Insider Chatter by Donna Bogatin

Thw Wall Street Journal claims the richest man in the world scaling back on his “social graph” usage is ”the most damning indictment of ”social networking technology.” REALLY? Bill Gates is also scaling back on what he does at the company he founded, Microsoft: Any personal computer technology “indictment” there?

There was a Facebook indictment yesterday, it came form MySpace. Arnie Gullov-Singh, VP Product Mangement, Fox Interactive Media, had his competitive “social networking technology” fun at the OMMA Behavioral conference in New York City, at the expense of Facebook, as I present in MySpace to Facebook: NO ‘Reach, Relevancy, Results’! OMMA Report.

I asked Gullov-Sing about the future prospects for MySpace advertising, both in-house prime and the lower grade, out sourced Google variety. My question to panelist Gullov-Singh:

I appreciate your calling Facebook a “competitor”; Mark Zuckerberg refuses to return the favor. 

In any event, do social networks risk becoming too popular for their own good? As user generated content grows like a weed, what will be the impact on ad quality and pricing? Will users be subjected to more “punch the monkey” ads?

Gullov-Sing avoided the seemingly undeniable inventory glut issue, hailing MySpace is popular among advertisers and its CPMS are doing just fine, while offering no hard data to support his contentions.

After the panel, I sought specifics from Gullov-Sing and pointed out that MySpace partner Google itself lamented MySpace ad quality and pricing, in an indirect dig during its Wall Street conference call.

Gullov-Sing told me that there are a lot of reasons for Google not doing well at MySpace. I suggested to Gullov-Sing that perhaps MySpace is not providing necessasry internal MySpace data to Google so it is best able to optimize.

Gullov-Sing indicated to me that Google doesn’t understand the sales process and thinks technology is the answer to everything.

If Google really did learn how to sell advertising like the rest of the media world, though, would its MySpace performance really improve? After all, MySpace has its direct hands on the “good” MySpace ads goods, while Google is an outside ad serving player, playing around with runnerup inventory.

MySpace inventory distribution appears to match the industry standard put forth at the OMMA conference by Peter Horan. The CEO of IAC Media & Advertising said a sites’ advertising is generally about half direct-sale, premium ad inventory and half of lower quality, resold by aggregators.

I have been questioning the quality and “salability” of MySpace’s inventory available to Google since the $900 million deal was announced in 2006 during a joint Fox Interactive Media and Google conference call.

Fox Interactive has continued to retain exclusive rights to directly sell its most desirable, and most lucrative, display advertising to Fortune 500 advertisers. In addition to Google being exclusive search and keyword targeted advertising sales provider, the agreement has provided for Google to have an option on My Space’s unsold, “remnant” display advertising: a “right of first refusal on display advertising sold through third parties on Fox Interactive Media’s network.”

Google CEO Eric Schmidt was well aware of the MySpace monetization challenge when he made a long term, expensive pledge to MySpace, but believed the vaunted Googley technology would prevail. Schmidt in 2006:

“We are not going to cover MySpace with ads,” he said, noting that Google carefully analyzes what sort of ads encourage users to click on what sort of pages to produce the most revenue. “It turns out the right answer is to show fewer, better ads.” (NYT)

It turns out, though, that Schmidt’s Google did NOT, and still does not, have the right MySpace answer, demeuring now that Google is “still in the learning stages of how it monetizes social networking”:

We have had a challenge in Q4 with social networking inventory as a whole and some of the monetization work we were doing there didn’t pan out as well as we had hoped. But we are continuing the efforts and we are still optimistic about future quarters.

MySpace, on the other hand, is optimistic about the present! 

PLUS: MySpace To Google (Round 2): Text Clicks Do NOT Rule! VideoEgg Report

MORE: MOBILE Visions? Microsoft, Yahoo, AOL Open Up: NOT Google! OMMA Report and Henry Blodget Tech Ticker Puts Yahoo Finance at SEC Risk and LinkedIn Preps Spy Network: Is YOUR Company Safe?

CONTACT DONNA BOGATIN

Esther Dyson continues her “friending” ode to Mark Zuckerberg, courtesy of the Wall Street Journal.

