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To briefly review recent news: Microsoft is going to allow advertisers to set a “cashback” reward to consumers for purchases that originate from ads on Microsoft Live Search.
Think about the quality of companies that currently incentivize users to participate in advertising:
Microsoft should be embarrassed to join that list of companies.
Some naysayers might argue that the list above is about CPC arbitrage; whereas, Microsoft’s new offering is essentially cutting consumers into the loop on CPA revenue. Ok, then we should change the list to the “Big Three” companies that dominate the Affiliate Network world:
Again, Microsoft should be embarrassed to join that list. These are ad networks of last resort for publishers, and they end up powering a lot of product-oriented splogs. Is joining this list seriously Microsoft’s silver bullet to beating Google?
Granted, Performics is technically a part of Google at this point, but I don’t believe that the Performics asset was a motivating factor in the DoubleClick acquisition. Google acquired DoubleClick because it was the fastest way to get a foothold in the display ad world. Considering Google’s recent aggressive actions to either lower the pagerank or de-index spammy affiliate network driven splogs, I think Google recognizes that paying anyone other than publishers is a slippery slope towards inauthentic engagement with ads.
Yet, I feel like I’m taking crazy pills. Based on the relatively positive (or at least curious) initial reception to Microsoft’s new CPA strategy in the blogosphere, it’s not obvious to others how silly this idea is. I can’t think of an example on the web where paying an end-user (the consumer, the browser)
has ever turned into a big business.
Paying end-users to do anything online consistently results in people gaming the system, automating clicks, or developing arbitrages that pollute the online ecosystem. Why should we expect Microsoft’s latest CPA initiative to be any different?
Google launched online health records. I was instantly reminded of the movie Gattaca. Gattaca took a pessimistic tone towards the nature vs nurture argument, assuming that everyone has an upper-limit to his potential for success predefined by his genes. In the movie corporations used this information to select the “most qualified candidates.” There is a passing reference to how this prejudicial practice is illegal, but, of course, corporations disregard for these laws and use rationalizations to mask their genetic biases.
We can’t parse DNA with Gattaca-esque accuracy yet, but we can see the expression of DNA in phenotypes and can make biased judgments based on those phenotypes. Some phenotypes (race, gender, etc) are obvious based on a quick visual scan, but many phenotypes require access to medical health records to know for certain.
With Google’s release of online health records today, I wonder if we are opening an opportunity for entities (individuals, corporations, governments, etc…) to access people’s health records with unprecedented ease. Could I download my neighbor’s health records as easily as I can download a copy of Gattaca? Fred mentioned he’s trying to make his health records public. I’m not quite there yet. Yet, at the same time, I feel a sense of inevitability about this whole process. Five years from now, I can’t imagine toting a file of paper medical records from one doctor to another.
Mark Cuban writes in his post “Beating Google” that one way to beat Google is to pay the owners of sites in the top 5 slots of the results page for the most popular keywords to remove their sites from the Google index. Thus, Microsoft (or Yahoo or a new competitor) could claim “I’m the only search engine with results from Engadget, Techcrunch, WSJ, etc….”
There’s a whole industry built up around doing exactly the opposite. It’s called SEO. People pay other people ridiculous sums of money in order to make their site rank as high as possible on results pages for as many relevant keywords as possible in Google.
Furthermore, SEM is a similar industry that has grown up directly in contrast with Mark’s idea. People see ranking highly in Google to be SO valuable, that they will pay to rank higher than their competitors for relevant keywords, and will pay on a performance basis per click (which, unlike SEO, is a marginal cost, not a fixed cost — read: blackhole on your bottom line).
