What I’m Reading

I’ve been traveling the past few days. Here’s a bit of a catchup post on what I’m reading these days.

BBC joins up with MySpace: This could have been written up in the Onion (maybe it already has). The BBC signed a content distribution deal with MySpace making selected videos available through a MySpace TV channel. A quick peek at the channel yields this video gem: “Stefan Eats Testicles” (the link fortunately, or unfortunately, did not work for me). Yum.

The Facebook Economy: Great piece from the Knowledge@Wharton folks. Features the commentary of Peter Fader, a longtime Internet marketing expert:

“Being based 100% on Facebook is very risky, because social networks are inherently unstable. Five years ago, we would have been talking about Friendster.”

Discussing the flap over Scrabulous, Fader says:

“Scrabulous has created value for the product in a way Hasbro would have never thought of doing. Hasbro’s challenge is to call off the lawyers, do better business development and come up with an online version of the game people will like even better. If people are playing more Scrabble, they should figure out how to tap into that.”

Google tests demographically targeted AdWords: Google is launching a test of a new feature of AdWords letting advertisers deliver targeted ads based on age and gender. The feature only works on sites that have gender and age information — many of them social networks.

Widget standards coming? GigaOm reports that widget industry exec may start working with the Interactive Advertising Bureau to create standards for widget advertising.

Lightning Strikes Twice for OfficeMax Elves

Apparently, been-there-done-that doesn’t apply when it comes to people wanting to make themselves look like elves.

According to an article on AdAge.com, OfficeMax’s ElfYourself holiday campaign turned in some pretty incredible numbers. It’s all the more astonishing because they did the exact same thing last year. I admit I rolled my eyes when I heard about this year’s installment. “Can’t they come up with anything more creative,” I remember thinking.
According to AdAge.com, people created 123 million elves this year, up from 11 million last year. By December, according to Hitwise data cited in the article, the ElfYourself Web site (if you still want to create an elf, you’re out of luck now that the campaign is done) had risen to #55 among all Web sites based on market share of visits.

The numbers get even more crazy. In December, according to Nielsen stats cited by AdAge.com, 16% of the active Web audience visited the site - amounting to 26.4 million people.

Let me throw in one more stat, from comScore: Traffic to OfficeMax.com was up 170% between November and December, to 15.3 million unique visitors.

Did we all have absolutely nothing better to do when we were supposed to be out shopping and decorating and drinking eggnog? Why did lightning strike twice for OfficeMax and this viral promotion?

I’m still shaking my head in disbelief, but I’ve got a few ideas why: Like the little red button in competitor Staples’ “Easy Button” ad campaign, this viral was easy for consumers to create, easy to send and easy to watch (they used old-fashioned email). It has started to become a brand icon for OfficeMax (the company used the image in some of its holiday marketing materials, meaning some people probably went looking for it). And it made the consumer the star of the campaign - literally.

Can OfficeMax do this again next year? Given this year’s success, I’d have to say yes.

Facebook Developers Are Getting Too Cocky

Last week, Slide Inc. got a big $50 million investment round. It’s definitely the largest funding of an application/widget developer that I’ve heard about.

Max Levchin, Slide’s founder, has every right to be proud of his accomplishment. His company’s applications are among the top time-wasters on Facebook, and he’s getting ready to unleash more apps for the upcoming MySpace platform.

But, in an interview with The New York Times’ Bits blog, he makes what I consider a very disturbing statement. According to reporter Brad Stone’s blog entry, Levchin said:

“It’s impossible for social networks focused on scaling the network itself to build all the niche applications that bring people and keep people on these sites,” he said. Just as consumers bought Windows to play games, organize their taxes or create documents, application makers like Slide “add the bulk of perceived value to the consumers of these Web platforms,” Mr. Levchin said.

It’s disturbing because without access to Facebook’s code, Slide’s apps wouldn’t even exist. No doubt Facebook feels like IT offers a lot of value to its members. Not to mention the fact that Facebook lets developers keep all of the revenue they generate. More time spent on developers’ apps = less time with Facebook features = less revenue for Facebook.

It wouldn’t take much for Facebook to change the terms and start taking a cut of what the developers generate. Levchin and others ought to remember that.

Super Bowl Ads: Less Buzz, Still Great?

