D.C. -- General Electric and Google partnered last week to lobby the federal government for investment in the electrical grid to support more renewable energy generation.
The corporate giants said they want to give consumers more energy choices through a smart grid that will also accommodate the next generation of electric transportation and manage electricity more efficiently.
Together the companies will collaborate on advanced geothermal technology and the software and services needed to help utilities integrate plug-in electric vehicles into the grid. They will lobby in Washington, D.C. through policy proposals, advocacy, public relations and information programs.
The move comes as Congress considered an energy bill and the renewal of federal tax credits for green power, which are set to expire at the end of the year.
"The current regulatory and economic model is failing to drive the innovation and investment we need in today's electric grid," GE and Google said in a statement. "We will work to overcome regulatory and institutional barriers and advocate for appropriate incentives."
Google launched an green power initiative last year, Renewable Energy Cheaper Than Coal, while GE's ecomagination drive aims to push revenue of environmentally-focused products like wind turbines to $25 billion by 2010.
Published September 22, 2008
WASHINGTON, D.C. -- General Electric and Google partnered last week to lobby the federal government for investment in the electrical grid to support more renewable energy generation.
The corporate giants said they want to give consumers more energy choices through a smart grid that will also accommodate the next generation of electric transportation and manage electricity more efficiently.
Together the companies will collaborate on advanced geothermal technology and the software and services needed to help utilities integrate plug-in electric vehicles into the grid. They will lobby in Washington, D.C. through policy proposals, advocacy, public relations and information programs.
The move comes as Congress considered an energy bill and the renewal of federal tax credits for green power, which are set to expire at the end of the year.
"The current regulatory and economic model is failing to drive the innovation and investment we need in today's electric grid," GE and Google said in a statement. "We will work to overcome regulatory and institutional barriers and advocate for appropriate incentives."
Google launched an green power initiative last year, Renewable Energy Cheaper Than Coal, while GE's ecomagination drive aims to push revenue of environmentally-focused products like wind turbines to $25 billion by 2010.
Thursday, August 21, 2008
More than 10 Billion Videos Viewed Online in the U.S. in February
More than 10 Billion Videos Viewed Online in the U.S. in February
Number of Online Videos Viewed in the U.S. Jumps 66 Percent Versus Year Ago
RESTON, VA, April 16, 2008 – comScore (NASDAQ: SCOR), a leader in measuring the digital world, today released February 2008 data from the comScore Video Metrix service, indicating that U.S. Internet users viewed more than 10 billion online videos during the month, representing a 3-percent gain versus January (despite February being two days shorter) and a 66-percent gain versus February 2007.
Google Sites Extends Lead in Online Video Market Share
In February, Google Sites once again ranked as the top U.S. video property with nearly 3.6 billion videos viewed (35.4 percent share of all videos), gaining 1.1 share points versus the previous month. YouTube.com accounted for 96 percent of all videos viewed at Google Sites. Fox Interactive Media ranked second with 586 million videos (5.8 percent), followed by Yahoo! Sites with 293 million (2.9 percent) and Microsoft Sites with 293 million (2.9 percent).
Nearly 135 million U.S. Internet users spent an average of 204 minutes per person viewing online video in February. Google Sites also attracted the most viewers (81.8 million), where they spent an average of 109 minutes per person watching video in February. Fox Interactive attracted the second most viewers (55.7 million), followed by Yahoo! Sites (37.1 million) and Microsoft Sites (27.1 million). ABC.com attracted the tenth largest viewing audience, and its viewers exhibited heavy engagement averaging 51 minutes of online viewing per person.
Other notable findings from February 2008 include:
72.8 percent of the total U.S. Internet audience viewed online video.
80.4 million viewers watched 3.42 billion videos on YouTube.com (42.6 videos per viewer).
50.2 million viewers watched 539 million videos on MySpace.com (10.7 videos per viewer).
The average online video duration was 2.7 minutes.
The average online video viewer consumed 75 videos.
To request more information about comScore Video Metrix, please visit http://www.comscore.com/contact
Number of Online Videos Viewed in the U.S. Jumps 66 Percent Versus Year Ago
RESTON, VA, April 16, 2008 – comScore (NASDAQ: SCOR), a leader in measuring the digital world, today released February 2008 data from the comScore Video Metrix service, indicating that U.S. Internet users viewed more than 10 billion online videos during the month, representing a 3-percent gain versus January (despite February being two days shorter) and a 66-percent gain versus February 2007.
Google Sites Extends Lead in Online Video Market Share
In February, Google Sites once again ranked as the top U.S. video property with nearly 3.6 billion videos viewed (35.4 percent share of all videos), gaining 1.1 share points versus the previous month. YouTube.com accounted for 96 percent of all videos viewed at Google Sites. Fox Interactive Media ranked second with 586 million videos (5.8 percent), followed by Yahoo! Sites with 293 million (2.9 percent) and Microsoft Sites with 293 million (2.9 percent).
