| by Les Luchter, Tuesday, Aug 21, 2007 6:00 AM ET |
| ZAGAT SURVEY HAS EXTENDED ITS three-decades-old, user-generated-content franchise to mobile with Monday's launch of Zagat.mobi. Visa Signature, in a deal arranged by AKQA and sold by Interep's Winstar Interactive Media, signed on as exclusive sponsor for the first two months of the mobile site, which is compatible with all Web-enabled phones. AOL's Third Screen Media is Zagat.mobi's ad-serving partner, and Zagat worked with Starcut to design and develop the site, and has licensed the Starcut Media One platform. The free service provides users with basic restaurant, nightlife and hotel content for all major U.S. cities, London and other select international destinations. The content includes listing info such as addresses, phone numbers and hours; links for directions, movie times, airline sites, etc.; and such features as "send to a friend via SMS" and "find nearby." Paid subscribers to Zagat.com will also receive ratings and reviews of the listed businesses. Later this year, Zagat also plans to use the mobile site to launch its first-ever shopping service, giving consumers the ability to buy lifestyle products, fashion, gourmet products and entertainment, revealed Nina Zagat, co-founder and co-chair of Zagat Survey. Visa Signature's deal with Zagat.mobi extends the brand's recent relationship with Zagat that also includes the sponsorship of ZAGAT.com menus, ads on the weekly ZagatBuzz online newsletter, and the giveaway of "Zagat to Go" software for smartphones. Visa Signature is also the default credit card on Zagat.com. "We are especially excited about devices like the iPhone, for which ZAGAT.mobi is optimized," Zagat said. "We are delivering mobile advertisers highly motivated and active consumers who use their phones constantly to accomplish tasks for both work and play. That's a great environment for any marketer." |
Thursday, August 23, 2007
Zagat Goes Mobile With Visa As Sponsor
CondéNet Expands To Cinema Pre-Shows
| by Gavin O'Malley, Tuesday, Aug 21, 2007 6:00 AM ET |
| NO WEB SITE IS AN island. Digital publishers are increasingly branching out beyond the Web to reach audiences of scale. Condé Nast Publications' CondéNet--which oversees Style.com, Men.Style.com, Concierge.com, and Epicurious.com--has partnered with film distributor Emerging Pictures to expand its reach beyond computer screens. Beginning this month, CondéNet will create 10-minute video pre-shows, taken from Concierge and other online channels, to run before feature films in the Emerging Pictures cinema network. Ray-Ban has signed on as a launch advertiser for the program. "This partnership allows CondéNet to further develop a multi-platform for our content," said Richard Glosser, executive director of emerging media, CondéNet. Not long ago, the Web was typically on the receiving end of any content deals between online and offline channels. Now, the tables have begun to change as online publishers seek audiences of scale, and offline publishers seek out cheaply produced fare. A shining example of this trend was the Warner Bros.' decision to launch gossip site TMZ.com as a syndicated TV entertainment magazine. "Emerging Pictures and their cinema network provide a great 'big screen' consumer experience for our fashion, cooking and travel videos, and allows us to offer our advertisers a new distribution channel to reach their target audience," Glosser added. The Emerging Pictures network runs in 10 cities--including New York, Chicago and Fort Lauderdale--and includes museums, cultural and performing arts institutions, and art-house theaters. |
Marketers Start to Use Social Networks for CRM Instead of Ads
Real Promise of MySpace, Facebook Lies in Potential to Help Nurture Consumer Relationships -- but How?
NEW YORK (AdAge.com) -- For all the talk about how much money Facebook and MySpace are making off ads -- and whether or not those ads work -- there's a growing sense of concern that the promise of social networking as a marketing vehicle is getting lost. Some marketing execs are suggesting the space should be used less like a paid media vehicle and more like a customer-relationship-management tool.
The topic was broached last month at Widgetcon, a conference on the nascent widget economy (one agency executive in attendance suggested it was a breakout session turned into a daylong event). At the event, former JWT CEO Chris Jones said MySpace was at a crossroads.
"[They say], 'It's not fair others can use the audience that we created for marketing purposes without us having a share of that.' At the same time, it's MySpace, not Rupert's Space," he said. Mr. Jones is an adviser to FreeWebs, which creates widgets run on social networks.
Debra Aho Williamson, analyst at eMarketer, calls the display advertising "low-hanging fruit" and suggests that the real potential of social networks has yet to be tapped.
Untapped potential
"What's been a challenge is figuring out a model that expands the beauty of social networking," she said. That's partly because it's easier to buy display ads and sponsorships than to create completely new programs; it's also not exactly clear how to monetize a role as a long-term, relationship-building tool.
Some marketers have adopted this approach within their proprietary social networks: Carnival Cruises' CruiseConnections.com lets people talk about and review cruises, allows novice users connect with experienced cruisers and creates a network where booked passengers can connect prior to sailing. Some advertisers hope this kind of rich customer relationship experience can exist within existing communities. Ian Schafer, CEO of Deep Focus, hopes the roles of Facebook and MySpace evolve into more conversation-monitoring and relationship-nurturing.
"I understand the entertainment dollars are easy, but to be able to come to these brands with a real solution -- not just inventory -- for helping them manage their brands or conversation around their brands is an opportunity," he said.
Facebook claims the goal of its groups is for marketers to have these kinds of continuing relationships. Marketers can use a sponsored group to communicate with consumers via discussion threads and "wall" posts. Marketers pay to promote their group through sponsored stories on news feeds, which let others know about the group. For example, Champion formed a group earlier this year and is still participating in a message board. Ms. Williamson said she believes the Facebook groups are the closest a big network has come to helping brands create long-term interaction with consumers.
