Saturday, December 27, 2008

Vertical Search vs. Google

I have blogged in the past about how Gogole's PageRank algorithm is providing decreasingly useful search results, and how vertical search is much more targeted and useful. The main issue here is that most searches are context-driven, for example when you type in a word and hit search, are you looking to buy something, a definition, or a review?

The vast majority of my searches are vertical searches from the Firefox search toolbar. I have installed the following search engines into the dropdown:

Amazon
Dictionary.com
EBay
Facebook
Google Maps
IMDb
LinkedIn
MySpace
Songza
TheFind.com
Thesaurus.com
WhoIs Lookup
Wikipedia
Yelp
YouTube
Mycroft (to find more search engines to add!)

For example, if I hear of a new artist on the radio and want to check out more tracks, I select Songza. If I want to check out their fan presence I select MySpace. And if I want to buy tracks or the album, I select Amazon. Picking the search vertical and then typing the search term is much more efficient than typing in the search term, looking at what Google returns, processing the results, and then going from there.

Although I have an engineering-oriented mindset when approaching search, there must be quite a few people performing searches in a similar way since both Firefox and IE have dedicated prime toolbar real estate to an extensible search box. Why wade through an unpredictable, interim web page when you can go straight to what you're looking for?

Tuesday, December 23, 2008

2009 is the Year of "Off-Domain"

I had an interesting conversation with one of our partners today, and noticed that we have started using "off domain" as a shorthand phrase when discussing reach outside of a source website. For example, "Foo.com now has 40% of their impressions off-domain," meaning that 40% of Foo.com's user interactions are occurring outside Foo.com itself, on Facebook and MySpace social widgets, blog widgets, and other types of widgets.

Off-domain metrics will be the numbers to watch in 2009 in order to grow impressions and engagement. Doubling your site's traffic is virtually impossible, but for many websites a successful social widget campaign can easily accomplish that task.

Wednesday, December 17, 2008

Video Glows through the Online Ad Nuclear Winter

BusinessWeek and The Huffington Post both wrote yesterday that online ad spend is going into the gutter, in particular on social networks. I have blogged quite a few times about how the banner/display ad business has not been showing results, so it is no surprise that they are the first plug that gets pulled in a downmarket.

On the other hand, EMarketer just published numbers, that "video ad spending will run counter to overall economic developments, rising by 45% in 2009 to reach $850 million." Why? Video ads work. People don't mind watching video prerolls before good video content, while they blithely ignore banner ads.



I am in full agreement with BusinessWeek and The Huffington Post that banner ads do not work at all on either social networks or websites. eMarketer's data shows that ad spend growth will be in video advertising, which bodes well for companies with video content, and especially well for social networks, where videos are one of the most viral types of content.

Sunday, December 14, 2008

An Article is to a Newspaper as a Track is to an Album

A thought occurred to me today while reading Virginia Hefferman's latest The Medium column in the Sunday New York Times, one of the best columns covering transitions in the media industry. Her article Content and Its Discontents laments how old media is becoming decimated. Yes, clearly reading a magazine or newspaper cover-to-cover is very old school, or as Jon Stewart poignantly nailed it with a joke newspaper entitled "Cincinnati Dump Accompaniment". But does it necessarily mean that content is dead just because newspapers and magazines are effectively dead? A newspaper column is to a newspaper as a track is to an album.

The music industry has gone through a very similar transition as newspapers and magazines. Albums are definitely dead. Labels are pretty much dead. But music is flourishing! Fans can purchase tracks for a $1. A band of two like Ghostland Observatory or Trifonic can create amazing music that used to take bands of at least four. Distributing a music video means an upload to YouTube, not a deal with MTV. Artists connect directly with their fans on MySpace. Launching a new band means converting a few bloggers who love music instead of faceless label executives. Music spreads virally through social networks as fans post the music to their profiles.

