Mantic Media

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.

SAI posts a summary of the Q&A between Google execs (Tim Armstrong and David Eun) and the bankers at Bear Stearns. The most notable bit:

Usually careful to downplay any competitive threat to traditional media, Armstrong dispensed with that notion in a talk Monday at Bear Stearns’ media conference in Palm Beach, Fla. Over time, he said, Google’s strategy is to have advertisers load their entire ad budgets into Google’s system, which would allocate spending across media whether online or offline.

Other important mentions include Google’s intention to ramp up monetization on YouTube and to quickly leverage the acquisition of DoubleClick to grab a large share of the display advertising market.

I wouldn’t bet against them on display ads, and as I said before, they are well positioned to become the dominant player in TV/digital video advertising as it converges.

All this, and the stock is threatening to drop below $400, nearly split in half in a few short months. Can’t wait to buy back into that on the other side of this recession.

So the story that has dominated Techmeme for the past 2 days is Mark Zuckerberg’s keynote from SXSW, or rather, how interviewer Sarah Lacy spectacularly ruined it.

I’ve read the bulk of the coverage and watched the video. Lacy clearly saw this as a career making event and intended to grab as much of the spotlight as possible.

She got a lot more of it than she bargained for. The real story here is the geek storm that erupted, in the audience, on blogs, Twitter, and now Digg. I’d feel bad for Lacy if this wasn’t good for her career. In two weeks few will care about the over blown debacle, but many will remember the attractive dark haired reporter who was all over the web.

Is this the future of media? Displease the audience and get booed off the stage in a Digg-style riot?

I hope not, or at least that these occurrences are rare. Because in the hurricane of Sarah Lacy bashing only a few have bothered to analyze the words of Zuck.

As GigaOm shrewdly points out, Zuck’s isn’t concerned with money or Facebook’s $15 billion valuation. They’re all about the vision at FB. This leads others to suggest that FB needs a pro CEO.

Wrong, but nice try. When considering what Zuck says it’s just as important to consider who he’s saying it to. SXSW is an audience of users and developers. These people are interested in the ideal of Facebook and most of all in development of the user experience.

They are not investors, concerned with monetization and valuation (see what Zuck says to those here), and he was right to feed them the dreamy user-topia shtick. Better to fib than risk becoming a sell out.

While FB does need an experienced exec, who’s to say that Sheryl Sandburg isn’t now pulling the strings. Zuck is crucial to the company as a media darling a la young Steve Jobs and a pre-IPO Apple. Facebook needs all the coverage it can get to maximize the eventual IPO.

Check out the lovely Lacy’s flailing post-interview interview below. She just got knocked down a peg or two.

This story caught my interest because it brushed against me personally.

Last year, when PickTheBrain was about 6 months old, I was contacted by a company called GeoSign. I spoke with their business development manager, Timothy Royston. They were interested in investing or acquiring the site. I told them my story and shared some traffic stats. They never got back to me with a proposal.

It was thrilling because GeoSign had just received $160 million in venture capital. One the largest sums ever for a VC deal. I scoured the web for info on the company but found surprisingly little. The properties listed in their media kit seemed middling at best.

Well evidently there was something fishy going on behind all that mysteriousness. GeoSign’s income was coming almost exclusively from Google AdSense through keyword arbitrage. They were buying cheap keywords from Google and Yahoo and directing visitors to pages filled entirely with higher paying ads.

And then Google pulled the plug. A $100 million a year in revenue evaporates. But there was never a business there. It was an exploitation of the system.

If you look at the web with a certain mindset there are numerous opportunities for exploitation and profit. Loopholes in the system that lead to easy money.

The lesson here is don’t waste your time. Don’t build up ways to exploit the system. These detract from the web and are eventually eliminated. They’re all take and no give.

The only business worth building is one that creates value.

Update: TechCrunch finally covers the story, getting GeoSign some of the infamy it deserves.

Good news for small and medium sized publishers. Web users are moving away from the portals and spending more time on niche sites. Accordingly, advertisers are spending more money on these sites, which offer superior audience targeting.

This makes a lot of sense. The portals are generic. They’re good for general mainstream news (sports, finance, etc.) but not much else. When you want content about the stuff that means a lot to you (but not a billion other people) you go somewhere more specific.

As the average internet user becomes more savvy, they’ll feel increasingly comfortable on smaller sites and be more willing to branch out. More people will understand that Yahoo/Google/MSN is not the internet. Social media sites like Digg make discovering niche sites increasingly easy.

The advantage the portals have always had is scale. How does your company reach a massive audience? But as the online ad industry matures and inventory from niche sites is consolidated, ad buyers will have more (and better) options.

This is vital to what we’re building at PeopleJam.

I started my first blog in November 2006 with hopes of developing a revenue generating machine. I was infatuated with the idea of escaping my day job, had aspirations as a writer, and a blog seemed like the perfect way to achieve both.

This worked out well. The blog became pretty popular and eventually I was able to generate some nice side income from it. But somewhere along the line the taste went sour. The blog wasn’t about the ideas and the writing. It was about traffic and ads and money money MONEY. Writing a post wasn’t something I got to do, it was something I had to do.

And that’s not for me anymore. The value of a blog isn’t the number of readers it has, but the quality of those readers, and the quality of the thought and discussion it creates. I think I can find another way to make money.

**This is in no way intended to knock blogs that make money. They perform a valuable service and deserve every penny they get. And yes, many have done an amazing job of maintaining integrity and becoming profitable.