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When it comes to revenue, some statements are not only worth thinking about, but are worth re-reading several times. The first quote came a few days ago from Eric Schmidt, CEO of Google, who said,

“Trust me that revenue is large enough to pay for all of the Android activities and a whole bunch more.”

That “whole bunch more” should lead readers to take a closer look at the mobile ad market. Of the four largest smart phone OS providers: RIM (Blackberry), Google, Apple, and Nokia, Blackberry appears to be the only one without a clear profit plan in mobile advertising. It’s no surprise then that Blackberry is looking to buy their way in, as reported in the Wall Street Journal here.

It’s old news that Google paid $750 million to acquire AdMob and that Apple scooped up Quattro Wireless Mobile for $275M. But few know that Nokia launched its own mobile network back in 2008. Although Nokia may be in the game it has not had the same smartphone success in the United States, the hottest mobile advertising market.

AdMob, acquired by Google, is currently the largest mobile ad network, estimated by International Data Corporation (IDC) to control 21 percent of the market, with Millennial Media, the apparent target of Blackberry mobile ad growth plans at 12 percent. Yahoo and Microsoft are in the game, but trail at 10 percent and 8 percent respectively.  AOL, which bought former market leader Third Screen Media in 2007, is no longer a factor.

If there is any trend, it’s that mobile advertising is less of a web portal game, and more of a mobile OS game.

One key reason that mobile OS providers are more relevant in this market is that they can change the economics of the carrier phone relationships. What if, instead of carriers paying a subsidy for phones on their networks, the carriers were paid, not once, but over and over again for the life of that phone on their network? Wouldn’t that be more attractive? That’s exactly how Google has changed the game - by sharing revenue with carriers.

This could be lucrative for carriers and could easily influence device selection and promotion. Who has the most to lose, is Nokia and RIM as they dominate smart phone unit sales, but Nokia already owns an ad network, they just have to execute. Blackberry, then, better get its act together, and soon. Not only do they risk missing out in revenue, but their distribution channel with the carriers could be negatively impacted.

To put the opportunity into perspective, I’ll close with the second quote made on CNBC’s Mad Money, where in 2008 Google CEO Eric Schmidt said that,

“Mobile computing alone will bring in more money than the company’s desktop business.”

If he meant what he was saying, Schmidt sees mobile advertising as larger than the approximately $6 billion a quarter that Google currently earns from web-based advertising. Now that’s a quote worth thinking about.

Excerpted from:
Mobile Ads: Fad Or The Next Big Revenue Opportunity?

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Brands and marketers are always looking for the magic bullet that turns a normal campaign into an overnight success. So it’s no surprise that $11 million in revenue from a single merchandise promotion generates a lot of interest in a company. It’s the kind of success story that gets marketers talking.

That success story belongs to Groupon whose national promotion for Gap last week resulted in income of $11 million from sales of a $25 coupon worth $50 of store merchandise to over 440,000 shoppers, according to AdAge. While Gap has yet to see how many coupons are actually redeemed, Rob Solomon, Groupon’s president said,

“I’m pretty sure if they ran a national TV campaign, they wouldn’t have gotten nearly 500,000 paying buyers in the store.”

Less than two years old Groupon began as a locally-oriented service offering a “deal a day” to subscribers in particular cities who give Groupon their email addresses. The twist is that an offer is only redeemable if enough people express interest in it. With redemption rates exceeding 80 percent on average, Groupon’s growth is easy to understand since it often splits the value of the offer as part of its revenue. It is the local focus that got Groupon to where it is today. The company is obviously unafraid to think beyond localization. “There’s a lot of room to remain hyper-local,” Solomon tells Reuters, “but to introduce super-specials, like for the Gap. Gap is a testament to demand for the big guys.”

Such success is necessary for Groupon to show its model cannot only attract large brands, but that it can retain its position of dominance within its own model now that a slew of copycats have followed on the heels of its success.

Groupon has already spawned several look-alikes – LivingSocial and ScoutMob are competitors. Yelp just launched a similar service, as did Travelzoo. But as with Facebook in social networking and Foursquare in location-based services, Groupon has first-mover status – something it will clearly take advantage of as it grows.

In the last five months, according to AdAge, Groupon has grown from 3 million to more than 15 million subscribers, has gone from 300 to more than 1,500 employees, and has expanded from the U.S. to 28 other countries. The week following the Gap promotion, an additional 750,000 subscribers signed on. Solomon says Groupon expects to have over 20 million subscribers by the end of this year and generate some $400 million in gross sales. The company is well funded by venture capital and shares in the revenue it generates for retailers.

Groupon currently makes localized offers in 29 countries in Europe, Japan, Latin America, North America, and Russia. According to Reuters, Groupon expects to expand from 85 markets to 200 in North America by the end of 2011.

There is no question that Groupon’s model can generate a successful crowd effect driving a glut of conversions based on a coupon. However even though the model is obviously a hit among advertisers, there is legitimate concern among brands that are worried about “training” consumers to only wait for, or buy with, an offer. Not all case studies of the model have had positive results.

1. Advertisers have experienced product shortages that have created customer service nightmares.
2. When examining the buyers often it was discovered that Groupon did not generate new-to-file customers.
3. Poor customer service from Groupon itself.

As Augustine Fou, the chief digital officer at Omnicom’s Healthcare Consultancy Group, is quoted by Mashable in saying that stores like The Gap are exactly the type of advertiser who shouldn’t be using Groupon. He estimates that their loss on such a campaign $7.5 million revenue which is a hefty expense for publicity.

Groupon is, of course, all about driving traffic – and what it did in terms of traffic generation for Gap is now generating a lot of interest among retailers. Advertisers seem enamored with Groupon and many will be lining up to try the service this holiday season. The experience with Gap has proven that Groupon can sustain its business model with a national as well as a local audience. Solomon tells AdAge that he expects Groupon to hold another national promotion “pretty soon,” and that there will be more to come in the last quarter of this year.

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Jambool, creator of Social Gold and former provider of virtual currency for Facebook games and web apps, was sold to Google for a reported $70 million. This follows the trend of game and social app providers LabPixies and Slide we covered here.