Perhaps content has become irrespective of medium in our multi-channel world. I would read Virgina Hefferman's column if it was a blog, on nytimes.com, a note on her Facebook page, or part of the paper Sunday NYT (the last paper product that I actually read!). Does content die with its old school medium? It hasn't happened for music or video, it shouldn't happen to thoughtful written analysis. With hyper-targeted advertising, soon a columnist should make as much money from a blog and speaking/consulting work based on the blog, as he or she would be paid by an old media entity such as the NYT.

Thursday, December 04, 2008

Social Networks: Go Native or Go Nowhere

There has been a lot of noise in the marketplace about widgets on social networks. But the truth is that the majority of these widgets are simple Flash or content widgets that aren't capable of taking advantage of the true viral power of social networks.

We just launched a new version of iWidgets that allows content owners to syndicate their content into social networks like Facebook with multiple views as well as action-based newsfeed updates. These are critical features for developing a viral application. As great as technologies like Flash are for multimedia development, they fall far short on social networks.

Below are screenshots of a widget showcasing content from the E! television show Girls Next Door, which, I should add, although it seems misogynistic, apparently its primary demographic is women age 20-35.

The widget lets a fan show off who their favorite Girl Next Door is, and brings in the latest video clips about that girl. When the fan makes her selection, a post is made to their newsfeed which tells all her friends about her favorite girl next door. Facebook will soon allow additional impressions of such newsfeeds to be purchased on friends' homepages to accelerate virality. iWidgets makes action-based newsfeed postings like this a drag-and-drop snap.



In addition, the widget has multiple views, one for the popular Facebook Wall tab, which is absolutely necessary for Facebook placement today:


As well as a view for a Fan Page or a Profile's Boxes tab:


There is also a view for installing the app as its own tab on a profile or a canvas that is clickthrough to from the other views:


With the new views feature, iWidgets widgets can be placed in prominent locations like Facebook's Wall tab. In addition, we're delivering to publishers the ability to create action-based widgets where people can tell their friends what they are doing with the widget via newsfeeds, so the content can spread through the social graph. These are unique, viral features that no other widget platform provides!

Monday, August 11, 2008

Up Next from Apple: Apple TVs

Apple's next move occurred to me while I was walking by my local Apple store: Apple iTV, which will be:

  • Wall-mountable 37", 42", 50", 60+" LCD screens

  • Look cool, with a hip Apple logo

  • Stream iTunes video and audio content from the web and from your Mac

  • Have special apps on the appstore that run on your TV (sports scores, etc.)

  • Cable card compatible so you won't need a cable box

  • Wirelessly display your MacBook's video feed

  • iPhone-like touch screen remote control

  • Include a browser controllable by above remote control's keyboard

  • Built-in DVR


  • So a very cool looking TV that is plug-and-play capable of showing video rentals and playing music. This will do to Sharp/Sony/Samsung/Comcast what the iPhone did to the Blackberry and AT&T: cost more, eviscerate the market, and bypass the network operator. Sweeeet.

    Monday, June 16, 2008

    iWidgets Public Beta!

    We are doing a soft launch of iWidgets and inviting technical/web poweruser types to play with www.iwidgets.com. Quite the opposite approach of the ActiveGrid massive press launches I used to do. :) It has been an honor to work with such a great team of people to deliver what is by far the nicest software I have ever been involved with.

    As I have posted on this blog before, people are spending more and more time on social networks like Facebook and portals like iGoogle, and not spending as much time on individual websites. So the question is, what's a website owner to do?

    I think that most Facebook applications suck, mainly because they live only within Facebook. How many sheep can you throw at each other? What's really interesting is when you bring user information from outside Facebook into Facebook. For example, iLike, one of the most successful first Facebook apps, shows your friends what you are listening to on iTunes.

