DejaVu All Over Again?

November 28, 2007

Come with me back to the mid to late 90s. Remember those years?

Remember trying to find office space in and around the Bay area? First Tuesday meetings with three thousand green badged ‘entrepreneurs’ chasing three red-badged ‘VCs’ around the room? Remember pets.com, WebVan, boo.com and the million other startups hoping to make it into this brave new online world? The mass of money pouring into crazy no-hope projects for the slim chance of picking the right one? The multitude of companies who added an ‘e’ or an ‘i’ to the front of their names? Or a ‘.com’ at the end?

Remember all those companies whose sole method of ever making money was via advertising …?

Fast forward back to today and you may wonder whether anything has changed. Are we going through the same cycle again, you might ask?

I’d suggest the answer is probably ‘yes’ … and ‘no’.

Let’s look at the similarities to last time: there are certainly far too many ‘me too’ products, most of which will fail or be picked up in a fire sale. How many social networks or video sharing sites do we really need? Especially when there’s little to no differentiation between them. There are plenty of social news sites, but no’ones quite struck the right formula just yet (Digg may be close, but has its own issues to deal with). And we’ve got widget, wiki, blogging and portal offerings coming out of our ears. There’s a lot of investment money still to be had, even with the current squeeze on the US market, and a lot of online businesses offer free services in the hope of ad revenue.

There are some major differences though. Firstly the penetration of broadband, which lack of helped to kill companies like Boo (along with totally incompetent founders – more on that later) is now such that the user experience can be far richer. Video, immersive technologies such as Second Life, real-time communications, fancier Flash and Javascript effects, integrated voice and the like help with that greater level of interactivity.

Secondly, whilst there are still plenty of ‘green-horns’ running web businesses, a lot of the companies this time around are run by those people who went through the first-round: for better or for worse. It doesn’t yet mean they necessarily know how to run a successful company, but you have to believe it helps.

I also think that in terms of advertising as a business model, whilst not perfect and whilst still very risky for most ventures, it is more viable than before. Platforms such as Google adsense and ad-words, Facebooks flyers and Beacon, the work that News Limited are doing on the MySpace and syndicated advertising platform mean there’s a lot more serious and targeted effort being put in now than the simple sale of banner-ads or annoying pop-ups. Acquisitions by the big players of companies like eQuantive and the like ensure major investment in this field. That coupled with the drop-off in traditional advertising means that there’s a potential gap to fill (although, for now, the drop off in offlline advertising isn’t being reflected 1:1 online – by a long way).

There will still be large challenges to this model, not least of which a number of privacy issues yet to be fully resolved, but you have to believe that whilst the gold rush dreams should well and truly be put-aside, there’s still some pretty decent money to be made in them thar hills!

If there’s a common thread, it’s that whilst plenty of silly businesses have and will perish in both rounds, the basic tenets of business online have survived and there are plenty doing it well (see the acquisition of Homestead recently as a prime example of survival!)

Predictors of another bubble burst and predictors of nothing but flowers and glory will, in my humble opinion, both be wrong!

(oh, the story about Boo. Nothing too exciting, but I saw Ernst Malmsten and Kajsa Leander presenting at a First Tuesday event in London in the late 90s, and I have to say that if you can predict a companies future by the terrible performance of its leaders – especially Ernst – you would have been pulling your money out as fast as you could!)

PS: looks like boo.com is now a travel company of sorts

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Santa .. Sponsored By ..

November 26, 2007

This weekend we went along to watch the first Sydney Christmas parade. Loosely modeled on the Macey’s Thanksgiving parade in New York (minus the giant balloon figures), the event attracted over 50,000 people according to media reports.

The thing that struck me though was how horribly corporate it all was. Perhaps I was just young and naive, but as a kid I remember watching parades where the floats were clearly knocked up in someone’s garage by a couple of blokes at the weekend. Dodgy plywood strapped on top of an old van and costumes made from old curtains and papier mache sufficed.

I’m no longer naive enough to believe these things are free, or that advertising doesn’t invade every aspect of our day to day lives, but I was somewhat bemused by some of the participants: The Sydney JetBoat? Austar Cable TV? Ronald McDonald? Santa sponsored by the Daily Telegraph?

Maybe I’m just a grumpy git – all the kids around me in the crowd still loved seeing Santa and couldn’t have cared less if he were sponsored by Haliburton. As for some of the others though .. I think I managed to annoy my wife by stating loudly ‘look, here comes an advert for ..’ every time a new group came past 🙂

Have I lost the plot, or just a sign of the times?


Facebook Advertising Platform

November 22, 2007

A short while ago Facebook announced the release of their advertising platform. Given that I had written about that previously, and was in need of some fresh ideas for advertising the Thursday Club (side-project), I decided to give it a go.

Setting up a campaign is a pretty straightforward process. You select the criteria for your audience segmentation, starting with the geography (I’d love to have the option to select ‘World’, but you have to start at a particular country – although you can run multiple campaigns simultaneously in different countries). You can also select gender, age ranges and target keywords to further define your audience. I do like the fact that as you select each keyword you are shown a tally of the number of people that match your criteria. I’m sure someone could reverse engineer some interesting statistics out of that.

It doesn’t appear that the keywords currently include group membership, or much other than a persons direct interests.

You can then create some simple text copy (think basic Google adword style) and optionally upload a picture. If you have a company page, you can also choose to include related information from that. Finally, select how much you’d like to pay per click or per view (I chose ‘per-click’) and that’s pretty much it. You can set timeframes for your campaign and maximum spends per day.

I would recommend experimenting with the CPC rate you bid as you can go from zero impressions to many thousands through some very small adjustments. You can see the effects almost straight away. Current click-through rates are pretty low, but that may be a function of my test ad-copy too 🙂

Overall though I like it. The operation is pretty much identical to how I perceived it might work, bar some limitations on granularity. It would also be nice to get some clarity on exactly where these ads show up.

I’ll let you know what affect this has on traffic to my site, but as of now (24 hours after starting) there have been 5000+ ad impressions which I don’t think is too shabby.

I’ll also be experimenting with some much more targeted ads with a small number of potential viewers.

Stay tuned!