Yahoo! is doing it, but Facebook should have

An interesting piece by Saul Hansell in today’s NY Times titled “Yahoo Reveals (Some) Details About Its Ad Plans“. While there was lots of good information on what Yahoo! is trying to take on here, what caught my attention was this part:

“It is also making a big play in behavioral targeting: tracking data about users in order to show them ads for things they are most likely to buy. While Yahoo has watched behavior for years on its own network, it will now start accumulating behavior of users on the sites of other companies.”

This capability comes as a result of their recent Blue Lithium acquisition, which had been operating a behavioral ad network competing with the likes of Tacoda (now part of AOL) and Revenue Science. But what struck me about this announcement is what I recently explained to a friend, that Facebook should have been the one making this  announcement given the amount of information they know about their members. This, rather than the ill-fated Beacon program, which was clearly violating members’ privacy, even if Facebook was just trying to push on the edges of innovation a tad.

Facebook could easily have extended itself as a behavioral ad network which in turn would have enabled it to better understand its members activities outside of its own site. It could have moved down this path without anyone so much as batting an eye.  Now with Yahoo!, Google and AOL playing this game, and Revenue Science as the last significant independent player in this space, I’m not sure that the opportunity remains as solid for Facebook, but I guess time will tell.  Me thinks that their monetization woes could have been put behind them had they opted to pursue the behavioral ad targeting direction.

Voter Privacy Issues: Latest Blue Lithium Offering

Today’s announcement of Blue Lithium’s new behavioral ad targeting network may begin to push the boundaries which were once considered sacred in terms of voter privacy. Here’s the story (free subscription req’d):

BlueLithium Delivers Voters With New Behavioral Ad Network

BLUELITHIUM HAS LAUNCHED A NEW behaviorally targeted ad network, the first service built to help political candidates leverage the Web’s geo-, demo-, and behavioral targeting abilities to advertise their campaigns. The San Jose-based digital marketing company rolled out its Voter Network today, and politicos can run standard display, rich media, and even video ads, crafting messages with targets as specific as: Women, ages 18-34, living in Seattle, with a household income of $70K+, who are interested in foreign affairs.

So what’s the concern here?  Well, for one, to the extent that Blue Lithium can tell if a user clicked on an ad, they can begin to classify them further in terms of where they sit on the political spectrum based on the candidate whose message they followed.  The opportunity for misuse of the information gathered through this network is also fairly substantial in an area, that unlike companies pushing unwanted offers for commercial gain, can begin to affect our political & social lives in undesired ways.  Imagine such a network in a country where the ruling political party decides to start going after its opponents in nefarious ways.

It will be interesting to see where the privacy advocates will come down on the value or concerns over this offering, but frankly, I think the possibility of abuse is fairly significant and something that Blue Lithium will have to answer to sooner or later.  To me, this raises concerns on par with the DoubleClick/Abacus privacy issues, and more recently the Google/DoubleClick ones.  Certainly a topic for a good debate.

You Gotta Love Jason Calacanis

While I don’t always agree with Jason’s politics or his at times overbearing stage presence, I have a soft spot for him in that he seems to understand some subtleties of Web traffic and he exploits these diligently and directly. In his most recent post about Mahalo, he announces the launch of Mahalo Greenhouse where he is now paying people $10 to $15 per search result page created. In contrast with my previous comments about the service, what I like about this latest development is threefold.

First, the SEO value of these pages is significant and $10 to $15 feels like relatively cheap labor to me but more importantly is that he’s paying a one time fee for this content that will likely have a greater lifetime value. Note by contrast that About.com pays its guides a percentage of the revenue generated from their pages, which is an on-going fee.

Second, by opening up and allowing people to submit search result pages, he’s tapping into that Wikipedia juju. That’s a beautiful thing, since he’s also allowing them to donate that money to the Wikimedia Foundation. Now he gains some wonderful PR and shows that he’s trying to do the right thing here. One might argue that the right thing would have been to follow the About.com model here too and pay a percentage of the ad revenue he will generate on an on-going basis to the foundation, but hey, baby steps, what he’s proposing is a step in the right direction.

Third, something we learned at Tribe, which many others surely know, is that “content is king”. In other words, for an advertising driven site to be successful it has to have a lot of content to increase the chances that results leading to its site will be frequently displayed by the major search engines. This is a sublety that is often not deeply understood by watchers of these sites, but that you quickly realize when seeing the daily logs of exactly how much traffic is coming from the search engines and what impact additional content can have on this. At one point, while at Tribe I had wanted to start a “love the content provider” campaign so that all areas that enabled people to submit content into service, be it recommendations, blog posts, discussion tribes, etc., would be reviewed to make sure they were as effective and simple as possible. Also, to explore and find ways to enable people to more frequently add content to the site. Suffice it to say, part of Mahalo’s ability to start generating real traffic, and hence revenues from this, will hinge on how fast it can create as much content as possible. While they could hire people, opening it up in Wikipedia sort of way means that now you can use people more effectively to review submissions for acceptance than to create the original content.

It will be interesting to keep up with Mahalo and see if these raw ideas that hit right at the heart of online success workout as cleanly as they appear. For me, the simplicity of the model, less so its ingenuity, make this a fascinating case study.

Tags: mahalo, about.com, tribe, wikimedia foundation, jason calcanis

Was Squidoo a CGM attempt at what Mahalo is doing?