    Most sites have some type of interesting user data that their users would love to show off on their social profile. Whether it's favorite recipes, outfits they have designed, or comments they have made, letting users show off their data on their social profile builds awareness for your brand and drives traffic back to your site.

    iWidgets is a cloud-based Widget solution that provides an easy drag-and-drop interface for website owners and brands to quickly produce sophisticated widgets that extend their website data into widgets. The widgets are published as native Facebook, MySpace, and iGoogle widgets, which are much more intuitive and fit into each destination. This is a huge step up from Flash widgets that are jammed into sites without any awareness of their environment or the social graph. Users prefer native widgets that fit in, so they are much more viral, especially with native features like posting message to a profile's newsfeed. We are also adding promotion features where you can pay for installs to kickstart your widget campaign.

    Some technical details:

  • Complete AJAX Widget builder with full drag-and-drop built using the jQuery AJAX library.

  • Users draw lines between both visual components like video players and nonvisual components like feed fetchers to connect data and events.

  • WidgetWORA technology that transforms the widget into a native widget on each destination, no small feat when you consider that FBML is serverside and OpenSocial is clientside and each destination has its own special widget sizes and API's.


  • I hope you can take some time to check it out! Here's how to get started:

  • 3 Minute Screencast - Watch a quick screencast on how iWidgets can help you extend your reach and drive traffic to your website.


  • Gallery of Widgets - Check out a gallery of engaging widgets that extend websites with interesting information about their users into social networks and portals.
  • Friday, April 25, 2008

    The Ghosts of Web Past, Present, and Future: JavaOne, Web 2.0, and AdTech

    We had a troika of conferences at Moscone in SF in the last few weeks, and the differences between the shows was remarkable.

    JavaOne - The Ghost of Web Past. The heavy duty software infrastructure show for enterprises, where the old Web 1.0 crowd of enterprise vendors and customers coalesce. The only interesting things about Java nowadays are mobile and Java's slow crawl to support scripting languages. Otherwise there is nothing to see but the latest PR ploy, which this year is: Neil Young on stage! JavaFX! Wow! Java has been completely overrun by the script kiddies and other than GWT has been relegated to back-end service processing and outsourced IT guys cranking out basic CRUD apps.

    Web 2.0 - The Ghost of Web Present. Completely bland show with nothing interesting at all announced or even discussed. It's old news that none of the Web 2.0 feature sites are going anywhere other than aggregators like Digg and Mint, whose whole point is to minimize the number of sites you have to go to. IBM and Intel now have Web 2.0 tools, showing that this is a market that has completely matured. What we all got out of Web 2.0 was a very high bar for how easily a webapp should work - note to developers, if your webapp needs a manual or tutorials, you've screwed up!

    AdTech - The Ghost of Web Future. It is no secret that he Web is financed by advertising dollars, but the excitement at AdTech is palpable. Banner ads and keywords are not working as well as they used to and those dollars are looking for something new like white label social networks, virtual worlds, and widget syndication. The intersection of technology and creativity at this show was very stimulating (as were the advertising chicks, who were way hotter than the other two venues!).

    Since these three shows span the last 10+ years of my career, I guess in summary in goes like this: build basic webapps (JavaOne), build cool webapps (Web 2.0), make money from webapps (AdTech). The past and present were good times, and the future looks very bright.

    Friday, April 11, 2008

    If Facebook is a Platform, What is SuperWall?

    Facebook is indisputably a platform since it provides a set of API's on which developers can deliver applications for a broad set of users. Facebook also offers a set of bundled applications, such as Pictures, Events, and Status, which are clobbering sites like Flickr, Evite, and Twitter, since these are inherently social applications - "Judy was just tagged in the photo Jim's Birthday Party!" gets a lot more attention than someone's Flickr feed.

    We can learn from history here: Windows was one of the first platforms to both court developers and bundle applications, and Microsoft progressively added more and more applications, such as anti-virus, browser, email, fax/scan, movie editing, etc., and completely obliterated entire industries.

    Companies like Slide and RockYou have a majority of their page impressions from delivering horizontal applications such as SuperWall, FunWall, and Top Friends. Facebook's upcoming profile redesign is going to include a Wall redesign which will likely include the popular features of SuperWall and FunWall, and the new Friend list feature will eventually make their way into Friend views.