Nearly 135 million U.S. Internet users spent an average of 204 minutes per person viewing online video in February. Google Sites also attracted the most viewers (81.8 million), where they spent an average of 109 minutes per person watching video in February. Fox Interactive attracted the second most viewers (55.7 million), followed by Yahoo! Sites (37.1 million) and Microsoft Sites (27.1 million). ABC.com attracted the tenth largest viewing audience, and its viewers exhibited heavy engagement averaging 51 minutes of online viewing per person.
Other notable findings from February 2008 include:
72.8 percent of the total U.S. Internet audience viewed online video.
80.4 million viewers watched 3.42 billion videos on YouTube.com (42.6 videos per viewer).
50.2 million viewers watched 539 million videos on MySpace.com (10.7 videos per viewer).
The average online video duration was 2.7 minutes.
The average online video viewer consumed 75 videos.
To request more information about comScore Video Metrix, please visit http://www.comscore.com/contact
Boost Clicks 22% by Integrating Display in Your Search Plan
Boost Clicks 22% by Integrating Display in Your Search Plan
Tuesday, September 2, 2008 11:00 AM - 12:00 PM PDT
Webinar Registration
Studies show that an integrated display and search advertising campaign can boost your overall search click through rates by 22%. Display advertising provides graphics, motion, and images that can illustrate your product, service, or brand in a more impactful way than standard search capabilities. Online display (banners) also offer lower CPC and have significantly more scale though conversions are generally lower than paid search. Lately however due to advanced targeting and auction based ad networks, many advertisers are reaching their CPA goals with display in addition to enjoying the powerful branding, awareness and traffic that can be generated. No longer just for the big brands, advancements in technology have pulled online display within reach of advertisers of all sizes. Please join us September 2nd for a webinar presentation and discussion on this topic.
CLICK HERE to register
Tuesday, September 2, 2008 11:00 AM - 12:00 PM PDT
Webinar Registration
Studies show that an integrated display and search advertising campaign can boost your overall search click through rates by 22%. Display advertising provides graphics, motion, and images that can illustrate your product, service, or brand in a more impactful way than standard search capabilities. Online display (banners) also offer lower CPC and have significantly more scale though conversions are generally lower than paid search. Lately however due to advanced targeting and auction based ad networks, many advertisers are reaching their CPA goals with display in addition to enjoying the powerful branding, awareness and traffic that can be generated. No longer just for the big brands, advancements in technology have pulled online display within reach of advertisers of all sizes. Please join us September 2nd for a webinar presentation and discussion on this topic.
CLICK HERE to register
Realities of Online Video Advertising
Realities of Online Video Advertising
By Zachary Rodgers, The ClickZ Network, Feb 9, 2005 features
Online video advertising is a tiny segment of the overall market, drawing a scant $121 million in spending last year compared with $9.5 billion for all online media, according to JupiterResearch. Other stats show Web video ad spending represents just under a tenth of a percent of the $250 billion total U.S. ad market. Yet marketers are really excited about it. Why?
Rapid growth, partly. The Online Publishers Association found more than a quarter of Internet users now watch video online weekly. Jupiter predicts a 64 percent jump in online video ad spending this year. The top video aggregators report daily streams in the millions. No question, the reach is there.
With growth comes the thrilling comparison online marketers get to make with television. Finally, the Web competes with the idiot box in its own language -- video -- with audiences approaching cable network proportions. Many publishers and agencies now believe broadband maturity and a healthy online ad market have converged to create an ideal environment for video ads to thrive.
For advertisers, many questions remain. Which publishers have the greatest inventory and service record? What are the dominant formats? Where should the creative come from?
The Formats
The lion's share of the online video spend goes to in-banner advertising. While in-stream ads are widely considered most effective, media buyers report inventory is a constant problem.
"With pre-roll ads, the inventory is quite limited. It's growing, but the majority of stuff we do is within ad units," said Ian Schafer, president of Deep Focus, a full-service interactive shop serving the entertainment vertical.
Schafer's firm buys three to five million video ad impressions a month. He and other agency heads with large video budgets agree inventory is a problem. On the bright side, he said in-banner ads are a much better prospect for clients than they once were.
"The state of that kind of ad has gotten a lot better, just in the past year," Schafer said. He credits the improvement to better products from vendors like Klipmart, whose in-banner video ads let the user expand a spot to full-screen proportions. "That presents our clients' marketing assets in a way they were meant to be seen. In many cases, we can have that be in a widescreen, letterbox format."
Klipmart is only one of a seasoned pack of rich media vendors hard at work innovating around video. Others include Eyewonder, United Virtualities, Eyeblaster and Viewpoint.
