It’s been a while since my last post here. My excuse is summer and that I have been very busy fly-fishing for salmon and getting married!
Know that I am back I would like to tell you a bit more about a subject that I have touched on before, Barack Obama. As you know he is running for president in the US and he apparently has a good web team helping him out. But I did not know how good they actually where!
During a flight to Russia this summer I came across an article in the economist on Obamas very successful donation campaign. Apparently he is miles ahead of Clinton and the others. That doesn’t interest me much but the way he got the money did. Apparently he got a lot of money from thousands and thousands of very small donations. How? He has set up an affiliate program for donations. Absolutely brilliant! Anyone can create an Obama site of their own and have people donate money on it. The minimum amount you have to donate is close to nothing, making the barrier for donation very little. And it doesn’t matter that people donate small amounts as long as Obama has a big distribution platform. The result speaks for its self, Obama is King of online donations.
So what do we have here if it’s not “long tail politics” or the Google of politics? Penny by penny, vote by vote.
It was funny reading the other candidates response to Obamas success, they didn’t have a clue!
The same could be said for the political parties in my own country. I would love to help you out as long as you are not a member of Fremskrittspartiet!
Tuesday, August 14, 2007
Tuesday, June 19, 2007
On the macro side of things, by Even Aas-Eng
The web is growing, everybody knows that. But what is the commercial online potential, how much money can google make? How big will ebay grow? How many people will use Skype in five years? And how many will be fooled into buying a book they certainly don’t need by amazons great cross sell functionality in eight years? I off course don’t know the answer to any of these questions but I know that the potential is huge and we haven’t seen anything yet.
As I once lived in India I am trying to keep up with the digital development in the country and I stumbled over an article last week that describes the potential that I mentioned above pretty good. Here are some quick facts:
- 9% internet penetration among urban Indians (total urban population 336 million)
- 83% broadband penetration of those connected
- No numbers available for rural India, we are taking about 800 million people!
- The internet population has grown about 30% year on year
In other words, we have a long way to go in India and let’s not even get started on China. I think that we will see an unprecedented growth in online usage among the growing Indian middleclass the next five years. So let’s assume that the total number of Indians connected in five years is 200 million and that we have the same number in China. Then we add some millions of new user from other developing economies and suddenly the global online world has grown by almost 100%
If Google keeps their market share they will generate around 60-80 billion USD in ad revenue (I am sure they wont keep it though), amazon will have doubled the number of book sales and so on.
So I think that if you happen to know a company that’s working on the global online arena as a media player or in the ad-technology field, buying stock is probably not the dumbest thing you can do!
As I once lived in India I am trying to keep up with the digital development in the country and I stumbled over an article last week that describes the potential that I mentioned above pretty good. Here are some quick facts:
- 9% internet penetration among urban Indians (total urban population 336 million)
- 83% broadband penetration of those connected
- No numbers available for rural India, we are taking about 800 million people!
- The internet population has grown about 30% year on year
In other words, we have a long way to go in India and let’s not even get started on China. I think that we will see an unprecedented growth in online usage among the growing Indian middleclass the next five years. So let’s assume that the total number of Indians connected in five years is 200 million and that we have the same number in China. Then we add some millions of new user from other developing economies and suddenly the global online world has grown by almost 100%
If Google keeps their market share they will generate around 60-80 billion USD in ad revenue (I am sure they wont keep it though), amazon will have doubled the number of book sales and so on.
So I think that if you happen to know a company that’s working on the global online arena as a media player or in the ad-technology field, buying stock is probably not the dumbest thing you can do!
Friday, May 25, 2007
Look to Norway! Or not.... By Even Aas-Eng
My very good friend and COO of Compraventa in Spain (Spains largest classified site) Pablo Martin commented on my earlier post about the ad potential in youtube. He said that CPM prices in Norway have gone totally haywire and that in all other markets the average price per CPM is substantially lower. And he is right indeed.
I suggest that the rest of the online media world should follow the Norwegian online market closely in the times ahead. Why? The last three/four years we have experienced a massive growth in the spending on online media. The growth has mostly been driven by spending on display ads on the big online newspapers and portals. Unlike other markets we have spend little money on SEM/SEO og affiliate marketing (to my despair)
Spending on search is still a mere 10-14% of the total. In some areas Norway is a very sophisticated market in others we are completely lost. Even though this is an interesting discussion in itself lets not focus on that now.
So we spend money on display ads in Norway and we spend a lot. Who are the advertiser, mostly distribution players like the travel industry and other e-commerce companies. They have spent more and more money on the same ads every year as the prices have increased. The total number of user has also risen but not enough to defend the steep rise in prices. The result for the advertiser has been a weaker ROI year by year. But they still spend because they are still in positive territory.