In a post about the Slide acquisition, I discussed how Facebook, which originally welcomed developers in 2007 with open arms by dangling the possibility of riches, changed the game and pulled the power back in, away from developers. But why did developers originally flock there? In a blog post, Paul Allen called it the “true spirit of Wikinomics”, explaining:

“Mark Zuckerberg made three big announcements. 1) Applications can be deeply integrated with Facebook 2) Distribution of the applications will occur through the network, and 3) The business opportunity Facebook is providing will give 100% of advertising revenue (for third party applications) and 100% of transaction revenue to the application developers.”

That move had a huge impact. First Round Capital, a venture capital firm, describes this step: “By providing a clear roadmap – and business opportunity – for the widget makers, Facebook has just increased its virtual R&D budget by over $250 million dollars.” First Round correctly predicted that companies like Slide, RockYou, and other developers would enrich the user experience and likely enrich Facebook.

One such company, Jambool, took on the task of building a virtual currency business on Facebook, facilitating the buying and selling of virtual goods and services for application developers. This gained them some traction with other app developers and helped to build a growing business.

But that was the past, and now, as Facebook has grown in size and influence, it has changed the rules. Just as Slide, RockYou, and others have seen their fortunes wane as Facebook grew more powerful Jambool literally had  the rug pulled out from under them once Facebook introduced credits and negotiated deals where these credits would be the exclusive virtual currency on the site. It’s no mystery then that Jambool was snapped up by Google.  Like Slide before them, Jambool’s market valuation and market viability took a hit when Facebook changed the game, making them more likely to embrace an acquisition by Google.

This expands the Google fold to include game makers, experts in viral widgets, social advertising, expression tools, and now virtual currency. What’s next? Who else has been hurt by Facebook changing the game? What gaps need to be filled in Google’s social strategy?

While there are many utility apps and games that fit the bill, the one missing piece are offers – the trend where users don’t pay directly for points, credits, or virtual goods directly, but instead they do tasks, trial products, or spend money on other things that get them what they want.

The two most obvious candidates in this space are OfferPal, which was flying high until the scamville problem we covered here and the choice by Facebook to use TrialPay and PeanutLabs for their offers. This dramatically cut OfferPal’s profile and instantly cast doubt on how big they could become, and now, with a reduced valuation but solid technology implementation, Google could pick them up and round out their portfolio. However, while OfferPal is one obvious choice, Google could also choose TrialPay – a successful, and less controversial, but smaller provider in the offer space. If Google was willing to be aggressive, they could buy TrialPay, which is the favored integration partner for Facebook and currently the main provider of offers that yield Facebook credits. Such a move, at the right time, could not only give Google a solid technology and team, but also temporarily disrupt Facebook’s ability to leverage offers for credits.

Google is building an army of technology,  social tools, and people to challenge Facebook’s dominance in social media. While it has successfully executed on many technologies, it’s only now buying the companies with the traction, experience, and the mindset to put the social back in Google. The only remaining questions are around their ability to they integrate the recently acquired companies and if/how they will move into the offers market.

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Over the last two days, the dust from Affiliate Summit East 2010 has settled and most of us have recovered from the jet lag and three consecutive days of late nights and early mornings (for some there may have been some drinking involved).  And now that we’re starting to settle back into an everyday pace, a lot of us are assessing just what we took home from the conference. Well, here are the top 5 things I took away from ASE 2010.

1. AdWords faces some tough competition

From Facebook Ads to Plenty of Fish, advertisers seem to be turning to user-driven-networks spread their message. And it’s no surprise why.

While AdWords only lets you target by location and intent, user-driven networks let advertisers reach users by both location (great for localized offers) and demographics while at the same time fostering a network affect of like-minded shoppers. So while Adwords only helps you reach users that are already aware of the kinds of services/products you offer, user-driven networks allow you to reach a completely untapped customer base through their social interests.

2. Facebook Ads are the new big thing

Despite the fact that Facebook Ads are bupkis advertisers are drinking the Kool-Aid. No matter if it was a session or a one-on-one interview, everyone seemed to be talking about Facebook Ads. Those who’d figured out the platform heralded positive results, and those who hadn’t figured it out weren’t ready to give up on it just yet and wanted to know more about how to leverage it.

In a nutshell, Facebook Ads let advertisers target users by demographics and personal network; and that affords them a bit more trust currency. And as we know, belief is essential to selling. For instance, your ad might tell a user that one of their friends “liked” your product/service, and that seems to help with conversions more than a run-of-the-mill banner ad or sponsored result. Of course, the flip-side of that is that your product/service can’t completely suck.

3. Email remains a vital component

Believe it or not, email is not just still important, it’s more important than ever. And the reason is that email notifications are an integral part of the social networking experience. Just think about it: whenever a contact takes any action on your profile or content on a social network, you get an email notification.

As Declan Dunn pointed out in his session, marketers should pay attention to users’ email experience for two reasons. First, email is obviously integral to keeping users engaged in whatever community you’ve built-up through social media.

Secondly, and more importantly, depending on the platform you use to manage that community, either you can’t advertise directly to them or it’s inappropriate/inadvisable to do so because it infringes on their community experience. So email notifications become one of your best opportunities to promote any product or service.

4. A picture is worth a thousand clicks

During his awesome session on Facebook Ads, Jeremy “Shoemoney” Schoemaker broke down the most important elements of a Facebook Ad. And the most important piece of the puzzle was, you guessed it, the image.

Essentially there are three elements to a Facebook Ad: the title,  the ad copy, and the image. From his own personal experience with Facebook Ads, Jeremy has found that the image impacts an ad’s performance much more so than the body or the title. So much so, in fact, that between the three elements, Jeremy focuses 70 percent on the image, and only 20 percent on the body and a mere 10 percent on the title.

5. Sex still sells

Credit: Adrants

Of course, this isn’t exactly a revelation. But sometimes, it helps to be reminded of  age old truths — if only to not lose sight of them.

For starters, there were no shortage of pretty face representing the CPA networks and merchants. One network even had a pair of bikini babes prowling the conference floor.