New technical capabilities include adding an interactive Flash layer to streaming video, a practice Klipmart calls hotspotting. Such clickable video has obvious implications for product placement, long a gaining concept among marketers in general. Klipmart, eline Technologies and United Virtualities all either offer or are preparing to offer hotspotting.
"If you can integrate product placement into video and act on it, that's very important," said Cory Treffiletti, managing director of Carat Interactive San Francisco. "A savvy producer can incorporate that into their budgets."
Klipmart also reports it's working to support the streaming of live events for its clients. Cyrus Krohn, former publisher of Slate and now executive producer at MSN Video, said live event streaming looms large in MSN's strategy. He said it's one of the portal's tactics to increase inventory in the coming year.
"The live events we've produced in collaboration with MSNBC are starting to look like real television numbers," said Krohn. "With the Scott Peterson verdict, there was no pre-promotion or announcement. The judge just announced the ruling would be read in a couple minutes. We had over 300,000 streams for that reading."
Considering Klipmart and MSN Video are close partners, you should expect to see ad-supported live streaming on MSN in the near future, courtesy of Klipmart.
The Advertisers
So who's buying the most online video media?
Todd Herman, MSN Video's streaming media evangelist, said 23 of the top 50 brands have advertised on the service since its official launch in August 2004. They include some of the very biggest companies: Pfizer, Procter & Gamble, General Motors, Johnson & Johnson.
Asked to describe the buy-in of various verticals, Herman said packaged goods jumped in first. "CPGs really led the way. Then you had the auto manufacturers come in. GM is in a very strong leadership position now in online video," he said. "We are starting to see financial services companies now, too." He added retail stores, Target among them, and media outlets to that list.
Entertainment is also big, for obvious reasons. Deep Focus represents MGM, Miramax and HBO on a range of online promotions into which video figures very highly.
The Aggregators
Where should marketers place their ads? The media buyers ClickZ spoke with for this story all ranked MSN highly in terms of service, implementation and original video content.
Yahoo, via its Yahoo Music audio and video destination (formerly LAUNCH), is primed for a big video roll-out. While there have been no official announcements, the online ad community seems poised for the portal to unleash a bevy of content. Yahoo is clearly eager to go deeper in the content business, considering the appointment of Hollywood powerbroker Lloyd Braun to head its media division, and the opening of the company's new offices in Hollywood.
Braun has been quoted in media reports as saying the talent community in Los Angeles is eager to provide content for the Internet but are not sure of the best way to do it. Yahoo's partnership with Mark Burnett Productions involving "The Apprentice" and "The Contender" is one possible model.
"Lloyd wasn't hired to sell banner ads," noted Jeff Lancot, VP of media for Avenue A/Razorfish.
With AOL, buyers are taking a wait-and-see attitude. They agree the portal has a great opportunity to leverage its ties with powerful media brands, and they're cautiously optimistic about service improvements. It's the video destination with the most to gain.
Plenty of other sites are offering very attractive video ad placements. AtomFilms, ifilm, CNN, ESPN and WWE were all variously mentioned by agencies as appealing targets for video ad placements.
The Creative
Most advertisers still choose to repurpose their TV assets when running online ad campaigns, despite near consensus that the :30 spot is too long.
"It's easy to repurpose TV Ads, but it's not a good idea. Everyone seems to agree, but they keep doing it," said Avenue A/Razorfish's Lanctot.
That's changing a bit, as it turns out. Agencies report clients are more receptive to creating original spots for the Web. Ford has done so, for its Lincoln brand. And Klipmart is creating Web-only footage starring a big-name actor for a Hollywood client, said CEO Chris Young.
Carat's Treffiletti affirms clients are allowing some wiggle room on the subject of original vs. repurposed content.
"We have some clients who have allowed us to actually shoot video for [the Internet]," he said. "In addition, when they're shooting a commercial and they have the A roll and the B roll, the B roll has a lot more life now. We can actually use that extra footage."
The Inventory
Part of the blame for the inventory shortage can be laid at the feet of portals and other video aggregators. The OPA's survey revealed 59 percent of people discover online video through random surfing. How much larger would the inventory be if portals did a better job of striking deals with content owners to bring video to their users?
"The publishers aren't positioning this to consumers as a mainstream part of their offerings just yet," said Ari Paparo, product manager for DoubleClick's DART Motif. "Consumers and publishers aren't seeing eye to eye on where this fits into their browsing experience."
No surprise, then, that mid-sized video-focused sites are doing the best job of promoting their video content.
"[Pre-roll] has always been available on ifilm, AtomFilms and ESPN Motion," said Treffiletti. "If more sites incorporate video into their sites in a meaningful way, the inventory will increase."
To their credit, the portals are trying: Yahoo through its well-known film industry connections, and MSN through its exclusive deals with NBC and Fox Sports, among others.
