Author Archive for Shahar Nechmad

Yahoo Suicide Act and The Importance Of Data

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by
Shahar Nechmad
on June 15, 2008
in Google and Yahoo
. 0 Comments

I don’t live in the valley enough times to take the new Yahoo - Google deal as personally as a lot of the bloggers around here. Most reactions were somewhere between anger and contempt to true sadness.
Many people gave their explanation to why this deal is actually bad for Yahoo on the long run, detailing how it will put to death their search and search advertising businesses.
But what people are missing is that by signing the deal, Yahoo kills not just their search efforts, they also kill their long term vision.

In the press announcement that Yahoo published there are two very important quotes we need to give our attention to:

“This agreement provides a source of funds to both deliver financial value to stockholders from search monetization and to invest in our broader strategy to transform display advertising”

Basically Yahoo admits that they can’t beat Google in search advertising and that they need to focus on where they are still leaders, the display advertising market. They put their future on trying to lead this still big market.
But here lies the problem. We all know Google, very soon, will go with full power also after this market, and with the relationship they have with so many advertisers and the DoubleClick acquisition, they have everything they need to also win it.
Now let’s go forward. At the same press release Jerry Young also write:

“We believe that the convergence of search and display is the next major development in the evolution of the rapidly changing online advertising industry.”

This is absolutely true. We all know that web advertising is all about targeting. The better you will target your ads, the better ROI you will give to your advertisers and more money to your publishers. And Targeting is all about data.
What Jerry basically say is that by mining search data to build a better profile of users, you can enhance display advertising performance.
The problem of course lies with the fact that by giving Google access to all those Yahoo search results, they are giving them not just inventory but also this valuable data. They are giving their biggest future competitor their most precious asset they have, securing their failure to win also this battlefield.

End Game - Google Wins

Published
by
Shahar Nechmad
on June 12, 2008
in Google and Yahoo
. 1 Comment

Today big news were of course the expected deal between Yahoo and Google.
Yahoo will outsource some (we can guess most) of their search advertising and in site contextual advertising to Google.
This makes Google basically almost unbeatable in search. It’s no longer a technology question of coming up with better algorithm to do contextual advertising. It’s all about the ROI they can give publishers and advertisers. And this is first of all a size question. When you have such a huge amount of advertisers and inventory, you can play the numbers in a way that will maximize the results better than anyone else. Microsoft and the other players simply don’t have a chance.
So there are two big questions that come up to mind:
Is this deal good for advertisers? Still hard to know. In the short run, it definitely makes their lives better. Bid for words on Google and reach also the rich Yahoo traffic. On the long run? When Google own interests is to make prices go up as they take a cut of the sale, it’s always bed to have simply just one player. So for the long run, we have to sit and wait and see how this will play out.
The second important questions is of course - So how can someone beat Google?
It seems that there are now just two ways to beat Google:

1. Create such a better search engine, that you will be able to basically convert Google users. This scenario is very unlikely to happen. The main reason is that it is not a technology question but a psychology one. The Google name is “burned” into people mind so hard that even if you’ll proof to them that your engine can bring better search results, most people will still use Google just out of the fear that they are losing something.

2. Hit Google where it really hurts - the revenue share with their publishers. Google takes approx 30% of advertising money and give the other 70% to the publisher. A year ago there was some discussion in the blogosphere about an open source search platform. A platform that takes on the power of open source to beat Google page rank algorithm and at the same time gives publishers 100% of the advertising deal.
Such a platform can be 29% worse than Google, and still convince a publisher to give it his inventory.
Of course this is all theory. In reality there are many problems in creating sucha platform. From who going to fund the massive datawherhouse needed for this, to how you make sure SEO black hats doesn’t game the sysetm when it is an open source one.

YouTube user watch 50.4 videos per month on average???

Published
by
Shahar Nechmad
on May 23, 2008
in Video
. 3 Comments

The new comscore data shows what we all could say, that the king of online video is YouTube.
What I find curios is the fact that they claim that on average each YouTube user watched a whopping 50.4 videos on April.

Maybe I’m completely wrong here, but this sound to me like a way too big of a number. My feeling is that this number just shows that YouTube player still falls to black hat tactics of uplifting the number of views of some videos.
I would love to see the number of how many videos were viewed on average per unique user. My guess is that the number will be very different…
If you think I’m wrong here and have other data to show it, please leave it in the comments.

Microsoft Cachback - Desperate But Also Genius

Published
by
Shahar Nechmad
on May 22, 2008
in Advertising, Google and Microsoft
. 0 Comments

I have to agree with Michael Arrington. The new move by Microsoft, Cach Back, seems like a desperate move, but it could also turn out to be a game changing one.

