Tech Mediums

Yahoo is using viral marketing to push its search engine past Google.

Before I go there, I gotta admit, while I’m a free market kind of guy, I also don’t some companies that absolutely dominate a space (errr…unless I own stock in them at a good buy-in price). 

So when I see Google killing the competition in search, I want to see someone else to temper them (I don’t own stock in Google).

So Yahoo’s latest idea is to have other companies build search engines using Yahoo’s search technology, thereby saving these companies the cash necessary to build from scratch (Yahoo estimate: $300 million).  In return, Yahoo will sell ads on through those search engines.

I think it’s brilliant (barring a few possibly filled holes).  You have other developers customizing, and more importantly, marketing your technology, while you generate money through that method.  What it does is instantly make Yahoo bigger without the time, people and money to do it otherwise.

Classic viral marketing, in another form.

 The possible whole are the kinds of financial deals Yahoo would work the companies.  The NYTimes mentions Me.dium as an example of a partner-company that Yahoo has signed up (financial terms are uncertain).  Me.dium is a search engine (not yet fully released) that allows users to see what other websites their friends are going too.  The theory is that people place more weight on what their friends say than through other means.  This is true, for good or bad (if my friends are looking at ill-informed sites, then those are the ones that will probably pop up first in the search).

Seth MacFarlane and Google

If you haven’t heard by now on NYTimes.com, Seth MacFarlane, creator of the Family Guy (I’m watching Blue Harvest on DVD as I type, btw) and American Dad is having his new creation, Seth MacFarlane’s Calvacade of Comedy, distributed over the internet, freeing up his creative juices and avoiding censorship from the FCC. 

MacFarlane has two key partners, Google and Media Rights Capital (MRC).  But instead of Google being used to distribute advertising, it’s being used distribute the actual show through its Google Content Network.  Using its algorithms, Google will identify the kinds of people who will be interested in the show.  It’s the same model as advertising, targeted with an enormous amount of metrics/data to refine the targeting.

Currently, TV can not provide this level of targeting. 

MRC, a niche production company that is also working with Raven-Symone through its Digital Rights arm, will take the lead on corralling advertisers or the show.  It can, thus, provide them with the same level of exacting ROI that the net offers and that TV can not.

I think this is an incredibly smart move on Seth and Google’s part.  Certainly Google, in using this as further proof of concept that its model can be applicable to ALL media, not just advertising.

 JibJab

This made me think of Jib Jab’s move to further develop its revenue model and how new media companies are continuing to figure out best ways to monetize the net.

So one product, Sendables, JibJab’s e-Card business, allows users to add themselves to videos.  Gregg Spiridellis, co-Founder/CEO of JibJab Media says the premise is that “Its all about personal expression.”  Users can put their face on someone else’s body for free, but then pay to share it with friends.  I did this Snoop Dogg video with my son’s baby picture to test it out (I would post it here, but I gotta admit, I was kinda sick seeing my son in a Snoop Dogg video - word to the wise…don’t do it).  I also didn’t want to pay the $3 to share the video.

Snoop’s got an interesting thing going…be everywhere his fans are and expand the JibJab brand.  Some fans use JibJab.

David Lazarus over at the LA Times wrote a piece on the failed buyout of Yahoo by Microsoft. 

The piece was fascinating because David polled high schoolers at Loyola High School (Los Angeles) on the deal.  Specifically, the students said that Microsoft (and Google) was, indeed, cooler than Yahoo. 

Hold on a sec!  Microsoft > Yahoo???

Why?

In a word…Xbox.  Yes, their platform, along with the Xbox-only mega game, Halo, is what propels a so-called “evil” corporation into a cool corporation.

Some of the students also mentioned that that there’s nothing wrong with being profitable…meaning, just because a multi-billion dollar corporation is profitable isn’t, in and of itself, wrong. 

That’s hot. 

  Also, they didn’t have problems with some advertising, but just didn’t want website properties to be overloaded with them.  Interesting. 

Anyway, the problem with Yahoo is that there’s not much resonating with these students.  They don’t use Yahoo for search…they use Google. 

I don’t really use Google.  In fact, I consistently prefer Yahoo because of the depth of content (Finance and Movies as examples).  I use Yahoo search because of the convenience.  I actively use Gmail, though, but I have an old Yahoo email account. 

My point, is that I wonder what other teenagers would say about Microsoft > Yahoo.

Anyway, check out the article.  It’s pretty interesting. 

The battle for Middle Earth (I mean, internet advertising) is getting VERY interesting.  So you have the 400 lb sumo wrestlers in the ring (based on traffic), Yahoo & Google, each having 139 million and 137 million uniques/month, respectively.  AOL comes in 4^th (behind Microsoft) with 111 million uniques according to comScore.  

Next up, Yahoo is to use Google’s Adsense to deliver relevant ads alongside its own ads on a test basis (two weeks).  It’s looking more and more like a move to tease Microsoft just enough so that it will either increase its offer to something more acceptable to Yahoo or make them go away (how did Microsoft become the kids that no one wants to play with…more of a rhetorical question).

 So Let’s Play This Out…

No secret that a few online properties dominate online advertising, which is estimated to be about $21 billion in 2007 (online ad spending is expected to hit about $51 and about 15.4% of total media buys billion by 2012). 

So if Yahoo expands its “test” with Google and completely runs Google (which I don’t think will happen – 1) it would shift Yahoo power to Google, 2) that would allow Google to dominate in ways it doesn’t/can’t now and 3) it’s shaping up to be a bluff anyway), then that exposes advertisers to potentially more than 270 million unique visitors (or if you look at ad networks’ overall reach, a combined Yahoo and Google ad network would be 310 million uniques).

 Monopolies

That’s a heck of a lot of control over ad rates that a combined Yahoo/Google network would control.  That would force smaller players to combine, which I think will happen anyway as a defensive tactic:

1. While internet advertising is growing at a great pace, overall actual dollar spend is still finite…there’s so much money in corporate coffers, and
2. the number of online properties that can be created is infinite - thus, you have an infinite number of online properties competing for finite dollars. 

 Offline Going Online

No. 2 above, combined with internet advertising growth, is driving traditionally offline media to partner and acquire online properties. 

Radio One, the biggest urban terrestrial radio company, announced on April 10 that it is acquiring Community Connect, owner of BlackPlanet.com and AsianAve.com, for $38 million (Black Planet was one of the FIRST social networking sites, and it focused on the niche model which has gotten hot – it’s lost a little luster with the propensity for being spammy, like MySpace,  but it’s still one of the go to sites for people and studios pushing certain films).

Hearst Media, known for its offline properties (magazines, newspapers and TV stations), has been acquiring websites as well.

The Goal: offer advertising clients a greater reach off AND online.  One point of contact for a wider reach.  Of course, the main goal is to maximize revenue since terrestrial radio and magazines have been having a tough time growing revenue.

 Smaller Sites

How do smaller sites, that have a few tens or hundreds of thousands of visitors, compete? 

Get this - borrow from the big boys and merge.  If not merge, then create a network of sites that can drive pricing power with advertisers.  This could be a lot more lucrative if done right. 

 Competitive Landscape

So you basically have the following groups in this order

1. Search – Yahoo, Google, AOL
2. Traditionally offline who already are online – NY Times, LA Times, Fox Interactive
3. Large Social Networking – MySpace, Facebook, etc.
4. Traditionally offline media going online – Hearst, Radio-One
5. Smaller sites that combine to form a larger network - ?