But sex seems to work even on a performance-basis (no pun intended). In fact, one of the examples Shoemoney offered during his session (linked above) was an experiment where he sent US traffic to ad pages where some of the ads featured a cleavage pic and some foreign text. The cleavage/foreign language pics got more clicks than the non-cleavage ads that had English copy.

So it seems that sometimes, it doesn’t matter what your call-to-action or value propositions. Users seem to judge books by their cover, and have their minds in the gutter.

The sum of it all

Overall, Affiliate Summit East 2010 is the best conference I’ve been to this year, and maybe one of the best ever. Unlike a lot of other industry conferences, everything was extremely well organized (from sessions to parties), and the networking opportunities abounded in both quantity and quality.

More importantly, all the intelligence to be gained through sessions came directly from the front lines. After all, these are affiliate marketers. They live and die by their performance, so there’s no margin for error. They’re very focused on results, and very quick to figure out what works and what doesn’t.

In a nutshell, everything I learned was about what is working, not what was fun or cool to do with someone else’s money. I’m looking forward to doing it all again in Las Vegas in January.

The rest is here:
Top 5 Take Aways from Affiliate Summit East 2010

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Over the last two days, the dust from Affiliate Summit East 2010 has settled and most of us have recovered from the jet lag and three consecutive days of late nights and early mornings (for some there may have been some drinking involved).  And now that we’re starting to settle back into an everyday pace, a lot of us are assessing just what we took home from the conference. Well, here are the top 5 things I took away from ASE 2010.

1. AdWords faces some tough competition

From Facebook Ads to Plenty of Fish, advertisers seem to be turning to user-driven-networks spread their message. And it’s no surprise why.

While AdWords only lets you target by location and intent, user-driven networks let advertisers reach users by both location (great for localized offers) and demographics while at the same time fostering a network affect of like-minded shoppers. So while Adwords only helps you reach users that are already aware of the kinds of services/products you offer, user-driven networks allow you to reach a completely untapped customer base through their social interests.

2. Facebook Ads are the new big thing

Despite the fact that Facebook Ads are bupkis advertisers are drinking the Kool-Aid. No matter if it was a session or a one-on-one interview, everyone seemed to be talking about Facebook Ads. Those who’d figured out the platform heralded positive results, and those who hadn’t figured it out weren’t ready to give up on it just yet and wanted to know more about how to leverage it.

In a nutshell, Facebook Ads let advertisers target users by demographics and personal network; and that affords them a bit more trust currency. And as we know, belief is essential to selling. For instance, your ad might tell a user that one of their friends “liked” your product/service, and that seems to help with conversions more than a run-of-the-mill banner ad or sponsored result. Of course, the flip-side of that is that your product/service can’t completely suck.

3. Email remains a vital component

Believe it or not, email is not just still important, it’s more important than ever. And the reason is that email notifications are an integral part of the social networking experience. Just think about it: whenever a contact takes any action on your profile or content on a social network, you get an email notification.

As Declan Dunn pointed out in his session, marketers should pay attention to users’ email experience for two reasons. First, email is obviously integral to keeping users engaged in whatever community you’ve built-up through social media.

Secondly, and more importantly, depending on the platform you use to manage that community, either you can’t advertise directly to them or it’s inappropriate/inadvisable to do so because it infringes on their community experience. So email notifications become one of your best opportunities to promote any product or service.

4. A picture is worth a thousand clicks

During his awesome session on Facebook Ads, Jeremy “Shoemoney” Schoemaker broke down the most important elements of a Facebook Ad. And the most important piece of the puzzle was, you guessed it, the image.

Essentially there are three elements to a Facebook Ad: the title,  the ad copy, and the image. From his own personal experience with Facebook Ads, Jeremy has found that the image impacts an ad’s performance much more so than the body or the title. So much so, in fact, that between the three elements, Jeremy focuses 70 percent on the image, and only 20 percent on the body and a mere 10 percent on the title.

5. Sex still sells

Credit: Adrants

Of course, this isn’t exactly a revelation. But sometimes, it helps to be reminded of  age old truths — if only to not lose sight of them.

For starters, there were no shortage of pretty face representing the CPA networks and merchants. One network even had a pair of bikini babes prowling the conference floor.

But sex seems to work even on a performance-basis (no pun intended). In fact, one of the examples Shoemoney offered during his session (linked above) was an experiment where he sent US traffic to ad pages where some of the ads featured a cleavage pic and some foreign text. The cleavage/foreign language pics got more clicks than the non-cleavage ads that had English copy.

So it seems that sometimes, it doesn’t matter what your call-to-action or value propositions. Users seem to judge books by their cover, and have their minds in the gutter.

The sum of it all

Overall, Affiliate Summit East 2010 is the best conference I’ve been to this year, and maybe one of the best ever. Unlike a lot of other industry conferences, everything was extremely well organized (from sessions to parties), and the networking opportunities abounded in both quantity and quality.

More importantly, all the intelligence to be gained through sessions came directly from the front lines. After all, these are affiliate marketers. They live and die by their performance, so there’s no margin for error. They’re very focused on results, and very quick to figure out what works and what doesn’t.

In a nutshell, everything I learned was about what is working, not what was fun or cool to do with someone else’s money. I’m looking forward to doing it all again in Las Vegas in January.

See the original post:
Top 5 Takeaways from Affiliate Summit East 2010

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2.2 billion dollars in revenue and 11 percent growth seem like strong earnings. That is, unless your eBay. The strength of eBay’s Q2 earnings, driven mostly by PayPal, were undermined as eBay cut its fiscal forecast by $250 million. Such earnings adjustments are enough to make $20 million in fraudulent affiliate commissions seem like a small matter.

Due to Amazon’s growing strength and marketplace shifts, eBay’s market relevancy has slipped over the years. They just seem to be out of mind. As consumers adopt social media, eBay has become less exciting.

So how do you bring the excitement back? eBay hopes money will help.

Resorting to bribes, eBay has launched eBay Bucks a loyalty program that will offer consumers 2 percent back on items purchased on the site through PayPal. Once the Bucks are rewarded, consumers can use them towards additional eBay purchases. The program excludes all purchases from Business & Industrial Capital Equipment, Real Estate, and eBay Motors categories.

