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Online direct response shows booms and busts by category January 30, 2009

Posted by jeremyliew in advertising, targeting.
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Earlier this month the Lookery blog looked at the booms and busts of behavioral targeting.

They point out that behavioral targeting is most visibly effective for online direct response in considered purchases (where the decision to buy takes a while, so there is some time to notice purchase intent and start to target advertising). They also point out that some of the industries that have these characteristics have gone through wild cycles of increased then decreased demand, sometimes for structural reasons, sometimes for legal reasons, and sometimes for economic cycle reasons:

online direct response booms and busts

online direct response booms and busts

* Auto – 2004-2008
Auto has always been a major driver of behavioral targeting the last few years benefitting everyone from Google to Internet Brands (aka Carsdirect.com)
* Household Durables – 2004-2008
The rise of high end e-commerce fueled consumer electronics and appliance e-commerce sties
* Mortgage & Finance – 2003-2006
With qualified leads selling from $50-500 a pop, companies like LowerMyBills made a killing
* Mobile Phones & Ring Tones – 2004-2006
A key driver of under 30 monetization as mobile co’s and ring tone services went wild chasing this high converting group
* Online Dating – 2004-2006
Before the rise of free sites like OkCupid, Plentyoffish, Woome, & Craigslist, dating paid some of the best CPA’s online
* Online Gambling 2002 to 2005
Gambling esp. poker was a major gold rush for online pubs emerging from the last ad recession with high payouts at least until the FTC decided to get all uppity

The economic cycle will turn eventually and bring back auto, mortgage and durables demand. Mobile and Online Dating may not return as strongly as they have been pressured by prices falling to marginal cost. I think online gaming will drive the next cycle. Let’s see.

Advertisers and big internet companies get behind standards for online video advertising. January 28, 2009

Posted by jeremyliew in advertising, standards, video.

Last week I missed the announcement of “The Pool“, a new initiative to help build standards in online video advertising:

Media companies including Microsoft, Yahoo, CBS’s CBS Interactive and Hulu.com are joining forces to attract more money to the fledgling online-video advertising marketplace by testing ad formats.

The project, dubbed “the Pool,” is the brainchild of Publicis Groupe’s Starcom MediaVest, which buys roughly $16 billion in U.S. ad time and space annually for big advertisers like Procter & Gamble.

Starcom MediaVest and sister agency VivaKi say they are trying to create standards in the online-video market, which is popular with consumers but hasn’t turned into a serious money maker.

The Pool, which includes six media companies and several marketers, such as Allstate, Capital One Financial and DineEquity’s Applebee’s, met in November, drew up a list of 30 online ad formats and whittled it down to five, which will be tested in focus groups this week. The two highest-scoring ad formats will be put into beta testing on the media companies’ sites. The Starcom MediaVest clients involved in the Pool have agreed to use the winning ad format and buy time on the media sites involved in the research.

This is a very exciting development and likely will be a great catalyst to help boost the online video market. The IAB put out their online video standards in August and the Pool is further momentum towards the standards that will drive this market forward. It’s very good news.

Next I hope we see a “pool” for social media, perhaps around engagement advertising?

How to do a layoff January 26, 2009

Posted by jeremyliew in HR, layoffs, management.

It’s never easy to do a layoff. If you have to do it, Professor Bob Sutton from Stanford business schools gives good advice via Wired (oddly not on their website, but in their print edition). I’ve repeated the advice below with my annotations italicized.

Predictability: (If it is clear that cuts will happen) Warn your staff exactly when cuts will happen. Secrecy breeds stress.

Understanding: Humans always want to know why. Give reasonable justification for termination. (Note that with layoffs personal performance is not a factor – layoffs are to do with positions being eliminated. Explain why the company cannot afford to keep the position.)

Empowerment: Let them have some control over their exit. A package with options – say, a choice between extended health coverage or cash up front – reduces anxiety.

Compassion: A little humanity goes a long way. This can include things like having surviving staff out of the office so that affected employees can pack up their desks without people watching them.

What other advice do readers have

Why do people buy virtual goods? January 13, 2009

Posted by jeremyliew in digital goods, game design, game mechanics, virtual goods, virtual worlds.

I recently read a paper by Vili Lehdonvirta about what drives the purchase of virtual goods. I’ve suggested three use cases for virtual goods before:

1. Attention in a noisy environment (usually digital gifts)
2. Self Expression
3. Increased Functionality

and later proposed a fourth use case, convenience.