"Whoever owns the rights to the content is what it's going to boil down to," said Schafer. "Finding it is one thing; consuming it is another. If we make it more available for people to consume, the sky's the limit in terms of being able to integrate [ads] within that content."
Some are looking to search as a possible way to accelerate user adoption of video.
"If we get a relevant video search engine, it will make a big impact on the adoption of video online," said Lanctot.
Multimedia search engines like AOL's Singingfish and new video search offerings from Google and Yahoo hope to realize that dream. Yet the content is limited to searchable shows and clips that have been provided online by networks and other video owners.
The Viral Video
Meanwhile, brands aren't waiting for the portals or the search engines to figure out video. Facing a lack of inventory, advertisers have been creating their own programming, often in the form of viral spots and longer commercials.
The Super Bowl is the best recent example. When Fox cut the second airing of GoDaddy.com's Bowl spot last Sunday, company CEO Bob Parsons wrote about the incident on his blog and linked to the hosted ad. The result was half a million streams in less than two days.
Advertisers ranging from Budweiser to Amex have also done well posting banned ads and extended versions of TV spots online.
"Not always will a TV ad play well on the Internet, but what you can do is take that theme and create content specifically geared for the Internet," said Karen Howe, CEO of Singingfish. "Then you can associate that with audio/video search."
The Outlook
Online video is still in its awkward phase. It's a period akin to the state of rich media four or five years ago, says DoubleClick's Paparo.
"The market is being pushed ahead by the publishers and they're not standardizing," he said. "You've got different formats, workflow differences, and widely varying reporting expectations. It's lower quality video and it's smaller. But it's got a benefit in that the viewer is actively watching and there's a response mechanism."
Aside from its fumbles and its promise, online video brings a fundamental shift in media consumption.
"People are consuming their media mid-day," said MSN's Krohn. "It's the new prime time... a period of the day they really couldn't have before."
But Krohn, a CNN vet himself, sees the evolution of television and the Internet as symbiotic rather than competitive. In the long term, TV and the Web will be one, he says.
"Television has got a lot on the Internet as far as history goes, but the evolution of products I'm envisioning will service both parties," he said. "I don't know how long it's going to take, but you're really going to have a hard time distinguishing between the monitor and the box."
By Zachary Rodgers, The ClickZ Network, Feb 9, 2005 features
Online video advertising is a tiny segment of the overall market, drawing a scant $121 million in spending last year compared with $9.5 billion for all online media, according to JupiterResearch. Other stats show Web video ad spending represents just under a tenth of a percent of the $250 billion total U.S. ad market. Yet marketers are really excited about it. Why?
Rapid growth, partly. The Online Publishers Association found more than a quarter of Internet users now watch video online weekly. Jupiter predicts a 64 percent jump in online video ad spending this year. The top video aggregators report daily streams in the millions. No question, the reach is there.
With growth comes the thrilling comparison online marketers get to make with television. Finally, the Web competes with the idiot box in its own language -- video -- with audiences approaching cable network proportions. Many publishers and agencies now believe broadband maturity and a healthy online ad market have converged to create an ideal environment for video ads to thrive.
For advertisers, many questions remain. Which publishers have the greatest inventory and service record? What are the dominant formats? Where should the creative come from?
The Formats
The lion's share of the online video spend goes to in-banner advertising. While in-stream ads are widely considered most effective, media buyers report inventory is a constant problem.
"With pre-roll ads, the inventory is quite limited. It's growing, but the majority of stuff we do is within ad units," said Ian Schafer, president of Deep Focus, a full-service interactive shop serving the entertainment vertical.
Schafer's firm buys three to five million video ad impressions a month. He and other agency heads with large video budgets agree inventory is a problem. On the bright side, he said in-banner ads are a much better prospect for clients than they once were.
"The state of that kind of ad has gotten a lot better, just in the past year," Schafer said. He credits the improvement to better products from vendors like Klipmart, whose in-banner video ads let the user expand a spot to full-screen proportions. "That presents our clients' marketing assets in a way they were meant to be seen. In many cases, we can have that be in a widescreen, letterbox format."
Klipmart is only one of a seasoned pack of rich media vendors hard at work innovating around video. Others include Eyewonder, United Virtualities, Eyeblaster and Viewpoint.
New technical capabilities include adding an interactive Flash layer to streaming video, a practice Klipmart calls hotspotting. Such clickable video has obvious implications for product placement, long a gaining concept among marketers in general. Klipmart, eline Technologies and United Virtualities all either offer or are preparing to offer hotspotting.
"If you can integrate product placement into video and act on it, that's very important," said Cory Treffiletti, managing director of Carat Interactive San Francisco. "A savvy producer can incorporate that into their budgets."
Klipmart also reports it's working to support the streaming of live events for its clients. Cyrus Krohn, former publisher of Slate and now executive producer at MSN Video, said live event streaming looms large in MSN's strategy. He said it's one of the portal's tactics to increase inventory in the coming year.