    So while you can get some short term play out of delivering a horizontal application for a platform, it is a fact of life that sooner rather than later you are going to get steamrollered, just like Norton and Netscape were on Windows. Focusing on the long tail of vertical applications, which on Facebook is apps like Compare People and Texas Hold'em Poker, is a more viable bet for longer term application growth and monetization.

    Friday, April 04, 2008

    Websites Are So Over

    I have posted a few times about how I often can go an entire day without going to a website, and instead spend my day in Google Reader to read content, iGoogle to see headlines and realtime information like stock quotes and weather, and Facebook for social information.

    Apparently I am not the only one spending most of my web time on these widget-oriented sites. Alexa 3 year usage graphs for top brands that I picked out at random all show decreasing or flat usage. Brands like FedEx and McDonalds are beginning to realize that their web presence is being increasingly ignored. Banner ad campaigns are increasingly expensive due to CPM price increases as ad placement competition increases. And to top it off, users hate banner ads more and more, so clickthrough rates (CTRs) are going down! Banner ad buyers now pay more for less!

    People don't go to brand web sites anymore, banner ads cost more, and people are not clicking on banner ads. These are trends that are not going to reverse themselves. In order to achieve visibility on the web, brands will need to start expanding their web presence onto sites like Facebook and MySpace where users are already spending their time instead of trying to drive them to their own sites. Creating engaging and fun widgets is going to take a lot more creativity and effort than a banner ad campaign. The web is going to get very interesting over the next couple of years!

    Alexa 3 Year Usage for Top Brands






























    Database 2.0

    Database requirements for websites have become simpler and simpler. Finding a product of a certain type or the invoices for an account is very straightforward and is in fact hierarchical and does not require dynamic relationships. It is an ironic twist that the hierarchical databases of yesteryear like IMS are more suited to today's applications than relational databases.

    The main feature of a relational database is relationships - "joining" data across different tables of data. But no one in their right mind does complicated joins of data on a production web database because it is so slow, even when using features like views. MySQL, which has completely dominated the web database market for years, only recently has accomplished feature parity to commercial databases like Oracle.

    When people need to do complicated data queries, they copy the data from the production databases to what used to be called a "data warehouse" but is now in fact just another database and run reports off of that database instead of the production database.

    Both Amazon EC2 and Facebook Platfrom, which are attracting legions of next-generation developers have recently added simplified database offerings that are essentially hierarchical databases. These databases will meet the needs of most web applications and widgets respectively and do nothing else. Amazon's database is even called "SimpleDB" - for web apps, simple does the trick.

    Thursday, March 27, 2008

    Commercial Open Source - It's Been Figured Out

    Commercial open source has offered a revolutionary business model for enterprise software. Rather than exorbitant high prices, long sales cycles, impossible to install software, systems engineers, and vendor lock-in, commercial open source software is self-service. By the time a customer pays for it, they have already identified a problem, found the open source software as a possible solution, evaluated it, deployed it, and rolled it out to their organization. Commercial open source companies save in recruiting costs by hiring developers who have already found their project and are proven contributors.

    The cost of hiring, marketing, distribution, and sales has gone to near-zero, and those savings are passed on to the customer. Traditional, bloated proprietary software can not compete with this model at all, where even their yearly maintenance cost is more than the cost of the commercial open source equivalent.

    There have been three commercial open source successes to date: Red Hat, JBoss, and MySQL. By success I mean companies with a lot of customers, a lot of revenue, and a high liquidity event. There are a slew of commercial open source companies with significant traction that are following in their footsteps, including Alfresco, SugarCRM, and Mulesource. All of these companies are all remarkably similar in three critical ways:

    - Direct Replacement for a Proprietary Equivalent
    - Easy-to-Install Server
    - GPL License

    Direct Replacement for a Proprietary Equivalent

    The successful commercial open source companies all offer direct replacements for existing proprietary software. UNIX operating systems, J2EE application servers, and databases are very quantifiable pieces of software with well known features and benchmarks. The open source up-and-comers that offer content management, CRM, and ESBs are almost as quantifiable and replace well-known, established proprietary software.

