Web Advertising - Huge Growth, Major Issues

FastCompany & The Wallstreet Journal recently publised stories studying the growth of Web Advertising sales - and I couldn't help but agree with many of their conclusions.  Web Advertising recently took over TV advertising (in total dollar expenditure) in Britain - but several major problems remain.

First, only 16% of internet users click on banner ads - meaning the notion of paying people for clicks may be overrated.  To further drive home this point, 8% of internet users account for 85% of all banner clicks.  This statistic suprised me at first, but then I realized that the only banners I had clicked on in the past year had been by accident.  HP may sponsor slate.com, and own the entire first page, but the success of that ad shouldn't be based on how many people "click".  The mere reminder that HP is having a sale, or is launching a new product is sufficient - it's building brand awareness.  I may not need a laptop today, and hence wouldn't click, but may need one two months from now, or simply refer a friend to HP should they be looking for one.  CPM, based on the number of impressions an ad gets are significantly more useful, and cost effective.

For this blog I use google adwords, and most of my costs are derived from CPC advertising.  However, when I track who has been to my site, the number of feed subscribers, and where they came from, I realize that many of the clicks were errors. (This may not be a good thing to advertise...but it's true.)  However, when the clicks are legitimate, either sourced from a keyword search in google, or a click on a banner ad that was posted on a relevant page (perhaps another Tech/VC blog), then the number of subscribers goes up, as does the number of pageviews.  I would say that only about 1/4 of the clicks I pay for in the CPC format are "good clicks" - meaning I paid to get a user to my site, and that user sees the value of my site and chooses to subscribe, or views more than one page. 

I'm not sure web advertising has found its true form yet - but so far people seem to be buying it, and buying it hard.

Hello Internet, Please Make My Life Easier.

I don't know how you all feel about this - but apart from being the easiest place to send all my mail to - Gmail doesn’t cut it for me.  This is going to sound grouchy - but I really don't like Gmail’s filtering capabilities, I don't like the way it aggregates messages into discussions, I don't much care for its layout.  It's too rigid.  The discussion aggregation isn't fluid - if I forwarded emails to 15 different people, it just groups their replies into that discussion, instead of starting new ones.  I have one thread where I have 15 different conversations, each with important individual dates and meeting times, all grouped together into a 100 email thread!

I'm a huge fan of aggregation services (as I've mentioned before...), and today I found a few new ones of note

Feebly.com -  Fantastic aggregator of blogs, RSS feeds, and other information into one platform.  Feebly doesn’t aggregate EVERYTHING on the web for you, but it does do news and blog information quite well.  I love the layout, the presentation, and the navigability of the page.

LifeIO – The self proclaimed “swiss army knife” of information – I like that branding and I think they do it effectively.  Again , if you want to be the place where I point all of my information sources to, you have to make my life easier.  It has to be easy for me to setup the account and setup the linkages, and it has to be easy for me to then find the information on the site.  LifeIO does this remarkably well.    The key to this service is that they don’t focus on just one aggregation – they try to do it all – let’s see if they succeed at doing everything well….so far so good…

MAIN PAGE
 

EMAIL

Gist.com -  The last service I’ve been playing around with recently is Gist.   Gist.com has been in beta forever, and there are some pretty smart people behind it, but I just don’t quite get what I’m supposed to use it for.  If I were a Fortune 500 CEO, it’d be useful for me to see what types of news were being published about the people I am most frequently in contact with….but how useful?  I currently only have one friend of all the people I’ve emailed or friended on facebook that has relevant news on them (Congratulations Casey), and I’m in close enough contact with her that I don’t need this service to aggregate news on her for me.  Furthermore…the layout is too clustered….I go to gist and feel overwhelmed…so much so that it’s easier for me to simply go to Google every time I’m curious to see what the press is publishing on my friends and network. 

 

Kcal / MBps - Earn Your Bandwidth

I absolutely love this idea...

http://inventorspot.com/articles/webcycle_makes_internet_users_work_out_32197

A pair of investors found a way to link up a bike machine (similar to what you'd find in a gym) to your computer and linking the rate at which you bike to the internet bandwidth available.  The faster you bike...the more internet bandwidth you have to play with...

The Webcyle

It would be even better if you could set your own benchmarks - ie...instead of limiting bandwidth, I "earn" a set amount of hours of internet service per day if I hit my workout goals.....

That would absolutely get me out of bed every morning to go to the gym.