CGM = Consumer Generated Media

So first there was About.com (previously known as The Mining Company) with a model of creating a site with “guides” managing areas of interest and building up resource pages on the topics they were interested in and responsible for. These people were trained by the company, on how to create valuable real-estate on the About.com site, and were paid a percentage of the CPM/CPC revenue generated by their pages. Then, much later, came Squidoo. This service encouraged ordinary users interested in a topic to build a resource page and they would be paid a percentage of any affiliate revenue generated from offers appearing contextually on their page. This in effect took a lower cost approach to user generated content. While from a Google perspective, there’s probably some interesting search engine optimized (SEO) traffic coming here, the quality of the content pales in comparison to About.com’s. Not having looked at all of the Squidoo content versus all of the About.com it might be a bit speculative to make this last comment, but it’s been my impression in random reviews of both sites that About.com is more useful to me than Squidoo.

But now, along comes Mahalo with what seems to be some innovative positioning in saying that it’s going after the search engine biz, when in effect, it doesn’t cater to the “Long Tail” of searches at all (only focused on top 20,000 queries and are up to the top 5,000 so far). Next, it proposes to create a results/topic page for each of the 20,000 queries. For any query not covered by the Mahalo pages, regular Google results will be returned. At this stage, the service appears to be more analogous to a site with 20,000 pages that offers search results using the Google site search capability. But given that Mahalo is going after the top 20,000 queries that should also mean that they will eventually begin to place highly within the organic search engine results given the SEO opportunity here. Hmm…

Mahalo appears to be taking a more similar approach to About.com in terms of training and paying people to create the pages (versus allowing people to naturally do this on their own). The differentiator is how they’re choosing the content for building their site pages.  Like About.com, the quality of the pages should also be superior to Squidoo’s.

One can call this search, but I think that’s a stretch given that there are several more appropriate metaphors for what Mahalo is doing. I’d even liken it more to Richard Rosenblatt’s DemandMedia, that went from the domainer business to one where they would build up the domains with relevant content to create a more permanent informative destination page, monetized through text-based advertising though they will surely be well positioned in the future for the lead generation business. The Demand Media offering is described as follows:

Demand Media consists of nearly 60 Web sites in niche verticals such as golf, outdoors and gardening, reaching 28 million unique visitors per month; a domain registry service that’s second in size to godaddy.com and reaches 60 million unique visitors per month across its sites; and the “Channelme.tv” initiative launched in May. Under Channelme.TV, Demand Media provides Web users with the ability to buy a personalized URL, such as their name, and add a .tv to it. Individuals then can populate their sites with videos from about 15 Web partners, such as YouTube, Brightcove and MySpace, creating a “personalized TV channel.”

Here’s a great breakout of Demand Media’s properties (note that WeHow is even compared to Squidoo).

Anyway, given that I know a few of Mahalo’s investors, and know of the faith they have in Jason Calcanis, I’m sure there’s more to this play and likely some innovation on the cost side of creating this content which provides another advantage to the other models. That, and Jason is scrappy entrepreneur which you gotta like if you’re an investor in start-ups. So with that said, it will be interesting to keep up with his start-up to see how it evolves over the next couple of years.

Tags: mahalo, about.com, squidoo, demand media, jason calcanis

Tumri, a throwback to my days at Impulse! Buy Network

After reading the following VentureBeat post about Tumri back on May 7th, I wrote the following comments:

Talk about a case of “Back to the Future”, back in 1997 a company called Impulse! Buy Network was built on this very premise. It was sold to Inktomi in April of ‘99 for $115M, which at the time provided Softbank Ventures (Mobius) w/the best ROI of their portfolio for that year. It was before the term widgets was in vogue and these ads were called “barkers”. Yahoo!, AOL, ComputerShopper, Disney’s GO Network, AT&T Worldnet, and a host of other major portals were affiliates and displayed these product driven ads targeted to whatever section on their web site they were placed (ie. sports products targeted to sports content on the portal). Yes, contextual ad targeting before Google had released AdSense.

This was a merchandising network, with such merchants as J.Crew, K-mart, and over 200 others feeding product offers into the network. These product offers could also be paired up w/such selling methods as “falling price offer”, “auction”, “limited time offer”, and so on.

Anyway, Inktomi ended up combining Impulse! w/their C2B acquisition (a competitor to MySimon and Junglee at the time) of an early comparison shopping engine. This made tons of sense because if you consider, having products in a comparison shopping engine or as product offers on widgets, these are simply applications of a product database. Hmmm…I wonder if a similar fate awaits these latest entrants?

Funny to see these apps coming back strong. I should also note that at that time Accel passed on investing in the company, so I’m guessing this time around they didn’t want to miss it again ;)

Well, in catching the following press release that Tumri had teamed up with online performance based direct marketing agency NETexponent to offer their widgets, I started seeing the second leg of what Impulse! ended up moving towards over time.  Because some of the portals at the time wanted to control which merchants would be allowed to appear on their site, and they liked the Impulse! platform and administrative features for giving merchants more control for handling this themselves, Impulse! began to license a branded closed version of its open network functionality where merchant would be permissioned by the portal and only appear across those other web properties that the portal company wanted (as opposed to across the entire Impulse! Buy Network).  Disney’s GO! Network was the first licensee of this model.  It would not be such a leap to see Tumri enter into relationships with networks of sites like the New York Times Co. or Yahoo! or Viacom, that want to offer the Tumri capability as an added product to offer their advertisers.  After all, this is basically the combination of advertising and affiliate models.

In looking over Tumri’s list of advisors, I see three ex-Inktomi folks but none of them were from the Impulse! acquisition, which leads me to believe that they may be missing out on some of the valuable lessons gleaned from the first iteration of this merchandising business model.  People like Mark Goldstein, DC Cullinane, Richard Ling or Scott Cahill, would have been invaluable resources for them to have included among this group.