"The live events we've produced in collaboration with MSNBC are starting to look like real television numbers," said Krohn. "With the Scott Peterson verdict, there was no pre-promotion or announcement. The judge just announced the ruling would be read in a couple minutes. We had over 300,000 streams for that reading."
Considering Klipmart and MSN Video are close partners, you should expect to see ad-supported live streaming on MSN in the near future, courtesy of Klipmart.
The Advertisers
So who's buying the most online video media?
Todd Herman, MSN Video's streaming media evangelist, said 23 of the top 50 brands have advertised on the service since its official launch in August 2004. They include some of the very biggest companies: Pfizer, Procter & Gamble, General Motors, Johnson & Johnson.
Asked to describe the buy-in of various verticals, Herman said packaged goods jumped in first. "CPGs really led the way. Then you had the auto manufacturers come in. GM is in a very strong leadership position now in online video," he said. "We are starting to see financial services companies now, too." He added retail stores, Target among them, and media outlets to that list.
Entertainment is also big, for obvious reasons. Deep Focus represents MGM, Miramax and HBO on a range of online promotions into which video figures very highly.
The Aggregators
Where should marketers place their ads? The media buyers ClickZ spoke with for this story all ranked MSN highly in terms of service, implementation and original video content.
Yahoo, via its Yahoo Music audio and video destination (formerly LAUNCH), is primed for a big video roll-out. While there have been no official announcements, the online ad community seems poised for the portal to unleash a bevy of content. Yahoo is clearly eager to go deeper in the content business, considering the appointment of Hollywood powerbroker Lloyd Braun to head its media division, and the opening of the company's new offices in Hollywood.
Braun has been quoted in media reports as saying the talent community in Los Angeles is eager to provide content for the Internet but are not sure of the best way to do it. Yahoo's partnership with Mark Burnett Productions involving "The Apprentice" and "The Contender" is one possible model.
"Lloyd wasn't hired to sell banner ads," noted Jeff Lancot, VP of media for Avenue A/Razorfish.
With AOL, buyers are taking a wait-and-see attitude. They agree the portal has a great opportunity to leverage its ties with powerful media brands, and they're cautiously optimistic about service improvements. It's the video destination with the most to gain.
Plenty of other sites are offering very attractive video ad placements. AtomFilms, ifilm, CNN, ESPN and WWE were all variously mentioned by agencies as appealing targets for video ad placements.
The Creative
Most advertisers still choose to repurpose their TV assets when running online ad campaigns, despite near consensus that the :30 spot is too long.
"It's easy to repurpose TV Ads, but it's not a good idea. Everyone seems to agree, but they keep doing it," said Avenue A/Razorfish's Lanctot.
That's changing a bit, as it turns out. Agencies report clients are more receptive to creating original spots for the Web. Ford has done so, for its Lincoln brand. And Klipmart is creating Web-only footage starring a big-name actor for a Hollywood client, said CEO Chris Young.
Carat's Treffiletti affirms clients are allowing some wiggle room on the subject of original vs. repurposed content.
"We have some clients who have allowed us to actually shoot video for [the Internet]," he said. "In addition, when they're shooting a commercial and they have the A roll and the B roll, the B roll has a lot more life now. We can actually use that extra footage."
The Inventory
Part of the blame for the inventory shortage can be laid at the feet of portals and other video aggregators. The OPA's survey revealed 59 percent of people discover online video through random surfing. How much larger would the inventory be if portals did a better job of striking deals with content owners to bring video to their users?
"The publishers aren't positioning this to consumers as a mainstream part of their offerings just yet," said Ari Paparo, product manager for DoubleClick's DART Motif. "Consumers and publishers aren't seeing eye to eye on where this fits into their browsing experience."
No surprise, then, that mid-sized video-focused sites are doing the best job of promoting their video content.
"[Pre-roll] has always been available on ifilm, AtomFilms and ESPN Motion," said Treffiletti. "If more sites incorporate video into their sites in a meaningful way, the inventory will increase."
To their credit, the portals are trying: Yahoo through its well-known film industry connections, and MSN through its exclusive deals with NBC and Fox Sports, among others.
"Whoever owns the rights to the content is what it's going to boil down to," said Schafer. "Finding it is one thing; consuming it is another. If we make it more available for people to consume, the sky's the limit in terms of being able to integrate [ads] within that content."
Some are looking to search as a possible way to accelerate user adoption of video.
"If we get a relevant video search engine, it will make a big impact on the adoption of video online," said Lanctot.
Multimedia search engines like AOL's Singingfish and new video search offerings from Google and Yahoo hope to realize that dream. Yet the content is limited to searchable shows and clips that have been provided online by networks and other video owners.
