Category: Advertising

New Gmail Ad Unit

This morning, I noticed a new ad unit within Gmail. The usual practice for Google, and almost everyone else, is to make the click open a new window and show the target URL in that. In this case, the ad unit opens a first level of content within Gmail, just like an email, and then there is a further click-through that takes the user to the final page.
Gmail now has four ad units in the mail content page and Google has been fairly innovative with their formats. One of the units — the top one — starts as a band on top and when you scroll down it collapses to a smaller unit on the right panel, above the usual set of four link tower unit.
As it is always possible, Google could just be bucket testing this unit.

Filed under: Advertising, Internet

The Price Is Right: YouTube Versus Labels

The Guardian has an interesting story on how record labels are learning how to make money from YouTube.
Five years ago, this is what I had written in ‘Youtube: The future of music distribution?‘

Now, if Youtube were to give the record companies a fixed amount of money (they had set apart $500 million for copyright litigation-related costs in escrow), for legally playing out music/music videos and if that fixed amount of money is higher by even a cent, compared to what the industry might make legally a few years down the line, who can honestly complain about it?

Since I wrote that many moons ago, I have been quite convinced that the fight with YouTube for the record labels was less about copyright/licenses and more about the right price. Internet has not changed much the manner in which music is created; what it has ripped to bits is how discovery and distribution works for music. The stark truth for labels is that in trying to keep the old model going for as long as possible they have lost on being on top of the game as far as distributing music goes.
Another way to ask the question is: where is the Hulu for music for record labels?
With iTunes and YouTube they have given up a key point of leverage and that horse has long bolted. The situation is largely beyond repair with the limited imagination the industry has. So the only option left is to cut overheads, haggle over the price and ride the wave.
If the price is right they would not care less whether the clip or stream with the largest number of eyeballs is the official one or not, as long as they are getting paid for any stream (official or user-generated) or clip with their artist in it. In fact, it is more of a headache for YouTube as official channels can get them better revenue on the ads, compared to the clip being played on an unofficial channel.
To a great extent, this change is already visible on YouTube through two developments: YouTube’s fingerprinting service has of late improved dramatically. It now develops artist pages and playlists from official and unofficial channels. Secondly, they are aggressively pruning non-official versions of various clips, leaving only what the copyright holder wants to show available to the viewers.
For the users this has one major downside. In a manner of speaking, YouTube was the true successor to Napster in the width of content it used to host. You could find some really obscure clips on it earlier. As the cleanup continues, that feature will slowly fade away. On the other hand, products like Grooveshark, Spotify, Gaana and Saavan are making it increasingly easier to find and consume legal content, thus reducing one of the major cases for piracy – which is convenience.
For the labels, eventually, it is not that bad a deal. It is incredibly complicated to run a digital operation that manages both geo-restriction and monetization effectively. Given enough time, a new product is eventually bound to emerge that will do that better than a YouTube or an iTunes store. Till that happens, they can cut costs, make more money and let others do all the hard work.