Once the Seattle Seahawks got knocked out of the playoffs, I tuned out of the Super Bowl hype for a while. Of course, when I saw the results of yesterday’s game between the Packers and Giants, I kind of wish I had watched.

Maybe marketers, like me, are saving all of their energy for the Super Bowl. I had a vague feeling that I wasn’t hearing a lot about the spots that would appear during the big game, and I guess I was right.

According to analysis by Cymfony discussed in a ClickZ news article, this year’s Super Bowl advertisers are doing a lot less pre-game publicity for their advertising. Says Jim Nail of Cymfony: “the volume of traditional online discussion and media coverage is a lot lower than last year.”

According to a briefing Jim gave me in December as part of my work for eMarketer, marketers that hope for post-game discussion in the blogs may be disappointed: 78% of the total volume of Super Bowl ad discussion happened in the three days following the game.

However, and this is important for those of you who pay attention to social media, in last year’s game the traditional media coverage that happened before the game played an integral role in spurring online conversation after the game. In fact, advertisers that released their ad prior to the game ended up with up to five times as much coverage and discussion AFTER the game.

So, what’s holding this year’s crop of marketers back? ClickZ says it may be that UGC, such a buzzword during last year’s game (see: Doritos), is a been-there, done-that. But surely a few marketers have something interesting up their sleeves. So, let’s get this game started!

In the meantime, Cymfony’s Super Bowl Advertisers blog has a running commentary on the latest news.

MySpace vs. Facebook: Who’s Winning the Stats Battle?

These days, whenever News Corp. execs give public speaking appearances, the Facebook comparison slides are de riguer. Try as it might, MySpace just can’t get the little monkey (or 1,000-pound gorilla?) off its back.

The latest dustup? Some Hitwise figures announcing that MySpace had a 72% market share of US visits to social networking sites in December 2007 — well above Facebook’s 16% share.

TechCrunch jumped into the fray with some numbers from comScore showing that MySpace had 69 million US unique visitors in December vs. Facebook’s 35 million — giving it not nearly as big a lead as the Hitwise numbers indicate. In page views, TechCrunch reported, MySpace’s 38 billion trounced Facebook’s 13 billion.

TechCrunch also reported — breathlessly — that worldwide comScore figures showed that Facebook had surpassed MySpace in minutes spent on the site — 21 billion to MySpace’s 17 billion.

MySpace, meanwhile, sent out a press release touting the Hitwise numbers and figures from NetRatings (yet a third measurement service) showing that

“MySpace leads in the “Loyalty Matrix” (time spent per person combined with visits per person). During the month of December the average user spent over two hours and fifteen minutes on MySpace.”

A couple of things to note here: First, page views are a distorting metric. In a time when so many sites are using Ajax, they’re becoming less and less important as a measure of true activity.

Second, time spent is also a vague measure. For one thing, Facebook’s site has become one of the slowest loading sites around (thanks to all those apps cluttering people’s pages). And plenty of people keep Facebook open in one browser tab while they do other things online. So unless comScore’s numbers measure active engagement with the site (something the company is in fact working on), the time spent metric is also flawed.

Mark Zuckerberg’s Coming-Out Party for the CBS Generation

For a couple of years now, I’ve been telling my parents about the analyst work I’ve been doing in social networking. Considering that they are retired people living in the middle of Florida, I think they are pretty Internet savvy.

Still, I was surprised to call them at 7:45 on Sunday evening for our weekly chat and hear that they were watching the Mark Zuckerberg interview on 60 Minutes. In fact, my dad didn’t even get on the phone until the interview was over.

There has been a lot of talk about this momentous occasion, and how this was Facebook’s unveiling for the CBS generation. The interview opened with Lesley Stahl setting up her own Facebook page and - amazing! - getting a friend request from an old acquaintance within minutes. The skeptic in me says it was a setup, but who knows.

I think Zuckerberg played the part well - awkward at times, passionate at others, overly mawkish at still others (saying the company needs to make money because it has 400 employees to pay? not the most compelling explanation of their ad strategy).

Will there be a spike in Facebook usage among 50- and 60-somethings? Perhaps. I can’t wait to see what they think of Vampires and SuperPoking. But Scrabulous, well, now that’s a pretty natural fit.