I always thought laptop keyboards should be able to absorb the energy released when typing to charge their battery....random separate thought...

Aggregation - Then What?

While I was at Bloomberg, one of my pet projects was to work on building an aggregation of independent research for our hedge fund clients.  Although the majority of research is produced by the large sell side firms (Goldman Sachs, Bank of America, Morgan Stanley...etc), many of our hedge fund clients would come to us asking if we knew of any good independent research providers.  When speaking with these funds, many of them would express a lack of reliability from the sell side research they were perusing - they all said it was good to keep tabs on what the large firms were saying, but that they in no way used the research as an investment decision by itself.  The independent producers of research, however, proved to be much more reliable as they only could make money if their recommendations were accurate.  The problem with the independent research space is that nobody had successfully created a platform to aggregate them, and rate them.  Many independents didn't want to be officially rated, and most of them didn't have an established sales effort to push their research to potential clients.

What we did is try to aggregate all of this information in one spot, and only aggregate those with proven track records of success.  This enabled our clients to come to us looking for specific types of research they were looking for, knowing that the recommendations they would receive would be reliable.  It took the guessing game out of the equation for funds, and saved them a lot of money in the process.

The internet seems to be following a similar model - there is a vast amount of information out there, but the tools we have at our disposal for aggregating this information are weak.  There has been a clear emergence of aggregators in different spaces - Google Reader, a news aggregation site, has had a great amount of success pooling together different sources of information into one place.

There are many opportunities left in this space - not only in ameliorating the existing aggregation tools, but also in new spaces that haven't been properly catalogued.  The social media space is particularly lacking in this space, and although there are a few emerging players trying to pull it off, it's not clear that they've figured out the right model or layout to do it.

One such site is Schmedely -  a pretty neat idea and they definitely understand the need for simplicity.  People want aggregators to be easy to use, and to standardize information in a way that's easy to peruse.  Schmedely is a service that enables its users to aggregate all of their social sites feeds and general information they want to see, onto one site.  You can thus create a custom webpage for yourself, where all of your social media is aggregated for you to peruse, along with any other information you might want to see.  "I wonder what my friends are saying on twitter, while simultaneously following cnn.com, while also seeing what the weather in Philadelphia is like," for example. 

What hasn't been done succesfully is aggregating this information for the viewers of YOUR information.  My site is an attempt to aggregate what I say on twitter, my blog, and what I read and find interesting.  This having been said, it wasn't the easiest thing in the world to put together, and I haven't aggregated ALL of my portals yet...just the dominant ones.   Ideally I could come to a site, and aggregate all of my information in a fully customizable space, in the same way Shcmedely allow us to customize what we want to see for ourselves....

A combination of both wouldn't be a bad idea....

 

Social Media Update!

Important note - I stand corrected on my last comment on the international adoption of myspace.  As the chart below will show you, the global adoption of Facebook has absolutely taken off, with recent stats showing that Facebook is a particularly big hit in Turkey and South Africa of all places.

Another interesting stat I found that just blew me away is that the average user on twitter only tweets .37 times per day!   The average twitter user only tweets once every 2-3 days!  (To read more on this, you should check out Lightspeed's blog).  They also do a great job comparing Facebook's status updates to tweets - turns out Facebook has about 2-3 times the number of status updates than twitter does....

Social Media Interesting Facts....

Twitter :

• 1448% growth YOY
• 18.2 million unique visitors in May 2009 up from 1.2 Million the same month the year before.
• Estimated 6 million users.
• Time per person increased 175% YOY to 17:21 minutes in May 2009.

Facebook :

• 190% YOY Growth in Unique Visitors
• 75,444,000 Unique Visitors in May 2009

Myspace.com :

• Largest social networking site – when ranked by total video streams,  116.1 million video streams.
• 12.2 Million unique viewers of video content at myspace.com

Youtube :

• 4^th most visited site, with 85.1 million visitors
• Surging – 8.9 billion videos were viewed by 120.3 million US citizens in July
• 21 billion videos were viewed on the internet according to the new numbers

State of the Blogosphere :

ComScore Numbers-

• 77.7 million unique visitors in the US.  Total internet audience 188.9 million

Emarketer (May 2008)

• 94.1 million us blog readers in 2007 (50% of internet users)
• 22.6 million US bloggers in 2007 (12%)

Universal McCann (March 2008)

• 184 million WW have started a blog, 26.4 in US

Technorati Stats :

Some of the key takeaways here for me are as follows :