Organic growth
But hard as it might be for marketers to stomach, the most vibrant groups tend to sprout organically. Examples are the several devoted to Nikon cameras, where owners post photos they've taken, answer each other's questions about techniques and offer tips for getting the most out of the product.
That kind of affinity and attention is not something marketers can buy, warns Chad Stoller, executive director of emerging platforms at Organic. "Groups will form if there's interest; they will not form from an ad buy," he said. So how should a marketer react when groups form around their brands? "Often the first reaction is to spend against it," Mr. Stoller said. "The first reaction should be to listen to it and figure out how to make that group better."
In the meantime, paid media does seem to be paying off for social networks. The channel is expected to rake in $900 million in advertising this year, according to eMarketer. MySpace and Facebook make up 72% of the market. Two weeks ago, News Corp.'s Fox Interactive Media reported profits of $10 million on top of $500 million in revenue, mostly on the back of MySpace.
Link to AdAge Article
Catching the European Mobile Market
European mobile customers may speak many different languages, but marketers everywhere are getting the message.
"The European mobile market starts with two big advantages: a widespread, high-speed infrastructure and handset manufacturers that are among the best in the world," says John du Pre Gauntt, eMarketer Senior Analyst and author of the new report, Mobile Europe. "So it's no wonder that European mobile consumers are accustomed to switching easily between voice and data services."
A recent receptivity among carriers, regulators and brands is opening up new opportunities for mobile marketing on the Continent.
eMarketer estimates that mobile advertising spending in Western Europe alone will grow from $382 million in 2006 to $3.46 billion in 2011, roughly a ten-fold jump.
"These are huge numbers," says Mr. Gauntt. "Of course, when compared to Asian juggernauts such as China, where one operator, China Mobile, alone will serve more than 400 million subscribers in 2007, they seem slightly less overwhelming."
According to an Exane BNP Paribas and Arthur D. Little study, on a per-capita basis, Europeans in 2007 will spend an average of €30 ($41.48) per month on mobile voice and data services, and growth is expected to be slow.
"One of the primary reasons the red carpet is rolling out for marketers is that the mobile industry has exhausted almost all other avenues for monetizing its mobile Internet and 3G investments," says Mr. Gauntt. "Marketing revenues stand out as one of the few new sources of income in this relatively mature market."
MTV Rolls Out a Mobile-Music Venture
Joins with Real Networks, Verizon for iTunes Challenger
NEW YORK (AdAge.com) -- Two years after launching iTunes competitor Urge, with Microsoft, MTV Networks has a new partner in Real Networks. The two unveiled today a joint venture called Rhapsody America, which also includes mobile partner Verizon Wireless. The deal brings what MTV hopes will prove to be a unique element to the mobile-music space, and will help differentiate itself from the likes of Apple's iPhone and Zune, the portable music device Microsoft launched just months after its Urge partnership.No PC connection needed
Like iTunes, Rhapsody America will allow users to download MP3 files to their PC for 99 cents. But unlike the iPhone or Zune, which require connection to a PC, users will be able to purchase music for their Verizon V Cast-enabled phones on-the-go -- meaning they can hear the latest Justin Timberlake song on their phone directly without having to plug anything into their computer first. Users will also have the option of "dual delivery," or the ability to download to their PCs as well as to their phones, via Verizon's V Cast music, a partnership previously existed with the MTV Networks' Urge program.
MTV serves as the content provider for the joint venture through its preexisting relationships with record labels for streaming music videos on V Cast. Van Toffler, president of MTV Networks Music & Logo Group, said in a statement, "It's like we've put the best lead singer, drummer and guitarist all on the same giant stage, allowing music fans to experience the purest music play in any way they want."
The pay model for Rhapsody America will mirror the ones already in place for Urge and Rhapsody, said an MTV spokeswoman. Individual MP3s will cost 99 cents, while unlimited monthly subscriptions will remain at $9.95 for PC-only, or $14.95 for "PC to go," which includes mobile. Music videos will continue to be available for free streaming.
Promotional spots announcing Rhapsody America will begin airing on MTV next week, with additional spots and integrations airing throughout the Video Music Awards on Sept. 9.
Link to AdAge Article
Way Too Good for Facebook or MySpace?
Roger Allen Conner Jr. has little use for the common folk who frequent MySpace (NWS) and Facebook—you know, the clubs anyone can join. "A lot of social-networking sites are very low-quality," says Conner, the 22-year-old founder of a North Carolina consulting firm named SiloIQ. "The type of individuals that are on these social-networking sites are generally not well-networked themselves."
Not even a business-oriented network like LinkedIn will do. To put it bluntly, Conner wants powerful friends: the kind of people who board private jets after cutting business deals. People who don't get stopped by the bouncer at New York's Bungalow 8 nightclub. People with connections who can open doors and get his company noticed. People with log-ins to aSmallWorld.
Better known as "aSW" to its members, aSmallWorld is one of a handful of private online social networks where big is bad.
Online Country Clubs
Membership in these networks, not unlike the exclusive country clubs where the rich and powerful hobnob, is carefully guarded. At aSW, only a subset of established members have the power to invite new users to join. In developing the site, founder Erik Wachtmeister rejected the prevailing Web 2.0 business model of attracting large audiences so you can sell ads to big brands. Instead, he confines membership to the relatively small group of people who travel in the same elite, often moneyed, social circles. "One's network on the site is less useful if it is diluted by people you don't know," says Wachtmeister. His goal was "to create a private place where people could be much more forthcoming with information."
Critics are split into two camps: Some call aSW dreadfully elitist, while others say it's not exclusive enough. Nonmembers have nicknamed the site "Snobster," arguing that its invitation-only policy contradicts the premise of open communications upon which the Web was built. Then there are those on the inside who complain that, in an effort to become profitable, aSW is accepting less "valuable" members.