When I heard Dyson declare to Web 2.0 startups in New York City last June (on the heels of Zuckerberg’s unveiling of “Facebook Platform” to the world), “Throw out your development, go use Facebook,” I asked if it would really be prudent for the Web to capitulate to Facebook, as the self-described Internet “court-jester” advised. I warned startups of how Facebook is a wolf in sheeps clothing, citing Zuckerberg’s F8 Platform own Terms of Service.

MY advice to Web entrepreneurs to create their own, proprietary, self-sustainable, independent businesses is proving prescient. SEE: Scrabulous At Risk? Zynga $10 million VC Game: Facebook Roulette   

I also have been warning, since May 2007, of Facebook’s non user-friendly privacy policy and practices. My concerns about Mark Zuckerberg’s non-negotiable data mining machine have also proven on the mark. SEE: The REAL Google (and Facebook) Nightmares: Eternal Data Traps

Nevertheless, Dyson’s admiration for the Harvard drop-out’s “social graph” can not be contained. For Dyson, the Beacon affair is not a privacy quagmire, but a mere Facebook PR faux pas! Dyson applauds how Beacon “familiarized millions of users with the notion that they can control information about themselves online, and determine to whom it is visible.”

REALLY? NOT according to the poor soul who had his Christmas “ruined” due to Mark Zuckerberg allowing Facebook to inform his 100 best friends of his ”surprise” diamond gift for his wife. 

Google, Yahoo, Microsoft? Who cares! Dyson assures “a more profound revolution is taking place on the online social networks,” particularly the one named Facebook.

Who needs MySpace? Zuckerberg prohibits Facebook application partners from even mentioning the name of his biggest nemesis!

MySpace is STILL the space, though, in terms of both traffic and monetization, as Arnie Gullov-Singh, VP Product Mangement, Fox Interactive Media, underscored this morning at the OMMA Behavioral conference in New York City.

Who needs Facebook? “I don’t get it.” Gullov-Singh shared about Facebook’s Beacon and social ads: “How will marketers ever get reach, relevancy and results?”

Moreover, what is really in it for the consumers? “Do any of my friends care that I bought an airplane ticket to come to NYC?” Gullov-Singh pointed out, rhetorically.

Facebook’s latest ad tricks are tools ”thought up by engineers,” Gullov-Singh scoffed.

The ultimate MySpace indictment of Facebook marketing: “LOW RETURN ON ENERGY!”

MORE: LinkedIn Preps Spy Network: Is YOUR Company Safe? and How Web 2.0 Meetups Displaced the New York Software Industry and MOBILE Visions? Microsoft, Yahoo, AOL Open Up: NOT Google! OMMA Report and Henry Blodget Tech Ticker Puts Yahoo Finance at SEC Risk and MySpace To Google: Learn How To Sell Advertising, OMMA Report

CONTACT DONNA BOGATIN

The future of all varieties of local search will be analyzed, debated and predicted over three days of The Kelsey Group’s Interactive Local Media Conference set for Los Angeles, post-Thanksgiving holiday.

I am a five year, multidisciplinary veteran of the Kelsey local intensives: From academic analyst, to startup entrepreneur, to professional blogger, I have experienced the annual event for interactive local media execs and local search practitioners from all angles and always look forward to the high-level local pow-wows.

This year, I have the pleasure of joining the Kelsey Group analysts on stage to wrap up the three-day local meetup in helping evaluate if we are in the midst of a local revolution, or an evolution.

Local media play AnchorFree, for one, would undoubtedly vote for local revolution, thanks to its ”hotspot media network.”

I met AnchorFree co-founder and CEO David Gorodyansky, and team, at the Ad-Tech conference in New York City earlier this month when the Silicon Valley based startup hosted a Silicon Alley Happy Hour. While many Ad-Tech exhibitors laid claim to the latest and greatest ad network innovations, the AnchorFree value proposition is indeed compelling:

The largest Hotspot media network, representing more than 10,000 Hotspot locations, generating more than 400 million page views through five million user sessions per month. The location-based ad network is a new marketing channel for brand and direct response marketers to deliver interactive, timely and targeted advertisements to laptop and mobile device users when they are away from the home or office.

What is so “revolutionary” about the AnchorFree ad network? In a telephone interview this week, Gorodyansky proudly told me his company can target local ads better than Google and Yahoo! As the leading search engines rely on IP addresses for ad serving precision, both Google and Yahoo work under 30% to 50% margins of error, Gorodyansky indicated.