News I’m Following

Some news tidbits I’m following:

Gaia Online gets $12mm venture round. Investors this time include Sony (a previous investor) and Time Warner. What intrigues me the most about Gaia these days is that the teen-oriented VW has been building its audience by using a widget on Bebo. Bebo members can sign on to Gaia and play a trimmed-down version of Gaia right from Bebo (via VentureBeat).

MTV extends its video syndication play. New artners include iMeem, Veoh and Dailymotion, joining existing partners AOL, Bebo, Joost, MSN and Comcast’s Fancast. MTV will handle ad sales, giving a cut of revenue to the video sites. And because MTV will allow its video clips to be widgetized, it will also gain revenue when its content is picked up by individuals and placed on their blogs, social network profile pages, etc. (via MediaPost)

Usage of video sites growing exponentially among young adults. According to a new Pew Internet & American Life Project survey (conducted in October-December 2007), 48% of US adult Internet users have ever visited a video site such as YouTube, up from 33% a year ago. 15% did so “yesterday” - i.e., the day before they were surveyed. That’s up from 8% a year ago.

Among people ages 18-29, 70% had ever visited a video site, up from 55% a year ago. And 30% said they had done so yesterday, double the 15% from a year ago.

As video proliferates across the Web (thanks to syndication deals such as MTV’s and the ease of spreading video virally by using widget technology) these figures will continue to rise.

Widget Advertising: How Big Will it Get?

Businessweek reporter Aaron Ricadela has a great article about the widget ad business. In it, he quotes Will Price, a managing director at the Hummer Winblad VC firm, estimating that the entire widget ad market will amount to just $20 to $40 million in 2008.

It’s not clear from the article if this figure is simply including advertising placements on widgets or if it includes the money marketers will spend to create widgets and applications to promote their own brands and properties.

With widgets promoting movies becoming the norm for entertainment companies and even Hellman’s mayonnaise getting into the act, this could be a big ad business indeed.

Portals are Dead! Long Live the Portal!

Does anyone else hear the term “Yahoo! Life” and think “My Yahoo!”? Is there really much difference?

When CEO Jerry Yang got on the stage on Monday to announce a few sketchy details of the Yahoo! Life initiative (not truly a working name, by the way), he said, “At Yahoo we want to be most essential starting point for your life.” Hmm, sounds familiar. Let’s wind back the Internet time clock to 1996:

“My Yahoo! puts our users in control, allowing them to receive personally relevant information when they want it.” - Jeff Mallett, Yahoo! SVP business operations, July 1996

The press release goes on to note one additional feature: “With My Agent, users can discover music, movies, and books that match their interests, and communicate with others who share similar tastes.”

The Yahoo! Life initiative puts email at the center, making it more relevant by prioritizing mail from important people. And by opening up its platform to third-party developers, Yahoo! says it will be able to display widgets that pop up when you mouse over certain words in email messages.

OK, sure, the technologies are updated and the content is widgified and the email-as-the-center-of-your-social-network idea is worth exploring, but I honestly don’t see much that’s totally new here. Do you?

Piper Jaffray on Social Network Advertising

Piper Jaffray’s latest edition of its Internet Strategist research note (out today; not available online) contains strong optimism for the future of online advertising. Among the predictions from Piper analyst Aaron Kessler: 20% growth in the online advertising market (vs. single digits in the rest of the ad biz), strong growth for ad networks and more consolidation in online ad services.

In the social networking realm, Piper projects that sites such as MySpace and Facebook will continue to suck time and pageviews from other sites, but that ad CPMs for SN sites and user-gen sites in general will remain low due to huge inventory (i.e., untargeted remnant banner ads), consumers’ lack of interest in the ads and advertisers’ concerns about the content.

One bright note for social networking, Kessler believes, is the ad targeting plans that the two major sites are working on. MySpace’s HyperTargeting has shown CPM lifts of 50%.

Kessler left out a key piece of the SN revenue puzzle: search. Already, search accounts for 30% of MySpace’s revenue, according to a presentation that Fox Interactive Media’s Michael Barrett gave at last month’s UBS media conference.

Another revenue driver for 2008 and beyond is the local/small business market. Both MySpace and Facebook recently launched self-serve ad systems, enabling any business to create a campaign (on Facebook, businesses can design a page for free, while MySpace still charges for anything but the basic no-frills page). Local online advertising is a growing business and social networks may be poised to bring in a sizeable portion of that revenue.