• While many of us may be "tweeted" out, or simply bored of the service...it seems to have finally hit its "tipping point" and is spreading virally
• MySpace.com is the largest social media company on the internet today, and it is the one least used by the people I know.  This having been said, I recently was referred to this myspace website by a friend (don't ask), and it made me realize the different hosting formats myspace allows for, and the relative strength this represents vis-a-vis facebook. 
• Facebook's greatest strength, and its greatest weakness, is its rigid standard format.  They've been doing a good job of opening up the site to different apps, but ultimately a musician can't reach as many people and as easily as he/she could through myspace.  Facebook started as a private club, and now that same "club" mentality may restrict its growth. The facebook URL's are a step to change this, but does anyone really use their URL?  If so, comment away!
• Last comment - the international adoption of myspace has blown away any of the other services thus far, and may continue to.  Facebook isn't traditionally used in Spain, for example, where a rival and identical service called tuenti.com has surfaced.  Perhaps facebook should adopt its model to be more accomodating to local markets?

Below are some interesting statistics Technorati published on the Blogosphere...

Links :

Blogging Stats

Youtube Stats

Myspace, Facebook, Twitter Stats

Spray-On Solar Panels - no, really

Scientists at the university of Texas, Austin have invented nanoparticle inks that can be sprayed on and function as photovoltaic cells. According to Matthew Panthani, a doctoral student working on the project, the team has made "a solution of these nanocrystals...[that can be] sprayed onto a subtrate" such as the sun facing side of a roof. The team developed inks that are made up of copper indium gallium selenide (CIGS), that are 10,000 times thinner than a strand of hair.

The solar cell prototypes they've developed can convert up to 1% of the sunlight that hits the cells into electricity - their end goal is to achieve a 10% conversion rate. Furthermore, the CIGS solution is semi transparent, leading some of the scientists to conclude that the material could even be used in the production of windows so that the windows could double as solar cells.

Doing some preliminary research through the web, I almost literally stumbled upon a few other interesting technologies that are being developed :

New Energy Technologies (Symbol : NENE) announced back in May that they had developed a tinted transparent glass they have named SolarWindow, capable of generating electricity by coating glass with the world's smallest organic solar cells. For those of use geeks out there, New Energy Technologies uses an "organic solar array, which achieves transparency through the creative use of conducting polymers" (link to study here). The biggest breakthrough in this technology is its ability to generate electricity not only from the visible light spectrum (sun produced light), but also through artificial light.

Formula 1 cars have been able to translate the kinetic energy produced when braking into additional energy for some time now. What is new, however, is the application of this technology to roads. In Gloucester, U.K., a Sainsbury store has installed kinetic plates which get pushed down every time a vehicle passes over them, which then moves hydraulic pipes that drive a generated. These plates can generate up to 30kw of energy an hour, which is more than enough to power Sainsbury's checkout registers.

The most interesting aspect of the two latter technologies is their ability to "recycle" energy that's already been expended. I believe the key to technological breakthroughs in the energy space lie in making the use of our energy more efficient while simultaneously being able to recycle the energy that is used. Imagine your laptop charged its battery the more you typed, by absorbing the kinetic energy released when you type. What if the interior of our homes were lined with nanoparticles that enabled them to absorb all of the artificial light emitted once the sun sets? What if the national highways in the United States were able to absorb the kinetic energy released by the millions of cars, trucks and buses going over them every day?

Related / Source Articles :
http://isiria.wordpress.com/2009/05/21/windows-that-can-generate-electric-energy-from-sunlight-and-artificial-lighting/

http://jrse.aip.org/jrsebh/v1/i1/p013101_s1

http://printsho.station193.com/php/wordpress/archives/2009/06/15/shoppers-cars-will-soon-be-able-to-power-supermarkets/

http://www.livescience.com/technology/090824-spray-on-solar-cells.html

Public + Private Transportation Hyrbrid = Priblic?

Image via Wikipedia

Like many people on this planet, I've always thought there'd be an easier way to get to and from the airport. Public transportation is all fine and good, but it doesn't really get you from the airport to where you're going. JFK tried to deal with this transportation issue by building the airtrain - a train that connected Queens and a NYC subway line to all of JFK's terminals. The problem with the airtrain is that if you're coming from the upper east side in Manhattan, you have to switch trains three times before you get to your terminal. If you travel like I do (read: excessive luggage) we're talking a major pain in the neck, shoulders, and biceps.