While there's little argument that aSW is growing fast, what constitutes too fast is open to debate. In the three-and-a-half years since its launch, membership has grown from 500 users to about 260,000. But MySpace has grown to more than 100 million members over a similar timeframe, making it a major recipient of the $900 million that research firm eMarketer estimates will be spent on social-network advertising this year.
For now, aSW appears to be an online gateway to the upper echelons of the social stratosphere. Although Wachtmeister won't name-drop when it comes to aSW users, a search of the site's member lists reveals plenty of twenty- and thirtysomething investment bankers, fashion-industry types, CEOs, and recognizable last names: Firestone, Rockefeller, Forbes, Trump (see BusinessWeek, 8/20/07, "High-Net-Worth Networking").
Cheating Discouraged
On InviteShare.com, a site where users seek invitations for Web services that are in testing or aren't open to the public, there's a 647-name waiting list for invites to aSW. Conner is among those hoping that an aSW member will invite them. Some would-be members would even be content to borrow a member's log-in—an offense worthy of expulsion to Big World, a section of aSW where your privileges are sharply curtailed.
Luxury advertisers, many of which shun the mainstream social networks, see aSW as a place where they can reach wealthy consumers and promote their products without losing brand cachet.
Notably, the site already features classified ads where people sell classic Jaguars, yachts, and Cartier watches. Advertisers include champagne producer Moët & Chandon (LVMH) and private-jet company Sentient.
Yet to make aSW a financial success, Wachtmeister has to balance demand for exclusivity against an advertiser's hunger to reach more eyeballs. Wachtmeister says aSW, which has 35 employees, is nearing profitability. And he rejects any suggestion that standards are being lowered as it grows. "The new members we get today could be as good, if not better, than some of the members we got a year ago," he says. "We can go a long way before we have to worry."
Some aSW members disagree. They argue that the site has accepted people who don't have much in common with the original group of 500, hand-selected by Wachtmeister, an investment banker and the son of a Swedish diplomat.
Disgruntled Jet Set
On one of the site's discussion boards, a member lamented that a real-world party recently promoted on the site was attended by people whom he didn't recognize as aSW members. In response, another member wrote: "I've been to a few aSW-only events that one would have thought were Facebook (or even MySpace) people." Another complained: "Here in Spain, a great share of people becoming members nowadays do not match the original profile of 2004, 2005 [admitted members]. At all."
Naturally, discontent among some aSW members has encouraged a handful of would-be competitors to launch social-networking and event sites pledging to be even more exclusive.
BeautifulPeople.net promises members the "most beautifully, exclusive little black book in the world." The site asks potential members to submit photos and profile information for review by existing members. Members pay subscription fees.
DiamondLounge, which bills itself as a private members' club for the rich, famous, and powerful, plans to launch Oct. 1. Arya Marafie, DiamondLounge's managing director, says members will be accepted by invitation or by submitting a Web application. Rival sites, Marafie says, bill themselves as networks for "for millionaires and beautiful people, and then they let everyone in. DiamondLounge is a whole lot more exclusive."
Rather than seek ad revenue, DiamondLounge will rely on subscription fees and extra charges for premium services, such as the use of online conferencing services. Marafie says the club will shoot for 5,000 to 20,000 members and plans to host members-only, "red carpet" events in the real world, perhaps with sponsorship from advertisers.
Mainstream in Disguise
Real-world events are a key attraction of aSmallWorld. Every day, happenings are listed for people in hot spots such as Beijing, Cannes, Dubai, Paris, New York City, and the Hamptons. Some events are intimate gatherings thrown by aSW members simply to connect with others in the network. One recent event, a Hudson River sailing expedition, brought together about 10 people who sipped white wine and socialized while cruising up and down the river. "If you are a member, it gives people the impression that you are vouched for," says aSW member Dennis Lin, a 30-year-old project manager for a Manhattan financial-software company. "It allows people to let down their guard a little bit, and they are more open to going out."
But some events listed on aSW are just mainstream events in disguise, posted by publicists who have gained access to the site's message boards. These soirees, like a recent one held at a large New York lounge called the Forum, can be indistinguishable from any other event. Most people at the Forum that night—including the bouncer—had never heard of aSmallWorld. They had simply heard that the sponsor was giving away rum-based drinks for the first hour.
While some aSW members are peeved, there are plenty who like the idea of aSmallWorld that's large. Some are eagerly awaiting the day they might get invite privileges so they can move over their Facebook contacts. "What's wrong with meeting new people?" wrote one member. "What did you use to do before the Internet when you had to rub shoulders with all the common riff-raff? Don't be such a snob."
Bottled water: Really better?
Everett sells millions of gallons of water every year to companies that pour it into bottles and jugs, slap on brand names, and then sell it to consumers.
So it didn't surprise Mark Christensen to learn that PepsiCo's Aquafina - the nation's most popular bottled water brand - gets its water from the tap.
For two decades, the owner of A & W Bottling Co., located along the bustling industrial belt west of Paine Field, has filtered and sold tens of millions of gallons of water and soft drinks using city tap water.
Three other companies in Snohomish County also bottle water from municipal sources, according to the Washington Department of Agriculture, which regulates the bottled-water industry in the state.
A & W Bottling and other companies do additional filtering and treatment before selling the water.
"It finally caught up with them," said Christensen about Aquafina. Labels on his Cascade Ice brand say it is made of purified water from "A Municipal Source," in accordance with Food and Drug Administration labeling rules. Aquafina had been using "P.W.S.," which stands for "public water source."
That change has ignited a debate on whether bottled water is actually worth the extra price to consumers and the environment.
It has also highlighted an open secret. Much of the bottled water sold in stores, 25 percent to 40 percent, according to government and industry sources, is tap water - sometimes further treated, sometimes not.
