Knexus

Facebook – Life is all about expectations

Life is all about expectations – today we hear that Facebook is in the market for new capital with a valuation of $5 billion, or possibly as low as $2-$3 billion. For a company with unspecified sales and profit, plus a very vocal user base who limit the business model opportunities, this is a handsome valuation. And yet not too long ago founder Mark Zuckerberg accepted a minority investment from Microsoft that valued the company at $15 billion (i.e. between 3 to 5 times the current valuation). So how should Mark Zuckerberg feel … well if he has any grounding in reality, he should still be feeling a very lucky man.

The future of MySQL in the hands of Oracle

Following the recent acquisition of Sun Microsystems, there’s some interesting analysis about how Oracle will manage some of their newly acquired open source software products, especially MySQL.

For those of us old enough to have participated in the dot.com boom of the late 1990’s, the build costs of new websites in that era were very substantial, in no small part due to the need to purchase expensive licenses, especially for an Oracle database.

More recently, the open source revolution has provided robust alternative solutions such as MySQL at a very low cost. This has liberating the opportunities of the internet for start ups and SMB’s the world over. Meantime, Oracle and its competitors have continued to generate huge sales through corporate sales of 10’s or 100’s of millions of dollars in individual companies.  

Only time will tell how much focus Oracle will put into MySQL, but don’t be surprised if its jettisoned as surplus to requirements at some point.

     

Observations from Adtech Paris 2009

Here are three observations from Adtech Paris, which I’m just back from. This is not intended as a critique of Adtech Paris, because I wasn’t there for enough time or able to see all of it. The first thing is it wasn’t that busy. ‘That’s obvious’ you might say, given the state of the economy. But my experience is that digital marketing remains highly topical, even in a tough market. Knexus held a networking lunch a few weeks ago and we filled to capacity in record time. Observation number two … the UK market seems quite a lot more advanced than France. Makes me wonder how American’s turning up in Paris for Adtech must feel. Final observation … many of the people attending Adtech that I came across (not the presenters) were what I would describe as ‘traditional marketers coming into digital’. That’s quite a vague categorization, but what I mean is they’ve got involved in the last 1-2 years most probably. Anyway, the point is that the mindset and understanding of the traditional marketers seems markedly different to longer term digital marketers. The newcomers seem excited by the scale of audiences on the internet and the ‘cool’ aspects of social media tools like Facebook and Twitter, but maybe don’t yet appreciate the fundamentally different marketing challenges in this environment.

Adtech Paris 2009 – Best Practices in Brand Engagement on the web

I’ve been at Adtech Paris this week. I was invited by Cadbury, who were presenting on ‘Advertainment’ and their Gorilla campaign and follow-ups. They asked me to talk about best practices in brand engagement on the web. Big subject and not a lot of time, but I came up with five points as follows: 1. Successful brands understand the new mindset required on the web in terms of pull rather than push marketing, and how to marry this with the new tools; 2. Focus on building trust and engagement, not just reach and frequency; 3. Don’t try to boil the ocean with reaching all your target audience on the net – aim for the influencers; 4. Beware of only creating buzz and making noise – conversations create much greater value; 5. People talk through brands not about brands.

The content raised a lot of interest in the audience, who I would guess were predominantly traditional marketers getting into digital. If you want a copy of the content, get in-touch!

Interest based Advertising from Google – simultaneous cheering and sobbing

So Google have finally announced the inevitable, they’ll be serving ads based on the previous history of a users behavior (which they’ve chosen to define as ‘interest based advertising). I say inevitable, because Google sits on incredible amounts of data and insight about large swathes of internet users and makes money from advertisers. Whilst they resisted the temptation for a while, the golden goose was simply too good to ignore. Not so long ago there was uproar when a company called Phorm launched similar capabilities in the UK. I wondered at that time why its caused such alarm amongst privacy advocates given the information Google rakes in on us all every day.

 

As the internet gets bigger and more complex, there’s a certain inevitability to things like behavioural targeting. Advertisers will be delighted by the improved targeting opportunities, in turn helping Google extend its profitability by taking a larger chunk of display advertising (where it has less than 2% market share in an $8 billion market). Website owners will also probably rejoice at the possibility that online display ads, which have previously failed to deliver sufficient benefits, may become more valuable.  Finally, I imagine younger internet users will actually be quite pleased to see ads that are most relevant to them. But for older users, this is just another erosion of privacy in a world of exploding behavioural data. What concerns privacy advocates is that interested parties are lining up to tap into this data for as far as the eye can see, from Government to advertisers, market researchers to tax offices. Not to mention the criminal industry!!