    The downside to this requirement is that the successful commercial open source projects are frankly not that innovative technically. Startups can innovate on either technology or business model, and open source is clearly a business model innovation. While there are some edge features in Linux/JBoss/MySQL that are not available in Solaris/WebLogic/Oracle, overall these are not products that represent a technical revolution. Before you flame me on this one, contrast the difference between the software that is getting replaced by open source and their predecessors: Solaris/WebLogic/Oracle/etc. were huge technical leaps over VMS/PowerBuilder/Collanet/etc.

    We really learned the lesson on this at ActiveGrid, where we put a ton of energy into innovating on top of the LAMP stack, but we were not a direct replacement for an existing product. It is a lot easier to sell JBoss or lightweight Java into a WebLogic shop where they can compare apples to apples, than selling a new way of doing things like the LAMP stack.

    Easy-to-Install Server

    Servers are traditionally very unwieldy pieces of software that require a lot of planning, expertise, and vendor systems engineers to get installed and working. Marten Mickos told me years ago that the key to MySQL's success was their 15 minute install policy - that users should be able to install the software and be up and running within 15 minutes. Taking what used to be complicated, cumbersome server software and making it a lot easier to install and administer is now a hallmark of successful commercial open source software.

    There have been a few open source successes on the desktop like Eclipse and perhaps OpenOffice, but note that no one is making significant money on these, so they are not commercial open source successes. Firefox is bankrolled by Google as a hedge against Microsoft. Software that installs on the desktop is held to a very high standard vs. server software, where installers are usually a bit more sophisticated and forgiving.

    GPL License

    After the first set of commercial open source successes were all GPL licensed, the next set of companies all switched their licenses to GPL from licenses like MPL+Attribution. The GPL requires that changes to the application be shared, but creative attempts to force the user's work product to be shared have been abandoned, (like MySQL's GPL PHP driver that would force people to either buy the commercial version or share their PHP app). Enterprises are now comfortable with using GPL software and understand they will not have to share their work product, just changes to the open source software itself. Most enterprises are already running Linux, JBoss, or MySQL somewhere, so it is easy to get new software approved that is using the same license. If the license is different, the advocate in the organization who is trying to bring in the open source software has to go through legal review with their compliance office, etc., which is a pain, so they are likely to either shelve the solution for a while or just try using something else.

    Getting software into an enterprise has evolved over time. In the 80's and early 90's, enterprises had to pay for every bit. In the late 90's and early 2000's, companies like NetDynamics where I worked gave tooling away for free and charged for servers. Now companies give servers away for free with the GPL license and charge for tooling.

    Conclusions

    At the beginning of a market, there is a lot of debate as to the right approach. When a market matures and there are successful products, it is hard to argue with their success. Clearly the path to commercial open source success is to target proprietary server software with known features and benchmarks, create a self-service and easy-to-install equivalent, and offer it under the GPL license with a commercially licensed option. There are now numerous companies following this recipe in every niche of enterprise server software.

    What's Next?

    Software-as-a-Service is a business model that is using open source server software to eclipse open source itself. Rather than deal with deploying and maintaining software at all, it is increasingly appealing to businesses to simply outsource a particular application to a vendor and access it through a web browser. Most of the innovation I am seeing nowadays is in this category, which is taking on both desktop and server software.

    Sunday, March 02, 2008

    Widgets: The Future of Online Ads


    This post was also published in BusinessWeek as part of their special report "CEO Guide to Widgets".

    Widgets: The Future of Online AdsLook to the evolution of television advertising to understand the necessity of widgets in today's online world

    The sheer volume of Web sites has grown so overwhelming that an increasing number of consumers—not just those in their 20s—are adopting multipurpose tools to help them manage and personalize the vast amount of data thrown at them every day. The mainstream adoption of online social networks such as Facebook and MySpace and personalized home pages such as iGoogle and Netvibes reflects attempts by consumers to make the Web more manageable. This new mindset, not surprisingly, also holds for the way in which the audience is willing to engage with ads.