Filed under: Advertising, Industry, Internet

Publishing, Distribution And Consumption In A Brave New World

One of my greatest disappointments with the past ten years in the digital sphere has been the absence of the creation of something that is immense. The eighties saw the growth and evolution of computing in the personal sphere, the nineties saw the evolution of the internet. But, over a decade into the new millenium, we have nothing to show more than refined versions of what has already been put into place. What I did not realize was that we may just be in the midst of experiencing something that is immense, but that something may not be a particular technology or a product. That something is only what a bunch of technologies or products enable us to do with information.
The past 15-years has been a frantic, often unpredictable, ride for the publishing business. What, even 20-years-ago, was the domain of the few has exploded into a creature so different that everyone who reads or write anything these days are still struggling to grasp the enormity and the meaning of the changes that are affecting it. The existing rules regarding who, why and what gets published is being shred to bits and new rules are being made up every day. All parts of the trade — writing, editing, distribution and consumption — are so drastically different from two-decades ago. This is disruption on a scale seldom experienced before.
Death of many gatekeepers
Content is now created on so many platforms – blogs, tweets, personal websites, photo sharing sites; content is now distributed over so many channels – email, social networking sites, content aggregators; content is now consumed over so many channels – browsers, desktop applications, mobile applications, email. What used to be a strictly linear process (create -> distribute -> consume) is now something that is best described as being similar to Brownian motion. What used to be predictable in most cases is vastly unpredictable now. In this brave new world almost everyone is a participant and nobody is a real gatekeeper anymore.
In a pre-internet world there existed clear definitions regarding producers/writers, distributors and consumers of content. Content could be only a handful of things; books, articles in newspapers and magazines. Only a handful of people were either allowed or enabled to create this content and there were clear rules regarding membership into this select club. This content was consumed over clearly defined channels like books, news publications and magazines. If you could not access any of these channels, what you wrote had little value as nobody could consume it. Consumers of content had no other available option, but to be reliant on the established channels.
The scenario now is so very different. Almost anyone is now a creator of content. And by anyone I mean anyone. For a long time now, I have held that there is no social media. There are only creators, distributors and consumers of media/content. Comments, tweets, mashups, curated lists – all these are as much content as any form of reporting or long form writing. Of course, all comments, tweets and mashups are not the same quality as all reporting out there, but it is also true that all reporting is not really all that great. Yes, it is jarring to see slang, SMS-language and badly written text in things I read, but that does not make it any less useful or informative compared to established publications.
This has serious implications for the old guard. Gatekeepers, in any ecosystem, wield tremendous power. This power is accrued from predictability, reach and resources. Publications are valued because they publish to a predictable schedule, with a quality that is predictable, with topics that are predictable. Publications are valued based on the number of people they can reach. Publications are also valued based on their ability to cover topics; some cover a large number of topics at a shallow level; some cover fewer topics at a far deeper level. The new world of content and publishing has attacked each and every source of power of the gatekeepers.
Implications on the present
The first implication of this is on pricing. Ability-driven scarcity has been one of the key factors in enabling publications to charge what they used to charge. Since the information they publish is no longer scare, that rug has been firmly pulled out from underneath their feet. Almost every new old-school style publication that has attempted to charge a premium in recent years has tried to based it on opinion or exclusivity than attempting to do it over information. The businesses based on pushing information like in the old ages will survive as long as digital reach continues to exhibit the current constrained growth and the lack of understanding and translating key businesses metrics in digital remain. But it is an inescapable fact that such businesses are living on borrowed time.
In 2004, I remember telling my boss at that time that we need to pro-actively plan for a world where we can’t control the form factor or context in which information published by us will appear. In 2012, I consume most of the content I read and view now from my Twitter timeline, Hacker News and Google News. There are very few instances where I consume content from homepages of publications. I had previously tackled this topic in 2010 and the risk to brands and publications on this front continue to only grow with time. Brands and publications that ignore this threat will pay a big price in the coming years.
Crystal Ball
It would be the greatest lie if I were to tell you that I know exactly how this is going develop and what the future of publishing will look like. Currently, content anywhere is one of the bleakest businesses to be in at scale, while it is one of the easiest to bootstrap and hit Ramen profitability, should you choose to put your mind to it. Nearly non-existent entry barriers (domain registration & basic web hosting) and a preponderance of Ramen profitability creates an illusion of stellar prospects for the domain, but the actual outlook at scale is really dire. It is rare to find successful large-scale digital/non-digital publications that are in the black. The risks in being involved in the domain with any sort of significant investment on either side of the table is significantly high.
For existing publishers, the way forward is to measure everything and understand the numbers and your core audience very well. Monetization strategies will continue to be unpredictable for many years to come. That you are pulling good revenue is now not a guarantee of the same in anything other than the immediate term. Audience funnels and goals need to be set and tracked as a core operational metric. The industry still has an excessive reliance on gross numbers that does not differentiate in value between customer A and customer B. If you can’t make that differentiation, it is only natural that you can’t monetize better.
For investors, at least in India, publishing is a no-go territory for any fund that probably has a size in excess of $100 million. There is no scale in the business at this point which will allow for returns that justify the investment. Even established players have been demonstrating flat or slow growth in revenue (no point talking profitability) over the past three-years. Even that growth is impacted by increasing operating costs that have not slowed down in the same years. Valuation, based on potential, can be easily ignored here. Exits are rare and at a level that makes no sense for anyone other than the founders and some form of relief for early stage investors. There are way too many shackles that make any attempted disruption too costly.
For the consumers, publishing is a lovely place to be at right now. Both quality and quantity has grown in content that is available for consumption. The growth is quantity has also led to the emergence of aggregators and curators. They used to play an important role in the early web as consequence of nearly non-existent means of searching the web with its limited content at that time (problems of discovery and scarcity of content), now they play an important role because of the excess of content that is available for consumption. Things will only get better for them. These are the true winners in this game.

