A little bit about everything, by Even Aas-Eng

The problem with writing a blog about online media is that there is so much stuff happening all the time. That means that if you haven’t posted anything in a while it gets difficult to decide what to write about. That’s where I am today! So I have decided to do things a little bit differently this time and provide a summary of interesting events that have taken place the last month.

First Microsoft finally makes a move and invests in facebook. From the outside it resembles Googles deal with myspace a couple of years back. They are paying to distribute display and search ads, they are buying themselves a ad network. Microsoft is buying 1,6% of facebook for 240 million dollars, this values the company to 15 billion in total. This means that the price for social media has had a rising curve the past years… Murdoch bought myspace in 2005 for 580 million dollars and Google bought youtube for 1,65 billion in 2006.

Let’s stick with facebook. There have been rumours for a while that they would launch an ad concept with social targeting possibilities. This month the facebook flyer appeared and yes there are interesting segmentation options. But even more interesting is how this product resembles the adwords model. It’s a long tail tool open for small and medium sized companies and perfect for small local campaigns. You buy based on CPM or CPC with your own credit card. So the concept could really be the first adwords competitor to appear in quite some time. Unfortunately though the people I have spoken with that have tried it says that its full of bugs.

Okay, back to Microsoft. Their new exec Brian Mcandrews (former head of aquantive) has stated the bleeding obvious; display ads will trump search in the years to come. This is off course already the case in many European markets where SEM is playing catch up and I am sure it will happen in the states to. Apparently this is suppose to solve Microsoft’s challenges in the advertising market, it doesn’t. They still has to get into search (buy yahoo!) and they are also trailing googles enormous inventory for display ads (adsense/site targeting, youtube, myspace deal) A good start I guess would be to buy more of facebook so that they can sell display ads in the US as well, this is not covered by the deal mentioned above.

And at last! The daily show with Jon Stewart will revamp its website and actually show their content there! Revolutionizing stuff, apparently advertiser will also be able to buy ads!!
Great news for all Jon Stewart fans and it’s great to see that Viacom is doing something for the users, not just suing youtube!

Finally we are getting somewhere, by Even Aas-Eng

Myspace has for the past six months been trying out their new ad platform customizing ads to their users based on their psychographic data. Myspace has an enormous amount of data about what their user do, what they don’t do, what they like, who their friends are, who’s their hero’s, what’s their previous responsiveness to ads and a lot of other things. All in all they are now offering advertisers a segmentation tool that we have not seen before.

Let’s walk around the mine field of privacy issues that surrounds this topic and talk about what this development means for the commercialisation of the web.

Three weeks ago I attended a seminar where Jack Myers spoke on the development of US online media prices. He told us that the average price per CPM had dropped significantly the last years. The reason for this being the abundance of online inventory (blogs,communities,chats,etc). The opportunity however is that with good targeting tools we should be able to segment that massive WWW and be able to show ads just to those people we want to reach. This will be positive for advertiser as their ROI will increase, it will benefit media companies as they will make more money on each user and it will benefit the agency scene as campaigns get more complicated and their competence is needed. It’s a win/win/win situation! Why this development has taken so long is beyond me.

We are really talking about a long tail tool here. Ad technology that incorporates user’s demographic and behavioural data will enable advertisers to utilize the long tail of websites. Media campaigns will turn extremely fragmented and complex but they will also be accurate and extremely effective. The technology enables us, human heads makes it a success.

Ad networks will be the big winners. Big pools of traffic gathered in Google adsense or at advertising.com will be split into countries, counties, cities, borrows, gender, age, income, education, professions, hobbies and sold to the highest bidder with a product that matches perfectly. Volume is key or volumes of niches are key, the ad networks have it. The person that I recently talked to in Norway that said she was sceptical to ad networks as a channel for advertising has tough times ahead!

Another winner will be communities. Think about all the info that you have added to your facebook profile. Your favourite music, movies, books, pictures, info about your travels, basically your entire life is there. What a potential advertising goldmine! Facebook is working on a similar product as Myspace and it’s my guess that it won’t take long before we can read about it in ad age.

Search is another interesting area. The logic behind search advertising is really what started this whole trend. Present ads that in some way match the search. Very easy to understand and very effective. Everyone that has Google toolbar have seen the search history box, interesting isn’t it? Don’t you think that your search log says quite a lot about who you are and what you do? Google hasn’t used this knowledge in their adwords technology yet (as far as I know!) but they will and when they do it will make search marketing even more effective.

This all looks a bit scary but it makes perfect business sense! The comforting bit for all users is that they will group us, they won’t come after us as individuals. At least not yet………

Have you seen the Iphone? By Even Aas-Eng

I am not a gadget freak and that is probably why I didn’t get to see the Iphone in action before I visited NYC a couple a weeks ago. On a rooftop terrace at a slick hotel a New Yorker was kind enough to give me a little tour. And I was impressed indeed. Lets look beyond the fact that the phone looks damn good and that it probably will become an even bigger fashion icon than its mp3 sister. Let’s also disregard all the small flaws and that it’s not customized to European conditions, they can and will fix that.

The real interesting thing about the Iphone is the internet. One of the most boring discussions we have in our industry is web for mobile. What will happen with WAP? Will we see the same growth in mobile advertising as we did with web advertising? You will never use your cell phone as you use your laptop. All these questions where buried when I saw the Iphone in action. Web and mobile will merge and this is the first real step. You can use the Iphone surfing the web, with its zoom in zoom out opportunities you can easily navigate any webpage. So do we need WAP pages and specialized mobile ad-networks, probably for a while but in the long run the web will prevail.

In October Google will integrate their mobile search ad-platform into adwords. They will use the same ads and run the same price model, as an advertiser you would have to opt in or out just as you do with adsense. It will be very interesting to follow the development of this revenue stream for Google (if they will share it!) with more and more Iphones or similar devices on the market I am sure that this will take off pretty quickly.

So the conclusion is: the Iphone is here, WAP is dead and long live the WEB!

The rise and fall of sloggi.com, by Even Aas-Eng

I guess most of you have heard about the sloggi campaign or visited the site. (probably a lot more than those who admit it)
This summer they launched a contest in order to find the world’s most beautiful bum! User where to take pictures of their own behind and post them on sloggi.com
Here the bums where categorized by gender and country and rated! And yes there are a lot of nice bums on sloggi.com

The concept seems to have taken completely off in eastern European countries and it has gotten a lot of press around the world. The Nordics was no exception where the site got a lot of negative press. And yesterday the (sad) news came; they are shutting down the competition and blocking all users from the Nordics. The campaign will continue in other markets.

So what do we have here, the most successful user generated content campaign the world has ever seen or a dodgy porn site? Its probably a mixture. Creating a UGC campaign is all about the users. If they don’t contribute you have failed. In this case they certainly did and in that matter the campaign is a smashing success. But nobody should be surprised that people submit pictures of their bums and that other people want to look at it. There are thousands of other online examples of that………..

But the question is if this is effective advertising for sloggi, personally I have no idea.

On a peculiar note I would like to raise a question to sloggi. Did you guys screen the photos? I am asking because I couldn’t find a bum on the site that didn’t look good!!

The screenshot below shows you the page views on sloggi.com (blue line), vg.no (norways largest site) and expedia in UK. As you can see, sloggi has surpassed expedias traffic…………

Brilliant Obama! By Even Aas-Eng

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!

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!

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!