Loyalty programs are historically healthy models with companies as large of Discover using them to great success. Although the model is proven, success is often dependent on how well consumers click with the company itself. Microsoft Bing’s shuttering of their cashback program is a clear example of what happens when a program doesn’t click.

Interestingly, one of the primary methods people did use Bing’s Cashback was on eBay. How this bodes for eBay’s program remains to be seen.

As a side note, eBay implementing such a loyalty program may have an impact on affiliate relationships especially those in the loyalty space. Will consumers get to double-dip on awards from eBay and its affiliates? Will eBay count sales referred by an affiliate if the consumer was previously enrolled in eBay Bucks? It will interesting to whether eBay will play fair with its own affiliates.

More:
eBay Hopes Shoppers Will Cash In On eBay Bucks

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The BlackBerry Torch 9800 is being introduced this week on the AT&T network. The reviews are in and they are, at best, mildly enthusiastic. Essentially, reviewers seem to agree that RIM, BlackBerry’s maker, is just keeping up with the Android and iPhone, rather than leaping ahead.

While the Torch isn’t likely to light a fire under the Android and iPhone, the phone is significant because of what it represents about our smartphone future. BlackBerry, after all, has been the market share leader in mobile phones for business use. The Torch 9800 is BlackBerry’s acknowledgment that:

1. Such “consumer” features as a touchscreen keyboard can’t be ignored, the Torch has both a touchscreen keyboard and the more traditional BlackBerry keypad.
2. Apps matter.
3. Seamless Web connectivity is essential. The Torch, says its maker RIM, features “expanded messaging capabilities with intuitive features to simplify the management of social networking and RSS feeds” and integrates access to the BlackBerry Messenger, Facebook, Twitter, and MySpace, as well as dedicated YouTube and Podcast applications.

Perhaps even more intriguing than the BlackBerry Torch introduction is this breaking news: Bloomberg is reporting that the three leading cell phone networks in the U.S., normally arch-rivals, are cooperating to potentially create a new smartphone payment system that could replace credit and debit cards.

AT&T, Verizon Wireless, and Deutsche Telekom’s T-Mobile USA are supposedly involved in a venture that “would let a consumer pay with the contactless wave of a smartphone.” The system, which may involve Discover Financial Services and Barclays bank as financial providers, is planned for testing in four U.S. cities.

Richard Crone of Crone Consulting, an industry consultant, told Bloomberg, “This is definitely a game-changer.” Mobile carriers, Crone said, “are the biggest recurring billers in every market. They are experts at processing payments.”

The implications of this venture are enormous. For one thing, the move directly threatens the decades-old domination of Visa and MasterCard as the only credit/debit games in town. Discover, always a credit card laggard behind these two companies and American Express, could have much to gain.

Such a capability would finally bring the United States closer to Europe and Asia in terms of sophisticated smartphone usage. Contactless technology using smartphones to make store purchases is already available in the U.K. and Japan. Retailers would probably be only too happy to accept a new payment competitor, since they have fought with Visa and MasterCard over transaction fees for years.

While the new technology applies primarily to the store environment, it has an impact in the online world as well, since mobile payments without relying on credit cards could streamline e-commerce even further.

Reportedly, Visa and MasterCard are working on their own mobile payment systems. Some banks are also testing new technology. According to Bloomberg, Citigroup launched “MasterCard PayPass” stickers in June that, when affixed to the back of a mobile phone, can be used to make a contactless payment at some 230,000 U.S. merchants. Alternative payment solutions are also being offered by a number of start-ups, including Bling Nation, Boku, and Zong.

Payment systems are just one area that will change with the advent of ever more sophisticated smartphones. QR codes, which I’ve discussed in a previous post, are another. QR codes (they resemble a square barcode) embed information that camera-enabled smartphones can read with a “QR scanner” app. Magazine ads or window signs with QR codes can be scanned to receive promotional information.

For the upcoming Fall television season, for example, the Fox network is using “Fox Codes” in magazine ads to offer viewers access to Internet-based information about the network’s shows, including videos and cast interviews. CBS is reportedly using QR codes for some of its shows as well.

“Geo-triggered” applications are also in vogue. The Android and iPhone run such applications in the background and can alert users to a specific event. For example, DailyCandy, an email newsletter for women, just implemented “Stylish Alerts” as an Android app. When a consumer is near a current local event, such as a designer sale, the app can send an alert to the shopper’s phone. The service is only available in New York City for now, but will likely be expanded to other cities.

With today’s smartphones, we are finally witnessing the convergence of mobile communications with the Internet. From a marketing perspective, this puts an individual consumer within reach, just when that consumer is ready to shop and make a purchase. Major new opportunities for retailers and online marketers alike to connect with consumers will now be available. In fact, the smartphone of the future is just around the corner. Are you ready to take advantage of it?

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Pondering The Future of Smartphones

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In today’s digital world the hottest new thing often has a lifespan that is equivalent to how long buzz about it trends on Twitter. Certain movements that were once cutting edge fall to the wayside or become part of the daily routine without much fanfare.

Blogs seem to have fallen into that element of routine. Since 2002, Technorati has indexed over 133 million blogs, and over three-fourths of all Internet users read blogs, according to Technorati’s “State of the Blogosphere 2009” report. With the wide adoption of blogging, there is rarely any buzz about blog technology itself.

Recently, however, Tumblr has managed to create some buzz worthy news boasting 25,000 new accounts daily, according to The New York Times, and serving up 1.5 billion page view monthly. For those that don’t know, Tumblr is a microblogging tool that essentially allows users to send anything quickly – including audio clips, images, videos, and of course, text. Other users can instantly “reblog” anything they receive, adding an important viral component to the service.

But Tumblr’s game is more about influence than numbers. David Karp, Tumblr’s founder, tells The Times that unlike Facebook and Twitter,

“Who is following you isn’t that important. It’s not about getting to the 10,000-follower count. It’s less about broadcasting to an audience and more about communicating with a community.”

Karp says creative expression is important on Tumblr as well – it isn’t just about publishing links to other articles and blog posts. Indeed, Tumblr offers the ability to choose from hundreds of themes or create an original theme, post virtually anything with minimal effort, create “photosets” or digital photo books, use a “Bookmarklet” to share anything you’re looking at on the Web, email or text posts from any mobile phone and, of course, publish to Facebook or automatically send a tweet.