"The propaganda of the industry leads people to believe they shouldn't drink tap water, but I don't do that," said Jon Gergen, owner of Crystal Mountain Pure Drinking Water in Arlington.
His company sells three- and five-gallon jugs of water to about 250 residential and commercial customers in Snohomish, Skagit, Whatcom and San Juan counties. He buys the water from Marysville, which gets its water from Edward Springs, the Stillaguamish River and Spada Lake. Gergen's company removes chlorine from the water and disinfects it before shipping it out.
Many of his customers order his water because their homes are on wells that pump out foul-tasting water with heavy minerals or they are at construction sites without access to running water.
Not all are so tolerant of the tap. Dan Harbeck, owner of Get Distilled Water Services Inc. of Mukilteo, says tap water is often unhealthy. His company's marketing material says water-borne-diseases pollute tap water, and minerals in tap water are harmful.
The company uses Everett tap water but filters out various compounds and disinfects the water using either ultraviolet light or ozone.
Steve Hatch, who owns Allwater Corporation in Lynnwood, a fourth business that bottles tap water in the county, declined an interview request.
Government health experts question claims that tap water is unhealthy.
While tap water does contain impurities, it's strictly monitored for safety, said Leslie Gates, a manager with the state Department of Health's office of drinking water. She added that both tap water and bottled water contain impurities.
City water providers are required to monitor water quality around the clock to make sure that it is safe to drink. If it becomes unsafe, they must shut down the water system.
"We have some of the best water in the world and people pay taxes, water fees and bills to make it that way," she said. "We want people to understand they can trust their tap water. It's as clean as bottled water, it's frequently tested for safety and it's a heck of a lot cheaper."
And most public water providers have to publish annual consumer confidence reports. Those reports include where water comes from, how it's treated and the results of water quality tests. They also list concentrations of potentially harmful substances, such as lead and arsenic.
Water bottlers are subject to regular government health inspections but aren't required to publish specific sources of their water, although the FDA has talked about the possibility of similar disclosure requirements.
"It's really not clear to consumers where their (bottled) water is coming from and what the quality of the water is," said Deborah Lapidus, a national organizer with Corporate Accountability International, which is taking credit for forcing Aquafina to label that its water is coming from public water sources.
The Aquafina revelation also coincides with a backlash against the bottled-water industry. Environmentalists say that transporting, refrigerating and manufacturing the plastic bottles is damaging the environment and that the discarded bottles are clogging landfills.
San Francisco and Los Angeles have banned spending city money to buy bottled water and some high-end restaurants in New York and elsewhere are dumping bottled water and opening the tap.
While the debate over bottled water continues to boil, there is one thing most agree with in Snohomish County: Everett's water, which comes from rain and snowmelt from the Cascade Mountains, is considered pristine.
The city's water is considered the "gold standard" by some bottlers, said Tom Thetford, Everett's utilities manager. He oversees the city's water system, which serves about 80 percent of the county, including people in Lake Stevens, Snohomish, Monroe, Lynnwood and Marysville.
Christensen, the owner of A & W, whose family has been bottling beverages in Everett since 1962, agreed.
In 2006, his company purchased more than 7.6 million gallons of the water, according to public records.
"We're fortunate," he said, standing by a conveyer that moved an endless row of plastic bottles into a contraption that placed labels on them. "We've got good water to begin with."
Exclusive: BlogMusik To Go Legit; Launches Free & Legal Music On Demand
Back in September last year Michael suggested everyone check out BlogMusik quickly before it was shut down. BlogMusik is a service born in France that lets you search for mp3 files on the web and listen to them in streaming mode for free. At the time the service was young and had no particular licensing agreements. A few months later, the SACEM, the organization in charge of collecting payments for artists’ rights sent them a cease and desist letter with a view to stop the service. A lot has happened since (beyond a rather nice site redesign and addition of sharing features).
BlogMusik will announce tomorrow that they came to an agreement with the SACEM, clearing the service of copyright infrigement accusations. The details of this agreement are not are not being disclosed, but other deals suggest it is based on a revenue sharing mode. BlogMusik’s business model is relying on advertising and affiliate revenue coming from the sales of songs on iTunes and Amazon. This agreement should cover BlogMusik for any music they host wherever the music is listened from. However they still have to come to an agreement with organizations representing majors and labels (Pandora had to face new webradio rates imposed by the RIAA). This is being taken care of according to the CEO of the company and new agreements should be announced soon.
All in all this is a good news for BlogMusik The company now has an opportunity to become a true free legal alternative to listen to music on the internet. Unlike Pandora this is a music on demand service where you choose the titles you want to listen to (although you have a smart playlist option to generate automatically radios out of a song or an artist).
BlogMusik.net will also change name and become Deezer.com. This is a good thing i had a hard time getting the UR/nameL right with this “k” in the middle (not mentionning the .net).
RadioBlogClub, another popular french service was forced a few months ago to change hosting provider following a complaint sent by the same SACEM. The service was interupted a few days and opened again as fresh as new. To date no official licensing agreement was made with the company.
Facebook Gets Personal With Ad Targeting Plan
Social-networking Web site Facebook Inc. is quietly working on a new advertising system that would let marketers target users with ads based on the massive amounts of information people reveal on the site about themselves.
Eventually, it hopes to refine the system to allow it to predict what products and services users might be interested in even before they have specifically mentioned an area.
As the industry watches the Palo Alto, Calif., start-up to see if it can translate its popularity into bigger profits, Facebook has made the new ad plan its top priority, say people familiar with the matter. The plan is at an early stage and could change, but the aim is to unveil a basic version of the service late this fall.
