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Seven things entrepreneurs should know about PR October 15, 2007

Posted by jeremyliew in Consumer internet, Entrepreneur, PR, start-up, startups.
9 comments

The following is a guest blog posting by Laurie Thornton,the principal and co-founder of Radiate PR, a boutique public relations agency representing emerging growth companies in the Silicon Valley and beyond. Radiate is also Lightspeed Venture Partners‘ PR firm.
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While attending the Lightspeed Internet User Acquisition Summit last month, three of Silicon Valley’s most respected journalists – Matt Marshall of VentureBeat, Rebecca Buckman of the Wall Street Journal and Erika Brown of Forbes — offered some insider tips on PR. Whether you’re familiar with the ins-and-outs of the process, most agree that public relations can deliver tangible results: drive significant Web traffic, fuel user acquisition and contribute directly to a company’s bottom-line. Here’s a snapshot of what was shared that afternoon, plus a few more thoughts on the ABCs of publicity, aimed at first-time, do-it-yourself entrepreneurs.

-Know Your Target – Take Careful Aim
: Any practitioner will tell you that tailoring a story pitch is essential. It’s well worth the time to thoroughly research the target outlet, understand the readership and know what the specific journalist covers. Sought after reporters receive upwards of 200 pitches a day. You won’t even make the first cut if your story idea isn’t spot-on.

-Implement the 30-Second Rule: The editorial world is saturated, so engaging a journalist at the outset is the hardest part of the job. Make the pitches brief – no more than a few short paragraphs. Too much text is a turn off! Craft your story idea as a well devised teaser and the reporter will be more likely to respond. You’ve got very little time to get their attention, so make it count.

-It’s Not Just About You: The majority of journalists won’t write about Company X’s new product, but they might cover it within the context of a larger category article or trend story. Consider Jaxtr, a VoIP contender. Here’s an opportunity to tell a David vs. Goliath story about how their service stacks up against Skype, the reigning industry behemoth who is generating some negative headlines at the moment. Package a timely story idea about how your company is making its own notable impact, or uniquely competing in the broader market.

-Users Tell it Best
: During my firm’s nearly four-year tenure representing LinkedIn, we frequently parlayed user success stories to demonstrate the tangible value of a social network for business – one that could help you land a job, get a trusted referral, etc. With these editorial placements, user sign-ups measurably increased. Then there’s PeerTrainer, a social network for diet and fitness, who utilized astonishing ‘before and after shots’ of a successful user. The compelling story of this woman’s personal journey landed her on the cover of People Magazine, where she directly credited PeerTrainer with her 100-pound weight loss. For both companies, the testimonials proved the most convincing and powerful way to attract and secure new users, and motivate existing ones.

-Patience, My Friends: The PR process can be likened to the sales cycle. Can you imagine your business development guy closing a major deal with a coveted strategic partner with one intro email and a single follow up call? Coverage doesn’t always happen overnight.

-Play Fair, or Don’t Play at All: We expect journalists to be fair, accurate and truthful in their reporting. Conversely, we need to play by the same rules. Always be straightforward and don’t cover up or candy coat the facts. Also, if you ever offer an exclusive – stick to your commitment. Forge reciprocal relationships with journalists. They pay off for both you and the reporters – everyone can win.

-Oh, Yeah — Please Don’t Forget About the Product: A solid product that tracks to its promised claims is a check-box requirement for any successful PR program. Expectations are extremely high, even in the early Beta phase. Budget and bandwidth constraints aside, don’t rush out before a product is adequately tested and refined. The press and other critics will take notice. Not even a really clever PR pro can compensate for an offering that doesn’t deliver. Resist the temptation to simply get your offering out there as quickly as possible before it’s really ready. If you can, take that extra time to make your product shine from day one. The great publicity will follow.

More online videos than search (soon!) October 12, 2007

Posted by jeremyliew in advertising, business models, Consumer internet, Search, video.
5 comments

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

Wisdom of Crowd or Crowdiness of Crowds II October 9, 2007

Posted by jeremyliew in attention, Consumer internet, social media, social networks, user generated content, web 2.0.
2 comments

In May I posted about a NY Times article that showed that making popularity data public made hits bigger and that talent was only one factor in this equation – the taste of the early adopters was more significant.

