Posts from — August 2007

Duncan Riley caused a mass heart-attack of the Techcrunch audience this week when he reported Robert Scoble’s prediction that Mahalo, Techmeme and Facebook are very soon going to destroy Google’s businesses. Robert Scoble might have succeeded in link-baiting, but his prediction did surely create a debate on who is going to halt, or at least prove a tough competitor for Google in the long run.

Ever since, I have been looking at the long term strategies of different companies trying to see what each of them strives to achieve in the long run. In my own analysis,I found Nokia to be one company that can seriously match up with Google in not just the mobile segment, but the internet segment as well.

Nokia’s Plans
Nokia had sometime back given its first indications of trying to get onto the internet segment earlier this year with its acquisition of Twango. Twango is a social network to share pictures, videos and audio, and this acquisition was seen as a move towards enabling easier sharing of social mobile apps among users.

This week, Nokia have further demonstrated their aggressive future plans with the launch of Ovi. Through Ovi, Nokia shall simplify the way its users access Internet services. This includes accessing the Nokia Music store, Nokia Maps and games.

Google Vs. Nokia
There seems to be a striking similarity in the way Google and Nokia have identified the future path. Both the companies seem to agree on ‘Internet on Mobiles’ being the clear path to the future. While Google has been beefing up plans on introducing the GPhone, which will clearly take all that Google has achieved on the internet to the cellphone, Nokia has been trying to extend its expertise in the area of handsets to internet.

However right now, the monetization model of these two companies seem to be different. Google will clearly stick to its tried and tested method of ads on its services. When it comes to Internet based services, mobile phones are still an unchartered territory. And Google shall surely be able to scale their existing ad model to the mobile phones. Compare this to Nokia, which shall stick to earning money through purchase of music and games.

Which of these two services shall win in the long run is a difficult question to answer, though worth guessing. In my opinion, Google shall still win this race. Reason – In the lucrative US market, the wireless carriers decide what handsets to provide that CAN prove to be a hindrance for Nokia. While Nokia faces considerable less pressure in the Asian and European market, one should also note that in the emerging countries like India, where Nokia expects huge sales, the consumers are still not tuned towards value-added services like music and games. Google at the outset, faces no such competition and atleast this will make Google a winner yet again.

The blogosphere is now speculating a new form of ad network that Google is coming up with. This is after a series of patents have been filed by Google in that direction. The key points to note in the new patents filed are:

User-Distributed-Search: From what I infer from the patent statements, Google provides an interface through which you may input the links that are useful to you in a particular context and Google shall determine the corresponding search query that shall provide all the links that you provide as the search result. This shall also come with advertisements. You may use this interface to email your links, post it on your blog or forums.

User-Distributed-Advertisements: This one looks the more evil of the patents. According to Google, users may individually select which ads are to be shown alongside an email message or a blog post. This will make ads closest to the actual content.

The methodology as such is not innovative. This is how referrals and affiliate links work. But it is the way that the advertiser is charged that makes it debatable. The UDA ads are not charged with the traditional CPC/CPM charges. There shall be an initial automatic arbitration that shall decide how much the advertiser should pay, but as and when the ads are being served, depending on how the ad is served (whether served alone or in combination with other ads), the prices are likely to change.

Spam Proliferation:

With UDA, It is not just the bloggers who are now making money. Every internet user is now in a position to make money out from emailing. Introduction of UDA will see a spurt in the bulk-emails and chain-mails. Imagine a group of hundred made specifically to send and receive mail-with-ads. Unlike the conventional Adsense ads, Google cannot ban users who it sees have a pattern of clicks from same users/IPs. This is because such a ban will defeat the very fundamental under which this ad-network is built, a friend-to-friend ad network. Even a genuine user of this ad network can expect clicks from only the same people he normally emails. So, detecting a spammer is all the more difficult.

Next time you get an email forward that ends with, ‘Each click on the adjacent ad will help one starving child..’; don’t forget to reward the spammer.

Yesterday, Google announced that they shall now be placing ads inside the Youtube videos. Here are a few significant points with regard to this announcement:

Ads appear semi-transparent on the videos from about the 15th second to the 25th second
Advertisers need to pay $20 for every 1000 impressions
The ads shall be non-intrusive and can be closed by the user at any instant
The user can also choose to open the ads on a new window

This announcement was on the cards for a long time, especially after Google announced in early February that they shall be sharing their revenues with the users. And also according to their own research on around 200 videos, this seems to be the most “preferred” form of advertising since the number of users who click on the ads was more than ten times the normal Click-through-rates of normal text based ads on websites.

Why this interpretation could go wrong
I have serious doubts about the results actually implying that users are ten times more interested on these ads than the context-based ads on websites. Let’s face it that none of us are really “interested” in ads. Any average report on website ads-optimization will tell you that clicks increase when people actually come to your website ‘looking’ for something. That is they assume your site as an interface site for them to get to their ‘destination’. But, in the case of YouTube, where users are normally there simply to watch videos and enjoy. That is to imply that Youtube is regarded a ‘destination site’ in itself.