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| A news-feed ad from Facebook's current program |
People familiar with the plan say Facebook wants to accomplish what Google Inc. did with AdWords, which lets anyone place ads next to search results by buying "keywords" online. It brought in the majority of the search engine's $10.6 billion in revenue last year. A Facebook spokeswoman acknowledged the company is working on an ad system, but declined to provide details.
Most users of Facebook treat it as a sort of online scrapbook for their lives -- posting everything from basic information about themselves to photos to calendars of events they plan to attend. They create a social network by linking their own Web pages with the pages of other users they consider online "friends." Facebook already uses some information from users' pages in a rudimentary system that allows advertisers to go online, and starting at $10, buy simple "flyers" that run as boxed ads on the left-hand border of Facebook pages. But for targeting, advertisers are limited to age, gender and location of the user.
The new service would let advertisers visit a Web site to choose a much wider array of characteristics for the users who should see their ads -- based not only on age, gender and location, but also on details such as favorite activities and preferred music, people familiar with the matter say. Facebook would use its technology to point the ads to the selected groups of people without exposing their personal information to the advertisers.
These ads would show up differently than the banner ads and boxed flyers that appear on the borders of Facebook pages, say people familiar with the plan. Instead, they would be interspersed with items on the "news feed," which is a running list of short updates on the activities of a user's Facebook friends. In addition, the ads would show up on Facebook pages that feature services provided by other companies, one person says.
Facebook has already had some success in getting users to notice similar ads created in a separate initiative. Under that program, launched last year, advertisers say they typically spend about $150,000 for a three-month campaign that gives them a special page on Facebook, as well as the news-feed ads. But customizing these campaigns can be a costly process for Facebook, which has to dedicate staffers to the efforts.
Facebook hopes allowing advertisers to buy customized ads online will be a less labor-intensive way to take advantage of the personal data people reveal on the site. A key part of this new plan is that Facebook would use an automated system to process transactions instead of requiring advertisers to work with a Facebook representative, people familiar with the plan say.
Next year, Facebook hopes to expand on the service, one person says, using algorithms to learn how receptive a person might be to an ad based on readily available information about activities and interests of not just a user but also his friends -- even if the user hasn't explicitly expressed interest in a given topic. Facebook could then target ads accordingly.
Getting this right is important for Facebook, which was founded in 2004 by then-Harvard student Mark Zuckerberg and which has become Silicon Valley's latest darling.
While the Web site had roughly 30.6 million visitors in July, the company says it needs to do a better job profiting from its huge user base.
That's because unlike other hot Web start-ups such as MySpace and YouTube, which were acquired by large Web and media concerns, Facebook wants to stay independent and potentially go public. Last year it stepped away from talks with Yahoo Inc. and Viacom Inc. to be acquired for close to $1 billion. The start-up's investors have publicly said they hope to take Facebook public at a valuation approaching $10 billion. That would require the company to generate far more revenues and profits than it currently produces.
Finding a way to use people's interests and personal connections to show them relevant ads has "always been the promise of social networking, but we're still waiting to see the big successes," says Debra Aho Williamson, an online-advertising analyst at New York-based eMarketer Inc.
Facebook is on track for $30 million in profit this year on $150 million in revenue, say people familiar with the matter. About half of that revenue is expected to come through an ad deal with Microsoft Corp. that lets Microsoft sell many of the major display ads on Facebook's U.S. site. The deal will likely bring in $200 million to $300 million for Facebook through 2011, and potentially much more if Facebook's traffic grows rapidly, say people familiar with the matter.
However, advertisers say the addictive quality of social networking means users are so busy reading about their friends that they hardly notice display ads and, even if they do, are loath to navigate away to an advertiser's site. Advertisers say the percentage of people that click on display ads is lower on Facebook, News Corp.'s MySpace and other similar sites than on other popular Web sites like Yahoo Finance and CNET Networks Inc.'s News.com site.
As a result, Facebook has needed to diversify its revenue sources away from just display ads. The new ad plan is being spearheaded by Matt Cohler, vice president of strategy and business operations, and Chamath Palihapitiya, vice president of product marketing and operations, with input from CEO Mr. Zuckerberg, say people familiar with the matter.
Facebook's plan, if it works, could be potentially powerful for advertisers. While Google's keyword-targeted ads aim at "demand fulfillment" -- that is, they are triggered by Internet searches conducted by people who are actively looking for something that they want -- Facebook's new ad plan could help advertisers address an area called "demand generation." This involves using available information -- not just from a user but also the activities and interests of his "friends" on the site -- to figure out what people might want before they've specifically mentioned it.
"It's about saying, 'We are going to take this information because you've acknowledged that you have an interest in X, Y and Z,'" says David Blum, who oversees the interactive division of Sausalito, Calif., ad agency Butler, Shine, Stern and Partners.
But Facebook's new plan faces hurdles. It could upset Microsoft, which is itself trying to build technology to make it easier for advertisers to place targeted ads on Facebook. A Microsoft spokeswoman declined to comment on this issue.
While Facebook plans to protect its users' privacy and possibly give them an option to keep certain information completely private, some Facebook users might rebel against the use of their personal information for the company's gain.
And the perceptions that targeted ads create can be as much of a problem as the reality. "Most people don't realize how targeting works; it becomes so good that even though it's anonymous, you feel like they know you," says Rishad Tobaccowala, CEO of Publicis Groupe-owned consulting firm Denuo Group. However, he says Facebook needs to be careful in implementing any targeted ad system, lest loyal users "find it creepy."
Profiting from Social Networking
Here are two potentially billion-dollar questions: How can you turn the Web's social-network users into consumers? And how can you turn idle browsing into a flourishing bottom line? Back in May, marketers hoped they might have the answer when social-networking giant Facebook opened its network to external developers. This instantly allowed them potential direct access to a user group of millions who are notoriously unimpressed by traditional advertising methods. The only challenge: developing real-world applications that users might want to embed in their profiles, which would have a real-world effect beyond mere entertainment.
