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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.

A purpose driven (virtual) life August 20, 2007

Posted by jeremyliew in business models, gaming, social media, start-up, startups, virtual worlds, web 2.0.
4 comments

We are continuing to see plenty of Massively Multiplayer Online Role Playing Game (MMORPG) and Virtual World startups. GigaOM recently listed the ten most popular MMOs (abridged description excerpted here – click through to the original for the full text):

1. World of Warcraft, released 2004 – 8.5 million subscribers.
2. Habbo Hotel, released 2000 – 7.5 million active users.
3. RuneScape, released 2001 – 5 million active users.
4. Club Penguin, released 2006 – 4 million active users.
5. Webkinz, released 2005 – 3.8 million active users.
6. Gaia Online, released 2003 – 2 million active users.
7. Guild Wars, released 2005 – 2 million active users.
8. Puzzle Pirates, released 2003 – 1.5 million active users
9. Lineage I/II, released 1998 – 1 million subscribers.
10. Second Life, released 2003 – 500,000 active users.

Of these ten, five are MMORPGs (WoW, Runescape, GuildWars, Puzzle Pirates and Lineage) and five are virtual worlds. The two types are discussed together so much that the lines are starting to blur. But I think that there is some value to clarifying the distinction

Virtual worlds are primarily about social activities. But this doesn’t distinguish them from MMORPGs. There is plenty of purely social activity going on in the MMORPGs as well. Indeed, for some players, MMORPGs (Bartle‘s “socializers”) are PRIMARILY about social activity.

What makes an MMORPG a game is something else. Wikipedia quotes several definitions of a game (italics mine):

* “An interactive, goal-oriented activity, active agents to play against, which any player (including active agents) could interfere one another, and which is designed to make money for the creator.” (Chris Crawford)
* “A form of play with goals and structure.” (Kevin Maroney)
* “A game is a form of art in which participants, termed players, make decisions in order to manage resources through game tokens in the pursuit of a goal.” (Greg Costikyan)
* “An activity with some rules engaged in for an outcome.” (Eric Zimmerman)

Crawford in his book Chris Crawford on Game Design says that a goal is what distinguishes a game from a toy. Games have a purpose. To borrow the title from Rick Warren’s best selling book, an MMORPG is a purpose driven (virtual) life.

In stark contrast, the virtual world Second Life is explicitly not a game, and explicitly does set goals for its users.

To push the metaphor a little further, Warren’s Christian “anti-self help” book tells its readers that they were put on earth to fulfill five purposes as defined by God. Similarly, a game player is placed into the game’s virtual world to fulfill purposes that are defined by the game designer. This can take all sorts of forms, from leveling up to achieving certain defined quests. But they are all defined and pre-ordained by the game designer, and I think that may be what distinguishes a virtual world from an MMORPG.

Is this just semantics, or are there differences in the way users behave in MMORPGs and virtual worlds? I’d like to hear what readers think, and will give some of my opinions in a later post

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.

Improving copy; an easy way to increase user interaction August 5, 2007

Posted by jeremyliew in Consumer internet, copy, interaction, Internet, usability, viral, viral marketing, web 2.0.
5 comments

Wired’s August edition has a good article about how newspapers are putting their readers to work which is worth reading. But one section that jumped out at me has broader applicability:

A GetPublished! button features prominently on many Enquirer Web pages, and the submissions land in Parker’s queue. They almost never resemble anything commonly considered journalism.

“It used to read, ‘Be a Citizen Journalist,'” Parker says. “And no one ever clicked on it. Then we called it ‘Neighbor to Neighbor,’ and still nothing. For some reason, ‘Get Published’ was the magic phrase.”

Changing copy can make a huge difference in your level of user interaction.

Direct marketers have known about the importance of good copy for years. Good email marketers constantly test and refine subject lines to improve open rates. Many best practices in email marketing subject lines have evolved that are often directly applicable to other areas. The same is true of the best lead generation businesses who are constantly tweaking their landing page copy and form-fill flow to maximize the completion rate.

Copy can improve interaction rates in media businesses as well as these more transactional examples. Another example is in social media optimization (an element of search engine optimization). For example, this list of the top 101 advertising headlines ever written (top 10 excerpted here):

1. They laughed when I sat down at the piano – but when I started to play!
2. They grinned when the waiter spoke to me in French – but their laughter changed to amazement
at my reply.
3. Do you make these mistakes in English?
4. Can You Spot These 10 Decorating Sins?
5. How a “fool stunt” made me a star salesman
6. How a strange accident saved me from baldness
7. Who else wants a screen star figure?
8. Who else wants a lighter cake – in half the mixing time?
9. Free to brides – $2 to others
10. Free to high school teachers – $6 to others

may seem dated, but many of them follow the same rules for headlines that help your article get Dugg today.

