After Summer Thoughts

I haven't written for a while and many things come to mind so I would just like to share some thoughts with you and maybe discuss them over the next few weeks.

Seeing how social media is impacting people's lives, day to day, in terms of time consumption, I am starting to think seriously that a small part of the economic recession is due to the more than a trillon people who are spending hours and hours just talking online and sharing things. Social media is time consuming and a big distraction when you are fully commited to a professional activity. I would like to think hard about this. I love social media, but we have to measure its impact in terms of productivity and opportunity cost.

Facebook Display Marketplace is up and running. This is a big competitor for Google. General CPC and CPM rates will drop because Facebook has introduced a huge amount of availble new display inventory into the RTB market. We will need to look at how advertising technology maintains general CPC and CPM rates over the next few years, based on advertiser's profitability. This is one of the next big challenges, again, for traditional media: falling advertising rates.

The key is to know what people want to buy next. Google did this with search, pinterest is doing this with pictures. We need to think outside the box to discover how we can predict what people will need to buy in the future and to be able to offer them the proper advertisement. The next company to discover this new technology or technique will be another great success in the internet business. To anticipate what a user has in mind before he starts to write it in a search box is one of the main challenges.

Social media is based on sharing and following, discovering and participating, but the most important thing is to be in the conversation. Companies need to manage this new marketing element on a daily basis and it is expensive. I think there is a good oportunity to solve this online marketing management problem. There are too many social media sites and platforms to have control over all the conversations that customers and potential clients have. Online marketing needs to unify the conversations to become more profitable.

Showing new hidden assets has been always a great business approach for internet companies. I still think that people's time is the best hidden asset that internet can capitalize on. Online platforms for freelancers and part time jobs will have a huge impact on the economy over the next few years. They will help the labour market to be more efficient. They will help companies to develop their business as they never have before: faster and better.

Finally, I am always thinking about the right combination in online marketing to succeed financially. My lastest thought is to combine four elements and make them work together like a unique system. I like to combine SEO, SEM, Social Media and Emailing. These four elements working together as one online marketing tool are so powerful and bring businesses the kind of online presence that internet companies require. But there is a fifth element: Display Adverting in RTB. The company that adds this new online advertising technology into their marketing mix, will improve their results in the way they did ten years ago with SEO and SEM. Here there is another big opportunity for marketers and online companies: to add this fifth element into the online marketing equation.

Over the next few weeks we can discuss these issues. Any preference to start?

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Online Advertising Market Facts & Figures

Sometimes it is good to analyze the market through the numbers. I would like to share eMarketer and comScore Data Mine's 2012 predictions for the online advertising market with you.

The first conclusion is that online ad spending is mainly happening in North America, followed by Western Europe and Asia-Pacific. Eastern Europe and Latin America will grow at a very slow pace.

Global online ad spending will continue to experience double digit growth: US online ad spending will double between 2011 and 2016.

The online advertising market share analysis shows us that Google is the dominant player in this market with a 44,1% of the pie. Facebook had only a 3,1% in 2011. The combination between search and display banner ads gives Google a tremendous advantage over their competitors. The question is if Facebook will be able to reduce this gap with Google and even with Yahoo! / Microsoft with their new Facebook Exchange platform.

Search advertising is still 49% of total online advertising spending in the US. Display banner ads have to improve their profitability to compete against Google Adwords. The battle between Google and Facebook for the display banner ad market has just started. Google has the advantage of Adwords and Facebook has the power of their traffic and online inventory. The future is unpredictable, but advertisers need results, so the company that delivers the best results will conquer this piece of the pie.

We can see how retailers are leading the online ad revenue by industry category. Since ecommerce is part of every company's online strategy, retailers are spending more and more money on online advertising. This trend will continue because online purchasing will migrate to mobile devices.

Revenues by pricing models in the US show how important results are for online advertisers. Cost per click and cost per action make up 64% in 2011, up from 61% in 2010. Display banner ads will need to prove if they can continue to be marketed at CPM rates or at CPC rates. This will be also an interesting trend to follow over the next few years.

Finally, we can see how online ad spending will double from 2011 to 2016, at least in each of the biggest online ad spending countries. It is a huge market and will continue high growth over the next years. There is a big opportunity for publishers, agencies and advertisers. The rest of the online advertising ecosystem will need to be aware of what Google and Facebook do. But the opportunity is still there. Don't you think?