Three months later, it's clear that there's no foolproof formula for success. Companies categorize their own applications from a list of 22 options and, as such, "businesses" come from across the board. In fact, the most popular "business" listing is Total Sports Fan, a sports application run by Boris Silver, a Wharton School student who has no plans to exploit the app as a business. In fact, he says, he listed it in that category because "he just kind of wanted to." This free-and-easy attitude is all part of the territory, and other, more serious-minded ventures need to not only understand this attitude but be willing to live with it.
Know Your Audience
Four of the most popular applications within the category include the virtual trading program Fantasy Stock Exchange, a recruitment specialist called Jobster Career Networking, an environmental activist app known as I am Green, and a person-to-person loan service called the Lending Club, which has what may be the most successful business model. Though they've attracted 174,000 users among them to date, capitalizing on those users is still a challenge. Here, we assess what they're doing right, analyze what they could be doing better, and determine what their stories can teach other companies that want to enter the space.
First: This is Facebook, kids. Despite its exploding demographic, this is still a forum for the young: 56.4% of users are under 35, according to ComScore. Applications need to be appropriate and relevant to that audience. Those hoping to extract money from a Facebook user need to understand what's at the network's core. Kevin Rablois, vice-president for strategy at San Francisco-based Slide, the largest developer of Facebook applications, says there are two ways for a business application to grow: through exploiting its social side or by providing users with a means for self-expression.
The Fantasy Stock Exchange (FSX) application, sponsored by virtual stock trading site HedgeStop.com, is currently the second most popular business application, with 92,000 users signing up since its launch in early July. On the application, as on its mother site, users trade virtual money based on real-time figures provided by NYSE and NASDAQ. The application loads content directly from HedgeStop.com and the 18- to 35-year-old players using it represent a similar demographic to those already using the company's core Web site.
Getting Beyond Marketing
HedgeStop.com hopes to earn money by selling banner advertising space on its application pages, promoting the idea that virtual traders can be real spenders. But since Chief Executive Daniel Carroll admits that targeted users are "mostly beginners" who don't yet have real funds to trade, they are also unlikely to be big spenders. Not to mention that an old-fashioned ad business model rather misses the point of the forum. Young users are wary of potential manipulation, and may be turned off FSX altogether if advertising gets too intrusive. Finally, the application has yet to offer features unique to Facebook. There seems to be no reason users shouldn't simply go right to HedgeStop.com.
It's a common mistake, says Facebook Senior Platform Manager Dave Morin. According to him, too many companies still see applications as marketing rather than as new business. They bring users to an application either to advertise to them or to build a connection they hope will subsequently send users off Facebook and to their main business—a company Web site, say, or its online store. Instead, companies should be trying to make the application into a self-sustaining business that generates revenue through the service it provides on Facebook. "The applications that are the most successful are the ones that integrate seamlessly into Facebook," Morin says, a model that conveniently supports Facebook's own business ambitions.A Business-to-Business Model
At the same time, most users expect Facebook to be entertaining and, well, free, so getting them to pay for an application directly is unlikely. Companies such as the career networking site Jobster.com are trying to get other businesses to pay for access to Facebook users.
On Jobster's Facebook application, called Jobster Career Networking, users post résumés and declare career goals. Jobster then feeds those résumés to companies such as Nike (NKE), GE (GE), and Merrill Lynch (MER), which pay a $100 monthly premium fee to access résumés from Facebook. That's in addition to the $300 they pay for résumés from the main Jobster.com database. It's a premium they're prepared to pay to access young workers with perhaps nontraditional backgrounds. "We aren't after the companies that want a classic job board," says Jobster's Vice-President for Corporate Communications Christian Anderson. In its first month on Facebook, Jobster Career Networking moved 300 companies from regular to premium membership and brought in 50 new partners, generating several hundred thousand dollars in revenue, according to Jobster CEO Jason Goldberg.
Given that Facebook is a social network whose main function is entertainment, there's a danger that job hunting may not be an activity users wish to load onto their profile, when they can do so just as well on Jobster.com or any other job search site. In fact, mixing business with pleasure is a concern for users who might not want their new boss hearing about their high jinks on vacation. This reality could provide a stumbling block for Jobster's latest feature, which enables users to add endorsements from Facebook friends to their résumé cover letters.
Rablois is skeptical of Jobster's plan. "Why would I want recommendations of my skills or a dedication posted along with drunken photographs?" he wonders. And won't employers disregard friends' recommendations as entirely, unashamedly biased?
Showing a Green Side
Jobster's Anderson says users have expressed the same concern. "We've really had to work to clarify that companies won't see your profile, that you won't be 'friending' companies." Consequently, says Anderson, they won't be able to judge the friends you cite as references; they'll just know how many recommendations you have. But this means that Jobster Career Networking has to restrict its links to the social core of Facebook to function as a professional application. It's a risky strategy. Given that the application adds little to users' experience of Facebook, they might as well use Jobster.com or other recruitment sites. If users ultimately decide against linking their private and professional lives, companies will be quick to pull their support. For now, though, it's paying off: 52,000 users have downloaded the application since late July.
I am Green lets users list simple environmentally conscious choices they make in their daily lives on their public Facebook profiles.
On the application's main page, users can talk about green technology, organic produce, and environmental issues. Founder Karel Baloun, a former Facebook employee, plans to monetize his 27,494 users by selling advertising space and selling green products on manufacturers' behalf. Baloun says he'll avoid young users' hostility to advertising by providing content only from the green companies they already like and discuss on the application page and by polling them about the brands they'd like to see involved.