Can you only take insights and ideas in 10 minute chunks!

                        

 

Knexus Digital has just launched ‘Insight Nuggets’ which are high value insights on targeted digital marketing topics in 10 minutes (see Mobile Marketing: Hypertargeting and measuring your ROI). Why 10 minutes and how did we get to this?

 Well, 5 years ago I’d go and spend a day at a conference to get some useful insights and ideas. A few years later I was getting so busy, I couldn’t afford the time but thought online webcasts would be a good alternative (1 hour, no travel etc.). In late 2008, customer feedback suggested one hour was too long for some people, so we introduced 30 minute online master classes. Very recently a senior manager at a global brand explained to me that he takes 10 minutes in a day to learn something new. However, if I asked for 30-60 minutes of his time in one go, it wouldn’t be possible.

 

So our working lives just keep on getting busier, and we’re so busy going faster we have less and less time to figure out whether we’re really going in the right direction and where we should be heading next – interesting!!  

 

Ad Networks thrive on tougher times

Experience indicates that even in a tough economic climate not everyone is a loser. For me it’s a lot more inspiring to think about who’s benefiting in recession rather than join the dark crowd following the latest job losses and sinking companies.  

In our own world of digital, it’s very interesting to discover that the advertising networks (like Advertising.com and ValueClick) are doing really rather well and that their success is coming at the expense of premium sites.

Put simply, when markets get tough, even those still willing to maintain their marketing effort are looking for deals. The advertising networks are able to pull together audiences from a wider range of smaller sites at dramatically lower ad rates than the premium sites. Even taking into account limitations of the networks in terms of quality of advertising inventory  and visibility, the economics are such that ad networks are estimated to have jumped from a 30% to 50% share of ad display spending in the U.S.

And the response from the premium sites is interesting. Although some are boycotting the networks, others are actually forming their own ad networks to mix premium site ad opportunities with broader web advertising opportunities.

The First Digital Marketing Conversations podcast recording

We recorded the first Knexus Digital Marketing Conversations podcast this morning. This is a new monthly feature that we’re piloting. Knexus digital marketing experts will be discussing latest market developments and analyzing the implications for brands.

 Today’s podcast had Eliza Dashwood (Ambergreen), Katy Howell (Immediate Future), Justin Rees (Leadpoint) and me (Graeme Foux) discussing monetization 2.0, the smartphone race and its implications for mobile marketers, the impact of recession on the digital marketing industry and predictions on key trends for 2009.

 There are some really interesting insights and thought provoking ideas. The podcast will be freely available tomorrow for download/listening, including on this blog. So take a look, see if you agree, and let me know your comments.

Next Generation Advertising Toolkit

I’ve spent a fascinating hour today with Gary Knight, Brand Partnerships Director at ITV, discussing Next Generation Advertising. Gary is one of Knexus Digital’s industry experts covering online advertising. He rebuffed the notion that TV viewing is declining as a result of media proliferation and talked about the challenges that agencies face to produce uniform creative work that can be used across TV, online etc.

 Other highlights of what Gary had to say included the idea that brands should create a portfolio of digital assets that can be quickly harnessed and that advertisers need to think about environment in which they’re targeted someone, and adjust to the ‘mood & personality’.

 The content has been recorded and will be available through Knexus Digital next Monday.

 

MySpace, Facebook, Twitter – brave new world of social networking meets old, tired business models

I was in a meeting this morning with a customer from a global brand. We were talking about his brands’ efforts to increase social media activity, including negotiations with MySpace. Put very simply, MySpace want to sell media space whilst this brand wants a deal based on shared risk i.e. upside for MySpace if their network drives real business for the brand.

 This conversation comes on the back of reading about Facebook’s latest efforts to monetize their community by offering behavioral insights to brands and Twitter’s announcement that they plan to charge for brands to use the service (a subscription).

 I’m struck by the contrast between the impact of social media, which is incredibly exciting in terms of changing consumer behavior and the opportunities this presents to marketers, and the business models of the companies driving this innovation, which are either rather old and tired or simply non-existent. It’s too bad that there appears to be a roadblock at the junction where social media innovation and monetization meet!