Filed under: Advertising, India, Internet, Media, Social

Influencers, Initiatives And Their Impact In Digital India

This is a post that has been in the making for a while. Having failed at trying to frame it properly all this while I figured it was better to just write it the way it came out. Before I start off I should make it clear that I am not an entirely unbiased party in all of this. I have my skin in the game in the social* industry segment primarily through Shack Companis who have been a client of mine for about a year now. They are involved in various aspects of the industry built around the digital social system and the subject I am about to cover are equally applicable to them too.
As a sort of an insider (due to my aforementioned work) and as an outsider (thanks to sometimes being considered an influencer due to my 1600 followers as of August 13, 2012) I am fairly unenthused by how brands and agencies are using the social platforms to promote themselves through various events. The concept of using special initiatives as entry points to having a substantial presence in earned media is nothing new. The practice itself is almost as old as Twitter’s breakthrough into the internet’s public consciousness; but with time agencies have figured out how to game this system and give an exaggerated view of the impact and effectiveness of the initiatives.
To be honest, this form of misrepresentation is only a small chunk of the larger problem of determining key metrics for anything digital. Even as the domain slowly creeps up on its 20th birthday, the tooling to measure various aspects of the digital business is still notoriously absent, be it on the product side or, more crucially, the investors’ side. We have seen the industry progress from the ‘eyeballs’ of bubble 1.0 to the ‘likes’ of the current times, both driving often misinformed decisions at the product, process and business levels of any digital operation.
Anyhow, going back to the special events bit, I was fortunate to be invited to one such event. Now, I need to make it clear that I don’t consider myself as in influencer. Yes, I have about 1.5K followers on Twitter, but most of that is thanks to being one of the early adopter crowd (started in mid-2007) and organically getting to that figure. If you have been around for that long on Twitter and have been an active user, you’d also probably have a similar or greater number of followers. I am not on Facebook or on Google+ and I love Twitter for the small, but carefully curated, list of people I follow there (and dislike it with a vengeance for odd periods when I see lynch mobs form).
Thus, the invite did not make me feel the full weight of my influencer status, rather, it made me feel quite grateful that as a near-nobody I was getting an opportunity to do something that I’d otherwise probably be unable to do. The invite was to drive a few laps in a newly-launched car at the Buddh International Circuit and being a fanatic motorsports fan I jumped at the opportunity. The event was well-organized and it came with no conditions that I generate any given number of tweets about it. The organizers were even kind enough to accommodate a dear friend of mine to be a part of the event. So, what exactly went wrong?
What I did not like was that at the registration counter for the event we were asked to register our Twitter/Facebook accounts at a kiosk and during the registration the application posted tweets/updates on our accounts without informing/asking us about it. This is where the mechanics of the exercise comes into play. If you have 50 people registered for an event and if you get all of them to tweet with the same content or hashtag, you can easily amplify it through a network of ten others re-tweeting it, thus easily creating a trend out of it for smaller demographies like India. And the sad fact was that the event was so good that if it was not for that forced tweet, at least I would have tweeted a lot more about it.
Since that time I have declined similar invitations. I did attend another event at BIC, but that was thanks to an invite to a relative of mine to a members-only event for owners of a particular make/model of automobile. For me, there is an inherent conflict involved in this – both as a consultant working in the space and as someone who likes other things outside work like travel and music. It is a conflict that I have seen before in my years in the media – of paid junkets for journalists – and I would really dislike to see the same thing happen in digital social ecosystem.
That said, it would be wrong to paint the entire practice as wrong with a broad brush. I do enjoy some of the content that is posted by the participants in events. But I am never sure if the participants would post as much or the make the same posts if they were not, in a manner of speaking, sponsored by a company. This is the key conflict where the ‘earned’ in all of this slowly crosses over into ‘paid’ even if that payment is indirect. What makes it worse is that brands are often sold the impact of an event on the volume than quality/sentiment. Even when sentiment is measured, it is often inaccurate as even the more accurate sentiment measuring tools don’t get it right enough for our market.
I do not, though, have any solutions to offer for this conundrum. For both brands and users it is crucial to understand that reputations are hard to earn and easy to squander. For me at least, Twitter is like a little social club of around 100-people I like to know and converse with. I have little desire to use it to excessively promote myself or my work. I love the ability to be able to speak my mind on it without having to think twice about professional conflicts and I intend to keep it that way.