Slide's Rablois thinks this might work, because users committed to a niche cause might be eager to buy green products. Then again, potential sponsors might not pay much to participate in such a niche market. Like HedgeStop.com, Baloun is trying to bring an old media business model into a new media space.
Fees for Lending Service
The smallest of these four business applications may be the closest to developing the most appropriate business model. On Lending Club, a person-to-person lending company that launched via a Facebook application in May, the social component is at the center of its business model. Borrowers load the application to meet up with lenders from within their existing Facebook networks and social groups. They then negotiate rates directly. Once an agreement has been made, they head to LendingClub.com, based in Sunnyvale, Calif., to enter bank account details, so funds can be transferred directly between accounts. Lending Club takes a small cut, up to 3%, of each loan.
Says Lending Club CEO Renaud Laplanche, "Person-to-person lending works best in an a environment where people feel connected to one another, lending to friends and friends of friends." He also claims that peers trust peers to give better rates than a bank. So far, the site has attracted 13,163 users. With its 3% transaction fees, Laplanche estimates that by the end of August, the company will have moved $1 million since its June launch. But the revenue for the company in the same three-month interval is only $30,000. Given the minimal costs of maintaining the Web site and its relatively small staff of 21 people, this may be enough for now, but as the application grows, its infrastructure costs will expand. Raising the company's commission, however, would quickly jeopardize its value proposition to users.
Facebook, where users expect applications to augment their social experience with little effort and at no cost, may be a tough environment for companies whose ultimate goal is making a buck, especially since so many companies are still trying to work with traditional ad models. Ultimately, the most successful applications are those whose business model, brand identity, and natural users match the culture and demographic on the network. As such, the top applications may not provide plug-and-play solutions for every brand hoping to enter Facebook. But the lessons they teach about the need for authenticity and relevancy are universal tenets for marketers in the Web 2.0 age.
Click here to view examples of Facebook's applications.
TwitKu: Single Interface For Twitter And Jaiku
TwitKu
The site brings your Twitter and Jaiku accounts onto one screen and adds a posting interface that allows you to post just to one of the services, or to both. The benefit for many people
Both Twitter and Jaiku have APIs, making this possible (or at least manageable). Clones/similar products like Pownce and the new Yappd don’t have APIs. When and if those services release them, I’d expect TwitKu to quickly add those services as well. And that would save those of us who want to use all of the services but refuse to choose a lot of time.
And since Twitter and Jaiku are all about presence and status updates of friends, there’s no reason not to add
Bebo Becomes Most-Visited Social Networking Site in UK
Bebo was closely followed by social networking behemoth Myspace.com, which enjoyed a 25% increase in traffic over the same time period, to reach 10.1 million unique visitors in July.
The fastest-growing social-networking site in terms of UK-based unique visitors was Facebook.com, which grew 366% since the start of the year and attracted an audience of 7.6 million unique visitors in July.
Other, comparable social-networking sites also experienced growth over the same time period. HI5.com increased its UK-based traffic 36% to 1.9 million unique visitors, while Faceparty.com grew 9% to 1.7 millionnnn.
Top Video and Movie Sites, Viewers and Advertisers
A deeper look at most popular video and movie sites, exploring viewer demographics as well as advertisers and types of ads.
| Top 10 Videos/Movies Destinations Week ending July 22, 2007 US, Home and Work | ||
| Brand or Channel | Unique Audience (000) | Active Reach (%) |
| YouTube | 22,071 | 16.22 |
| IMDb - Internet Movie Database | 8,703 | 6.4 |
| Netflix | 6,068 | 4.46 |
| Yahoo! Video | 5,614 | 4.13 |
| Moviefone | 5,025 | 3.69 |
| Google Video | 4,940 | 3.63 |
| Yahoo! Movies | 4,418 | 3.25 |
| BLOCKBUSTER | 3,979 | 2.92 |
| MSN Movies | 3,500 | 2.57 |
| MSN Video | 3,264 | 2.4 |
| Source: Nielsen//NetRatings NetView | ||
| Demographic Data for Videos/Movies Category Month of June 2007 US, Home and Work | |||
| Category | Target | Unique Audience (000) | Audience Composition (%) |
| Total |
| 88,252 | 100 |
| Male |
| 44,648 | 50.59 |
| Female |
| 43,604 | 49.41 |
| Age | 2 - 11 | 4,401 | 4.99 |
|
| 12 - 17 | 10,073 | 11.41 |
|
| 18 - 24 | 6,056 | 6.86 |
|
| 25 - 34 | 12,820 | 14.53 |
|
| 35 - 49 | 28,309 | 32.08 |
|
| 45+ | 36,064 | 40.86 |
|
| 55+ | 17,127 | 19.41 |
|
| 65+ | 6,545 | 7.42 |
| HH Income | $ 0 - 24999 | 4,925 | 5.58 |
|
| $ 25000 - 49999 | 18,112 | 20.52 |
|
| $ 50000 - 74999 | 23,090 | 26.16 |
|
| $ 75000 - 99999 | 17,539 | 19.87 |
|
| $ 100000 - 149999 | 14,577 | 16.52 |
|
| $ 150000+ | 8,085 | 9.16 |
|
| No Response | 1,924 | 2.18 |
| Source: Nielsen//NetRatings NetView | |||
Data on the Entertainment Movies Segment Week ending July 22, 2007 US, Home and Work
| Top 20 Advertisers | ||
| Company | Impressions (000) | Share of all Impressions |
| General Electric Company | 97,089 | 30.0% |
| Lions Gate Entertainment Corp | 57,794 | 17.8% |
| Time Warner Inc. | 44,840 | 13.8% |
| Viacom Inc | 36,770 | 11.4% |
| The News Corporation Limited | 26,611 | 8.2% |