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The Facebook RTB Opportunity

Facebook announced last week the launch of Facebook Exchange, a complete online advertising platform to buy online display inventory in real time (RTB). According to eMarketer, the social network leads the overall U.S. display ad market, growing their revenue to 16.8% of the U.S. display advertising market, up from 14% in 2011, and 11.5% in 2010. By comparison, Google's share of U.S. display ad revenue should reach 16.5% in 2012, up from 13.8% in 2011 and 12.1% in 2010, again according to eMarketer. The research firm estimates the overall U.S. display advertising market, including spending on ads bought through real-time bidding systems, will reach $15.39 billion this year, up from $12.4 billion in 2011.

For Facebook, the entrance into the RTB display market could represent the growth in revenues the company needs to beat the expectations raised by their IPO. Facebook needs to increase their revenues to deliver a much better profit margin and their current social advertising platform hasn't been successful enough. So they need to move forward and capitalize on their huge online ad inventory with proven technologies that are delivering better eCPMs or RPMs. Facebook will open themselves up to new display advertisers and agencies through their Facebook Exchange and will be able to grow the number of customers through programmatic buying. It is a huge opportunity for Facebook and a clever strategic move. If their results are not good enough, maybe Facebook will finally think about monetizing their online display inventory, partnering with Google. We will see the numbers.

For marketers, DSPs and agencies this is also an important announcement. Suddenly in the online display advertising market, trillions of well classified impressions are available to buy. By opening their online inventory to programmatic buying platforms (DSPs), Facebook Exchange will enable brands to benefit from the efficiency and effectiveness of impression-level decisioning. It reduces manual campaign management, improving the cost side of campaign execution. It tightly targets messages to a brand’s desired audience at scale. Facebook Exchange is a huge opportunity for marketers, DSPs and agencies, who should see their business grow in terms of volume and scale.

For the whole online advertising industry the Facebook Exchange announcement is very important. The entire online advertising business value chain will be impacted by this new player. Every single company along the value chain will see how its business grows in terms of volume and scale. All the technologies that have been developed during the last five years around RTB will have the opportunity to finally demonstrate that they are as profitable as search advertising. Facebook Exchange is a huge opportunity for the online display advertising industry to become more important in terms of revenues than the search advertising industry.

But who stands to lose after the Facebook Exchange announcement? The first impact will be that the offer of online display inventory will increase dramatically, so prices will go down, even if RTB technologies try to keep them at the same level. Online editors will see how, once again, trillions of online impressions will be available from outside their online properties, pushing eCPM or RPM prices down. This time though they will come from the world's biggest online property, not from millions of unknown online pages through Ad Networks. If Facebook Exchange is a success, online media players will suffer from it. Might they be able to create a new opportunity?

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Making Display Advertising Like Search Advertising

Search Advertising (SEM) is one of the biggest revolutions in the digital era. When someone asks me which is the best web 2.0 company - not social company - I always answer that it is Google with its Adwords advertising platform. There is no other online product or service like this in the world. Adwords is the best web 2.0: the user is the producer and pays a lot of money to achieve their online marketing goals. And it is tremendously profitable for users, companies and agencies. Facebook is trying to stake its own territory with their Facebook Ads, but today they are still far from Google Adwords.

If you have a look into the evolution of Adwords, you can see how display advertising is permeating the platform, giving advertisers the power to buy display advertising using the same approach that they use to buy text link campaigns. Adwords, and Google with other advertising products like Doubleclick DFP, ADX, etc., are pushing display advertising to be more like search advertising. Giving all the attributes of search advertising to display advertising increases the profitability for advertisers and publishers all along the chain. There is a long way to go, but technologies like retargeting are making it possible to bring the profitability of display advertising closer to that of search advertising. The retargeting business model still has a scaling problem, but if there are no more legal issues around privacy, ad exhanges and new technologies will solve this problem in the next few years.

One of the rules I follow to see if an advertising business makes sense is to see how many successful competitors Google has in every one of their advertising products. If, for example, I take Google Analytics and try to identify competitors to see how they are doing financially, I can see that it is a tough business model. But if I do the same exercice with retargeting, I can see that there are some companies that have impressive financial results. Companies like Criteo or MyThings are succeeding under the long Google shadow, having grown like no other advertising companies in the last four years. Making display advertising work like search advertising is one of the big trends that the industry is facing after having shown that there is a big business behind it. Will Facebook, like Google, introduce retargeting capabilities into Facebook Ads?