Filed under: Advertising, India, Marketing, Social

Metrics To Track In Online Operations

This is not really proper post, it is a collection of points I have repeated to many people (last posted in a Hacker News thread). Figured it would be a good idea to have it put up somewhere.

What it is a list of metrics you need to track when you run an online operation and the importance of each element:

The metrics

1. Page views: Track overall growth

2. Page views per user: Track engagement

3. Visits: Track overall growth.

4. Unique visitors: largely useless metric since every tool out there disagrees with each other on the number.

5. Revenue per user: Track user segmentation.

6. Revenue per page view: Track infrastructure costs.

7. Active users: Finer measure of engagement and churn.

8. User acquisition/retention cost: Track cost of marketing/outreach.

9. Conversions: Free to registered, registered to paid.

10. Off-site: Notification emails, Newsletter subscribers, open rates, Twitter followers, Facebook fans.

Their importance

(1) Important for selling inventory on CPM.

(2) Needed to get the mix of organic growth with existing users to increase, while keeping a different focus on acquiring new users.

(3) Needed for the ad sales pitch. No point getting a million visitors if you can't retain them, but sales needs inventory.

(4) This has always been ~10% off between different tools. Can be an indicative measure of engagement.

(5) Helps keep ceilings in place for acceptable cost per user.

(6) Helps make decisions on infrastructure where you need more than what you can buy.

(7) Possibly the only user-related metric that should matter internally.

(8) Can help you understand why bidding on that $5 CPC keyword does not make sense when what you make per user is $3.

(9) Helps you fine tune monetization.

(10) Helps you cover all other external delivery platforms.

Filed under: Advertising, Industry, Internet

Are Internet Portals In India A Case Of Death By A Million Cuts?

A curious aside from yesterday's post on In.com is that almost anyone who has a portal in India is not having a good time. There are not many who can claim to running one in India these days. I can only think of Rediff (Rediff.com), Times Internet Limited (Indiatimes.com), Web18 (In.com) and Sify Technologies Ltd (Sify.com) as the only players out there. The common thread between all these companies is that they are all in the red. It is a flaky to point out the portal angle as the only connection between these companies and their losses, but it is not without merit.

My reasonable guesstimate puts the top line for a company (it is a guesstimate, so do pardon me if the numbers are way off) close to Rs. 100 crore in revenue for a year. Most of these companies have a head count that is not lower than 150. With such a head count, compensation itself can easily be over Rs. 20 crore for the companies in a year. Servicing the facilities will add up another Rs. 5 crore a year to the bill. The technical infrastructure can add another Rs. 6 crore to the annual bill. Add another Rs. 15 crore in marketing expenses and it all adds up to a good Rs. 46 crore in a year.

The problem is that the head count is way over 150 in these companies (especially in those companies that are doing Rs. 100 crore in revenue) and the expenses I have listed are on the lower side. I have also not added other significant components like content licensing costs as they vary wildly from company to company. In the portal side of the business, advertising on content is more or less the only avenue for revenue and with the cost structures these companies have, it is impossible to scale those without a corresponding increase in costs. After a point, it is a case of chasing your own tail unless you can alter the fundamental variables in the equation.

The numbers mentioned above are not authoritative by any means and a lot of it can't be corroborated in any meaningful or public manner. But it demonstrates the point that doing more of the same that has been done so far will take you nowhere. This also represents a reasonable opportunity for a well-funded new operation that can be small and nimble. This also explains why the successful larger companies on the Internet India have been mostly transactional nature, which is only of limited relief since none of those have managed so far to diversify out of their core offerings.

What do you think?

Filed under: Advertising, Business, Industry, Internet