The Viral Video
Meanwhile, brands aren't waiting for the portals or the search engines to figure out video. Facing a lack of inventory, advertisers have been creating their own programming, often in the form of viral spots and longer commercials.
The Super Bowl is the best recent example. When Fox cut the second airing of GoDaddy.com's Bowl spot last Sunday, company CEO Bob Parsons wrote about the incident on his blog and linked to the hosted ad. The result was half a million streams in less than two days.
Advertisers ranging from Budweiser to Amex have also done well posting banned ads and extended versions of TV spots online.
"Not always will a TV ad play well on the Internet, but what you can do is take that theme and create content specifically geared for the Internet," said Karen Howe, CEO of Singingfish. "Then you can associate that with audio/video search."
The Outlook
Online video is still in its awkward phase. It's a period akin to the state of rich media four or five years ago, says DoubleClick's Paparo.
"The market is being pushed ahead by the publishers and they're not standardizing," he said. "You've got different formats, workflow differences, and widely varying reporting expectations. It's lower quality video and it's smaller. But it's got a benefit in that the viewer is actively watching and there's a response mechanism."
Aside from its fumbles and its promise, online video brings a fundamental shift in media consumption.
"People are consuming their media mid-day," said MSN's Krohn. "It's the new prime time... a period of the day they really couldn't have before."
But Krohn, a CNN vet himself, sees the evolution of television and the Internet as symbiotic rather than competitive. In the long term, TV and the Web will be one, he says.
"Television has got a lot on the Internet as far as history goes, but the evolution of products I'm envisioning will service both parties," he said. "I don't know how long it's going to take, but you're really going to have a hard time distinguishing between the monitor and the box."
Newspaper sites grow their portfolio of products
Newspaper sites grow their portfolio of products
Revenue streams are going away from traditional media outlets and moving towards interactive venues. As a result interactive advertising revenues grew from $4.6 Billion in 1999 to $21.2 Billion in 2007 (PwC2007annualreport).
So, how do newspaper companies, whose majority of revenues comes from print advertising, survive?
Well, to accommodate the trend toward online ad spending, newspaper sites have changed their business models by adopting a go to market strategy that diversifies their product suite. Newspapers have realized that they have to adopt a multimedia position to survive. In turn newspaper sites have created partnerships with third party vendors like Yahoo, Metrix for Media as well as employment sites like Career Builder and Hot Jobs to offer comprehensive advertising solutions to their customers.
Here’s a look at NEW product portfolios:
-Direct mail
-Video production
-Website development
- Search Engine Optimization (SEO)
- Search Engine Marketing (SEM); (PPC)
- Ad production
- Display advertising
- Behavioral targeting
- Geo targeting
- Targeted email campaigns
- Rich Media
Revenue streams are going away from traditional media outlets and moving towards interactive venues. As a result interactive advertising revenues grew from $4.6 Billion in 1999 to $21.2 Billion in 2007 (PwC2007annualreport).
So, how do newspaper companies, whose majority of revenues comes from print advertising, survive?
Well, to accommodate the trend toward online ad spending, newspaper sites have changed their business models by adopting a go to market strategy that diversifies their product suite. Newspapers have realized that they have to adopt a multimedia position to survive. In turn newspaper sites have created partnerships with third party vendors like Yahoo, Metrix for Media as well as employment sites like Career Builder and Hot Jobs to offer comprehensive advertising solutions to their customers.
Here’s a look at NEW product portfolios:
-Direct mail
-Video production
-Website development
- Search Engine Optimization (SEO)
- Search Engine Marketing (SEM); (PPC)
- Ad production
- Display advertising
- Behavioral targeting
- Geo targeting
- Targeted email campaigns
- Rich Media
Finding cracks in Facebook
Finding cracks in Facebook
The social-networking supersite is taking flak from users, developers, and advertisers. Right about now a young CEO like Mark Zuckerberg usually steps aside quietly. Not this time.
By Jessi Hempel, writer
(Fortune Magazine) -- Late last year Mark Zuckerberg, the 24-year-old CEO of social-networking phenomenon Facebook, got onstage before a Madison Avenue crowd and declared that he was leading a once-in-a-century media revolution. Long story short: The revolution hasn't panned out. Six months later, advertisers could be forgiven for mistaking Facebook for a smaller MySpace or a much larger Friendster (remember them?). And far from changing media as we know it, the virtual home of Superpokes, Funwalls, and other such time wasters is showing cracks in its foundation.