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Facebook Goes Financially Social - II

Financial markets can make mistakes. They can even create bubbles and burn what it took them decades to build. But in a single IPO with plenty of unusual issues, the market has reliable mechanisms to deliver its opinion. And that is what happened with the Facebook IPO. The market, the current financial market, the one that is digesting all the excesses of the recent past, said that they do not want more doubts about the value of a company and the price of their shares. If you want to raise a lot of money from the market, you need to show really good financials. As good as your online competitors. This was not the case for Facebook, so the financial market decided to give them more time and see what they will be able to do in the future.

But how is it possible that an online company with more than 900 million registered users is not able to succeed in their IPO? The first answer is because of the price of their stock. It was too high compared with their fundamental financials and ratios. The second answer is that Facebook could generate greater revenue than they are currently, just by taking another approach to their incredible success. What I mean is that if you are the one and only in the social media arena, try to focus just on this fantastic achievement and do not try to compete in other areas where you do not have the expertise.

I am talking about advertising and the fact that if Facebook could just partner with Google to monetize all their online traffic, they could cut their staff by fifty percent and become one of the best internet companies ever in terms of profitability. They would have an incredible business model based on user content generation with high profit margins. But egos play important roles in the differents acts of a company's life. Facebook has demonstrated that their battle for the online advertising business did not come from an accurate business strategy. Trying to be more GAP than GAP is what killed Fruit of the Loom, so trying to be more Google than Google in the online advertising business could kill Facebook. Google has to analyze their G+ strategy in the same framework, but Google has the advantage that they are a cash machine.

So, what happend if you bought into the Facebook IPO? You will need to wait some years to see how the company manages their growth. Until shares go over the IPO price, we will be vigilent about Facebook's strategy to monetize their huge online traffic and how the company reduces their expenses to increase profit margins. The sooner Facebook understands that they will no be able to compete with Google in the online advertising business, the better for their shareholders, the new "registered" users that Facebook has to take care of.

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Facebook Goes Financially Social

The Facebook IPO is around the corner. So finally the social network will be financially social as well. Everyone can have a little piece of Facebook. This incredible web page engages millions of people around the world. It is amazing how many hours per week people spend on Facebook: some estimate 14 hours just sharing, discovering, talking, living digitally. A friend once told me that the current global economic crisis is due to the decrease in productivity because of Facebook. People are always on Facebook!

But is Facebook a good enough business to make money for their investors? That is another question. Audience does not mean revenues, and revenues do not mean profits. Facebook has a long way to go to become an Apple or a Google. They have all the assets, but online advertising and ecommerce are tough businesses that require time and technology to scale. And Facebook needs a super scaling to reach the financial expectations that they have created.

So, will you invest in the Facebook IPO?

I would say yes! Even if I know that the valuation is high and the current shareholders may sell part of their shares in hours, if I do not invest in this IPO, when will I invest in an Internet IPO? I believe that there will be a huge demand for Facebook stock because people use, live and are part of Facebook. It is that simple. And if I have to keep my Facebook shares for many years because I cannot sell them without loosing money, I can always create a page on Facebook and rail against them on my wall! Facebook is here to stay and the only thing you need is patience to see how the company will build their success.

We will see next week how the IPO went! ;-)

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The Clone Wars

There is a big debate nowadays about companies and entrepreneurs who copy successful new businesses. Many people argue that these copies are just a sign of low creativity and lack of innovation. They criticize what those companies and entrepreneurs are doing when they clone software, ideas and business models. They see this activity at the edge of the ethical in intellectual property. They see it as a bad thing to do.

Innovation is a hard word. It implies so many different things that are hard to achieve. We use the word innovation like a commodity in our sentences, but the fact is that innovation rarely happens and is noteable in its absence. Disruption, division, break, interruption, separation, severance, splitting are needed in the innovation process, but not many people are willing to take the risk that innovation implies. Not too many people want to live their lives under the weight of innovation. They do not want to live outside established boundaries. They want to be part of something; to be disruptive, but in just the right measure. That is why the financial ecosystem creates a market to standarize innovation. Silicon Valley is the example of this financial ecosystem that protects innovation against the usual way of life.