Currently, Tumblr is gaining traction with the media because it gives them a means of communicating in a novel way with Tumblr’s primarily youthful user base. According to The New York Times, media outlets that have opened Tumblr accounts include The Atlantic, The Huffington Post, National Public Radio, Newsweek, The New Yorker, and Rolling Stone.

Alexa Cassanos, PR director for The New Yorker, told The Times that the magazine used Tumblr to promote its July 5 cover concerning the Gulf Coast oil spill. “We can highlight graphic content like photo essays or slide shows to an audience that may not read the magazine,” says Cassanos. “You just couldn’t do that, visually, on Twitter or Facebook.”

Another benefit of Tumblr for publishers is relationship building. James E. Katz, professor and Chair of the Department of Communication, Rutgers University, tells The Times that the typical interaction a publication may have had with a reader years ago was limited to a letter to the editor. Now, he says, publishers are realizing “there is a lot of expertise, wisdom and ideas in their readership.”

It may be overly simplistic to think of Tumblr as “Facebook and Twitter’s new rival,” which is what the headline of The New York Times article proclaims. But Tumblr does prove one thing: If you think you’ve seen it all in social media, just wait a minute and you’re sure to see something new.

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Adoption By Media Give Tumblr High Hopes

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In my article about RockYou, a comment from a ReveNews author led to a discussion of Slide likely facing similar market pressures as RockYou. Both RockYou and Slide were darlings of MySpace and expanded to Facebook as it became a more dominant platform. Early on, both RockYou and Slide did well, using all the smarts and experience they developed on MySpace to tweak the viral loop driving their user numbers upward. No one thought they could be stopped. Well, no one that is, except Facebook, who controlled the platform and wanted to participate in the riches and valuations that RockYou and Slide were taking in.

Back in 2008, while Facebook allowed it, Slide and RockYou worked the viral knobs like artists, so much so that Slide commanded a hefty $500M valuation as it took more institutional money.  Max Levchin, founding of Slide even stated “I’m convinced it will be bigger than PayPal”

The belief was that unlike PayPal, which was mostly dependent on eBay, Slide could ride on top of MySpace, Facebook, Bebo, and other social networks. By using their knowledge of social networks and viral loops, they believed that they could grow anywhere online using their viral techniques.

Of course we now know differently.  Facebook took several steps to show app vendors who was in control.  One step was to ‘clean up’ the User Interface (UI), hiding and/or removing applications from the default view of users, forcing users to take one or two clicks to access an application, and putting those applications out of mind. Users had to be passionate take the extra steps to even see these apps, driving app vendors to pay for advertising to gain more visibility. Another move by Facebook was to ratchet down the viral loop, limiting the methods and frequencies by which users could tell other users about new applications. Again, app vendors turned to Facebook advertising to regain the visibility lost.

As Facebook cleaned up their UI and turned things to their favor, other social networks followed suit changing to look more like Facebook, further pushing Slide and other personalization/expression apps to the fringes where only the dedicated would engage. A side effect of visually blanching Facebook and other social networks was that the ‘personalization and expression’ habit and viral loop was also killed. Less people saw cool slideshows and interactive apps, so fewer people commented on them or tried them out themselves. A vicious downward spiral that bled users away from apps.

So today, Facebook holds the cards, having crushed most app providers and especially personalization and expression apps without the sizable budgets needed to stand out in a crowd of more than 200,000 apps. Facebook dictates terms to most app makers, forcing them to accept 70 cents on the dollar for Facebook credits and locking them into 5 year deals. Five years ago, MySpace was multiple times the size of Facebook, and who knows if the tide will rapidly shift again to another network in that same time.

Realizing that popular shifts happen Google decided to capitalize on the number of skilled social network and viral experts who had found themselves on the losing end of Facebook’s changes to control its app market and UI.

It was only a matter of time before Google acquired a company with the background of Slide, and I expect that they will acquire a number of other companies with social network DNA to bulk up on their capabilities in engagement widgets, engagement ads, games, and viral growth.  Slide fits the bill well, as does LabPixies, which was acquired in April. Those two are not enough, as Google seems to have finally recognized that not only has it lagged in its attempts to do social, but that Facebook is a serious threat to its own dominance in advertising.

Google can start by setting the Slide team loose on the Google Buzz data for a Gmail situated social network launch. Let the Slide team apply their viral loop mastery on allowing Gmail users to quickly and seamlessly participate in the new Google social media offering by leveraging an existing email social graph. This time focusing on opt-in and relationship strength, as available from aggregate email data. This sounds like a bastardized, with a more functional feed and an email portal similar to, but more interactive and functional than, Google Buzz. There would be games from Zynga and LabPixies, both Google investments, with more gaming companies to follow, with added personalization apps plus widgets from Slide, and a network-wide integrated game mechanics system to engage and acquire users.

Google investment Zynga started rolling out a non-Facebook identity system earlier this summer for Facebook users, and last week Zynga modified their authentication system in a way that should allow them offer the same game to users on multiple social networks.  This step, would allow players on Google’s new network, Tagged, Yahoo, MySpace or elsewhere to join the same game and not be locked in to staying on Facebook to keep their characters.

Imagine that – being able take your Facebook Farmville or Mafia Wars character and play them on Google with no need to restart a new game.

Facebook has done well with the steps it has taken to make more money and control its platform. In the process, it has negatively impacted the businesses of game, widget, and app providers that are now more than willing to join Google, the largest Internet company with the most to lose from Facebook’s rise. With Google’s help, game developers are realizing that Facebook may not have all the cards.

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Google Buys Slide, Puts On Social Warpaint

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Rather than build their way into social gaming, Disney opted to acquire Playdom who is the creator of Mobsters, the #1 game on MySpace, and a lesser player on Facebook. It’s an easy move to second guess and say that Disney should have bought a larger social network game company. While that was indeed an option for Disney, that line of thinking ignores the leverage-able market positions available to them and focuses on an assumption that Disney will not be able execute.