    Advertisers, many of which have only just begun shoveling more of their marketing dollars into promotional banners and boxes on Web sites, had better heed this shift sooner than later. Some Web trends prove to be fads, of course. But when hordes of consumers start shifting from one technology to another, it's a good bet "old" marketing strategies will grow less effective. (Or so I say, which is why I started a new company called iWidgets last year to help advertisers develop campaigns that embrace the new mentality.)

    Learn from TV

    If this shift in consumer behavior in response to information overload sounds familiar, it should. We've seen much the same with television. When there were only three major networks, people would walk up to the TV, choose a channel, and watch it for a while. When cable television emerged, people would flip through 50 to 75 channels to see what was on. But with the advent of digital cable and satellite TV, which made hundreds of channels available, many overwhelmed viewers started looking for ways to manage and filter the content. This created a market for digital video recorders, such as those from TiVo (TIVO), and on-demand programming. This in turn changed the game for marketing, as users were suddenly choosing which ads, if any, they'd watch.

    This same phenomenon is now taking hold online. Instead of visiting more and more Web sites, users are shifting to the TiVos of the Internet. Consumers are using RSS aggregators to display news and blog postings from numerous sources in one place. They're using personal portals such as iGoogle and Netvibes to view customized collections of stock quotes, local weather updates, and relevant news headlines at a glance. They're using social networks including Facebook and MySpace to share pictures and "what's up" with friends, family, and even business associates.

    A Behavioral Shift

    As with TV, this behavioral shift is having a significant impact on the online advertising industry, a multibillion-dollar business dominated by Google (GOOG). Until recently, the whole thesis of online marketing has been that ads need to be propagated across thousands of Web sites so that users see them, click on them, and visit advertisers' sites. But nowadays, there are several problems with this approach.

    One is that users are not as willing to leave the site they're using to visit an advertiser's site. Although the economic downturn may be playing a role, it's worth noting that Google and Yahoo! (YHOO) both recently reported drop-offs in their click-through rates (BusinessWeek.com, 2/27/08). The two companies have come up with a myriad of explanations, but the reason is actually very simple: Web users are setting a higher bar for advertisers to lure them to another site.

    In fact, many users are starting to ignore ads altogether, a phenomenon known as "banner-ad blindness." At the same time, with advertisers shifting more and more of their marketing dollars online, the cost of an "impression"—placing an ad on a site—keeps rising. The net result is that online advertisers are now paying more to get less.

    Beyond Online Billboards

    So how should advertisers adjust to this new situation? First, let's look at what they're buying when they place an online ad. They are buying a piece of real estate on a Web page that's essentially no more than a link to another Web site. But that rectangle of space can also be exploited to function as a site within a site. Instead of just replicating a billboard on the side of the highway in a bid to get users to click and go somewhere else—something they hate to do—the ad should actually let them do something right then and there. Right in that little box, without switching sites, users should be able to browse products, customize orders, and eventually make a purchase. This concept of a little Web site embedded within another Web site is called a widget.

    Widget ads are just the first step. Instead of simply trying to build brand awareness, marketers now have the ability to reach out to customers with useful features to enhance their personalized pages on social networks. An athletic gear company could offer an application that lets a group of running buddies track how their times and distances compare. An airline could offer a "come visit me" application that displays the latest fares for a trip between the hometowns of viewers and Web page owners. Even better, an airline might offer a widget that lets users track their frequent-flier miles and search for award trips right from their iGoogle pages. These types of applications can be useful, engaging, and viral—when you see one on your friend's profile, you are likely to install it as well.

    Advertisers and consumers have played a game of cat and mouse for years. As we've learned from the ongoing upheaval in the entertainment industry, online advertisers have to adapt their approach to match consumer behavior, or risk irrelevance. They need to move beyond glorified billboards and deliver useful, engaging applications people will want to use and share.

    Peter Yared is a serial entrepreneur and the founder and CEO of iWidgets, a San Francisco startup helping brands deliver next-generation Internet advertising.