AnchorFree serves ads “pinpointed to street level location,” Gorodyansky told me. AnchorFree may even be able to target Yahoo local ads better than Yahoo itself; AnchorFree has an ad sales and delivery partnership with the number two search engine:

Advertisers are guaranteed 100% accurate location-based targeting, as AnchorFree’s geo-targeting capabilities are based on the access location of the consumer, and not on the less reliable ISP data.

The AnchorFree sales pitch: “We connect advertisers with millions of consumers in a captive, persistent manner that is highly measurable and geo-targeted to users’ exact locations. Any business, from coffee shops and restaurants to hotels, airports and malls, can leverage the AnchorFree network to offer their patrons free Internet access while generating new revenues with no financial investments required.”

AnchorFree aims to build a nationwide broadband advertising network providing 1-to-1 connections with attentive consumers, Gorodyansky told me. Whats more, the out-of-home laptop and wireless device users that engage with AnchorFree’s free-to-the-consumer, ad-supported hotspot network, are highly desirable to brand and direct marketers, Gorodyansky indicated.

Brands currently running across the AnchorFree network include American Express, AirTran, Circuit City, Clorox, Ford…AnchorFree commands CPMs of about $12.50.

While Gorodyyansky hails the local advertising appeal of its service for the media business, AnchorFree also sees its mission as revolutionary for the world at large:

The company enables a grass roots movement of thousands of locations around the world that come together into the largest public, ad-supported Wi-Fi community.

AnchorFree’s hotspot concept does sound “hot.” The hot local space nevertheless has lots of companies vying for “revolutionary” honors.

Dozens of other prospectively “hot” local plays are unbdoubtedly gearing up to make their own best advertising and/or technology cases to the hundreds of local decision makers set to convene in Los Angeles from November 28 to 30!

SEE YOU THERE? BE SURE TO STAY TO THE VERY END! CONTACT DONNA BOGATIN

MORE INSIDER CHATTER CEO INTERVIEWS: MerchantCircle CEO Aims To Disrupt Local Advertising $39 billion Spend: INTERVIEW AND Stepan Pachikov: EverNote Web 2.0 Perfect Mobile Storm To Hit in 2008, INTERVIEW

UPDATE:  CBS To AnchorFree WiFi: WE Own The Ad Billboard, Online AND Off

” Advertising will pay the way” on the Internet, Viacom and CBS Chairman Sumner Redstone reconfirmed today at a New York City conference. At the same time, the New York Times attested to the power of ad-supported online media, at another NYC conference.

Nevertheless, NY Times $10 million Free News Bet NOT a Sure Thing I headlined when the old gray lady knocked down its pay wall. The GM of NYTimes.com suggested same this morning, during an Ad-Tech panel on “Publishing in the Digital Age, How Companies Are Extending Their Reach.”

Vivian Schiller began her presentation by sharing just how much the venerable “dead tree media” has extended its reach online since it dropped its fee plans for featured opinion columnists and the archives: Search referral traffic has increased 133%, Schiller said.

Nevertheless, “it is too early to declare victory,” Schiller advised. In other words, the content must be free game–at the cost of $10 million in yearly subscription revenues–is NOT a slam dunk.

Schiller remains bullish, however. Under the TimesSelect regime (which represented about 10% of content), direct navigation represented approximately 55% of NYTimes.com traffic, search referrals about 45%. Since opening up “opinion and archives,” search referral traffic has “tripled, quadrupled,” Schiller said.

For the NYTimes.com, online subscriptions and direct navigation is akin to “appointment viewing”; Share of such traffic has decreased, as search referral traffic increased.

Schiller extolled the New York Times brand and the quality of audience it delivers to its advertisers. During the Q & A, I discussed how overall audience quality is impacted by the new influx of search referred traffic.

I asked Schiller:

1) As search referred traffic outpaces direct navigation, how will advertisers react?

2) Are CPMs lower for search referred traffic versus direct navigation?

3) How does NYTimes.com deal with fickle search referred visitors who sometimes don’t even finish the clicked-on story, let alone browse other areas of the site?

NYTimes.com advertisers are pleased with the greater access to a higher number of monthly uniques representing new, diverse demographics, Schiller indicated. Moreover, CPMs for advertising at NYTimes.com are not based on source of visitor origination, so CPM dilution is not a concern, according to Schiller.