Disney’s experiments in the micropayments market

Back in 2005, Disney was involved in a micropayments market experiment, and I was in the fortunate position of running the marketplace behind that experiment which also included Microsoft and HMV music among others. In that experiment, there were two major categories of content: branded and unbranded. I’ll focus on two components of those, music and games moving forward.

In the music category, we featured an independent music provider with a catalog of over 1 million songs alongside music provided by HMV music. Single songs were priced from $0.25 through $1.25 for indie tracks, set by the artists, while HMV music tracks were at approximately $1 or $1.50. When we measured sales across both music providers at the end of each week of the trial, branded HMV music outsold indie music some weeks by 10 to 1.  Personally I was guilty of the same bias, since I tended to favor branded artists as well.

We also had games from other indie developers and publishers alongside games published by Disney in the marketplace. Again, we saw Disney games outselling non-branded games by at least 2 to 1 and often more. What was surprising was that even the best indie games rarely beat the Disney branded titles. Even more surprising, one of most frequent complaints was that some of the branded games were ‘crap’, and when we investigated further, people reported that they just bought the game because of some Disney character name they saw on it.

Why Disney branded games will triumph

Now, how does that behavior apply today? I ask you to name any character from the games by Zynga, Crowdstar, or Playdom. Can you name any strong traits of any characters in those games?  Let me change the question up a bit. If your friends, or daughters played DisneyVille, would you play too? What about an X-men Wars game?

Wait you say, it’s about game play! To that I ask, what game play is so compelling on these social games? Do the cute characters have an impact? Is the music that important? Is cross marketing important? To that I say, you may soon play a game with Nemo and “Finding Nemo” movie related music, where you can get power-ups and virtual goods with your happy meal from McDonald’s where you also get Disney character figurine.

Is the social engineering going to be lacking? Probably not. Not even mighty Zynga could knock Playdom out of the #1 spot at MySpace, so Playdom must have been doing something right. Oh, and don’t forget that MySpace is still more about entertainment than Facebook. While many people don’t use MySpace as their primary social network, including myself, I can still find and access music and videos an order of magnitude faster and efficiently there than anywhere else. So while I might read status updates on Facebook, I find music, videos, and bands on MySpace – AND, I play games on both platforms.

So if games are supposed to be about entertainment, and Disney is about entertainment, then the Disney-Playdom deal has the potential to rock the social game world. In addition to the standard Disney stable of characters, Disney’s Marvel Studios also has the rights to 5000 Marvel characters as well.  If the Playdom team made an X-men game that played across the entire comic’s time-line, would that have draw? If you think strategically about where a well executed plan from Disney would take you – it’s not a hard stretch to see integrated marketing dominating the cross-sells of the near future.

A Disney game campaign imagined

So what could this mean? How vast would this power be? Imagine the following scenario:

Imagine Disney creates a game. Let’s call it Happy Nemo World. The game  the characters of Nemo, plus a few more personalities from the Finding Nemo movie. The following steps would come natural to a company that is versed at leveraging brand relationships to create advertising opportunities and buzz:

-As an in-game advertising deal, Disney partners with McDonald’s to launch with Nemo based happy meals w/partner McDonald’s, includes codes for special power-ups in the happy meal.
- ABC has a 2 hour holiday special featuring Happy Nemo World, adding the new characters, also offers special codes on TV.
- Disney radio also promotes the holiday special, game, and offers power up codes for special items.
- Disney stores nationwide find a new opportunity to sell Nemo plushies but this time with power-up codes.
- Disneylands and DisneyWorld introduce a new ride with characters from the game and special power-up codes on the ticket
- Disney introduces a new movie on DVD (like the nearly endless Aladdin series) – “Nemo finds a friend”, continuing the Nemo story, introducing characters from the game, and also providing power up codes.
- Disney runs a Twitter campaign where everyone who posts a link to the game also receives special gifts, with a similar one on Facebook
- Playdom games on Facebook and MySpace offer a cross-sell to the new game, and discounted movie tickets if you use play the new game.

Imagine the above scenario played out across Disney’s properties each already with their built in fanbase. Who else has that kind of marketing leverage and power to make those deals happen quickly? Certainly not Zynga. If/when Disney really wants to make an impact, they could bring to bear a tidal wave of marketing and leveraged brands that has yet to be seen in the social game space.

Disney is rapidly moving into a position where it will have the chance to dominate the entire social game industry by bringing recognizable brands and characters to new or even existing games, followed by cross-marketing in film, TV, radio, and other games. Such an endeavor is ambitious, requires massive cat-herding management skills from within Disney, but is well within the reach of the technology, business units, and existing footprint of its properties.

I say it’s Disney’s game to lose by failure to execute. It won’t be easy, but it’s usually dangerous to bet against the mouse.

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Disney To Use Playdom Acquisition To Redefine Social Games And Crush Zynga

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These days, recommendation engines are so common on larger online retail sites that you might not give them a second thought. Amazon and eBay have long been using personalization technology to create a shopping experience that’s highly customized.

The whole area of collaborative filtering, the behind-the-scenes technology used to drive customized recommendations, has advanced to the point that now, it has become easier than ever to implement without the huge investment in development. It doesn’t even have to degrade site performance like it did in the old days.

Susan Aldrich of the research firm Patricia Seybold Group believes recommendation engines will become commonplace next year. A survey Seybold and the Institute Telecom Paris conducted with 100 European and U.S. companies indicated that every one of the responding companies was planning to add a recommendation engine if it didn’t already have one.

Aldrich thinks one main reason for the new popularity of recommendation systems is advances in collaborative filtering. She says it uses modern web analytics instead of longs lists of business rules. The new systems are easier to update and more efficient.

Companies like Webtrends and MyBuys are on the forefront of collaborative filtering. Webtrends just announced full availability of its “Optimize Profile Enhanced Targeting” solution. It provides marketers with the ability to deliver a personalized web experience based on past behavior of visitors on their websites. Casey Carey, vice president at Webtrends, says profile-based onsite targeting “presents a great opportunity to maximize relevance, increase conversion rates, and ultimately see a significant return on [users’] marketing investments.”