Email virality and other forms of viral marketing can also often be tuned and improved through better copy. When dealing with email invitations from friends, more social messages may be more effective than the hard-sell/call-to-action type copy of the examples linked to above. For example, Flixster (a Lightspeed portfolio company) asks in the email subject:

Do we like the same movies?

while Tagged‘s subject line is

[Friend] has Tagged you 🙂

In both cases the actual copy is important, but more important is the fact that the companies constantly A:B test their copy to optimize and improve their conversion rates.

The takeaway here is that, although technology startups full of top notch engineers often look to improving the product to improve user interaction rates, sometimes something as simple as a change in words can have much the same result.

I’d like to hear from readers of examples of how small changes in copy improved their user interaction rates. [Note the call to action!]

The Prisoner’s Dilemma in online advertising August 1, 2007

Posted by jeremyliew in ad networks, advertising, Consumer internet, economics, video, web 2.0, widgets.
11 comments

I posted previously about how increased innovation in online advertising is driving up costs. Online media companies would generally prefer more standarization and less customization in online advertising; this makes their processes more scalable and keeps their costs down. However, they face a prisoner’s dilemma situation that has made it hard to drive standardization as an industry.

The prisoner’s dilemma is a staple of game theory classes. Wikipedia summarizes the problem as follows:

Two suspects, A and B, are arrested by the police. The police have insufficient evidence for a conviction, and, having separated both prisoners, visit each of them to offer the same deal: if one testifies for the prosecution against the other and the other remains silent, the betrayer goes free and the silent accomplice receives the full 10-year sentence. If both stay silent, both prisoners are sentenced to only six months in jail for a minor charge. If each betrays the other, each receives a five-year sentence. Each prisoner must make the choice of whether to betray the other or to remain silent. However, neither prisoner knows for sure what choice the other prisoner will make. So this dilemma poses the question: How should the prisoners act?

Classic game theory predicts that in a single instance of the game, the dominant strategy is to betray your accomplice. However, if the game is repeated, the best strategy for rational players repeatedly interacting for indefinitely long games can lead to sustaining the cooperative outcome.

The Wikipedia article cites several real world examples of the prisoner’s dilemma, including one involving cigarette advertising.

When cigarette advertising [on TV and radio] was legal in the United States, competing cigarette manufacturers had to decide how much money to spend on advertising … cigarette manufacturers endorsed the creation of laws banning cigarette advertising [on TV and radio], understanding that this would reduce costs and increase profits across the industry.

While not advocating that we use cigarette companies as a role model, I believe that the online advertising industry currently faces a similar opportunity to reduce costs and increase profits over the issue of increasing customization in online advertising that I posted about last week.

So how does this relate to the prisoners dilemma? Rather than the police asking suspects to confess, advertisers are asking online media companies for costly custom advertising. If one media company is willing to customize and its competitor isn’t, then the customizing company is more likely to win the deal.

But if both companies customize then creative and production costs go up while the size of the ad spend does not. More money is spent on creating the campaign, and less goes to buying media. Thus both media companies suffer.

If neither company customizes, then less money is spent on creative and more goes to buying media and filling the online media companies’ coffers.

To make this situation more complicated, there aren’t just two prisoners who need to cooperate, but rather many online media companies. With many players, it can be very hard to drive towards a cooperative outcome.

For media companies, the “cooperation” case means adhering to a set of standards in creative format. While this doesn’t eliminate the costs of creative, it does at least set boundaries to help control creative costs.

While these standards exist in banner advertising, (728×90, 300x 250, 160×600 etc), they do not yet exist in other, newer forms of online advertising (including social media marketing, widget marketing, online video marketing, and casual immersive world marketing). But through the IAB, we saw standards eventually emerge in banner advertising, and hopefully we will see the IAB and other standards bodies (perhaps the newly formed Widget Marketing Association?) help set standards within the newer forms of online advertising as well.

This is a necessary but not sufficient condition for the industry to converge to a stable “cooperative” equilibrium in this version of the prisoner’s dilemma. I’ve campaigned for standards in social network advertising before.

What else do readers think can be done to promote cooperation?

What’s in a name? That which we call a wiki by any other name would smell as sweet July 30, 2007

Posted by jeremyliew in communication, Consumer internet, Internet, Search, social networks, web 2.0, wiki.
4 comments

(with apologies to William Shakespeare)

Recently Ben Elowitz, CEO of Wetpaint, wondered why the term “wiki” was not better understood. Wetpaint (a wiki company), prompted by wiki being listed as one of the top 10 most hated internet words, commissioned a survey to ask online users about their awareness of wikis, as compared to blogs, social networks, forums and search engines.