Schiller acknowledged that average, overall time spent at NYTImes.com will decrease as the percentage of search referred traffic grows. The site is subject to the typical 80-20 rule, whereby a small number of loyal users drive a large portion of revenues, Schiller indicated.

BUT, if it is too early for the New York Times to “declare victory” on the “opening up” of NYTimes.com, it may also be premature for the company to conclude that there will no negative impact on CPMs going forward. After all, while the New York Times may not break out traffic by source for ad pricing, advertisers may very well judge the overall audience quality inferior at some point, and subsequently put downward pricing pressure on NYTimes.com CPMs.

In analyzing the New York Time’s future CPM prospects when it announced its farewell to TimesSelect subscriptions, I underscored that as page view increases will be derived from fleeting search engine and link-fueled visitors, it is unlikely that NYTimes.com would be able to continue to command high CPMS as it has been accustomed to with its dedicated readership.

Rupert Murdoch did a silmilar analysis in reporting to Wall Street yesterday on the future prospects for WSJ.com:

The wsj.com, making it free, we are examining the possibilities of doing that. There are a lot of pros and cons. We passed 1 million people now who are paying for it, and getting very, very high cost per thousand for advertising.

On the other hand, if that was to jump to 10 million or 20 million people around the world, it could be a wonderful thing for the brand. We would be selling the ads at a lower cost per thousand but I think we’d be in front.

NYTimes.com has already bet that it will be in front.

MORE AD-TECH EXCLUSIVES: NBC STILL Playing YouTube Games with Google: Ad-Tech Report and IAB Blasts FTC: Cookie Police Threaten $20 billion Internet Ad Economy, Ad-Tech Report

PLUS: YES! Facebook IS Scarier Than Google! AND WSJ.com Beware: Digg Users Plot Paywall Hack

CONTACT DONNA BOGATIN

As Google comes under increasing regulatory rhetoric fire regarding the consumer privacy implications of its desired DoubleClick acquisition, the online ad industry trade association (of which Google is an important  member) is stepping up its ANTI-regulatory rhetoric. 

It is the best of times, it is the worst of times, so declared the leader of the leading voice of the Interactive Advertising Industry, Randall Rothenberg, IAB CEO, at Ad-Tech in New York City this morning.

The IAB assembled a power panel to discuss “The State of the Industry” and prefaced the debate by warning the audience of interactive marketers, agencies and professionals that their livelihoods are at stake, (NO) thanks to the Federal Trade Commission (FTC).

How so? Despite booming prospects for the online ad industry–$20 billion yearly revenues projected only 13 years after the introduction of the Netscape browser, Rothenberg boasted, nearly a third in importance to the TV ad business—,the online ad party could come to a schreeching halt, if the FTC and “anti-consumer groups” have their way, Rothenberg warned, implying consumer advocates are masquerading as evil doers.

Rothenberg was incredulous, indicating the FTC hearings last week had the temerity to surface the view that time is of the essence in acting on behalf of consumers because ”the time for fact-finding is over,” the FTC believes.

The FTC itself is incredulous, with Commissioner Jon Leibowitz personally coming to the defense of Web consumers: “I am concerned when my personal information is sold to third parties and when my online movements are tracked across several Websites.”

“People should have dominion over their computers. We really mean it,” Leibowitz underscored and THAT is what the IAB is afraid of, that the FTC is not paying lip service to real consumer privacy issues, but will actually take meaningful action to protect users online. In other IAB words, REGULATE.

Cookies are a prime target of the the FTC’s regulatory investigations, much to the chagrin of the IAB and the powerful member companies it represents: Google, Yahoo, Microsoft…

Rothenberg is on an IAB mission to educate the FTC, so-called “anti-consumer groups” and consumers themselves on how, according to IAB member companies, the Web’s cookie technology is not only as harmless as fresh-baked brownies, but the (not so) little engine that could, IS fueling a multi-billion dollar democratic Internet economy in which EVERYONE can be the next Google!

During the Q & A, I noted that State’s Attorney Generals are also concerned about protecting users online, the underage ones.

My queston to the panel: Arianna Huffington indicated comments are moderated at HuffingtonPost to insure a safe and civil environment. In contrast, anything goes at UGC sites MySpace and YouTube. Do you share IAB’s position that regulatory oversight is necessarily a threat to your businesses, or do you look to the government to help build your credibilty with the public?