I always imagined planes could be reconfigured in such a way that they turn pseudo train cars. Take off / fold up the wings, build a tunnel, and have them drop you off under grand central in a special terminal. Even that idea, as eccentric as it is, doesn't solve the problem that the drop off location isn't convenient for everyone.

Turns out that a company based out of California has suggested a new airport shuttle system for the U.K. - http://www.fastcompany.com/blog/ariel-schwartz/sustainability/skytrans-personal-magnetic-transporter-physical-version-Internet

Brilliant!

The future of public transportation is a hybrid of public and private transportation - it should enable you to customize a destination while still taking advantage of a public infrastructure.

A similar concept has been proposed with City Car - cars that fold into one another in the same way that shopping carts do and "stack". It would be a membership service, and "stacks" of these cars would be strategically placed in key locations in urban areas. The one way service would enable the driver to take the first car in line, and drive it one way to another "stack" where he would simply park the car and leave it for another driver.

Public Private - that's where it's at.

Some Interesting Links :
http://www.boston.com/cars/news/articles/2007/02/18/the_car_20/?p1=MEWell_Pos5
http://cities.media.mit.edu/projects/citycar.html

What's the future of PE?

http://dealbook.blogs.nytimes.com/2009/07/23/whats-ahead-for-private-equity/

Interesting article a few days ago in the NYT on the future of Private Equity and what some recent studies are predicting. Through the Lauder Institute at Penn, we had the privilege of sitting down and meeting with some pretty important Private Equity fund managers, and all of them seem to be indicating the same strategy and reasoning:

1) Growth of portfolio companies through acquisitions. They're retrenching, and ensuring that the companies that they've already invested in continue to do well...and they're exploring a lot of M&A through their portfolio companies as the could benefit from growing their exisiting businesses and the synergies of merging them.

2) Cautious with new investments...They're still looking at opportunities that exist, but the bar has been set higher for their entry point. The fact that a company is "cheap" or trading at a good multiple is nowhere near being a sufficient justification for them to get involved.

3) Private Equity as a whole will evolve into adding more value to companies. Whereas the current split is probably 90-10 or 85-15 finance oriented versus strategy oriented, many of the managers have argued that is likely to switch. Strategy is increasingly important as they try to build value within their existing portfolio companies…and that isn’t done just by cutting costs, it’s by ensuring that their companies work more efficiently and better than their rivals. Instead of just hiring Bain to do the strategy piece of a transaction, they are looking to bring people on board within the fund itself that can manage that part of the transaction effectively.

This is good news, and will probably help change the way Private Equity is viewed in the world. If these funds start becoming intimately involved in ameliorating companies, (beyond just reducing their costs and increasing their multiples) I think you’ll find more people looking to work with PE funds. The days of easy credit and flipping companies based on financial ratios/leverage/multiples are long gone, and a new era of adding value and helping companies ameliorate themselves strategically has come.

Air Force 'Universal Translator' - FINALLY

Image by billypalooza via Flickr

The Air Force has finally contracted Northrop Grunman to equip a few jets with a "universal translator" system. This system will be designed to allow all personnel from multiple agencies, departmens of the government, and military forces, to seamlessly communicate with one another. An example of when such technology would be used is if a state department convoy carrying only cell phones and satellite phones were to be attacked in Iraq. This system would enable them to seamlessly call in for help, and communicate directly with the A-10 pilots that come in for close air support....

More importantly, I think this is an important and necessary step towards integrating all of the different networks and ways of communicating that exist in "civilian" life as well. One thing that struck me when I was studying to get my private pilot's license was the ammount of material focused on radio communication. Single engine planes carry two radio's at a minimum, both capable of tuning into two different frequencies. Depending on the airport, it may be necessary for the pilot to manage and manipulate 2 or 3 different frequencies at a time. This is an arduous task, considering the number of things that have to be done simultaneously during taxi, takeoff, approach and landing!

Furthermore frequencies are easy to botch as they're printed in size 3 Arial in a light magenta on maps. If you tune into the wrong frequency in the D.C. Airspace, this could spell for disaster, as you may never properly be authorized into the airspace. WE all know what happens then...F-16's and Blackhawks are mobilized to intercept the aircraft. The biggest irony here is that if the aircraft isn't tuned into the right frequency, the jets can't communicate with them in any way!

I'm a big fan of this system and hope that it rapidly gets adapted and put into use back stateside for us civilians!

Image via Wikipedia