At the top level, the awareness levels were as follows:

Awareness Survey

Since these were online users (not the general population) this could be construed as discouraging; many don’t seem familiar with the basic technologies behind the modern web. However, I think that the data is misleading – while many people may not know about the technology, they do know specific examples of these technologies. As always, people focus on how their problems are being solved, not on what technologies are being used to solve those problems.

Take search as an example. Although only 76% of internet users were familiar with the term “search engine”, Google was recently announced to have the most powerful brand in the world. It beat household names like Coca Cola, Marlboro and Toyota. Its hard to imagine that there are ANY internet users who don’t use a search engine an a regular basis, whether they know the term of not.

Similarly, although only 28% of the surveyed audience were aware of the term “social networking site”, according to Comscore 64% of US internet users visited a social network in June 2007, with 39% visiting MySpace alone. Awareness does not appear to be a barrier to usage.

The same is also true of wikis. Although only 16% of internet users were aware of the term wiki, Comscore says that 26% of US internet users visited Wikipedia in June. If people are using Wikipedia, it doesn’t matter if it sits in the “encyclopedia” category or the “wiki” category in their minds

In the most successful consumer technologies, the technology becomes transparent to the user. Apple has sold over 100m iPods but I’m sure that many iPod users will not be familiar with terms like MP3, AAC or DRM. Users of cordless drills may not be familiar with the term Lithium Ion, even though that is hoe their drill became cordless.

For consumer facing internet startups the lesson is to view the world through your users’ eyes. Talk about the problems you’re solving, not about the technologies you use to solve those problems. That means more about “music” and less about “ACC”, more about “writing” and less about “blogs”, more about “collaboration” and less about “wikis”. After all, as Juliet tells Romeo:

That which we call a rose by any other name would smell as sweet

Follow up on top social networks by engagement July 23, 2007

Posted by jeremyliew in social media, social networks, user generated content, web 2.0.
13 comments

Last night’s post on the top social networks by engagement provoked some good response. Some readers questioned whether Pageviews per user per month was the best measure of engagement given that some social networks make use of AJAX and other RIA (Rich Internet Application) tools that would reduce pageview count.

As an alternative I also looked at the top social networks ordered by time spent per user per month (again excluding sites with less than 500k unique users per month). Here are the 14 such social networks with over 40 minutes spent per month in June according to Comscore:

top social networks by time spent on site

The top five sites by PVs are still the top five sites by time spent and there is still quite a gap between them and the other social networks. Notably, Gaia jumps from being number 5 by PVs/user/month to #1 by minutes/visitor/month, reflecting the fact that a large portion of its use is a casual immersive world delivered in Flash (which isn’t counted though pageviews).

Other than that the rest of the list is largely the same. It seems like at a high level both measures of engagement come to the same conclusions.

Top social networks for engagement – some suprises! July 23, 2007

Posted by jeremyliew in social media, social networks, user generated content, web 2.0.
48 comments

Earlier today Om reported that Hi5 has raised $20m from Mohr Davidow. As Techcrunch points out, Hi5 is ranked by Alexa as 11th globally, higher than Facebook. Mashable notes that Hi5 claims 30 million members and 200 million pageviews/day, big numbers, but mostly in non-English speaking countries. Congrats to both Hi5 and Mohr Davidow.

This news prompted me to take a look at what are the most engaging social networks for US users. Comscore lists 174 sites in its social networking category. I ranked the sites by two key measures of engagement (i) pageviews per user per month and (ii) visits per user per month. I then stripped out all sites with less than 500k US unique users per month.

First lets look at the most engaging social networks by PVs per visitor (I cut off the list for sites with less than 100 PV/User/month

social networks by pvs per visitor per month

Its interesting to see that Orkut, generally thought of as a Brazilian and Indian focused site, has more pageviews per user per month from US users than even MySpace and Facebook. Myspace continues to dominate Facebook on all three key metrics, suggesting that reports of MySpace’s death are greatly exaggerated, Facebook apps notwithstanding. There is also a pretty marked step between the top 5 sites (500+ PV/UU/mth) and the next 6.