But history demonstrates that innovation usually happens where no one expects. So if innovations fall apart because they have not happend in Silicon Valley for example, or  Silicon Valley is in crisis, how can you continue to innovate? My answer is by repetition. By boring repetition.That is, repeating is so boring that people need to move away from it, and that is where innovation can happen. That is when disruption, division, break, interruption, separation, severance, splitting are necessary to reach another reality that makes us forget our boring repetitive past.

From this point of view I see the clone wars as a perfect instrument for innovation. Companies that are successful because they have copied profitable products, services and business models, can invest their profits to move away from their boring and repetitive activities and find new ways to take risks and innovate. So from this particular point of view, the era of clones is just another sign that in the following years we will see many innovations emerge from inside of the clones. And this is a good thing!

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Google Brand Activate Strategy

Ninetyfive percent of Google's revenue is advertising. So every anouncement that the company makes related to this subject has to be carefully studied. The last anouncement is related to online display advertising and the new metrics they are launching to deliver a better understanding about online campaigns in display, video and mobile ad formats to advertisers.

From Zach Rodgers at AdExchanger.com we see the following:

Google has upped the ante in display ad measurement with products in two categories that appear to be gaining traction with large brand advertisers. The new technologies enable campaign reporting based on "viewable" impressions and GRPs, and are baked into DoubleClick’s ad management suite as part of a new product initiative called Brand Activate.

The viewable impression product, called Active View, will allow ad buyers to credit only those impressions that are visible to an end user. (The Interactive Advertising Bureau proposed the industry move to a viewable standard last September,) Google previously offered a related capability through above-the-fold targeting, which has gained considerable traction, according to Neal Mohan, VP for display ad products.

With Active View, the company joins a growing family of vendors -- including C3 Metrics, Realvu, and comScore -- that help ad buyers measure only those impressions that are potentially visible to a user. This can mean not only discounting ads that are below the fold, but also those that are rendered incompletely, hidden behind other page elements, or screened by ad blocking software, for example.

Meanwhile the new ratings point product, Active GRP, is now available to DoubleClick for Advertisers clients through a pilot program. The technology works in tandem with Active View to estimate the TV-friendly reach and frequency a campaign achieved with its target demographic through a combination of aggregated (panel) and anonymous data.

At least one big brand is enthused. In a prepared statement shared through Google, Rick Hosfield, General Mills VP of content planning and distribution, said, “We are very interested in Google's Brand Activate initiative to help guide our understanding of how to optimize our brands’ performance in real time and across all platforms. Our interest is in identifying and using the metrics that matter most, especially those that allow for easy comparison between digital and TV.  We are excited to begin the journey and learn together.

Google is seeking Media Ratings Council accreditation for both Active View and Active GRP products.

With Brand Activate, Google is making the first move to implement TV advertising metrics into the online world.

Display advertising has pushed CPM, CPC and CPA rates down in the past few years for Google. The integration between Adwords, Adsense, DoubleClick and ADX is showing that it will be hard for Google to combine all this business models without hurting their prices. Display advertising pushes prices down because conversions are lower than in the search space.

Google needs to give some fresh air to their display business model and move it away from the Adwords claim "It's about results". So they are opening a new debate about how to market their online display, video and mobile advertising with their Brand Active approach. If Google could sell all their Youtube video inventory based on TV advertising rates, they could make more money than they are doing right now.

Google has become an enourmous online publisher, competing against Facebook, the other audience big online property. So Google needs, as every publisher does, to leverage the value of their online audience by giving the right price to their online display advertising. For Google, selling audience could be a much better business than selling conversions.

So Google has started its own strategy to sell their audience like TV has for decades and to try to earn more money from it. The big question is if advertisers will embrace the new metrics and approach after having tasted the same advertising products at lower rates. Google will need to convince advertisers with technology and audience results, and form a lobby with other big online publishers. The battle has just began, this time will Facebook and Google work together for it?

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The Chief Revenue Officer: Every Impression Counts!

Online media is making its desert crossing to profitability. Good content will always be an important business in the digital era, but how we generate it and how we manage our business operations around it is crucial for our business success. The online media business is still based on advertising revenues, but the online advertising sector has experienced big changes in the last decade.

Online media generate advertising impressions that have to be sold to advertisers at their maximum price. This business is based on technology and on traditional sales operations. But in the last several years technology is making the online advertising business more sophisticated and online media properties need new expertise on their teams to maximize the value and the price of their advertising inventory. Many companies and technologies have emerged to improve income from online properties. The final result is that RPMs or eCPMs have not increased too much and managing online advertising sales operations is more complicated than it was some years ago.