A recent Wharton research paper comes to a similar conclusion. Paid Content summarizes the results:

— “One, some common recommenders lead to a net reduction in average sales diversity. Because common recommenders (e.g., collaborative filters) recommend products based on sales and ratings, they cannot recommend products with limited historical data, even if they would be rated favorably. In turn, these recommenders can create a rich-get-richer effect for popular products and vice-versa for unpopular ones. This finding is often surprising to consumers who express that recommendations have helped them discover new products.
— In line with this, result two shows it is possible for individual-level diversity to increase but aggregate diversity to decrease; recommenders can push each person to new products, but they often push us toward the same new products.
— Result three finds that recommenders intensify the effects of chance events on market outcomes. At the product level, recommenders can ‘create hits’ out of products with early, high sales due to chance alone. At the market level, in individual sample paths it is possible to observe more diversity, even though on average diversity often decreases.
— Four, we show how basic design choices affect the outcome. Thus, managers can choose recommender designs that are more consistent with their sales or product assortment strategies.”

These are largely consistent with my conclusions from May for people who run social media sites:

1. If you’re trying to iterate towards a “best answer” then keep feedback loops to a minimum, at least before users “vote” on their own. (e.g. Hotornot, espgame)
2. If you’re trying to create “hits” out of some of your content (and don’t care if it’s the “most worthy” content – you only care that they are hits), then display feedback and popularity constantly, as this will effect user behavior and exacerbate the size of the hits (e.g. Youtube, Digg, American Idol?
3. If you want to “guide” user behavior in a certain direction, provide feedback that validates or shows the popularity of that behavior. This is consistent with my prior post on game mechanics applied to social media: keeping score.

Will email be dead in 5 years? September 17, 2007

Posted by jeremyliew in communication, Consumer internet, email, facebook, myspace, social networks, start-up, startups, VC, Venture Capital, virtual worlds.
14 comments

I used to work with John McKinley at AOL where he was CTO and, later, President of Digital Services. I have enormous respect for him. In a recent blog post, he says that email in its current form is under attack and doesn’t have long to live:

We are in the midst of an important moment of truth – email as we know it is under attack, and the major firms are not moving fast enough to prevent it from becoming more of a niche form of communications in the next 5 years. The email experience of today is being threatened on multiple fronts by a variety of new forms of communication:

  • Twitter/short-form blogging
  • Asynchronous messaging in social networks (e.g., the Facebook Wall)
  • IM experiences now supporting queuing of messages to offline buddies
  • Away message/Status message utilization in instant messaging
  • SMS adoption (late to come to the US, but now pervasive)
  • Wikis and other new collaboration platforms
  • Comments (MySpace comments, Blog comments, et al)
  • Casual communication forms (the nudge, the wink)
  • New sharing experiences (Flickr, et al)
  • Email aggregators (e.g., I use Gmail to aggregate all of my AOL, Yahoo, and POP3 accounts. These other companies still bear all the cost of hosting my email accounts, but now get none of the pageviews.)
  • Email and IM integration into social networks (the new entrant risk).
  • People have more compelling, more contextual, more effective, and more convenient options to share and interact than ever before, and incumbent forms of communications will be the losers here.

    John hits on a very interesting broader point. Every few years a new form of communication arises and for some people this becomes their primary form of communication. Over time, earlier forms of communication lose overall share. This has happened to letter writing, telegraphs, talking on the phone, Usenet newsgroups, chat rooms, and message boards in the past. Email has displaced many of these prior forms of communication over the last 15 years, and is now under threat itself.

    I don’t think all of the communication forms John lists above are equally threatening to email. Some are just features, and others have communication as a secondary aspect to another purpose. But it is clear that SMS, IM and social network messaging have supplanted email use among teens. Kids and teens are also some of the earliest and most enthusiastic adopters of casual immersive worlds.

    As John points out:

    The risk is as follows: the major internet incumbents rely tremendously on having a robust base of consumer email account relationships to feed their ad/search businesses. Having that email inbox relationship can yield 2x the monthly page views, when compared with non-email-account consumers.

    The reason is simple – users are more likely to use their primary form of online communication as their homepage. This is why the social networks threaten portals. Being a homepage is an incredibly powerful position because as the first page a user sees, you have an ability to influence what other pages a user sees.