| The Walt Disney Corporation | 23,071 | 7.1% |
| Sony Corporation | 16,901 | 5.2% |
| Metro-Goldwin-Mayer Inc. | 12,599 | 3.9% |
| Classic Media, Inc. | 1,948 | 0.6% |
| The Weinstein Company Inc. | 1,158 | 0.4% |
| Cablevision Systems Corporation | 1,025 | 0.3% |
| The Samuel Goldwyn Company | 818 | 0.3% |
| Magnolia Pictures | 800 | 0.2% |
| PictureHouse | 536 | 0.2% |
| IndieVest, Inc. | 384 | 0.1% |
| Yari Film Group | 339 | 0.1% |
| Epiphany Films LLC | 329 | 0.1% |
| Bombardier | 290 | 0.1% |
| Cox Enterprises, Inc. | 183 | 0.1% |
| Rogue Pictures | 104 | 0.0% |
| Total | 323,817 |
|
| Source: Nielsen//NetRatings AdRelevance | ||
| Top Ad Sizes | |||
|
| Dimensions | Impressions (000) | Share of all Impressions |
| Non-Standard Dimension |
| 84,437 | 26.1% |
| Leaderboard | (728x90) | 76,706 | 23.7% |
| Wide Skyscraper | (160x600) | 54,013 | 16.7% |
| Medium Rectangle | (300x250) | 48,707 | 15.0% |
| Half Banner | (234x60) | 26,076 | 8.1% |
| Large Rectangle | (336x280) | 12,857 | 4.0% |
| Vertical Rectangle | (240x400) | 10,066 | 3.1% |
| Skyscraper | (120x600) | 5,796 | 1.8% |
| Micro Bar | (88x31) | 1,721 | 0.5% |
| Button #1 | (120x90) | 1,323 | 0.4% |
| Button #2 | (120x60) | 749 | 0.2% |
| Vertical Banner | (120x240) | 552 | 0.2% |
| Full Banner | (468x60) | 404 | 0.1% |
| Rectangle | (180x150) | 298 | 0.1% |
| Square | (250x250) | 113 | 0.0% |
| Total |
| 323,818 | 100.0% |
| Source: Nielsen//NetRatings AdRelevance | |||
| Ad Delivery Types | ||
|
| Impressions (000) | Share of all Impressions |
| In-Page | 295,101 | 91.1% |
| Expanding | 18,885 | 5.8% |
| Over-Page | 7,323 | 2.3% |
| Pop-Under | 1,410 | 0.4% |
| Transitional | 1,041 | 0.3% |
| Pop-Up | 59 | 0.0% |
| Total | 323,819 | 100.0% |
| Source: Nielsen//NetRatings AdRelevance | ||
Note: Nielsen//NetRatings AdRelevance reporting data reflects advertising activity served on pages accessible via the World Wide Web and not within AOL's proprietary service.
Traditional marketing failing on social networks
Get interactive or get out, says analyst
Ian Williams, vnunet.com 17 Aug 2007
Traditional marketing campaigns are proving unsuccessful on social networking sites, according to a recently published report.
The Forrester Research study suggests that most marketers still use traditional tactics like run-of-site advertising and static microsites to push messages into these networks.
However, the return on investment in these campaigns is very low, and marketers should be prepared to engage in a personal relationship with users by providing something of value.
Promotions are good in this context, according to Forrester, but information or brand elements that users can pass on to their friends are even better.
"It is clear that successful social networking site campaigns do not follow traditional marketing rules," said Charlene Li, a principal analyst at Forrester and co-author of the report.
"Social networking sites cannot be treated as channels because their members are not passive web pages."
The report suggests that marketers should mimic how music acts promote themselves on sites like MySpace by engaging their fans with frequent backstage gossip and answering their questions.
"During the past 10 years, the evolution of the internet has dramatically changed how organisations interact with customers," said Gurval Caer, president and chief executive at marketing agency Blast Radius.
"Companies are recognising that traditional marketing approaches like advertising are less effective today, and marketers are struggling to deliver value.
"People no longer want 'interruptive' brand communications; they want interactions with their peers and true value from companies through Facebook applications or communities for sharing ideas and experiences."
Caer added that marketing needs to "turn itself on its head" with a much greater focus on building relationships that will make people's lives "easier, better and richer".
The report concluded that companies that want to advertise on social networks should embrace the interactive aspect of the sites in order to gain the full benefit of these campaigns.
Forrester Report: Marketing on Social Networking Sites
Link to VNU Net Article
Facebook surfers cost their bosses billions
CANBERRA (Reuters Life!) - Workers surfing the Internet social networking site Facebook could be costing their employers billions of dollars in lost productivity, an analysis by an Internet security firm said on Monday. Facebook is the latest Internet networking craze, with more than 230,000 Australians already signed up and reports of more than 100 new users every hour.
Internet security company SurfControl looked at the phenomenon, and found Australian workers who keep a close watch on their Facebook profile page were costing their employers up to A$5 billion ($4 billion) a year.
"People love being there and telling people what they are doing right now, what their thoughts are right at this second," SurfControl chairman Richard Cullen told Australian radio.
"It's so interactive that people just get addicted to watching their Facebook groups all the time."
Facebook allows friends to keep in touch, post photos and monitor one another's moods and movements. It also enables people to meet others and form new social networks.
Cullen said his findings were based on a typical Facebook user, earning an average wage, spending an hour a day on line. He then calculated the cost to companies if one person in every organization spent an hour on Facebook instead of working.
"We got the extraordinary figure of A$5 billion," he said.
Cullen said banning Facebook from work computers was not necessarily the best way to combat time wasting, as the site encouraged socializing, which in turn made people happier to work longer hours.
($1=A$1.25)