MyBuys, which provides personalization for multi-channel retailers, has introduced “Kinetic Advertising.” According to CEO Bob Cell, this “is a format that enables our display ads to incorporate movement, that let users interact with them and see a dynamic set of products that fit their profile.” With a Kinetic ad unit, says Cell, you can “populate a custom set of products and offers based off a shopper’s interactions with a brand that are specifically tailored to that individual.”

Aldrich draws an intriguing analogy for the recommendation engine – she likens it to a global positioning system. “If a site visitor doesn’t take the recommended path,” she says, “it will come back and recommend another path.” A key strategy of the recommendation engine is to use a site visitor’s known shopping history to put “them on a shopping path that other shoppers with similar interests have taken before completing a purchase.”

Not surprisingly, says Aldrich, companies making use of or planning to implement recommendation engines see value in cross-selling and upselling. Obviously , if an online retailer can get a customer to make an additional purchase at the same time as he or she is buying a product, the incremental cost for the sale is negligible. Recommendations, says Aldrich, have “high impact on conversions and order size.”

Expect to see more recommendation engines popping up on even smaller online retailers’ sites as plug-and-play collaborative filtering technology becomes more widely available.

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The New Must Have Accessory for Online Retailers? Recommendation Engines

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There are sure signs that Amazon is worried about Apple’s iPad. Their focus on rolling out a “cheap” version of the new Kindle WiFi, scheduled to ship August 27^th with a $139 starting price point compared to the current $189 version, will undoubtedly tempt some customers to rush out and buy one.

But Amazon shouldn’t be worried about the iPad as a Kindle killer. They should be thinking about India, not Apple.

When the new Kindle is compared to India’s $35 laptop,  and its price target of $10,  it looks a lot less attractive.

In a previous piece, I wrote off the $35 laptop as a wannabe computer because it lacked a number of important features, like the ability to store the large amounts of data usually associated with a hard disk or high capacity solid state drive. I still stand by this opinion.

But when the laptop is looked at as an alternative, cheap ebook reader in comparison to the Kindle or Apple’s iPad, it easily wins hands-down. This makes it especially attractive to me since I said I’d buy an ebook reader if it was priced below $50.

In India, targeting the ebook reader market could potentially be a match made in heaven, especially if you factor in that India’s schools are moving towards using laptops as a textbook replacement.

The one-time capital expenditure incurred with purchasing these computers would be than offset by the paper savings. Schools could load textbooks in an ebook format rather than stock their printed equivalents. And there’s more than ample time to recoup the costs over the 4-year or 10-year academic cycle of the students using them.

That’s fine for India, but what about us?

A $35 ebook reader could revitalize reading for a generation weaned on the Internet, video games, and cell phones. But it’s not a perfect solution because the laptop’s Linux OS will likely need a tweak or mod to be anywhere near the usability of the Apple OS. An intuitive user interface and a suite of useful apps would make it even more attractive.

After all, what’s a platform without widgets, apps and content?  And while apps are meant to up sell a device and distract the buyer with toys in order to pay more for a phone or for a reading device they have been the bugbear of many new computing platforms, whether you’re referring to the Palm PDA, Sharp Zaurus or until recently, the iPod.

But there are practical issues before India slays the Kindle. Costs associated with marketing, importing, and distribution to other countries have a way of inflating price. And, while hip with geeks, Linux hardly has adoption among the masses.

But with a $35 price point the India laptop has an advantage in low market cost over any device.  It does face an obstacle in regards to access to a reading inventory. It’s doubtful, after all, that Amazon will hand over theirs. Fortunately, having such an inventory accessible is a small hurdle, especially when there is quality content available, like the 33,000 books found at sites like Project Gutenberg.

Combine this inventory with cross platform compatibility into other ebook stores and the $35 laptop is suddenly an attractive proposition. The point is that as an ebook reader a device such as the one India has developed has tantalizing prospects and the ability to create market shift as well as be a potential Kindle killer.

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Companies are learning a tough lesson about customer empowerment: give your customers reasons to communicate and they’ll do so willingly, sometimes in ways you can’t control.

American Express recently released findings of a customer service survey the company conducted online among a random sample of 1,000 U.S. consumers age 18 and over. The same survey methodology was used in Australia, Canada, France, Germany, India, Italy, Japan , Mexico, the Netherlands, Spain, and the U.K.

The findings indicate, not surprisingly, that nine in ten Americans consider the level of customer service important when deciding to do business with a company. But only about one-quarter of them believe companies value their business and will go the extra mile to keep it.

Good News / Bad News

The good news is that, contrary to a commonly held belief, customers will talk more about a positive experience with a company than a negative one. Three-quarters of respondents said they are very likely to speak positively about a company after a good service experience, while 59 percent said they are very likely to speak negatively about a company after poor service.

But here’s the bad news companies need to consider: nearly half (48 percent) of respondents report always or often using an online posting or blog to get others’ opinions about a company’s customer service reputation. What are they looking for? Negative opinions.

According to American Express’ survey over half of respondents (57 percent) say they believe more in negative reviews than positive ones on blogs, and 48 percent believe more in negative reviews on social networking sites. Jim Bush, Executive Vice President, World Service for American Express, explains:

“The Internet has made service quality more transparent than ever before. In the online space, positive recommendations are important, but people often give more weight to the negative. Because consumers can broadcast their views so widely online, each and every service interaction a company has with its customers becomes even more crucial.”

Even more telling is the fact that Americans are seemingly losing their patience with poor service. In fact, 81 percent of respondents have decided never to do business with a company again because of poor customer service in the past. Half of the respondents say it takes just two poor service experiences before they stop doing business with a company.

According to Brand Reputation CEO Graeme Crossley:

“A customer that has a good experience will typically tell 3 to 5 people, but a customer who has a poor experience will tell more than 20. When this is trend occurs via the web, these numbers can rapidly multiply and could spell disaster for brands that don’t have strategies in place to combat online negative chatter.”

How should consumer ratings impact your social initiatives online?

When it comes to consumer ratings for a product or company, for example, should a company stay silent in the face of a negative review? Given the implications of this survey, probably not. Maybe a company can ask satisfied customers to post positive reviews on the same site, or respond to the review if allowed.