Until we will see more brand advertising money goes into digital, search will still be the king. And Microsoft is in big trouble in this field. Google is the de facto ruler of web search and because of that also of the search advertising money.
In recent years Microsoft worked hard on developing better search algorithms and products, but even when they were successful (I’m saying for a long time that some of the Live properties are much better than the Google competitors) it wasn’t enough to push users to do the switch.
It’s a psychological issue. Too many people are fixed on the notion that Google is the web. That Google results are the only result.
So how cachback can change this?
By giving money to the users.

What brilliant here is that Microsoft finally realized that they actually don’t have to completely convert people to Live from Google. All they need is just the last ad click.
We have written about this in this blog a couple of times - the current way advertisers are measuring ROI is very wrong. But it is the way used these days and it can play into Microsoft hands.
Currently when advertisers are trying to attribute a purchase to a campaign, they look at what ad (or referrer) the user clicked on to get to the site in the session in which the purchase was made. They basically attribute the all purchase just to this ad or campaign. This means, that it doesn’t matter if you used Google to do all your price comparison, if you used Google to search for the product for a week. If in the end you will go to Live, do a search (when you already know exactly what you want)an buy the product, Microsoft will get the all glory.
And this situation is exactly what could happen. Users will use Google to do the hard research as they trust it more than Live, but in the end will go to Live and make the purchase in order to get the cachback discount.
Simple but brilliant.

And of course Microsoft is hoping that if you will use Live for this for enough time, you will start to use it also for other searches and maybe in the end even convert totally from Google.

Ironically, Atlas that is now part of Microsoft is one of the leaders in trying to push a new attribution and measurement model (that I think is much more accurate) that called “Go beyond the last ad click”.

So will this work? Will Microsoft will win the last search battle? Hard to say, but it is probably their best move so far.

Advertising in Social Networks

Published
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Shahar Nechmad
on May 19, 2008
in Advertising and Engagement
. 1 Comment

Nice article from Ad Week about advertising in social networks, and how the model there is going toward building experiences instead of just display ads.
This fits well with what I wrote last week on the same subject.

The big question of course is how you measure the success of such campaigns, and how you compare one to another. This opens up again the discussion about engagement metric which I won’t dive in right here, but feel free to read other posts in this blog which discussed this issue :)

Advertising, Social Networks and What is the Future?

Published
by
Shahar Nechmad
on May 16, 2008
in Advertising, Engagement and Google
. 1 Comment

This week I turned my back to Apple and went to buy a Microsoft Zune. The all process got me thinking about the importance of brands. iPods and iTunes importance for Apple is much more than the direct revenue stream.
People that the iPod has an important role in their life got to use iTunes. If you want to really enjoy iTunes you need to run it on Mac OS. In order to run Mac OS you need to buy a Mac. If you already have a Mac, good chances you will also buy some other Apple hardware like external hard drives, Apple TV, etc…
Same was true for Microsoft for years. If you use Windows, good chances you will use MS Office. If you use MS Office, you will probably use Office Live or Share Point Server in your office, and the loop continues.

It’s not just about the fact that it is easier to use other services or hardware from the same company, it’s also that we start to trust this company to give us a full experience around our digital life. We trust them to have the best service for us.

This is exactly why we see such a big war today in the social networks battlefield. Google, Facebook and MySpace are fighting for their brand and all of us trust.

So how does this will affect the future of advertising?
Maybe the way to monetize social networks is not to try and target ads that will take the user out to the advertiser site. Maybe the answer is to incorporate the advertiser content, interactions and brand into the already trusted and familiar environment of the social network (Anyone said widgets?).
If an advertiser can extend it’s messages and even build a “mini site” or experience into a trusted environment like iTunes, Facebook or your device, it can encourage users to interact with it much more. This could also be extended to other environments. WIll you be more likely to buy things from within iTunes, using the same one click mechanism you trust? Will you be more likely to register to a coke awards program from within your MySpace home page?

And yes, I think that this is another good example why brands should look for sites that has high engagement metric from its users. The reason is that those high engaging users are more likely to also interact with his brand and services.

The Importance of Participation or Why Digg is Still Better than Yahoo

Published
by
Shahar Nechmad
on May 14, 2008
in Attention, Engagement and Yahoo
. 5 Comments

Read/Write web came out with a story today that try to show that Yahoo Buzz got bigger than Digg.
The data that the article is based on is new Comscore data that shows that Yahoo Buzz did passed Digg in the number of uniques.

buzzdigg1aa.jpg

If you consider just the traffic numbers, indeed it seems that Digg are in big troubles. But a quick look at Yahoo Buzz and Digg home pages will show you a very different picture.

On the Yahoo Buzz home page, the most voted story has 118 votes. Most other stories has less than 30. At the same time, Just by taking a quick look you can see that most stories on Digg home page have more than 300 diggs (votes).
It even get worse for Yahoo Buzz if you go to the tech section where most stories have just about 2 - 30 votes. Even if you look at all stories from the last 24 hours and not just recent hours, the picture stays the same.

