More online videos than search (soon!) October 12, 2007Posted by jeremyliew in advertising, business models, Consumer internet, Search, video.
Tod Sacerdoti, CEO of the online video ad network Brightroll, notes that video impressions will soon pass number of searches.
1. U.S. video impressions will pass core search impressions in the next three months
2. U.S. video impressions will pass expanded search (meaning including Amazon, eBay, etc.) in the next twelve months.
3. Video advertising spend is being underestimated by analysts (eMarketer currently estimates video will grow from 10% to 25% of search revenue, and from 5% to 12% of total online ad spend, over the next five years)
As with all audience shifts, such as network television to cable television or television to the Internet, ad dollars will follow the audience. However, it does take time, as the network to cable transition took 5+ years and we are still in the midst of the spend movement from television to the Internet.
My bet? I estimate that video advertising will be 50% of search revenue within the next five years and will be larger than the entire search advertising business in the next ten years.
A couple of years ago, when I was running Netscape, the average revenue per search was about 2.5 cents when factoring in sponsored link click through rates and average CPCs. That translates to about a $25 CPM. Web video eCPMs may end up in a lower range than that, although premium video advertising inventory is certainly in that range today. This bodes well for Todd’s projections.
Liz Gaines at New Tee Vee weighs in with her opinion here
Big companies have led the latest surges in virtual worlds October 11, 2007Posted by jeremyliew in gaming, media, virtual worlds.
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Virtual worlds are big and will continue to grow – over $1bn has been invested in 35 virtual worlds in the last year. A recent eMartketer report on virtual worlds notes that:
eMarketer estimates that 24% of the 34.3 million child and teen Internet users in the US will use virtual worlds on at least a monthly basis in 2007. By 2011, 53% of them will be going virtual.
Argueably, virtual worlds will become one of the dominant forms of online communication, supplanting email for this demographic, just as social networks have done.
Virtual World News notes in an interview with eMarketer Senior Analyst Debra Aho Williamson:
“I think we may well see a growth trajectory similar to what we’ve seen for social networking,” continued Williamson. “Virtual worlds can be an addictive, immersive, compelling environment. They offer a lot of things for kids and teens to do. Just over half of kids and teens will visit virtual worlds at least on a monthly basis by 2011. Already you’re seeing session times of a half hour, an hour, and ten hours a month. 2008 and 2009 are where the growth is slightly bigger than ’10 and ’11. You’ve got other media companies jumping in the game. Disney is getting aggressive. MTV and Nick are getting very aggressive. Right now what we’re seeing is a lot more development activity and figuring out how a virtual world fits into media assets. I think as we get into ’08 and ’09 is when you see a lot of traction.”
The Alexa graph below shows that Williamson’s observation about big companies jumping into the game is spot on:
Barbiegirls signed up 3 million members in the first 60 days – it took Second Life 3 years to hit the same metric. Some say that Webkinz is pulling users from Club Penguin. And IAC is driving massive growth for Zwinktopia, as they noted in their Q2 2007 earnings call:
Zwinky.com now has over eight million registered users, spending on average 64 minutes on the site each session. The recent April launch of the Zwinky Virtual World, Zwinktopia, has led to over 15 million transactions using the Zwinky virtual currency called Z-Bucks. In addition to monetizing through search, there are clearly e-commerce opportunities with Zwinky, as well.
Two of these companies are using offline channels to drive online growth, and many other companies (including MTV, Disney etc) will be taking the same approach. While the incumbent virtual worlds like Habbo and Gaia are unlikely to be threatened, I wonder if bigger companies, using their distribution muscle to get out of the gate quickly, will make it harder for new virtual world startups. What do you think?
Good Facebook stats October 5, 2007Posted by jeremyliew in facebook.
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Of the 22 Million people who logged into Facebook in August, nearly 21 Million go on to check their profile or their friends. Beyond that, activities differ:
* 14 million people interacted with Facebook Applications in August.
* Applications are also highly engaging; capturing more time per session than any other activity on the site.
* Over 16 Million people browsed photos in August. On average, they viewed nearly 150 per month.
* Only 80,000 (or .3% of total active members) “poked” someone in August.
Check out the Compete page for a great graphic breaking down this and other popular forms of Facebook behavior.
Search improvements are more about understanding queries better, not understanding results better October 2, 2007Posted by jeremyliew in Search, yahoo.
The Yahoo search blog outlines most of the new changes, but they can be summarized in one phrase; the new Yahoo search understands queries better. This gets instantiated in a two different ways:
1. Yahoo recognizes certain classes of queries and brings relevant vertical search results (e.g. video, photos, news, local, music etc) back into the body of the search results. Both Ask and to a lesser extent Google (with its Onebox) also do this. e.g. try searching for evolution of dance and get the video at the top, or Justin Timberlake and get a capsule of information on the singer at the top.
2. Yahoo aggressively helps users to refine their queries. Although average query length has been creeping upwards, search is still an iterative process for many users. People will type a search string, review the results, realize that it isn’t what they wanted, and improve the query string. Yahoo doesn’t just correct typos and suggest longer search terms that start with the same words, but it also recognizes concepts that are similar. (Ask does something similar in the left rail). E.g. try searching for King Henry VIII and get a suggestion for Catherine of Aragon. It also watches for hesitation as users type and auto-magically makes suggestions when they are needed.
As John McKinley (the ex CTO of AOL) pointed out a few weeks ago, AOL Search had this vision nailed over a year ago, but when new management came in they instituted a much sparser, more “Google-like” model instead. Henry Blodget thinks that this change tanked AOL’s search revenues in Q2, causing it to miss the quarter.
Yahoo has been rolling some of these search improvements out incrementally, and as a result, Compete found that they have both higher search fulfillment rates than Google. More of Yahoo’s search queries turn into clicks than Google’s, suggesting that users are finding what they want more often.
These improvements involve some deep technical problem solving. Finding a way to identify when to show results from a vertical search engine, and understanding related search concepts at scale are both difficult problems. You can cheat and do this with a big list, but that rapidly runs out of steam given the long tail of search queries. This isn’t just a lick of UI paint over the same old search engine.
The question will be whether this is enough. Yahoo has put a lot of time and effort into product innovation. I believe that there are three phases of competition in a consumer technology market; first distribution matters most, then product, and finally brand. Search may have already passed into the “brand” phase of competition. If people believe that Google has the best search, then they may not even try Yahoo’s search to be proved wrong. Yahoo will need to do more than ship great product (as it has done with this product), it needs to also find a way to drive trial from users who have Google as their default.
Conference Season is upon us October 1, 2007Posted by jeremyliew in conferences.
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Well, we’re well and truly into the fall conference season. For readers who are interested, I’ll be speaking at the following conferences this month and next:
Graphing Social Patterns in San Jose (Oct 7-9), focused on both the business and technical aspects of building apps for the Facebook platform.
Widget Summit in San Francisco (Oct 15-16), focused on both the business and technical aspects of widgets
ANZA Gateway to the US in San Jose (Oct 22-24), focused on bringing Australian and New Zealand startups to the US
Digital Hollywood Fall in LA (Oct 29- Nov 1), focused on the future of media, creative content and advertising
Defrag in Denver (Nov 5-6), focused on transforming information into layers of knowledge