User growth remains impressive. Since September 2006, when Zuckerberg opened Facebook to nonstudents, the site has grown 12-fold, making it one of the fastest-rising dot-coms in history. Visitors tripled after Facebook expanded internationally last year, and they continue to spend more time on the site: 20 billion total minutes in March 2008, vs. 6.4 billion a year prior. But the number of U.S. visitors has leveled off, fluctuating between 30 million and 35 million, according to comScore. And that's not all. Anecdotal evidence suggests that many of the adults who signed on last summer to see what the fuss was about are done with their social-networking experiment. The company also delayed its much-anticipated redesign, originally due in April, in deference to third-party developers that have complained that Facebook has become a frustrating partner. "Developing on Facebook is like playing a game where the rules are changing all the time," says Jia Shen, co-founder of widget maker RockYou. He's turning his attention increasingly to social networks like MySpace that use the OpenSocial standard promoted by Google (GOOG, Fortune 500).
Meanwhile the most controversial product Zuckerberg introduced, Beacon - the thing he was bragging about in that Madison Avenue speech - has failed. It allows friends to see one another's activities on different Web sites. Zuckerberg claims it was designed to enhance the user experience, but it's easy to see its appeal to advertisers. Imagine what happens to Blockbuster's traffic, for example, when one user finds out that her coolest friend just rented Walk Hard. But users hated the loss of privacy. Some signed a MoveOn.org petition to halt the program; one testy Texan even filed a lawsuit. Zuckerberg amended Beacon and admits that the company messed up. "We made mistakes in communicating about it," he says. "We made mistakes in the user interface. We made mistakes in responding to it after it was out there."
But Facebook's biggest concern has to be the blasé attitude that media buyers have toward the company. Microsoft (MSFT, Fortune 500) paid $240 million for 1.6% of Facebook, giving the startup an eye-popping valuation of $15 billion; according to media reports, as of early May the Redmond crew has been exploring ways to buy Facebook outright. But Microsoft's ardor obscures the fact that Facebook generated only $145 million in revenue last year, according to eMarketer, much of it from an ad deal with Microsoft. MySpace, by contrast, had $510 million in revenue. Facebook ads can sell for as little as 15 cents per 1,000 impressions (CPM) - compared with the estimated $13 on Yahoo (YHOO, Fortune 500) properties. And even at those bargain prices, marketers are reluctant to spend money on a venue where users aren't paying attention. Jeff Ratner, a managing partner at WPP's MindShare Interaction, whose clients include Motorola (MOT, Fortune 500) and Unilever (UN), spends less on Facebook than he did six months ago. "As soon as they stepped out of Beacon, Facebook doesn't look that different," Ratner says. "It just becomes another buy, and there are cheaper, more efficient ways to reach eyes."
It's not unusual for a startup to encounter choppy waters. All young companies hit a point where everyone doubts the founding vision. And in Silicon Valley, right about now the founder usually slinks into some "strategic," "advisory," or "product" role in favor of a veteran. Jerry Yang, Steve Jobs, and the Google duo all followed such trajectories.
But at Facebook that's not an option. Even with all the turbulence, Facebook's investors are in Zuckerberg's corner. And they might as well be - because they can't fire him. When starting the company in 2005, Zuckerberg took the counsel of Sean Parker, a former entrepreneur who was ousted at Napster, where he was president, and at Plaxo, where he was CEO (and later at Facebook, where he was president). Parker told Zuckerberg to control his board at all costs. Zuckerberg took heed. The Facebook board has three members: Zuckerberg, Peter Thiel of the Founders Fund, and Jim Breyer of Accel Partners. But Zuckerberg owns an estimated 20% to 30% of the company and can add two more members at will. (At press time, Marc Andreessen, the serial entrepreneur and Netscape co-founder, was in talks with Facebook to take one of those board seats, according to a source close to the situation. Facebook declined to comment.) That power should allow Zuckerberg to keep the CEO title for a long time.
To his credit, Zuckerberg knows he can't run Facebook alone. So in March he enticed Google's Sheryl Sandberg to become COO. (Soon after, Elliot Schrage, Google's savvy spinmeister, followed her to ply his trade at Facebook.) Sandberg grew Google's AdWords and AdSense profit machines. Now, as Zuckerberg focuses on the product, Sandberg, 38, will impose some corporate discipline on an undergraduate flip-flops-and-Red-Bull vibe. She'll implement performance reviews, refine the recruiting model, and spearhead an international push. Oh, and she hopes to develop a new ad scheme aimed at the billions that marketers spend on branding ads every year. "I'm hopeful that we play a significant role in pushing the envelope [with] awareness building," she says. "How we get there, I don't think we know yet."
The social-networking supersite is taking flak from users, developers, and advertisers. Right about now a young CEO like Mark Zuckerberg usually steps aside quietly. Not this time.
By Jessi Hempel, writer
(Fortune Magazine) -- Late last year Mark Zuckerberg, the 24-year-old CEO of social-networking phenomenon Facebook, got onstage before a Madison Avenue crowd and declared that he was leading a once-in-a-century media revolution. Long story short: The revolution hasn't panned out. Six months later, advertisers could be forgiven for mistaking Facebook for a smaller MySpace or a much larger Friendster (remember them?). And far from changing media as we know it, the virtual home of Superpokes, Funwalls, and other such time wasters is showing cracks in its foundation.
