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Saturday, June 18, 2005

Bringing New Meaning to the Phrase "Google Cash"

Loose lips have leaked the rumor that Google is planning to offer an online payment service. I guess when you're planning something as big as taking PayPal on, word tends to get out.

No one is confirming this yet.

The timing of this is interesting in light of a possible short-term drop in (or at least slowing of) the revenues Google reaps from the content targeting side of its ad program. I've been convinced for some time that Google would eventually pick an opportune moment to atone for its flawed implementation of the AdSense program, by severely cutting back on the revenues paid to low-quality publisher partners. A revenue hit wouldn't be welcome on Wall Street. And for all of their IPO bravado to the effect that they wouldn't pay attention to short-term market fluctuations, Google management have no doubt come to understand the value of inflated or at least steady stock valuations when they're playing for keeps against fewer, larger, competitors -- primarily Microsoft and Yahoo, but also eBay and Amazon. Pulling the plug on AdSense revenues would be too drastic.

So Google at some point decided to change their approach to how AdSense worked. From a certain angle it looks like a series of incremental steps: "smart pricing," better policing of low-quality partners, a beta test of a publisher exclude feature, etc.

Now, however, with the release of Site Targeting, Google has a whole new approach to content targeting, one that will, at least for awhile, run concurrently with the old approach. The old approach limited control by advertisers over the locations of their ads, but the benefit was relevancy and paying only when someone clicked. The drawback was that clicks were often low-quality or fraudulent.

The new program is CPM-based and allows publishers and advertisers to make a marketplace. From the advertiser standpoint, if you play with the interface, you'll be allowed to pore over big lists of potential sites to show your ads on. I'm sure more than a few long-suffering advertisers are experiencing a perverse glee at seeing lists of their "old friends" -- all those terrible sites that didn't convert -- mixed with lists of high-quality sites they would love to show up on. I predict that a large number of advertisers will vote with their mouse clicks, and really put a dent in those unrecognizable, contentless sites' pocketbooks.

Once the program seems to work, I doubt Google will keep the old one around for too long.

Danny Sullivan and others have long argued that search and content are different, so there is no need or logical sense to having them priced the same or run from the same interface. I tend to agree. Clients who want broader media buying are looking for different things than those who just want search. Those who want both can hire a qualified agency to manage each side appropriately.

Other than trying not to antagonize webmasters who have been making a living off AdSense, I can't think of very many reasons for Google keeping the old version of content targeting around. I think that very soon it will become evident that the old content program is merely being grandfathered for a set amount of time so as not to confuse or upset publishers and advertisers. Phasing out the old program will perhaps lead to a slackening of revenues, as with any painful economic transition. In this case, the transition can be boiled down to moving advertisers dollars from bad publishers to good ones. In the long run, that should strengthen the fundamentals of online advertising and attract more advertisers to the party.

By way of keeping the markets interested in Google's growth story, and eventually finding a potentially huge revenue vein to reinvigorate growth as advertising revenue growth slows, this Google payment processing initiative comes at an opportune time indeed.

Posted by Andrew | | | Permalink

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Friday, June 17, 2005

AdWords Site Targeting Goes Live

After a beta test period proved successful, all Google AdWords advertisers can now access a "site targeting" feature for content-targeted ads, so they can control what partner sites their ads appear on. Placement will be auction-based, with CPM rates starting at $2.

Now that's smart.

As argued before in this space, this could get pricey. One way that some advertisers might choose to approach this is to narrowly experiment with just appearing on some prime Internet real estate, even if the cost is a bit steep. If you're going to burn cash for visibility, at least you want to do so in such a way that you and your company's management control the delivery of the message. If you aren't fussy about appearing all the time, you could still bid $2 CPM and be seen regularly by your target audience, building awareness over time.

Posted by Andrew | | | Permalink

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But Will it Play in Prince George?

You might want to disregard everything I said about there being a market for "smart" in sport.