So yes, Yahoo Buzz is leveraging the Yahoo home page to build a big reach. But sometimes it’s not about quantity - it’s about quality. Digg users are much more loyal to the Digg brand. Their engagement in the site is much higher. Yahoo Buzz users are more likly to skip to the next hot site, as they are less emotionally invested than the Digg users. There is much more chance that they will stay loyal to the site on the long run. I will even argue that their value to advertisers can be higher (put demographics aside as I don’t know Digg data) as their digital participation is higher.

This is a great example why by looking just on page views and uniques we can get a very disturbed picture of reality. This is exactly why attention and engagement metrics are so important to the future of the web.

yahoobuzz.png digglogo1.gif

Media Consumption

Published
by
Shahar Nechmad
on May 11, 2008
in Advertising
. 2 Comments

We are living in an age when all media types starts to blend with each other. You can watch TV programs on your computer and you can access the web from your TV. Blogs are changing the newspapers business and let’s not even start with mobile.

During all of this, it starts to be confusing when you try to understand how you need to build your content and on what media it should run.

Last week I heard a great new way to look at this world.
Instead of trying to figure out the differences between TV and the web and who blends with who, all we need to understand is how the consumer is going to consume our content and messages.
Going with this, we can say that there are three ways you consume media:

  • Leaning back - For example when you sit on the living room couch or your bed and watch the TV
  • Leaning forward - For example when you sit on your desk chair and use your computer
  • On the move - When you use your mobile device like the iPhone

If you think on the world like that, you will know how to design your content for the best user experience and easily adapt it to the changing landscape of the media devices.

Laptop+user_959_18321922_0_0_4000799_300.jpg keyboard_hero20070629.png

Why Engagement is Crucial For The Future of The Web

Published
by
Shahar Nechmad
on March 23, 2008
in Advertising and Engagement
. 4 Comments

Dollar On Thursday I had the pleasure of presenting NuConomy in the Under The Radar Conference (and may I add - we won both the Judges and audience awards).
After my pitch, Rafe Needlman (CNET) who moderated the event asked me a very interesting and important question: "Do I think that advertisers will start to use engagement as their buying currency?"

My answer was that I think it will happen eventually, but it will be a long process.
Coming back home, I thought that I gave just half the answer. The second half is all about why it is so important for the future of the web, that engagement will become the next currency for advertising.

Today most advertisers look on three metrics: Unique users, page impressions and time spent on site.
The number of unique users is no doubt very important and will stay like this. Let us focus on the two other metrics.
By measuring page impressions as a currency we basically encourage sites to create bad user experiences. You can argue that some sites use too much ajax today, but I believe we can all agree that page refreshes are simply bad thing. The best user experience comes from sites that use a smart combination of Flash and ajax. Instead of encouraging this, we actually punish those sites by paying them less money.
Same thing also for time spent on site. Again, we actually encourage sites to be slow. If the pages will take more time to load, if you will need to go through more steps to get what you want, if you won’t be able to get the data through RSS and other channels, you will spend more time on the site. Again, advertisers today encourage sites to develop bad user experience.

Measurement of engagement takes a different approach. In essence, it say that what’s important is not the quantity but the quality. By using engagement as currency, advertisers will say "We don’t want just a million people to watch our ads, we want the right people to watch and interact with our brand". Instead of paying for every joe that see or click on the ad, an advertiser will pay just for the audience he actually want to engage with.
If you advertise a sport product, you want to pay just for sports fans that interact with your brand and not for people who never watched a football game in their life. The more they are engaged in sport, you will probably be willing to pay more.

Using engagement as a currency, will not just encourage better user experience and adoption of new technologies, but will actually yield better ROI for the advertisers.

So if this such a great solution for everyone, why do I think it will be a long process until we will get there?
There are many reasons, but probably the number one reason is the fact that engagement is not a comparable metric. It’s easy to say that one site has more page views than the other. It’s much harder to say that one has a more engaged audience than the other.
We still don’t have any standards to how engagement should be measured. If you read this blog, you know that I believe that there is no just one engagement metric that fits all. Still, I do believe that we all can come up with different engagement standards for each vertical.
So we will have an engagement metric for blogging sites and another for video. Who should define them? It will probably be a joined effort of the community and the IAB. Yes, the world of engagement will be more difficult to navigate in but it is also the right way in order to take us to the next step in the evolution of the web.

NuConomy in the IAB Conference

Published
by
Shahar Nechmad
on March 17, 2008
in Conference and IAB
. 0 Comments

The IAB were kind to invite us to do a panel together with Comscore about next generation metrics, in their Leadership Forum conference.
The conference takes place in Chicago this Wednesday. If you are near the area, please ping me back and maybe we can meet up for a drink…

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