Vili proposes a different taxonomy:

Purely “utilitarian” or use-value0based attributes can be divided into two categories: performance (simple numerical advantage) and functionality (new abilities and options). Virtual goods also have attributes capable of generating emotional or hedonic responses, particularly their visual appearance and sound, but also any background fiction or narrative associateion with them. Hedonic attributes are difficult to distinguish emperically from the conceptually different social attributes, which refer to attributes that make virtual items suitable for creating and communicating social distinctions and bonds. Such attributes are provenance, customisability, cultural references and the “branding” of an item with a known commercial brand. Rarity is perhaps the most socially oriented attribute of virtual goods, because its value is strongly associated with its ability to distinguish a (small) group of owner from non-owners

In the paper he gives examples of each of his classes of virtual goods. He also summarizes some previous research on digital goods. In particular, he notes advice from Oh and Ryu to game designers based on research on Kart Rider and Special Force:

– Balance between items that can be purchased with real money and items that must be earned through gameplay, and build synergies between the two categories
– Allow players to keep “ornamental” items permanently, but make “functional” items consumable
– In the case of items that ive the player a performance advantage, do not disclose the exact numbers;provide approximate descriptive texts instead
– Introduce items linked to specific events and communities (e.g. Christmas decorations and guild emblems).

It’s useful to read the whole paper (around 15 pages)

Some startup CEOs’ New Years resolutions January 5, 2009

Posted by jeremyliew in 2009, start-up, startup, startups.

I asked my CEOs what their New Years Resolutions were. Here is what they resolved:

Jonathan Kibera of specialty ecommerce company Mercantila was alliterative in his focus on revenue:

Simplicity: Reduce the # of components necessary to generate revenue.
Stability: Be consistently excellent at each of these components.
Scale: Drive as much business as possible.

Lance Tokuda of social apps developer Rockyou is equally focused on revenue and mindful of the economy:

Optimize for revenue generation over growth to preserve cash in a weak advertising market.

Scott Albro of B2B media company Tippit knows what to worry about and what to not waste angst on:

Focus on what we can control and make sure, every day, that what we can control is more powerful than what we can’t.

Ed Baker of mobile virality company Demigo will be focused on execution in 2009:

Set realistic deadlines and meet them. While I will continue to encourage and work with the team to set aggressive milestones for each of our weekly releases, we need to do a better job of making sure we always meet these deadlines, and don’t let them slip.

Joe Greenstein of social movie site and app developer Flixster is making sure that his team feels the love:

Make sure everyone at flixster knows how much they matter. The further we get into this business, the more it is clear to me how directly responsible the talent and commitment of our team is not only for the successes we have had thus far, but for our hopes for the future and for the quality of the experience along the way. In a difficult economy especially, my 2009 new year’s resolution is to make sure everyone at Flixster knows that this is our company, to succeed or fail by our efforts and to be shaped along the way by our collective vision.

Amy Jo Kim of casual game publisher Shufflebrain (Photograb) is letting users guide product development as much as the company’s own vision.

My resolution is to listen to — and learn from — what the market is telling us, and mine the unexpected opportunities that are coming our way.

Siqi Chen of social game publisher Serious Business (Friends For Sale) will be putting in place the infrastructure to support the same key philosophical commitment:

In the new year, I resolve to get better at making data driven (characterize, hypothesize, predict, and test) decisions. This is an obvious point to most entrepreneurs these days, but the past year has really shown us that it isn’t as simple as just deciding to be data driven one day. Building the technology infrastructure and the engineering culture that makes this possible at scale are non-trivial projects. We’ve gotten a lot better at this in the short history of our company, but we’ve still got a long way to go, and we intend to continue to improve on this in 2009.

And finally David Scott of casual game maker Casual Collective sought more explicit communication and introspection:

Every Friday afternoon we will set aside time (away from our screens) to discuss all the things we achieved that week and list all we want to achieve in the following week. This will help keep everyone aware of what everyone else is doing, spark discussions and ideas that otherwise may not have happened, end the week with a better sense of achievement, and help us hit the ground running on Monday mornings. With such a small team we also need to better prioritize tasks.

And to lose weight of course 🙂

What are your new years resolutions for your company?