Web Advertising - Huge Growth, Major Issues

FastCompany & The Wallstreet Journal recently publised stories studying the growth of Web Advertising sales - and I couldn't help but agree with many of their conclusions.  Web Advertising recently took over TV advertising (in total dollar expenditure) in Britain - but several major problems remain.

First, only 16% of internet users click on banner ads - meaning the notion of paying people for clicks may be overrated.  To further drive home this point, 8% of internet users account for 85% of all banner clicks.  This statistic suprised me at first, but then I realized that the only banners I had clicked on in the past year had been by accident.  HP may sponsor slate.com, and own the entire first page, but the success of that ad shouldn't be based on how many people "click".  The mere reminder that HP is having a sale, or is launching a new product is sufficient - it's building brand awareness.  I may not need a laptop today, and hence wouldn't click, but may need one two months from now, or simply refer a friend to HP should they be looking for one.  CPM, based on the number of impressions an ad gets are significantly more useful, and cost effective.

For this blog I use google adwords, and most of my costs are derived from CPC advertising.  However, when I track who has been to my site, the number of feed subscribers, and where they came from, I realize that many of the clicks were errors. (This may not be a good thing to advertise...but it's true.)  However, when the clicks are legitimate, either sourced from a keyword search in google, or a click on a banner ad that was posted on a relevant page (perhaps another Tech/VC blog), then the number of subscribers goes up, as does the number of pageviews.  I would say that only about 1/4 of the clicks I pay for in the CPC format are "good clicks" - meaning I paid to get a user to my site, and that user sees the value of my site and chooses to subscribe, or views more than one page. 

I'm not sure web advertising has found its true form yet - but so far people seem to be buying it, and buying it hard.

Hello Internet, Please Make My Life Easier.

I don't know how you all feel about this - but apart from being the easiest place to send all my mail to - Gmail doesn’t cut it for me.  This is going to sound grouchy - but I really don't like Gmail’s filtering capabilities, I don't like the way it aggregates messages into discussions, I don't much care for its layout.  It's too rigid.  The discussion aggregation isn't fluid - if I forwarded emails to 15 different people, it just groups their replies into that discussion, instead of starting new ones.  I have one thread where I have 15 different conversations, each with important individual dates and meeting times, all grouped together into a 100 email thread!

I'm a huge fan of aggregation services (as I've mentioned before...), and today I found a few new ones of note

Feebly.com -  Fantastic aggregator of blogs, RSS feeds, and other information into one platform.  Feebly doesn’t aggregate EVERYTHING on the web for you, but it does do news and blog information quite well.  I love the layout, the presentation, and the navigability of the page.

LifeIO – The self proclaimed “swiss army knife” of information – I like that branding and I think they do it effectively.  Again , if you want to be the place where I point all of my information sources to, you have to make my life easier.  It has to be easy for me to setup the account and setup the linkages, and it has to be easy for me to then find the information on the site.  LifeIO does this remarkably well.    The key to this service is that they don’t focus on just one aggregation – they try to do it all – let’s see if they succeed at doing everything well….so far so good…

MAIN PAGE
 

EMAIL

Gist.com -  The last service I’ve been playing around with recently is Gist.   Gist.com has been in beta forever, and there are some pretty smart people behind it, but I just don’t quite get what I’m supposed to use it for.  If I were a Fortune 500 CEO, it’d be useful for me to see what types of news were being published about the people I am most frequently in contact with….but how useful?  I currently only have one friend of all the people I’ve emailed or friended on facebook that has relevant news on them (Congratulations Casey), and I’m in close enough contact with her that I don’t need this service to aggregate news on her for me.  Furthermore…the layout is too clustered….I go to gist and feel overwhelmed…so much so that it’s easier for me to simply go to Google every time I’m curious to see what the press is publishing on my friends and network. 

 

Kcal / MBps - Earn Your Bandwidth

I absolutely love this idea...

http://inventorspot.com/articles/webcycle_makes_internet_users_work_out_32197

A pair of investors found a way to link up a bike machine (similar to what you'd find in a gym) to your computer and linking the rate at which you bike to the internet bandwidth available.  The faster you bike...the more internet bandwidth you have to play with...

The Webcyle

It would be even better if you could set your own benchmarks - ie...instead of limiting bandwidth, I "earn" a set amount of hours of internet service per day if I hit my workout goals.....

That would absolutely get me out of bed every morning to go to the gym.

I always thought laptop keyboards should be able to absorb the energy released when typing to charge their battery....random separate thought...

Aggregation - Then What?

While I was at Bloomberg, one of my pet projects was to work on building an aggregation of independent research for our hedge fund clients.  Although the majority of research is produced by the large sell side firms (Goldman Sachs, Bank of America, Morgan Stanley...etc), many of our hedge fund clients would come to us asking if we knew of any good independent research providers.  When speaking with these funds, many of them would express a lack of reliability from the sell side research they were perusing - they all said it was good to keep tabs on what the large firms were saying, but that they in no way used the research as an investment decision by itself.  The independent producers of research, however, proved to be much more reliable as they only could make money if their recommendations were accurate.  The problem with the independent research space is that nobody had successfully created a platform to aggregate them, and rate them.  Many independents didn't want to be officially rated, and most of them didn't have an established sales effort to push their research to potential clients.

What we did is try to aggregate all of this information in one spot, and only aggregate those with proven track records of success.  This enabled our clients to come to us looking for specific types of research they were looking for, knowing that the recommendations they would receive would be reliable.  It took the guessing game out of the equation for funds, and saved them a lot of money in the process.

The internet seems to be following a similar model - there is a vast amount of information out there, but the tools we have at our disposal for aggregating this information are weak.  There has been a clear emergence of aggregators in different spaces - Google Reader, a news aggregation site, has had a great amount of success pooling together different sources of information into one place.

There are many opportunities left in this space - not only in ameliorating the existing aggregation tools, but also in new spaces that haven't been properly catalogued.  The social media space is particularly lacking in this space, and although there are a few emerging players trying to pull it off, it's not clear that they've figured out the right model or layout to do it.

One such site is Schmedely -  a pretty neat idea and they definitely understand the need for simplicity.  People want aggregators to be easy to use, and to standardize information in a way that's easy to peruse.  Schmedely is a service that enables its users to aggregate all of their social sites feeds and general information they want to see, onto one site.  You can thus create a custom webpage for yourself, where all of your social media is aggregated for you to peruse, along with any other information you might want to see.  "I wonder what my friends are saying on twitter, while simultaneously following cnn.com, while also seeing what the weather in Philadelphia is like," for example. 

What hasn't been done succesfully is aggregating this information for the viewers of YOUR information.  My site is an attempt to aggregate what I say on twitter, my blog, and what I read and find interesting.  This having been said, it wasn't the easiest thing in the world to put together, and I haven't aggregated ALL of my portals yet...just the dominant ones.   Ideally I could come to a site, and aggregate all of my information in a fully customizable space, in the same way Shcmedely allow us to customize what we want to see for ourselves....

A combination of both wouldn't be a bad idea....

 

Social Media Update!

Important note - I stand corrected on my last comment on the international adoption of myspace.  As the chart below will show you, the global adoption of Facebook has absolutely taken off, with recent stats showing that Facebook is a particularly big hit in Turkey and South Africa of all places.

Another interesting stat I found that just blew me away is that the average user on twitter only tweets .37 times per day!   The average twitter user only tweets once every 2-3 days!  (To read more on this, you should check out Lightspeed's blog).  They also do a great job comparing Facebook's status updates to tweets - turns out Facebook has about 2-3 times the number of status updates than twitter does....