Some sports fans debate Stimpmeter readings, marvel at triple lutzes, and argue about whether the formula for the quarterback rating should be changed.

Others pay good money to watch goons smack each other in the mouth. Hey, bring the kids. Even though face shields have been mandatory equipment for minor hockey players right up to major junior for the past 20 years... slugfests are hockey, aren't they?

And that's what keep this big ol' ball we call Earth spinnin'.

Bonus audio coverage: Bobby Clobber weighs in on the NHL Strike.


Posted by Andrew | | | Permalink

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Tuesday, June 14, 2005

VOIP: Advantage, Yahoo

Yahoo buys VOIP technology provider DialPad.

In the future, will you use something like Yahoo Voice or Google Phone instead of the old ways of calling people? It sure seems likely. I guess you'll probably use whatever seems easiest, cheapest, and coolest.

Posted by Andrew | | | Permalink

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The Market for Smart: Does Hockey Need Some PhD's?

In the seemingly-off-topic-but-not-really dept.:

I've come across a rarity: an online reference to "hockey and sabermetrics."

Hockey's woes are so severe today that few Americans will care once the sport resumes play in the fall, if it does.

Why is it that such a deep, unshakeable market has grown up around the other major sports, but not hockey? I don't buy that it's Canada's game. The old six-team NHL inspired a ton of loyalty in Boston, New York, Detroit, Chicago. The Philadelphia Flyers ruled the 1970's (that would be part of the problem, likely). And who can forget the glory days of the old Buffalo Sabres.

Baseball, in spite of the many body blows it's taken, continues to hold viewer interest. Football fans are rabid, and armchair analysts (in the annual office pool) are becoming more rabid all the time.

Could it be that when you're not playing something, you'd better feel like you're involved in some way? Even your average joe likes to swap stats. And since Michael Lewis wrote Moneyball, people even talk about changing approaches to interpreting stats. Viewers are looking at a game that has stood the test of time for well over a century, and asking themselves: is the steal overvalued? Why is our stupid leadoff hitter still swinging at first pitches? Did Player X - the one with the .385 batting average - almost not get drafted just because he was short and ugly?

The beauty of sabermetrics (and baseball, and football too, in all of its complexity) is that it makes a great "date sport." The "man" can impress his date with his superior analytical mind, and she can pretend to be impressed. If she should surprise him with her grasp of the complexities, he just might fall in love. That'll sell a bunch of tickets, at least for a few seasons.

Football, for all its mayhem, has complicated coverages, and stats galore.

Hockey? It's never really been like that. In spite of a few wonderful ambassadors like Gretzky, Lemieux, and Bossy, the culture of the sport has generally been kept at the troglodyte level. The "old coaches" love to govern with fear and superstition -- much like the semi-literate "old scouts" described by Lewis in Moneyball. The ones who are slowly being replaced by number-crunchers.

Unlike football and baseball, hockey is a flow game. If the ice were widened and whistles minimized, it would actually be the best game going. The analysis of stats wouldn't be as extensive, and they'd be different kinds of stats. But it's what a modern game needs to make the office pools worth playing, to provide the kind of white-collar, armchair-expert discourse that keeps people talking. "Real guys" can also argue about cheap shot artists and acceptable hockey hair length if they want.

The state of statistical analysis in hockey is utterly maddening. Think about the key statistic in baseball: the batting average. Did you ever hear a ballplayer being judged by the absolute number of hits he gets (unless it's a lot)? Yet in hockey, a player who plays seven minutes a game is routinely described by his "15 goal season" or "he only has six goals in the first half." Some supposed superstars are on the ice 30 minutes a game. Shouldn't we be looking at "points per minute played"?