User growth remains impressive. Since September 2006, when Zuckerberg opened Facebook to nonstudents, the site has grown 12-fold, making it one of the fastest-rising dot-coms in history. Visitors tripled after Facebook expanded internationally last year, and they continue to spend more time on the site: 20 billion total minutes in March 2008, vs. 6.4 billion a year prior. But the number of U.S. visitors has leveled off, fluctuating between 30 million and 35 million, according to comScore. And that's not all. Anecdotal evidence suggests that many of the adults who signed on last summer to see what the fuss was about are done with their social-networking experiment. The company also delayed its much-anticipated redesign, originally due in April, in deference to third-party developers that have complained that Facebook has become a frustrating partner. "Developing on Facebook is like playing a game where the rules are changing all the time," says Jia Shen, co-founder of widget maker RockYou. He's turning his attention increasingly to social networks like MySpace that use the OpenSocial standard promoted by Google (GOOG, Fortune 500).
Meanwhile the most controversial product Zuckerberg introduced, Beacon - the thing he was bragging about in that Madison Avenue speech - has failed. It allows friends to see one another's activities on different Web sites. Zuckerberg claims it was designed to enhance the user experience, but it's easy to see its appeal to advertisers. Imagine what happens to Blockbuster's traffic, for example, when one user finds out that her coolest friend just rented Walk Hard. But users hated the loss of privacy. Some signed a MoveOn.org petition to halt the program; one testy Texan even filed a lawsuit. Zuckerberg amended Beacon and admits that the company messed up. "We made mistakes in communicating about it," he says. "We made mistakes in the user interface. We made mistakes in responding to it after it was out there."
But Facebook's biggest concern has to be the blasé attitude that media buyers have toward the company. Microsoft (MSFT, Fortune 500) paid $240 million for 1.6% of Facebook, giving the startup an eye-popping valuation of $15 billion; according to media reports, as of early May the Redmond crew has been exploring ways to buy Facebook outright. But Microsoft's ardor obscures the fact that Facebook generated only $145 million in revenue last year, according to eMarketer, much of it from an ad deal with Microsoft. MySpace, by contrast, had $510 million in revenue. Facebook ads can sell for as little as 15 cents per 1,000 impressions (CPM) - compared with the estimated $13 on Yahoo (YHOO, Fortune 500) properties. And even at those bargain prices, marketers are reluctant to spend money on a venue where users aren't paying attention. Jeff Ratner, a managing partner at WPP's MindShare Interaction, whose clients include Motorola (MOT, Fortune 500) and Unilever (UN), spends less on Facebook than he did six months ago. "As soon as they stepped out of Beacon, Facebook doesn't look that different," Ratner says. "It just becomes another buy, and there are cheaper, more efficient ways to reach eyes."
It's not unusual for a startup to encounter choppy waters. All young companies hit a point where everyone doubts the founding vision. And in Silicon Valley, right about now the founder usually slinks into some "strategic," "advisory," or "product" role in favor of a veteran. Jerry Yang, Steve Jobs, and the Google duo all followed such trajectories.
But at Facebook that's not an option. Even with all the turbulence, Facebook's investors are in Zuckerberg's corner. And they might as well be - because they can't fire him. When starting the company in 2005, Zuckerberg took the counsel of Sean Parker, a former entrepreneur who was ousted at Napster, where he was president, and at Plaxo, where he was CEO (and later at Facebook, where he was president). Parker told Zuckerberg to control his board at all costs. Zuckerberg took heed. The Facebook board has three members: Zuckerberg, Peter Thiel of the Founders Fund, and Jim Breyer of Accel Partners. But Zuckerberg owns an estimated 20% to 30% of the company and can add two more members at will. (At press time, Marc Andreessen, the serial entrepreneur and Netscape co-founder, was in talks with Facebook to take one of those board seats, according to a source close to the situation. Facebook declined to comment.) That power should allow Zuckerberg to keep the CEO title for a long time.
To his credit, Zuckerberg knows he can't run Facebook alone. So in March he enticed Google's Sheryl Sandberg to become COO. (Soon after, Elliot Schrage, Google's savvy spinmeister, followed her to ply his trade at Facebook.) Sandberg grew Google's AdWords and AdSense profit machines. Now, as Zuckerberg focuses on the product, Sandberg, 38, will impose some corporate discipline on an undergraduate flip-flops-and-Red-Bull vibe. She'll implement performance reviews, refine the recruiting model, and spearhead an international push. Oh, and she hopes to develop a new ad scheme aimed at the billions that marketers spend on branding ads every year. "I'm hopeful that we play a significant role in pushing the envelope [with] awareness building," she says. "How we get there, I don't think we know yet."
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