    The portals have long used webmail as the “milk at the back of the store” – a low margin product that keeps users coming back. But to get to the milk you have to walk past the high margin impulse purchase products in a supermarket – the candy and the cookies and the chips. Similarly, to get to your email you have to get past the editorial programming on the portals homepage. A few extra impulse clicks to which shows won at the Emmys or to read about the 700 foreclosure homes being auctioned in one city, and the portal generates some advertising revenue.

    This presents a real opportunity for startups. In the past, innovators that have driven mass adoption of new forms of communication have been bought by big portals well before they needed to show a revenue model, with ICQ and Hotmail being the two best examples. I’d be interested to hear what readers think are today’s most promising candidates for new forms of communication.

    In late stage consumer markets, brand matters more than product September 14, 2007

    Posted by jeremyliew in branding, business models, Consumer internet, distribution, product management, start-up, startups.
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    The WSJ today has an article about how hard it is for US auto makers to get “import intenders” to add domestic cars to the consideration set:

    Just about every month, CNW Market Research meets with a group of would-be car buyers and plays a trick on them.

    Sometimes the company, which specializes in auto sales trends, takes a Toyota Camry, removes any identifying logos, and tells them it’s a new model from one of the U.S.-based auto makers. Or it takes a domestic car and tells them it’s a Toyota or another import make.

    Either way, the result is the same. “If they think it’s an American car, the perception of the vehicle falls dramatically,” said Art Spinella, vice president of the Bandon, Ore.-based firm. “Detroit really gets a bum rap in the U.S.”

    When I was at AOL we did a similar experiment for search. We took search results from multiple search engines, stripped branding and UI, and asked users what they thought. The marks were pretty even across the board, but when branding was put back, Google was thought to have the best results ever time. PC World found similar results in April.

    As I’ve mentioned in the past, there are three phases of adoption for a new consumer technology. In the first phase distribution is paramount, in the second product is paramount, and in the third branding is paramount. Competing on the wrong dimension at the wrong time may not move the needle, as Detroit is discovering.

    Viral marketing, randomness and the difficulty of controlling growth in social media September 13, 2007

    Posted by jeremyliew in communities, Consumer internet, social media, social networks, viral, viral marketing.
    16 comments

    I recently met the CEO of a company who claim to be one of the most popular social networks in Turkey with several million monthly visitors from Turkey. This happened by accident – the founders are Americans who have no prior connection to Turkey.

    This is just one of many examples of how difficult it can be to predict or control the growth of viral social media. Google’s Orkut, is a better known example – a social network started by a Turkish engineer working in the US that now dominates in Brazil and India. Friendster and hi5 fall into this bucket as well. As I’ve noted before, the online advertising market in the US is bigger than that in the rest of the world combined. The senior management of these companies know this, and all would love to see more US traffic, but it is now beyond their control.

    The reason is the mathematics of viral growth. If the viral coefficient (the number of additional members a new member brings) in a population is less than one, it grows but eventually hits a ceiling. But if the viral coefficient is greater than one, it grows unbounded. Although your social media property may start in many different populations, it will come to be dominated by those with the highest viral coefficients.

    This is best demonstrated by example. Consider a new social media property with 30 members, 10 each from three distinct populations; call them Pinks, Purples and Greens. Suppose that by luck and because of the initial users, the viral growth coefficient for the Pinks is 0.6, for the Purples is 0.9 and for the Greens is 1.2. Watch what happens to the populations over time:

    viral-coefficient-impact.png

    All three groups are initially equally represented, But already by time period 4 the population is more than 50% Green. By time period 10 it is more than 75% Green and probably considered a “Green social network”. By time period 16 less than one member in 10 is not Green. For Green now substitute whatever national, language based, religious, racial or other demographic grouping that you choose.

    These evolutions can happen very fast since a time period is the time it takes for a new member to invite more members. 2-8 weeks might be a reasonable assumption.

    This example is vastly simplified, of course. Viral coefficients vary over time within and between groups. Viral coefficients also don’t vary quite as much between groups; the same underlying feature set is being exposed to all groups. But it illustrates the point that randomness can play a significant role in the eventual makeup of a social media property’s user base.

    I posted about a similar finding in May, how you don’t necessarily get the wisdom of crowds, but sometimes just the crowdiness of crowds. It was based on a NY Time’s article that showed how randomness can have a big impact on the most popular songs for a crowd when popularity information is public.