Now it looks like we are getting closer to a tipping point. Prices and the CAC are getting so high that advertisers are starting to think twice about spending their budgets online. There is still growth but I think we might see a halt very soon. So what happens then?
We might experience a drop in media prices or at least a flattening. The other scenario is continuous growth. How can that happen? The keyword is brand advertising. When/If the big brand advertiser starts throwing more money online they might replace the distribution companies as the number one source of income. Brand advertiser has more money, they are willing to spend more money and they don’t measure ROI the same way. This “shift” in advertisers could lead to further revenue growth for online media companies. What will the distribution players do? They will spend more with google, yahoo, tradedoubler, advertising.com and others.
This is why I think that other countries should look to Norway, they might learn something about the future of their business. Or not!
I suggest that the rest of the online media world should follow the Norwegian online market closely in the times ahead. Why? The last three/four years we have experienced a massive growth in the spending on online media. The growth has mostly been driven by spending on display ads on the big online newspapers and portals. Unlike other markets we have spend little money on SEM/SEO og affiliate marketing (to my despair)
Spending on search is still a mere 10-14% of the total. In some areas Norway is a very sophisticated market in others we are completely lost. Even though this is an interesting discussion in itself lets not focus on that now.
So we spend money on display ads in Norway and we spend a lot. Who are the advertiser, mostly distribution players like the travel industry and other e-commerce companies. They have spent more and more money on the same ads every year as the prices have increased. The total number of user has also risen but not enough to defend the steep rise in prices. The result for the advertiser has been a weaker ROI year by year. But they still spend because they are still in positive territory.
Now it looks like we are getting closer to a tipping point. Prices and the CAC are getting so high that advertisers are starting to think twice about spending their budgets online. There is still growth but I think we might see a halt very soon. So what happens then?
We might experience a drop in media prices or at least a flattening. The other scenario is continuous growth. How can that happen? The keyword is brand advertising. When/If the big brand advertiser starts throwing more money online they might replace the distribution companies as the number one source of income. Brand advertiser has more money, they are willing to spend more money and they don’t measure ROI the same way. This “shift” in advertisers could lead to further revenue growth for online media companies. What will the distribution players do? They will spend more with google, yahoo, tradedoubler, advertising.com and others.
This is why I think that other countries should look to Norway, they might learn something about the future of their business. Or not!
Thursday, April 19, 2007
It’s all about the ads, by Even Aas-Eng
So Google buys Doubleclick, nobody should be surprised really. The price is steep but again it will pay off for Google. Let’s take a few steps back and look at why.
About a month ago Steve Balmer of Microsoft held a lecture where he described Google as a "one trick Pony". I wasn’t there but I guess he was pointing at the fact that Google only has monetized one product, search ads.
Mr Balmer is right and wrong at the same time. Approximately 94% of Google’s revenues are generated by ad sales. Looking at it like that Google doesn’t have many tricks! But what we need to look at is where the ad revenue is coming from.
Most marketing people only associate Google with text ads in search engines. But the fact is that about 46% of their ad revenue is generated through the adsense system. Don’t know what adsense is? Read up here http://en.wikipedia.org/wiki/Adsense
Adsense is "long tail" in practise. The adsense system enables Google to commercialize the long tail of web sites and that’s a pretty long tail! Google’s network of niche publishers using the adsense technology consist of several million web sites. And the real beauty of it is that it keeps on growing as the web grows. That is one of the reasons that adsense revenue has risen so sharply the past couple of years. 70 million blogs today, 140 million in one year? Imagine what that would mean for Google’s ad revenue, and they practically have no competition.
Previous Google deals with companies like Myspace and the You tube buyout has all been about one single thing, buying ad inventory. They are buying places to display their adsense ads. As mentioned in an earlier post on this blog this is a traffic sensitive business model. As long as the traffic is high Google will reap the rewards anyway. The acquisition of Doubleclick though is of a different kind.
Adsense ads has up to recently been text ads. Those days are gone and we are now seeing more and more display and video ads. Who buys those ads? Companies looking for brand awareness and companies that wants to communicate with their target audience. These companies are big and most of them use international agencies like the one I work for. Most of these companies don’t live in a "customer acquisition cost" type of world. They have parameters like demography, geography, annual income, gender, that decide where they allocate their budget. All the soft values that distribution maniacs like my self forgot years ago! My point is that the correctly targeted banner ad is not dead, it has just been reborn!
Up to now the adsense system has been limited in many ways. You can’t use third party ad-serving systems, it’s been poor on segmentation and the creative’s has been very limited indeed. This will change with a Doubleclick integration. Doubleclicks customers are the ones that Google now tries to please. It’s no longer the long tail of small and medium size companies or the web-distribution giants that Google are targeting. It’s the big FMCG companies, the automakers, the telecom giants and so on. These companies need data, they need flexibility and they make decisions based on other values than Amazon or Expedia. Doubleclick will provide just that.
