Yahoo is still the biggest online property in the U.S., with fairly sturdy content and communications assets, but its options for restoring growth are getting fewer. Yahoo must re-energize its business around video, a social advertising network and/or syndication, or sell itself to Microsoft or AOL, assuming they’re still interested.
Google had a great quarter and finally has a hot social media offering. But it can’t relax on its laurels. Google faces key challenges to the growth of its search and advertising businesses that it could address with better product integration.
On the heels of Google’s quarterly earnings report, we’re seeing a lot of numbers thrown around today. Google itself has a lot to brag about, including signing up 10 million users to its new social media project, Google+. Twitter counters Google’s sharing figure with some huge stats of its own. (Facebook figures are apples and oranges.) Techmeme’s top link this morning observes that Google’s revenues grew way faster than those of its search- and ad network partners. That’s probably due to two things: Searches convert better on dedicated search engines and Google’s display network is mired in low-cost CPC ad inventory that’s more vulnerable to hard economic times than search. In my Weekly Update, I’ll be taking a look at how Google can keep its growth rate high with better product integration.
The Wall Street Journal hears that Yahoo is preparing a hybrid content syndication/ad network product for third-party sites. AdExchanger thinks it sounds like a combination of Facebook Likes plus an ad network, but that doesn’t capture it, nor would such a thing exploit what Yahoo is good at. The Journal says sites would get a widget with Yahoo content personalized for the reader on the third-party site, based on contextual targeting of other content on the site and/or on behavioral targeting drawn from Yahoo’s data. Accompanying the content on the widget would be display ads whose revenue Yahoo would share with the other site. There’s no info on how advertisers would purchase these ads. In theory, this sounds like a good offering, particularly for second-tier sites. Yahoo has plenty of quality content, is pretty good at lightly personalizing its own sites, and could offer a brand-friendly environment with the scale of a network – if enough sites sign on.
Facebook’s master plan for music — as revealed by Om — sounds cool, but it will be tough for Facebook to make a fortune off it. That’s because 1) there’s a limited opportunity for music subscriptions, 2) Facebook doesn’t charge rent, 3) the margins in digital music sales are terrible and 4) the best advertising opportunity is challenging.
There are some new schemes for social media monetization in the news today. Groupon is talking to Foursquare, after already signing up Loopt. UberMedia is hitching up with actor Ashton Kutcher on a branded Twitter client and, to tie the celebrity and social commerce themes together, Glen Beck will offer discount deals on a new site he’ll promote through his other media channels. Some see Groupon as a potentially powerful mobile ad network. Check-in apps are a good place to promote offers, but Groupon should buy space on mapping apps if it really aims to be an ad network. These just feel like distribution deals. Similarly, Kutcher and Beck are both big brands with lots of fans, but neither seems to have huge potential for scale, let alone network effects. At least Kutcher or his management seems to be curating content with some contextual relevance for his audience.
Facebook’s silly scheme to plant anti-Google privacy stories illustrates the companies’ bitter rivalry and points at what they’re really fighting over. The competition is not so much about each company’s core business – search or advertising-powered social networking – as it is about future products and services, and their roles as technology platform providers.
Amidst reports that it was having trouble unloading $1 billion worth of shares at a very rich valuation, Facebook last week started testing its first home-grown social commerce product, Facebook Deals. Already facing stiff competition from Groupon and LivingSocial, will Deals be Facebook’s next billion-dollar business? Competitors, marketers and developers hoping to leverage the Facebook platform need to figure out how Facebook will continue to grow.
Pundits are advising Facebook what to do next this week. MG Siegler says it’s high time Facebook did a native iPad app. In a perfect world, Facebook would like HTML5 to solve its cross-platform development issues, but I agree it’s missing an opportunity to try out new features, especially ones that take advantage of the iPad’s gesture-based user interface. It might even get to experiment with new advertising formats there. Facebook continues to build out its ad platform, but if it’s worried about driving users nuts with a “marquee-style” rich media takeover, as suggested by Jason Calacanis and his Launch team, perhaps it could try them on a tablet first. Potential privacy legislation might throw some wrenches into the works of a possible Facebook Connect-based ad network, even though one proposal has a “Facebook loophole.”
Zach Rodgers is a solid reporter, but he doesn’t make a convincing case that Google will own online display advertising next year, or in the near future. Real-time bidding is all well and good, but what about advertising in real-time feeds? Other than adding video inventory into its exchange, there’s not much on how Google could pull ad networks and exchanges out of the low-cost, click-through dominated, remnant inventory ghetto. In theory, Google is well-positioned to do what the industry calls attribution analysis, that is, understanding the influence of display (or offline, for that matter) campaigns on search and on ultimate purchase conversion. But I hear more about that from Microsoft. Brand advertisers increasingly want cross-media integrated campaigns, with things like product placement, sponsorships, social media integration, and influencer analysis. Oddly enough, traditional media companies have better assets to direct at meeting that demand.