Thursday, March 26, 2009

The Problem With Old Media is... It's Old Media

I had the honor of meeting marketing guru Regis McKenna a few weeks ago as he is an advisor to our lead investor, Opus Capital. I like to think that we at iWidgets are on top of our social media game, but I went into the meeting thinking that I could get some advice on positioning iWidgets, how to differentiate in a noisy marketplace — in other words, the usual marketing stuff, but this time from one of the all-time marketing gurus. Little did I know that I would walk out of the meeting with a new perspective on the transition to social media and the web.

It was a great conversation with Regis. I described the iWidgets social syndication platform to him and told him about the traction we’ve been getting in online video with customers like CBS. I outlined our move into the music vertical since a lot of songs also had video, and that all of this video and audio was easily monetizable due to the prevalence and acceptance of short pre- and mid-roll ads.

But while video and music uptake has been awesome, I shared with Regis that one issue we are facing at iWidgets is that we have a lot of inbounds and self-service customers with text-based content, accompanied by photographs, that is increasingly difficult to monetize. Usually text content is monetized by adwords or banner ads, and as I have blogged before, adwords and banner ads have abysmal CPM rates on Facebook.

Regis made a pronouncement on the transition to digital media that is still reverbating with me weeks later. "Text is dead," he said. "Those publishers will have to transition to video and audio or they will languish. Focus on the growth businesses."

In one sentence, Regis explained why newspapers are failing, why banners ads are decreasingly effective, and why video ads are booming. Brilliant!

Monday, March 23, 2009

Video Killed the Banner-Ad Star

This post was also published in AdWeek.

Over the past couple of years, the decreasing effectiveness of banner ads has led to increased hand-wringing. When I give talks nowadays, I start off by asking who clicked on a banner ad that day. No hands go up.

Banner ads were all the rage for many years, culminating in 2007 with Google's $3.5 billion acquisition of DoubleClick. But as more people spend more time online, banner ads are becoming the billboards of the Internet.

Billboards can be very effective. Ubiquitous Coca-Cola billboards build the brand. Billboards placed in highly visible locations like Times Square and Giants Stadium attract a premium. But it's quite the exceptional billboard that actually makes you take action -- calling a listed phone number to learn more about the business, for example -- just like it's quite the exceptional banner ad that gets you to click on it.

And well-placed billboards, such as one on a highway advertising a restaurant in a nearby town, can be effective and lucrative, just like a banner ad on a travel site tied to what you're already searching for can catch your eye. But overall, billboards are a niche market, and pale in comparison to broadcast TV and cable advertising.

The equivalent of TV advertising online is, of course, online video advertising.

For a long time, online content was mostly user-generated video -- the equivalent of cable-access channels, the garbage can of TV advertising. But now that major TV networks are distributing premium content over the Internet, users are increasingly watching premium video content from networks such as CBS and Fox, and Webisodic content from sites like and Not surprisingly, a recent report from eMarketer states that "video ad spending will run counter to overall economic developments, rising by 45 percent in 2009 to reach $850 million."

Now that premium video content is available, it's a natural fit for top advertiser dollars. Premium online video has only just begun its penetration. Previous generations of online content have already flowed from source sites such as YouTube and CNN into thousands of embedded widgets, RSS newsreaders and profiles on social-media sites.

The same phenomenon will happen with premium content, which is just starting to flow from destination sites like and to popular MySpace and Facebook pages. Particularly in an economic downturn, it's important for advertisers to leverage their existing assets such as short-form video ads and maximize consumer attention with ads that viewers will actually watch as they wait for their content to start.

Similarly, online video advertisers will get the most benefit from their investments when their content goes viral by tapping into the social graph on social-media sites. Ads will no longer have to wait for viewers to come to them; they'll find them where they live online.

As Charlene Li, author of Groundswell and founder of Altimeter Group in San Francisco, has said: "Social networks will become like air. They will be anywhere and everywhere we need and want them to be." If you're a content company, that's the distribution platform you want. You can go where the audience is. That's something that a banner ad can't do.

Video killed the radio star in the 1980s and, 20 years later, it's killing the banner-ad star.

Peter Yared is founder and CEO of iWidgets. He can be reached at

Facebook Getting Better, Slightly Worse, Better, Better

Robert Scoble has summarized the Facebook redesign very well:

My former boss, Jim Fawcette, used to say that if you asked a group of Porsche owners what they wanted they’d tell you things like “smoother ride, more trunk space, more leg room, etc.” He’d then say “well, they just designed a Volvo.”

People fundamentally do not like change. People also do not recognize that a product always has compromises. A product that never changes is going to die, and a product without compromises will never ship. I admire that Facebook is willing to experiment and push its technology forward even if it has drag its customers along. There was a similar outcry about the newsfeed to begin with, which is what everyone now is wishing worked the way it did when they originally complained about it!

The new realtime newsfeed is far from perfect. It really needs a thumbs down/thumbs up feature, for example. Just because I don't want to see a friend's constant quiz results does not mean I don't want to see photos they are tagged in or what videos they have rated. It is definitely prompting people to organize their friends into lists so that they can filter the newsfeed down to different circles of friends depending on their mood.

All in all, congrats to Facebook for experimenting and pushing social computing forwards. I am certain they will continue to tweak the experience and also add new features. Pushing the envelope like this is what a startup is all about and fortunately for everyone who uses it (all 180 million of us), Facebook still thinks like a startup.