Why then are the ads getting more hits? I can reason out two points. One, ads on Youtube are now a new thing. And more so ever during the testing period in June and July. New things do arouse curiosity and this is probably one reason why they invited more hits. The other reason could be that users could simply be looking to close the ads to watch the video in peace. Unlike the conventional Google ads that remain whether you wish or not, in this case, Google deliberately provides you an option of closing an ad that you do not want. And this can just increase the number of times an ad was clicked ‘by mistake’.

An Alternative?
Google is unlikely to change their ad format anytime soon, since it does need time to see the efficacy. Also, given that the number of clicks are going to be higher, the advertisers may also be under the impression of their ads doing well here. But, what is the best ad format for a video? Google’s tests on preroll ads – ones that are displayed full screen before the video is shown, show that 70 percent of the users actually stop watching the video in such a case. So, that clearly cannot be an option. However, I think marquee ads at the bottom of the video can be a nice option. It is a preferred form for rolling out news on TV, and users are already accustomed to such a format. That will also give the advertisers independence to decide how to show their ad – whether show their ad one time per video thousand times or show it twice per video 500 times.

Having said that, this is an interesting move and is surely going to shoot up the Google shares much more at the stock market. For Google, it looks like there is no sky at the top..

If you cannot face an enemy, become his ally. That’s exactly what Yahoo is trying to do. If the recent rumours are to be believed, Yahoo might give up its paid search advertising to partner with Google to do it for them. It is a deja vu of sorts for Yahoo who had snapped their partnership with Google years back to start their own search engine.

Why’s Yahoo doing this?
In fact, this is one of the cleverer decisions from Yahoo’s point of view. Adwords IS the most dominant of online advertising programs and YPN has always come way behind Adwords in competition. This step will help Yahoo boost up its numbers. Let me take hypothetical numbers to explain this: Suppose I need to advertise on both Adwords and YPN. Because Adwords is huge, and I also have more people bidding on my keyword here, I might be bidding at $10 for my keyword, while at YPN, due to lesser competition, I might only pay $5. So, simplifying the calculations, Yahoo might make only $5 at the max from this advertising.

Now, Yahoo is a huge site by itself. So, Google shall give Yahoo a much better deal than it would to any other Adsense partner. So, now with Google ads on Yahoo, Yahoo might just make $6 or $7 from the earlier $5. It is a better deal considering they are also not taking care of the ads inventory and the related cost now.

Why it’s going to affect me?

1. Google Monopoly
Google is already a clear market leader in this segment. Now with Yahoo partnering Google, it shall move into a much higher reach. As an advertiser, I might just not find the right variety of options to choose. Google still has competition, but then this partership will always mean more dominance.

2. Possible Ad-Price increase
For a moment, let us assume the advertisers at YPN to be mutually exclusive to their Adwords counterparts. With this partnership in place, the YPN advertisers have to move to one of the other existing options. If not Google, they will be moving to others like Microsoft adCenter. Eitherways, peer-competitios is going to increase amongst advertisers on each of these ad networks. Since in all these networks, pricing is based on bids, increasing competition means more pressure towards a price increase. Definitely not something I would want.

3. Potential increase in partnerships for Google
Point 2 suggests that Google could actually be increasing its profit margin per click with this partnership in place. This also means as an Adsense publisher, I might stand to get more earnings per click. That stands not just for ordinary publishers, but to the other big websites too. Probably Digg might get back to Google now!. This shall give more dominance to Google, which might shoot the prices further.

As you see, it is clearly going to create many more partnerships in Google’s favour. As I see now, it is going to be a nice thing to happen for an Adsense publisher. But if you want to advertise, it is going to be all the more harder!

Last week, Nokia announced that they were acquiring the multimedia sharing website Twango. Twango is a website where you may share all the pictures, videos, audios from your cellphones or digital cameras with your family and friends through a blog, website or a discussion forum. This was probably for the first time that a Mobile handset maker had laid hands on a Web 2.0 company. In fact, Nokia had supposedly had a look at 70 probably candidates before rounding upon Twango. Well, this is just the flavor of the season as many big companies have started expanding their customer reach by taking to 3G for the next level of revenue growth.

Now, the news is just coming out from WSJ that Google is courting Mobile handset makers for a GPhone. This handset will help Google push mobile users to use Google apps on their phones and also set a platform for serving more and more ads to mobile users.

Smartads for Mobile phones?

Yahoo introduced the patent-pending Smartads as the way to provide the most personalized ads to a customer. This was based on his activities on the different microsites of Yahoo. Now, with GPhone, Google can really be taking the alternative route for personalization. This is because Google has already patented a technology that provides local search on mobile phones based on GPS-based technology.

With internet on mobile becoming more pervasive, Google’s marketing strategy would revolve around pushing the customer to use mobile technology for localized searches (say the restaurants, beauty parlor, etc) and the web for more globalized searches. This would really give Google an upper hand against Yahoo and the other traditional rivals.

So, is Google moving out of web to counter Yahoo? No. Google is still the leader when it comes to search on the web. It might not be very long before Google introduces a technology to counter the Smartads. But, with mobile phones still being a largely untapped market, the future leadership might just be on the side of the company that makes early inroads here.