    Youtube’s entry into online video overlay will be good for its competitors August 23, 2007

    Posted by jeremyliew in ad networks, advertising, business models, Consumer internet, contextual targeting, video, web 2.0.
    6 comments

    Google’s announcement yesterday of overlay ads in Youtube has prompted a lot of discussion about the format of the ads, and who invented overlay ads first.

    As Henry Blodget and others have noted, some of the most interesting commentary on the overlay ad unit comes from Brightcove CEO Jeremy Allaire:

    To our disappointment, there has been extremely limited uptake by the advertising community around [overlays]. There are a lot of factors behind this limited uptake, including:

    – the advertising community buying video have been very focused on leveraging existing creative and buying patterns in the online video space

    – most content publishers and media owners have been focused on getting the ‘basics’ up and running, and also responding to the RFPs from marketers and advertisers, which are almost 100% focused on basic short-form video commercials

    – for premium brands and content, the basic pre-roll and companion banners are yielding extremely attractive CPMs and there is little evidence that :15 ads have any negative impact on end-user viewership behavior — in fact, our own metrics show that sites that run without any ads, and then introduce :15 pre-rolls and banners achieve identical usage and performance (e.g. no drop-off in users because of ads) on their content.

    Nonetheless, we remain very bullish about ‘composite’ video advertising formats that combine overlays and unique and non-intrusive calls to action with deeper interactive marketing experiences. We’ve been pushing this for years and only now are starting to see the publishers and media owners that we work with begin to take an interest in these formats. I believe this is because we’re now entering a phase where content companies are looking at ways to maximize yield and revenue within their content, and they are introducing more mid and long-form content which require, by economic necessity, a different suite of formats to deliver a good user experience.

    Jeremy’s experience is not surprising. As I have said in the past, new forms of advertising are hard. They take longer to catch on then you expect. Until standards emerge, it can be difficult to cross over from “early adopter” advertisers who are willing to experiment, into the mass market of advertisers. If the media buyer at the agency doesn’t see your sort of advertising as a line item, she can’t allocate you part of the ad spend.

    That being said, Youtube’s entry into the market is a game changer. With Youtube representing 50% more market share than ALL other online video sites combined (according to Hitwise), and with Google’s existing relationships with advertisers, they have both the volume and the connections to be able to create a standard. And that is great news for VideoEgg, Brightcove, AdBrite, and all the other online video ad networks. Online Google/Youtube can create the standard that the industry needs to be able to really grow into scale.

    Social design for social media companies August 15, 2007

    Posted by jeremyliew in communication, Consumer internet, Internet, social media, social networks, user generated content, web 2.0.
    2 comments

    At the end of June, Motorola published the results of an ethnographic study that they did on the sharing (communication) practices of family and friends. They collected in depth data for 2-3 weeks on 5 different social groups. The powerpoint is well worth reading as a reinforcement of the principles of social product design. The key findings will apply to anyone building social media and communications products:

    Motorola Findings

    As one of the study’s authors says on the Motorola blog:

    When we talk about the “user experience” the main emphasis is often on an individual’s experience with a particular technology. Even with a purported social technology, for example a social networking site, we still tend to create for the individual’s interaction with the site (how does someone find their friend, how do they access this site easily from a mobile device).

    However, designing for sociability means thinking about how people experience each other through the technological medium, not just thinking about how they experience the technology. The emphasis is on the human-to-human relationship, not the human-to-technology relationship. This is a crucial difference in design focus. It means designing for an experience between people.

    Read the whole thing , but one example that really struck home to me was about “focusing on the (meta) message” rather than “focusing on the mechanics of communication”. If you understand the meta message being sent as part of communications, you can really improve your users experience. Motorola gives two “meta messages” that are common “I know you” and “I care about you”. Facebook‘s birthday notifications on their homepage is a great example of a product feature that supports both of these meta messages. It helps users know when to write on a friend’s wall (or Superwall!) to send both these messages, both to the recipient, and as a performance for other friends of the recipient.

    For those interested in more about social design, I also find Josh Porter’s blog Bokardo quite helpful.