In general, hockey needs to smarten up a bit and get a bit of an image makeover. The old hockey men need to change their stripes. A bean counter like Gary Bettman can't motivate such changes. The sport needs gracious leaders and revolutionary thinkers -- the kinds of guys who played the game, and probably attracted their fair share of beatings for using big words, until the other guys found out they could defend themselves. Ken Dryden has left for parliament, and speaks too slowly. I dunno, maybe they should put that quipster Brett Hull in charge, and the first thing he should do is hire some marketing consultants and a few number-crunchers with PhD's. Such a good game, gone so wrong. It's because there is less of a market for "stupid" than people think, even in a fast, violent game.

They called boxing "the sweet science," didn't they?

Posted by Andrew | | | Permalink

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TV Ads Suck, AOL Decides

...so they plowed a big budget into search to attract people to their new portal.

Amazingly, this puts AOL ahead of the curve!

I don't hear the clatter of thousands of dominoes falling just yet, but the migration of dollars from broadcast to online advertising should accelerate as stories like this get around.

Posted by Andrew | | | Permalink

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Monday, June 13, 2005

BS'ers, Take Note

A note from 39,392 feet, or memories thereof:

Have you ever noticed how "search" (and information technology in general) seems to undermine BS with, well, facts?

Some airlines have little TV's in the backs of seats, and one of the channels is the plane's location, speed, and altitude.

On my WestJet flight home from Vancouver I often referred back to the "map channel," just to compare the lakes in real life with the lakes on the map, and of course to see how fast the plane was going, and how high it was.

Nodding off near sunset, I noticed a plane motoring in the opposite direction, off in the distance. A minute later, another plane flew by, much closer. Non-frequent-flyer, two rows up, called the flight attendant over to get some clarification on whether we were almost killed by some strange event. That's when the conversation took off in the direction of BS-land. "This plane is going about 750 miles per hour," stated the genial flight attendant, as I looked at the reading indicating we were doing about 580. It got worse. He said that usually the planes pass at least 1,000 feet apart, even though it looks closer. Then he came out with: "that's like 2 or 3 miles."

Anyway, the quasi-facts had the appropriate hypnotic effect.

The odd thing is, only a minority of us seem to want to (or be capable of) using basic 17th-century facts to measure up against what some yahoo may be rambling on about. Will the availability of facts at our fingertips, brought about by the Googles and Mapquests of the world, change this? One can dream.

Posted by Andrew | | | Permalink

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Five Questions

Pluggity-plug-plug. Ask a question, get an answer.

I'm on One Degree today.

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Fj*ked No More... Or Once More?

Harkening back to the boom-bust days is a useful way to gauge the seriousness of current plays that appear bubble-ish. To wit: art.com. They recently closed a $30 million round of VC funding before being bought out by AllPosters.com, for those scoring at home.

The official history on the company website notes that by 2000, it was one of a very rare breed of online retailers which were "cash flow positive." Perhaps this promise was what excited Getty Images so much when they bought them out for $200 million in cash and stock in 1999.

Clearly, the potential was overblown. Pud's crew danced a merry dance on the apparent grave of art.com in 2001 when the company hit a speedbump. Apparently it wasn't going so well. Art.com was dragging down its parent company.

It gets hazy after that, but all we know from the recent glowing reports from VC-land is that it was a heckuva good idea for the art.com people to "build a successful company for five years" and then get the $30 million, rather than "taking $10 million for a startup." This overlooks the fact that the founders probably had to raise cash (about $500,000) for the domain name when they launched the company (which they apparently did, in the initial round of VC), and the fact that Getty overpaid for the company shortly after it got going. So much for the slow build theory.

Anyway, art.com is either a growing powerhouse, or an example of VC neo-bubble thinking that hopes to sell the company to a greater fool for a greater valuation. Either way, you can buy posters of dogs playing poker there. Hmm, come to think of it, that's some pretty cool art. I think this one's gonna do OK after all.

Edit: they're using my IP address to show the purchase price in $Cdn. Shut up! I'm liking these dogs more all the time.

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Sunday, June 12, 2005

Coming Soon to a Drab Cubicle Near You

"Nothing you could say could tear me away from..." iGuy?

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