A similar strategy might be wise when it comes to social media. Companies need to be proactive and react quickly to both negative and positive feedback with the objective of both engaging a consumer in a dialogue and deflecting any negative follow-on.

Gatorade recently set up “Mission Control” (video below), a central facility that’s being used to monitor the sports landscape, monitor online discussions, track sports trends and buzz, track brand attributes, track media performance, and do proactive social media outreach. Obviously, not every brand marketer can afford a sophisticated “Mission Control,” but this is an example of how seriously big brands take social media – and it’s a good lesson for every company.

Click here to view the embedded video.

Combine perceptions about poor service with reliance on blogs and social networks for opinions about companies and you can see a conundrum looming for marketers. It becomes ever more important to not just provide good customer service, but also to monitor online complaints and do whatever possible to resolve them quickly and to the satisfaction of the consumer.

When a consumer takes the time to complain about a company’s customer service online, that company had better pay attention – because it appears that’s what other consumers are doing.

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American Express Study Finds Consumers Seek Out Negative Opinions

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AOL is offering a robust platform for political advertising, called the Politics hub, that will allow marketers to create targeted campaigns across AOL’s growing properties across the web. The move should be one of many as ad networks work to take advantage of spending by political groups.

According to Jeff Levick, President of AOL Global Advertising and Strategy, the goal is to create a clear resource in AOL for political marketers to use:

“Our Politics hub lets campaigns and issue advocacy groups take their messages directly to voters and key influencers in a proactive way through display advertising, and we make the on-boarding process something that is simple, easy and intuitive.”

AOL’s network has grown as the company has concentrated on acquisition of new content sites hitting specific niches and creating content for those sites to draw more users. The result is a network of more than 80 sites and an audience of more than 250 million.

One figure sure to attract political marketers is that according to AOL, 83 percent of voting age Americans use the Internet. The platform will feature display ads that will take advantage of geo-targeting, being able to focus down to the congressional district level, and make no mistake local is the key to all of this since political battles usually ebb and flow district to district. Combined with targeting AOL is hoping to leverage their more traditional user base combined with their in-display to provide a political marketplace that most sites short of Google won’t be able to match.

Political Advocacy Groups Have Adopted Social and Search, Will They Adopt Display?

Facebook has already seen an influx of political advertising because of the network’s ability to slice up user data by sex, age and other lifestyle interests allowing political marketers to more accurately select the type of audience they want to target.

“This cycle, we don’t have a major Republican candidate who isn’t asking about Facebook or isn’t doing it,” said Peter Pasi, the Executive Vice President of Republican online consulting firm Emotive LLC, in an TechPresident article.

The Supreme Court’s recent ruling to loosen limits on corporate spending coupled with the successful blueprint of online and social media outreach which helped vault President Obama into the White House in 2008, should create a large push in political dollars this year online. Republicans in general are taking a page out of President Obama’s playbook and investing in online outreach. The Tea Party activists found success on the conservative side with social networking activity. It helps stretch the advertising dollar.

As Lauren Dugan of SocialTimes looks at it:

“Dollar-for-dollar, Facebook advertising money might not directly equal more votes. But with larger budgets, politicians are able to do more with their online presence and ultimately increase their visibility, attractiveness and reputability on social networks like Facebook. New media, including social networks like Facebook, might not actually be all that “new” in terms of how politicians reach the people, with higher campaign budgets bringing in more supporters in the end.”

AOL is looking to be the next choice for those advertising dollars after Facebook as it can sell eyeballs that are reading very narrow content while at the same time bringing bring more strategy and campaign assistance to the table. It also has a slightly more conservative base than Facebook another point that AOL is banking on to win some dollars.

While Google still sits at the top of the political advertising food chain, AOL’s move highlights the trend of another traditional vertical moving away from traditional media in order to find green pastures online, thanks to rich metrics. As long as traditional media offers sketchy information about who is watching and who is engaging, online advertising markets will increasingly hold the edge.

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As soon as an online vertical gains traction in the market, someone comes along with a variation that demonstrates another way of looking at things. And so it is with location-based services. I recently talked about Foursquare, Gowalla, Brightkite, and some of the others in this market, all of which essentially reward users for “checking in” at various locations and telling their friends.

Now a new player, face2face, is in the game with a variation on the theme. face2face is app, developed by startup Proximate Global, Inc, that serves as a “location-aware smartphone app that solves the problems of privacy and safety.” It lets friends know “discreetly” when you are nearby. Instead of encouraging widespread sharing of information about where you are, face2face filters information and only notifies a user when a known contact is nearby rather than providing the contact’s precise location.

Face2face does a few other things differently from most location-based services. It is not based on play, so there are no points or medals. It has privacy settings so a user can decide if they want to be invisible to others.

Hameed Khan, Founder and CEO of Proximate Global, Inc., says it “is more of a platform than it is a particular service,” so it works alongside Facebook, LinkedIn, MySpace and Twitter, instead of replacing them with a new social network. In fact, the company calls face2face “a way to consolidate and manage your networks from a single application.”

Khan tells MIT Technology Review that “users need a good reason to share their location information” and they should be able to control who sees it. Khan thinks face2face can help make ads even more relevant. In the future, face2face “may offer coupons to a coffee shop where a friend is already sitting,” rather than simply distribute coupons to nearby coffee shops.

On its website, face2face is described as using “general proximity – never precise location… We make coincidences happen, finding the connections you’d otherwise miss, without sacrificing privacy.”

Look at how face2face positions itself against other location-based services:

“Most location services are often too open, too quick to share information, and the more you use them, the worse it gets. By using proximity instead of precise location, by withholding information from people unwilling to share their own, face2face protects you while it connects you. It’s the first step toward our broader vision of a private, yet socially active lifestyle.”

Proximate Global Inc. says it has designed face2face for “global scalability” since 70 percent of smartphone users live outside the United States. That may be one more way the company will differentiate this new application from its competition.

Who knows if this is what potential users really want from location-based services. But face2face has picked up on concerns about privacy, and it will be interesting to see if this resonates with potential users. Also, face2face seems to be approaching the market a little more seriously – demonstrating that there are implications to telling everyone and anyone where you are at any given moment.

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Startup Has A Different Way Of Looking At Location Discreetly

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