So the Doubleclick acquisition will go down very well in the agency world and with the companies we all want to play with. I am sorry Microsoft and Yahoo it was another smart move from Mountain View.
About a month ago Steve Balmer of Microsoft held a lecture where he described Google as a "one trick Pony". I wasn’t there but I guess he was pointing at the fact that Google only has monetized one product, search ads.
Mr Balmer is right and wrong at the same time. Approximately 94% of Google’s revenues are generated by ad sales. Looking at it like that Google doesn’t have many tricks! But what we need to look at is where the ad revenue is coming from.
Most marketing people only associate Google with text ads in search engines. But the fact is that about 46% of their ad revenue is generated through the adsense system. Don’t know what adsense is? Read up here http://en.wikipedia.org/wiki/Adsense
Adsense is "long tail" in practise. The adsense system enables Google to commercialize the long tail of web sites and that’s a pretty long tail! Google’s network of niche publishers using the adsense technology consist of several million web sites. And the real beauty of it is that it keeps on growing as the web grows. That is one of the reasons that adsense revenue has risen so sharply the past couple of years. 70 million blogs today, 140 million in one year? Imagine what that would mean for Google’s ad revenue, and they practically have no competition.
Previous Google deals with companies like Myspace and the You tube buyout has all been about one single thing, buying ad inventory. They are buying places to display their adsense ads. As mentioned in an earlier post on this blog this is a traffic sensitive business model. As long as the traffic is high Google will reap the rewards anyway. The acquisition of Doubleclick though is of a different kind.
Adsense ads has up to recently been text ads. Those days are gone and we are now seeing more and more display and video ads. Who buys those ads? Companies looking for brand awareness and companies that wants to communicate with their target audience. These companies are big and most of them use international agencies like the one I work for. Most of these companies don’t live in a "customer acquisition cost" type of world. They have parameters like demography, geography, annual income, gender, that decide where they allocate their budget. All the soft values that distribution maniacs like my self forgot years ago! My point is that the correctly targeted banner ad is not dead, it has just been reborn!
Up to now the adsense system has been limited in many ways. You can’t use third party ad-serving systems, it’s been poor on segmentation and the creative’s has been very limited indeed. This will change with a Doubleclick integration. Doubleclicks customers are the ones that Google now tries to please. It’s no longer the long tail of small and medium size companies or the web-distribution giants that Google are targeting. It’s the big FMCG companies, the automakers, the telecom giants and so on. These companies need data, they need flexibility and they make decisions based on other values than Amazon or Expedia. Doubleclick will provide just that.
So the Doubleclick acquisition will go down very well in the agency world and with the companies we all want to play with. I am sorry Microsoft and Yahoo it was another smart move from Mountain View.
Tuesday, April 17, 2007
Google buys Doubleclick, by Even Aas-Eng
I will comment on this when I have time but if you are interested you can check out this FAQ that Google released regarding its acquisition.
http://216.239.57.110/blog_resources/DC_FAQ.pdf
http://216.239.57.110/blog_resources/DC_FAQ.pdf
Monday, April 16, 2007
Hello, My Name Is Gord, And I’ve Been Behaviorally Targeted, by Even Aas-Eng
Here is a great example of why it works and some interesting points on why we should be a bit careful. http://blogs.mediapost.com/search_insider/?p=507
Wednesday, April 11, 2007
What’s new? Demographic targeting. By Even Aas-Eng
MSN has for a while offered the option of buying demographic targeted ads. The segmentation is based on passport logins and windows live id. With the introduction of adcenter, Microsoft’s ad words competitor, demographic targeting has reached the search arena as well. And apparently with good results. According to searchenginewatch several clients has experienced a drastic decrease in cost per action using the new tool. And its good news for Microsoft, this is probably the first innovation within search that they launch before Google or yahoo.
So while Microsoft launches demographic search, Google goes the other way and launches demographic banner advertisement in their site targeting network. A interesting move that should suite the agency world well. The data used to perform the segmentation comes from comscore who has gathered demographic information about sites taking part in Google’s site targeting program. So offline segmentation goes online, why did it take so long?
You can read more about demo-targeting in adcenter here:
http://advertising.microsoft.com/demographic-targeting-report
And Google demo-targeting here:
https://adwords.google.com/support/bin/answer.py?answer=33743
So while Microsoft launches demographic search, Google goes the other way and launches demographic banner advertisement in their site targeting network. A interesting move that should suite the agency world well. The data used to perform the segmentation comes from comscore who has gathered demographic information about sites taking part in Google’s site targeting program. So offline segmentation goes online, why did it take so long?
You can read more about demo-targeting in adcenter here:
http://advertising.microsoft.com/demographic-targeting-report
And Google demo-targeting here:
https://adwords.google.com/support/bin/answer.py?answer=33743
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