    Hidden traffic drivers at top tier sites August 14, 2007

    Posted by jeremyliew in ad networks, advertising, business models, Consumer internet, Internet, web 2.0.
    2 comments

    Glam has received a lot of attention recently, with many noting that its Comscore traffic is a rollup of multiple sites, some Glam branded, but most part of an affiliate network.

    While Glam is more like a vertical ad network (which it readily admits to), there are many other well known sites that derive meaningful amounts of their Comscore traffic from unexpected sources. Among Comscore’s top 100 web properties, Ask, CNet, the New York Times, Move.com and iVillage all also generate the majority of their network pageviews from sites other than their namesake:

    traffic analysis for top network sites.

    The non-namesake traffic was mostly driven through acquisition, although in some cases (e.g. Zwinky) the growth was organic. In many other examples though, acquisitions have been absorbed into the URL structure of the acquiring company. Yahoo for example acquired Launch (now music.yahoo.com), Hotjobs (now hotjobs.yahoo.com) Geocites (now geocities.yahoo.com), among others, all of which now roll up under the Yahoo.com URL.

    Whether ad networks or acquisitions, Comscore’s “media property” reporting often includes a lot more than the namesake URL in the rollup. While this can come as a surprise to the unwary, it is no surprise to the people that matter – the people who are buying online advertising. As one media buyer commented on the Techcrunch article about Glam (abridged quote):

    As an online media buyer, perhaps I have a different opinion then most of the outsiders commenting on the sidelines. I use comScore and NetRatings on a daily basis for planning media spends targeting large audiences online… The only way to measure the audience that any large media property reaches is through a panel based media measurement tool like comScore… It does not matter if they own a site or have a partnership with them.

    This stuff is no big secret.

    Monetizing Search August 8, 2007

    Posted by jeremyliew in business models, Consumer internet, Internet, Search, start-up, startups.
    15 comments

    Before I joined Lightspeed I was General Manager of Netscape, where I was responsible for the portal and the browser. Search drove about half of Netscape’s revenues and so I spent a fair amount of time trying to understand how to best monetize search traffic.

    One thing that initially surprised was that the top two search terms on Netscape.com were “Google” and “Yahoo“.

    In fact, around 20% of searches are “navigational” in nature – users looking for a particular website. Another 50% of searches are “informational” in nature (e.g. “capital of Taiwan”, “top social networks”) and the remaining 30% are “transactional” in nature (e.g. “cheap flights to Orlando”, “flat screen TV”. These stats come from an IBM research paper from 2002 that defines a taxonomy of web search, but the ratios were still roughly accurate as of 2006 when Gina Winkler, the outstanding woman who ran Netscape’s search team, left the company. [NB Netscape’s search is now largely a re-skinned version of Google, a very different product to what it used to be]

    It is relatively difficult to monetize navigational and informational searches. Try searches for “amazon” or “specific gravity of lead” and you won’t see any sponsored links. All the monetization comes from the transactional searches. Look at the huge number of sponsored links for searches on “ipod“, “rowing machines” or “disneyland hotels” in comparison.

    So a new search company’s ability to monetizing search depends largely on what percentage of its search volume is transactional. For some of the new vertical search sites, this percentage can vary dramatically.

    Take people search for example. A search on “jeremy liew” in Google yields no sponsored links (although before Ebay cut back its spending on Google there used to be an ad for “Great deals on jeremy liew at Ebay”!). In general, people search is informational. The proportion of transactional searches will likely be lower than general search. This is something that companies like Wink and Spock will need to take into account as they develop their business models.

    Conversely, sites focused on shopping search will have a very high proportion of transactional queries. The first generation of comparison shopping engines such as Shopping.com, Shopzilla built valuable businesses on much lower traffic than the big general search engines because almost every query is monetizable. This bodes well for the next generation of shopping search engines including companies such as Shopwiki, The Find (a Lightspeed portfolio company), and Krillion.

    Similar analyses can be conducted on other vertical search engines in areas such as local, travel, video and health – some of these will have a much higher proportion of transactional searches than others.

    Semantic search startups propose to do a better job on informational search than the current search engines. If they see a greater proportion of informational searches because of this, then they may in fact monetize at a lower rate than today’s search engines.

    Search is a tough business because of the need to change customer habits and pull search share away from today’s big branded search engines. If a new search engine does not monetize well because of its mix of queries, it has even more work to do.