Re-ranking by visits/month (and cutting off at 4 visits per month or once a week) gives the following list:

Top Social networks by visits per visitor per month

Unsurprisingly, the top few sites are the same on both lists. A few well known sites further down such as Windows Live Spaces, Habbo Hotel, imeem, Xanga, Yahoo 360, MyYearbook and Piczo don’t show up on the other list, suggesting that each visit doesn’t go as deep as the sites on both lists (ie lower PVs/visit)

Two sites that made both lists were unfamiliar to me; hoverspot.com and vampirefreaks.com. Hoverspot is a general social networking site that has doubled its user count over the last year according to Comscore, and Vampirefreaks is a goth/industrial social network.

Also noteworthy were four sites with over 500 PV/User/month that didn’t make the first list because they had less than 500k UU/mth; Shoutlife (a christian social network), Cyworld (the US arm of the wildly successful Korean social network), Mocospace (a mobile social network) and Cherrytap which appears to now be redirecting to Fubar.com and calls itself the first online bar (and seems to mostly be about meeting people). They show that you don’t have to have a large audience to drive high engagement.

UPDATE: Some readers in comments have questioned whether Pageviews per user per month is a good measure of engagement since some sites use Rich Internet Application (RIA) technologies such as AJAX that reduce pageviews. I recut the analysis using time spent instead of pageviews and it looks like the top social networks by time spent are largely the same (follow the link for details).

Facebook apps are providing new stages for “performance” by users July 17, 2007

Posted by jeremyliew in communication, Consumer internet, facebook, Internet, performance, self espression, social media, social networks, user generated content, web 2.0, widgets.
10 comments

Its now widely agreed that the two most common behaviors on social networks are self expression and communication.

Most of the online revolutions have been driven by new forms of communication. This started with Usenet and BBSs back before there was an internet, moved through the chat rooms of early AOL, the mainstreaming of email and the instant messaging revolution with AIM and ICQ. Communication has always been a large portion of overall time spent online because it drives both frequency of visit (people check for communications often) and depth of visit (reading and responding to your messages takes time).

Social networking is no exception, and that is what has driven the extraordinary pagesviews for the top social networks. In the case of social networks, the primary communications channels are private messages and public comments. You can see how these relate to other older forms of online communication below:

communications-matrix.png

Social network private messages look a lot like webmail. Public comments on social networks are newer and more interesting. Indeed, Danah Boyd includes public comments as one of the three defining features of social networks (along with Profiles and Friends lists). Unlike message boards, public comments “belong” to a single person and are addressed directly at them. But as Danah has also pointed out (I wish I was half as smart as her!), there is also a performance component to public comments on social networks.

This is best understood with an example. Suppose it’s your birthday, and I know it. If I send you an email wishing you “Happy Birthday” then you’re happy that I remembered. This communication is part of the social lubricant on which relationships are built.

But supposed that I post “Happy Birthday” to your Facebook Wall instead. Then not only do you know that I remembered, but ALL OF YOUR FRIENDS know that I remembered as well. They may find out from the feed, or by visiting your page, but they will know that I’m a good enough friend of yours that I know when is your birthday. That is the performance element of the communication.

Indeed, Danah says that your Friends list is your best guess at the audience for whom you are performing:

The collection of ‘Friends’ is not simply a list of close ties (or what we would normally call ‘friends’). Instead, this feature allows participants to articulate their imagined audience – or who they see as being a part of their world within the site. While SNSes have millions of users, most participants only care about a handful of them. Who they care about is typically represented by the list of Friends. If an individual imagines her profile to be primarily of concern to a handful of close friends, she is quite likely to have very few ‘Friends’ and, if the technology allows it, she’ll keep her profile private. If she wants to be speaking to her broader peers, her Friends list is likely to have hundreds or thousands of Friends who are roughly the same age, have the same style, listen to the same music, and are otherwise quite similar to her. She is also quite likely to keep her profile publically [sic] visible to anyone so that she can find others in her peer group (boyd 2006).

Historically, the Wall (Facebook)/Friend’s Comments (Myspace, Bebo and others) has been the only place on a profile where another user can put something on your page. The rest of the profile has been completely under the author’s control.

However, some of the Facebook apps have changed this paradigm. A number of the most popular apps allow another user to put something on your profile, including #2 Graffiti, #7 X me, #8 Superpoke, #9 Free Gifts, #15 Superwall, #16 Foodfight and lots more. [Note: X me and Superwall are both owned by Rockyou, a Lightspeed company].

In my own experience, performance is an aspect to the use of these apps as well. I feel a certain pressure to choose something “clever” to X someone (e.g. “defenestrate”, “disdain” or “milk”), and if I’m leaving graffiti on a friends page, I try to make it good. The popularity of these apps suggests that social network users are craving more stages for their performances.

I’d be interested to hear what readers think.

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