Wednesday, March 18, 2009

Sun & IBM - A Good Move for All

Well I blogged back in 2004 about what a great acquisition Sun would be for IBM and then blogged recently about how well Sun's open source is doing, making Sun an even better acquisition for Sun.

Sun's market capitalization has been roughly equal to its cash position for years, so it is effectively worth $0. IBM's market capitalization less its cash position is 1x its revenue, so any revenue it gets increases its market cap by $1. So buying Sun at 2x its market cap is an ACCRETIVE acquisition for IBM!

What IBM gets:

- Sun's $600M in open source revenue from Java and MySQL are the crown jewels of this deal. IBM now gets to control the infrastructure language that most of its customers are running. They get to upsell MySQL customers to DB2. This is a dream come true for IBM.

- Sun's $6B in server revenue. IBM can make a SPARC to PowerPC microcode translator and kill Sun's entire server group. The customers can get upgraded machines that run faster than anything on Sun's roadmap. The small x86 server group can be immediately killed and customers transitioned to IBM's x series.

- Sun's $5B in service and professional services revenue and people get migrated directly into IBM Global Services.

- Solaris and StorageTek storage can be integrated into IBM's existing Unix and Storage groups and put into life support as customers get migrated to Linux and modern storage solutions. This is the same thing IBM is doing with AIX and its own legacy storage products.

- Everything else can be killed, including management, grid, etc. These are all nascent markets for Sun, and already strong markets for IBM.

All in all I think this is a good move for Sun and IBM, and Sun's customers. Sun has been slowly and successfully transitioning into an open source software company, and IBM is a great home for both Java and MySQL. IBM is an expert and maintaining and migrating customers from obsolete technologies, which it will be able to do for SPARC, Solaris, and StorageTek.

Goodbye, Sun, you will be missed.

Wednesday, March 11, 2009

Internet-Enabled TV for $10

There is no question that the under-25 demographic does not watch TV. Go through any college dorm and you will see people watching shows on their computers, and very few TVs. For the rest of us, there are a quite a few solutions for watching Internet content on your TV, including Vudu, Roku, and AppleTV. But they all require spending $200+ for your own Internet set top box or adding software like Boxee or Playon to an existing device. These boxes have interfaces ranging from good to bad, but, with the exception of Boxee, none are have really nailed a great user experience.

People paid $200 for DVD players, TiVo's, and DirecTV receivers, but for whatever reason, a lot of people intuitively don't want to pay for an Internet set top box. So what can we do about this? It is really holding up the Internet TV market.

As discussed at itvt's TV of Tomorrow Show this week, one solution is for cable operators like Comcast and Time Warner to throw in an Internet set top box as part of a broadband + cable TV package. This would enable cable operators to continue to offer cable service, but supplement their on demand offerings with broadband on demand and also integrate premium subscriptions such as HBO.

Until then, a lot of households only need to spend $10 to get Internet content on their TV. If you have a flat panel TV and a laptop computer, all you need is a $10 VGA cable and a standard audio cable (make that $30 if you have a Mac since you will need to get a VGA adapter). Connect your laptop's VGA out to your TV's VGA in port and the headphone jack to the audio in on your TV and you are all set. You can then pull up whatever content you want (including Hulu) on your web browser, and then hit full screen.

To jump on the Internet TV bandwagon, you don't have to buy anything other than a cable, learn anything new, or have your content kicked off your device since it is connect to a TV like the recent Hulu/Boxee scuff. There is a ton more content available for free on demand on the web than there is on TV, including on-demand cable. Soon enough even subscription content like HBO will be available.

An exciting aspect of viewing shows on computers is that there is much more potential for interactivity, particularly social interactivity when people can easily rate, share, and opine on shows and scenes.

Thursday, March 05, 2009

Share Beats Search: More Hits from Facebook than Google

A monumental shift in web traffic happened over the holiday season. Sites ranging from gossip such as to live streaming such as suddenly began getting more of their traffic coming from Facebook than from Google.

As reported in HitWise, last week had 8.7% of its visits from Facebook vs. 7.62% from Google. is a very popular site that recently scored its best traffic day ever in late February with 13.9 million page views.

Content sites have spent billions of dollars — $12.2 billion in 2008 according to a recent eMarkerter report — on search engine optimization and search engine marketing in order to get traffic from Google and the other search sites. Yet organic traffic from Facebook is beating hits from Google.

Why? The answer is pretty simple. It’s the same driving force that’s behind so much of social media. You are much more likely to click on a link that your friend recommends than you are to trust the arbitrary data that Google churns out in response to your search.

I have written often that social networks like Facebook and MySpace are the best route for content publishers to monetize their content. But even I am surprised at how rapidly this transition has occurred.

With only nascent investment in social media, publishers are already seeing better traffic from Facebook than from Google. Soon the SEM/SEO spend will start to follow the eyeballs and transition from Google to social media.

Smart social media campaigns are a much more efficient use of marketing dollars since it takes the potential that obviously exists in a friend’s recommendation and turns it into something lively and unique — breaking the mold of boring search ads and easy-to-ignore banners and entering the world of social syndication.

--- This morning NewTeeVee wrote about the same thing, I brought the HitWise report up at their Beet.TV roundtable earlier this week.