If the Search market is currently setup such that people are paying in order to get into Google, you have a rough sense of how valuable it is to be highly ranked in Google. So, the amount of money it would take a competitive search engine to incentivize websites to leave Google would be something like:
(Total SEO Spent by Top-Ranking Sites) + (Total SEM Spent by Top-Ranking Sites)
Which, considering Google’s market cap (which only approximates the SEM side of this summation), is a ton of money. And this is just a calculation of the allowable of acquiring an internet visitor! The actual calculation that Mark is proposing is:
(value of a single visitor to a Top-Ranking Site) * (# of visitors driven by Google to a Top-Ranking Site)
which, is greater than the total SEM spend and SEO spend combined…. I just used the SEM/SEO spend combo to show you how large a sum of money Mark is talking about.
Time to go back to the drawing board on beating Google.
I have noticed a meme in the constant conversation about revenue models for web services recently. People are proposing a version of the “freemium” business model with the following twist: a product has slightly intrusive (but contextually relevant) ads baked in that users can remove by paying a small monthly fee.
I understand the intuition of the people proposing this revenue model. They know that consumers dislike ads, yet ads are a “necessary evil” in order to make free web services sustainable, or hopefully profitable. So, they’re trying to strike a compromise with consumers that appeases both free-zealots and anti-advertising-zealots.
But, this revenue model seems silly to me. Advertisers pay a premium in order to reach people in their specific demographic with disposable income. This idea of people paying to remove ads ensures that the audience for your ads are actually CHEAPER than the average internet audience. Why? Because the people in your audience with disposable income who are willing to pay for web services are the ones that will self-select out of your audience for your ads because they are willing to pay for your product. So, all that remains in the audience for your ads are people that are too cheap to pay for your service. That doesn’t sound like the audience that Disney, Coca Cola, or even your average direct response advertiser wants to reach.
Paying to remove advertising is an interesting thought, but it’s not fully baked at this point. The real sustainable solution is to create “paid content” that your audience doesn’t actually view as “ads.” For example, the last time I tried Adblock Pro, I noticed that it didn’t remove AdWords… in other words, the creator of the ad blacklist I used saw AdWords more as content than as advertising. That’s the real home run.
I launched TwitterSnooze informally late Monday of last week, so I thought I’d write a quick post with one week worth of stats. When I first launched the script, I thought I would wait a month before writing a post about usage, but I can see now that, based on the current usage rate, an additional 3 weeks of data will be fairly insignificant. Some of this data is a little inconsistent because I didn’t stick a Google Analytics tracking snippet on the site until a little bit into Tuesday; nonetheless, the data still shows the “flash-in-the-pan” effect nicely ;)
So, in the past week:
- 250 snoozes have been successfully entered.
- 200 unique people have been snooze.
- 202 unique people have hit snooze on someone else.
- 6,926 Visits
- 6,733 Unique Visitors
- 7,801 Pageviews
Here’s a graph of uniques throughout the week:
Here’s the top 20 sources of traffic (with corresponding performance metrics… I’m still amazed that StumbleUpon can drive significant traffic):
Here’s a breakdown of repeat visitors (clearly, I’m the guy in the 15-25 segment):
Here’s a leaderboard of who has been snoozed the most:
1st — scobleizer: 17 (Scoble, your trophy is in the mail)
2nd – techcrunch: 6
Tied 4th — djchuang: 4
Tied 4th — obamanews: 4
Tied 6th — gsnail: 3
Tied 6th — jasoncalacanis: 3
… so, the remaining 194 people have been snoozed less than 2 times.
The service was launched late night on April 28th, which you can see in this graph of Snoozes/Day:
Thanks to all the people that made TwitterSnooze the “Look! SHINY!!!” of Tuesday, April 29th :)
I had an itch to build something over the weekend, so I wrote a little Twitter toy script. I call it TwitterSnooze. It allows you to hit the snooze button on your Twitter friends. That means, you stop following them for a period of time, and then automatically re-follow them X days later.
Why use TwitterSnooze…?
- It’s a good tool to avoid a blast of tweets from a conference you are not attending… just snooze the conference goers for a few days.