Rothenberg rephrased my question, “So how do you feel about regulation?”

Fox Interactive Media Chief Revenue Officer, Michael Barrett, gave a thoughtful response underscoring both the MySpace safeguards in place to protect minors and the ongoing education efforts necessary to promote best online practices for the youngest MySpacers. MySpace is open to constructive input from the government, Barrett suggested, while nevetheless indicating neither technology or regulation are foolproof panaceas.

Moreover, user concerns online are not merely a function of the age of consumers, as I report and analyze in: Savvy Web Consumers Delete Cookies, Big Time.

Blasting the FTC may make for good press, but the IAB can not ignore a significant user allergy to cookies!

After all, IAB member comScore has been warning about the real world cookie deletion problem for many a months:

About 3 in every 10 Internet users delete their cookies in a month, with an average deletion frequency of about 4 times per month.

Consumer cookie deletion is rampant, IAB dreaded FTC “regulation,” or not. It is unlikely that a self-serving industry “education” program will dissuade one-third of Web consumers to change their behavior, in favor of the multi-billion dollar advertising economy.

ALSO: Facebook Puts Freeloader Users On Sale To Highest Bidders! and Facebook To Users: We Know How YOU Live, Work, Play, Vote…

PLUS: YES! Facebook IS Scarier Than Google!

CONTACT DONNA BOGATIN

NBC has a hate-love-hate relationship with YouTube, I noted to NBC Universal Senior VP, Digital Distribution, Ron Lamprecht, at the Ad-Tech conference underway in New York City. Google’s Director of TV Ads, Michael Steib, was at his side.

The two execs shared a stage for a panel entitled “Television 3.0,” moderated by Greg Baumann, Editor, Television Week.

During the Q & A, I underscored the irony of a Television Week editor opening a panel on the future of television by showing a “clip” about TV, running on YouTube! I also asked Lamprecht what NBC intends to do about the rampant unauthorized posting of copyright NBC materials at YouTube.

My Question: NBC has deleted its YouTube channel while semi-launching its would be YouTube killer. NBC content nevertheless continues to boom at YouTube. What will NBC do about the ongoing copyright infringement?

1) Join in the Google Video ID program OR

2) Join in Viacom’s billion dollar YouTube lawsuit?

Lamprecht’s answer: We launched Hulu.com. We continue to talk with Google, Michael and I just spoke before the panel (Google’s TV Ads point man concurred).

I saw, and heard over the open mikes, the two Google and NBC execs joking together as well, before the discussion got underway.  During the panel, NBC’s digital distribution point man even gave Google the thumbs up, underscoring how the tehchnology of the company that wants to control all the world’s advertising, even the broadcast kind, will be indispensable to television advertisers going forward. Robert Leverone, VP Television, Dow Jones, chimed in that partnering is key.

The NBC-Google co-panelist love fest today at Ad-Tech contrasts starkly with the NBC-Google almost showdown I witnessed at the OMMA conference in NYC in September.

As I recount in NBC’s Defense Against YouTube IP Abuse? Carrot, NOT Stick: OMMA Report George Kliavkoff, Chief Digital Officer for NBC Universal, twice lobbed veiled, but pointed, jabs at Google for its scant concern for protecting the rights of content creators at its YouTube juggernaut. HE was sharing the stage with Google’s Director of Media Platforms, sitting side-by-side with Eileen Naughton.

During the OMMA Q & A, I asked Kliavkoff: “You seem to have twice indicated NBC’s unhappiness with Google’s DMCA business model. Isn’t it time for NBC to give Viacom some real support by also suing YouTube for copyright infringement?”

Kliavkoff responded that NBC belives in IP “carrots, not sticks.”

Just weeks later, NBC pulled its YouTube channel. Lamprecht didn’t say today if THAT (anti) YouTube move was the carrot, or the stick, talking!

MORE: Tom Curley AP Crusade: Google AdSense Lawsuit Near? Thanks to Attributor and Hulu.com Debuts: Worth the Wait and  NBC on Why Hulu.com IS a YouTube Killer: OMMA Report

PLUS: Google To World: Give YouTube Your Videos, NOW! and NBC Still Booming on YouTube: Google Lawsuit Next? and OMMA Advertising Cat Fight? Google’s Media Chief Gets Defensive

CONTACT DONNA BOGATIN