Mantic Media

A big shot at Viacom is echoing the sentiment of my earlier post about portals losing traffic and ad dollars to niche sites:

The Web is fragmenting in a big way. People are using search to find what they are looking for, and they want to go deep into what their passions are.

Depending on the surveys you see … over 50% [of Web surfers] are using search as their electronic program guide. They’re typing into a search box for what they want and they go in deep. That tends to bypass the portal model.

So instead of being told what to look at, people are using search to find it for themselves. Makes sense because more high quality niche content sites are popping up to service those queries.

In addition to Google and Yahoo, people are also using human driven aggregators like Twitter (follow me), Delicious, Digg, StumbleUpon, et al, to find recommendations.

Reminds me of the day I discovered social media. Browsing Digg and Del.icio.us introduced me to great content I never would have found otherwise. More people make the same discovery every day.

This is the entrepreneurial marketer’s dream. Create something great, throw it out there, and the users will spread it for you.

The portals have 2 choices: devote themselves to search and the network business (Google) or move into the niche content business (Yahoo). As Calacanis astutely points out, the second option directly under cuts the first.

The margins are much higher for search, but Yahoo is getting crushed there. Competing with potential partners (eg niche content sites) will only exacerbate that problem.

Things are not looking good for Yahoo, but they are for the little guys who want to build a business around a passion, for users as passionate as they are.

The first era of the web was about digital interactions substituting for person to person interactions. Instead of going to a real store to buy something, you buy from an online store. The details and circumstances of the interaction don’t change much, they just happen online now.

The next era of the web will be about interactions that could never have existed pre-web. This is going to shake things up, destroy many old businesses, and give birth to many new ones.

Take, for example, Redfin.

They have an intriguing and aggressive business model. Instead of providing useful real estate information to consumers and then pointing them to real estate professionals like competitors Trulia and Zillow, Redfin is doing their best to completely remove real estate agents and brokers from at least half of a home sale. [TechCrunch coverage]

In short, Redfin will help you find a house online and then help you buy it without employing a real estate agent.

And here’s the rub: they refund buyers 2/3 of the buy-side real estate fee AND usually negotiate a lower sale price. On average this saves buyers $13,650.

That’s not pocket change. It’s an amount buyers will love bragging to their friends about. Unless traditional real estate agents are willing to change they’re going to get crushed.

Well, if Digg isn’t going to implement my feature idea, it’s good to see that Mixx is going ahead with it.

Convenient that I wrote a bit about conversational marketing the other day, as Starbucks just launched a major interactive marketing campaign.

They’ve created a site where users can contribute ideas for improving Starbucks and vote on the ideas of others. It’s very well executed and seems to be getting good participation.

This isn’t a place for Starbucks to push their message. It’s a way for them to listen and draw customers into a community centered around the Starbucks experience. There is a lot of dialogue going on and a feeling of inclusion.

This is a site users could browse for an extended period, just because they’re interested in the content. It feels more like a conversation than an ad.

I’d say that’s a bit more effective than a banner or a 30 second TV spot.

Mike Arrington recently posted on the trend of blogs accepting venture capital and how the big ad revenue and media attention blogs are receiving has changed the nature of the medium.

His observations are inline with my own, and are the reason I’m bearish on blogging for money.

Once a blog becomes a business the dynamics change. Rather than being about the flow of ideas and active discussion, it becomes about money and politics.

Each link out is an opportunity to brown nose a superior, or failing that, a visitor lost to a competitor. Content is tailored to maximize traffic and attract lucrative sponsors.

As cliques solidify and fear/resentment builds it gets harder to gain traction every day.

Another reason blogging stinks as a business is that it’s driven by talent. If you are the talent, then you can start off as solo act, bootstrap for the first couple years, and hopefully generate enough revenue to hire more talent. But forget about an exit.

Blogging is anti-entrepreneurial, in the sense that the blog founder (unless they can afford to hire top talent from the start) is inextricably tied to the business and the brand.

For economic reasons, the top players will eventually consolidate, either through acquisitions by big media companies or mergers where “the top talent band together in a company where they each have an equity stake”.

With this statement Arrington reveals his ambitions for the TechCrunch empire.

Lots of interesting reading today, and a lot of big news to consider. In case you’ve been away, the financial markets are ablaze (not literally but close) with the collapse of Bear Stearns. I won’t pretend to know where this is going (if anyone does) but this not your average cyclical downturn. Until this plays out, I’ll hope for the best and hang on the words of those who know better.

But in online ads (non-search), people are starting to ask the tough questions, namely, do they work? And does anyone with a brain click on them?

The money quote comes from Jakon Nielson (via AdAge).

The basic point about the web is that it is not an advertising medium. The web is not a selling medium; it is a buying medium. It is user controlled, so the user controls, the user experiences.

Couldn’t agree more. But something’s missing. Nielson is right when it comes to the first generation of web ads (banners) and he also recognizes the effectiveness of search ads. But what about brands?

Battelle sees brands as the next revelation in online ads (as opposed to the mass networks like AdSense) and discusses value creation in the media business. His 3 part series on conversational vs. packaged goods media is a gem. He says the big brands are yet to fully embrace and utilize the web (as the direct marketers have). They are afraid, and justifiably so, of the horrors user generated content could inflict on their pristine creations.

This is a dilemma. How to protect brands, yet allow the interaction that embodies the web? Not possible, at least in the way we think of brands today. The web strips away image and reflects reality (or at least public perception).

But I think the NEXT BIG THING is the socialization of the transaction. Instead of going to someone else’s house buy goods, buyers go to a neutral site (similar to a real life market place) where they can interact with other buyers and gather information to make the purchasing decision.

People who want to buy, being shown the offers they want to see, with sellers competing for their dollars. And the parties engage in continuous dialogue.

I’ve been by captivated by his blog, Bubble Generation, and his thoughts on monetizing social networks.

It looks like Apple is getting closer to replacing my television as requested. Here are some sketches of the Apple DVR interface from a recent patent filing.

Not only does Google want advertisers to upload their entire budget to the Google system, they now want publishers to do the same with their ad inventory.

*Apologies for yet another GOOG post, but it seems like every big development in media involves them, Apple, or both.

Google wants to host every video on the web, and it’s willing to front the cost for that right: The barriers to video publishing are crumbling.

Google is giving developers access to the YouTube infrastructure. You’ll be able to combine the benefits of YouTube (free hosting, large distribution) with the advantages of maintaining a standalone site (retaining the user, the ability to serve ads).

This eliminates bandwidth costs and provides a compelling motive to build on the YouTube platform.

But there’s a catch. Google gets your video. It gets to monetize your channel page on YouTube and it gets to index your video (on YouTube) through its search results. What do you think will rank first, a video on mighty YouTube, or the same video on its creator’s site?

A conflict of interest is created when the company that indexes and ranks the web also owns a massive amount of the content in that index.

Regardless, the economic incentives to publishers are too big to resist. Bandwidth is a major cost for video sites and going through YouTube will drastically increase margins.

Look for major media companies and startup video sites to make deals with YouTube and for professionally driven content to explode on the web.

All under Google’s control. This is good for entrepreneurs and for the web, but it puts Google in a frightening position: with a stranglehold on both search and video.

This might not equal the magic cash machine of paid search, but it’s going to be huge.