- It’s a nice way to get back at someone for saying something stupid… give them the silent treatment ;)
- It’s a good way to ignore someone that just flooded your timeline for no good reason… but it was just a one-time offense and doesn’t merit permanent unfollowing.
Who shouldn’t use TwitterSnooze…?
- As Dave Winer points out, TwitterSnooze is not ideal because when a person is unsnoozed, Twitter will send them an email alerting that person that you are now following them again. This is an unfortunate side-effect of the only way I know to implement a “Snooze” feature (by unfollowing and then re-following a user) given the current API. If you don’t like your snoozers getting alert emails, then TwitterSnooze is not for you.
- Security Note: TwitterSnooze stores passwords on the DB. TwitterSnooze deletes all passwords once they are no longer needed, but if the idea of your password being stored on this server makes you squeamish, then TwitterSnooze is not for you.
TwitterSnooze is inspired by a Merlin Mann post.
Update: If you do use TwitterSnooze, I highly recommend sending this someecard along with it.
I’ve noticed an increase in the number of spammy companies, random websites, and unrealistically endowed women following me on Twitter. It’s a simple form of spam: by following me on Twitter, spammers know that Twitter will send me an email with a link to their Twitter user account, which will encourage me to click and figure out who they are.
A simple feature request will remedy this problem. If the followee/follower ratio on a Twitter account is greater than 15x (ie: if a user is following 151 people, but only 10 people follow that user), then an email message should NOT be generated when that account follows someone new. So, you can still create an account that follows 10,000 people, but only the couple multiples of 15 will be bugged by an email notification.
I like this solution (and think it makes good fodder for a blog post) because it uses the implicit usage data of the service as a filter to improve the service. It’s an example of how capturing as much data as possible about users’ actions can help shape and improve a web service through iterative design.
Are you asking this question? If so, then take two and a half minutes to watch this video:
Twitter in Plain English from leelefever on Vimeo.
Fred Wilson recently wrote about the declining power of firms. Fred argues that the internet has reduced the costs of transacting with a market so significantly that the nature of firms (as outline by Ronald Coase) must change as well. I totally agree with this argument on an intuitive level. I see this trend coming.
However, as firms break into smaller pieces (or as small companies disrupt and displace large firms) what will happen to the the power of brands?
The power of brands was recently reinforced for me by a friend of mine from Stanford, Brendan O’Conner. Brendan ran an empirical test on search engine relevance. He compared the relevance of search results from Ask, Google, Yahoo, and Live by running real-world, common queries on all the engines and had subjects rate the relevance of the top five results. His methodology is spelled out in painstaking detail, so I won’t elaborate on it, but it definitely passed my sniff test. It’s important to note that branding was stripped from the results returned.
Brendan found that Google, Live, and Yahoo all performed equally well (within a margin of error) and only Ask had inferior search results relevance. Yet, this outcome is counter-intuitive, because so often you hear people say anecdotally that Google provides the best search results (thus justifying Google’s overwhelming lead in search share). So, why is Google so over-hyped? I would argue it’s because of the value of the Google brand.
Brand value is still very important online. Brand value is the reason why I only trust PayPal will my bank account data (instead of… Neteller, EasyCharge, AlertPay, etc…). I know that the PayPal’s (and eBay’s) brand, reputation, and market cap is on the line when I use PayPal. They have far more to lose if they screw up a transaction or expose my private data, and so I (perhaps naively) trust they will handle my account information with the utmost care.
Similarly, I think Google search results are the best because I associate their brand with great usability and user experience design. By contrast, I think of Live or Yahoo as a roach motels… sites designed with stickiness in mind that make me less efficient. That’s why I use Google every time.
So, returning to my original point, what happens to brands when firms fraction due to the lower transactional costs of marketplaces? Will high-value brands hold a firm together that might otherwise break apart? Or will brands become more niche (in other words, will I trust a greater number of brands to service a wider array of services)? I think brand value is a cost of engaging in a marketplace that will give large firms (with high brand equity) an edge over smaller companies.