So what can an online media do to increase the value and price of their inventory in order to generate more revenue? The answer is: "Every impression counts". Online media properties have to integrate the idea that there is no unsold inventory anymore into their business culture, and selling every impression that they generate has to be an absolute obsession. A new kind of manager appears to be key: the Chief Revenue Officer. The one who is always making sure to understand how to sell every impression at the highest price. The one who always has in mind that every impressions counts!

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The Labor Market in The Cloud

Internet is everywhere at anytime. We work on the internet sending emails, searching and sharing. Our organisations are online, executing their objectives and achieving their goals. Our teams work in the cloud and in many cases there is no difference between being at the office or working outside. Only productive meetings make the difference at the office. The rest can be done even better if you pay full attention to it without being disturbed by the daily routine of an organization. Business productivity can be reviewed if you think about how you could work in the cloud.

Companies that are using the cloud to compete and grow are used to being geographically distributed. They understand that they can achieve their goals spending less money. Productivity is based on results and they minimize their infrastructure costs. Workers at these companies do their jobs as if they were freelancers. They work focused on results. They avoid office time wasters. If the company is well managed, results of working in the cloud can be spectacular when you compare them to the average productivity of an office.

But where is the real opportunity in embrancing this new business culture? The opportunity is to extend this approach to every process of the company, looking for resources that can work in the cloud to take advantage of the difference in the cost structures between regions and countries. You can have your customer support team in India, or your online marketing agency in South America. If you know how to use technology and your company is ready for it, you can have enormous success by using a freelance labor force working outside your company and being paid in other regions where labor costs are lower.

Big companies have understood this for many years, now is the turn for small companies. This will be the real revolution in the labour market in the next years: when small companies see how crucial is to embrace cloud technology mixed with freelancers. The labor market will be in the cloud. Companies will be in the cloud.

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Raspberry Pi, Another Paradigm

For less than USD 25.00 you can have a computer through your TV thanks to Raspberry Pi, an extraordinary simple, tiny and cheap computer.

From their website:

"The Raspberry Pi is a credit-card sized computer that plugs into your TV and a keyboard. It’s a capable little PC which can be used for many of the things that your desktop PC does, like spreadsheets, word-processing and games. It also plays high-definition video. We want to see it being used by kids all over the world to learn programming."

But the best part of it is when the team says:

"We want to see cheap, accessible, programmable computers everywhere; we actively encourage other companies to clone what we’re doing. We want to break the paradigm where without spending hundreds of pounds on a PC, families can’t use the internet. We want owning a truly personal computer to be normal for children. We think that 2012 is going to be a very exciting year."

Can you image someone at Apple saying those things? Or chez Microsoft? Of course not.

Many things have changed in the last decade...

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Inbound Marketing, The Real Cost of The Digital Era

If we take a look at the definition of inbound marketing from Trustemedia.com we find that it is a marketing strategy where businesses implement tactics to "get found" by customers. Inbound marketing, as opposed to outbound marketing, involves creating and providing valuable content for your customers, promoting your remarkable content, building customer relationships, and overall "pulling" the customer toward you. Inbound marketing strategies create brand awareness, improve search engine optimization, create thought leadership, develop valuable customer relationships, establish credibility, and build trustworthy reputations.

In an internet that is becoming more social every day, inbound marketing seems to be something that cannot be left out of your online marketing strategy. But can companies afford the cost to produce and manage the content and relationships that this new marketing vision implies? Is it possible for a medium size company to begin to create content about their products or services and create value around them to establish credibility and drive more sales? Are most of the companies ready to embrace this new trend after having invested part of their online marketing efforts in the pre-social media marketing era?

Only companies that follow a lean strategy in every part of their business will be able to confront the real cost of the digital era: to become part of the conversation. Companies that have no focus on what they are doing and how they are doing it will suffer the financial pain of inbound marketing: not to be able to measure the profitability of their marketing investment. To be small and lean is crucial to succeed in the digital era. Niche companies will conquer their online space faster than mass market companies who will see how their efforts to generate quality content are much more expensive and less profitable. If you have a business based on a single product or business and you are solving a true problem by delivering value to your customers, inbound marketing strategies can amplify your mission and drive more sales through the conversations that you will establish with your potential customers. But beware, inbound marketing is the real cost of the digital era.

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