Train Thoughts

I read the news about the new Blackberry Gmail plugin and was excited.  I followed the instructions.  Deleted my Gmail account from BIS.  Re-added it.  Installed the plugin.  It works as advertised.  Labels, archiving and one way sync to your Gmail.

It’s the one way sync that is so disappointing.   Everything else works well, but then it falls short.  Just short enough that I switched back to the Google Blackberry app.  If it doesn’t sync both ways, then the Blackberry mail just gets too messy with emails that you already read in your Gmail web app, but are marked as new on the Blackberry.

As soon as two way sync works, I’ll be using it.

Entrepreneurs created tools to make websites so easy and inexpensive to create that just about anyone can do it in a few minutes.  If you think about this from a simple business perspective, the cost is so low to create a site, and distribute it, that the site only needs to make a very small CPM from advertising to support it (cover the cost of running it).  And.  If you have a really large site, that the incremental cost of serving a page is even less, so you can still make a positive gross margin and charge an even lower CPM.

I’ve made this point before.  Technologist have done their job in the web publishing space.  We’ve taken a market (content management/site creation) and totally disrupted it by making it so easy and inexpensive through content managment tools and hosted services.  Now that we are paying less to create sites, we have to expect to make less from advertising to support them, because the competition has already done that.  UGC sites at scale are supporting themselves under a .50 cent CPM.  As a publisher, we have to compete at that price, or we will die over time.

There is still the cost of creating content and managing it.  As these costs get greatly reduced, I think we can expect sites to charge advertisers even less.  Our prediction is CPMs will continue to decrease as a function of supply increasing (time online), and as costs decrease across content management systems, creating content, and managing/programming of content.

In the end, it will be the most efficient publishers that survive.

I have a personal goal to exercise three times per week this year.  So far, I’ve been a little behind schedule, but I’ve recommitted since getting through some digestive issues (gut pain).  I’ve been looking for an exercise plan to build strength, relax a bit, and help my guts.  I was introduced to Bikram Yoga.  Just four classes in now.  I’m nowhere near touching my toes, but my guts have never felt better.

I love the repetition of the class.  Each time you do the same exercises in the same order.  I love the heat.  It reminds me of finishing basketball practice soaked in sweat.  I also like that after I cool down, I feel relaxed.

I’m hoping I can keep fitting in the classes with my work schedule.  Next week, I’m on the road in NYC.  Maybe there is a studio I can drop in during the evening.

In 1999, you used to hear, “It’s hard to compete with free.”  The sustainability of free gave way to ad supported for many content sites.  Near 2004 user generated content exploded.  Video.  Social Networking.  Blogging.  Photo sharing.  A host of issues made it difficult to monetize the content with ads.  Some advertisers didn’t trust the content.  Other publishers chased growth over money.

That left us in a strange spot at the end of 2008 and it’s getting stranger in 2009.

The ad market has crumbled - internal YieldBuild numbers have it down about 30%.  International growth seems to be picking up.  That’s the case with HubPages.com - growing faster internationally than domestically.  It’s also true for Youtube, and Facebook.  While it’s difficult to make money in the US from ads, it’s even more difficult to do it overseas.

If you’re in the web publishing ad supported space, I think you need to pay close attention to who you’re competing with if you want ad dollars or to be #1 in your category.

First, if you are competing against Twitter.  They don’t care about making money and don’t need to make a profit.  They’ll have more features and more growth than you if you do.  If you pursue a revenue model over growth and find a business model that works in the space, they’ll jump on it.  So, they focus on growth.  You work to make a profit.  And then they will capitalize on your business model innovation because the have the scale.

Second, if you are competing against blogs.  Bloggers will create high quality content at a fraction of the cost of professionals.  Bloggers work from home and have very little overhead.  Large organizations have much higher cost structures.  Scaling in journalism isn’t what it used to be now that distribution is free online.  Just to put some math around it.  I think a blogger can earn 1/2 of the CPMs of a big outfit and still have better profitability because of their lower cost structure.

Third, if you are growing faster internationally, this is going to cost more and earn less.  It’s going to be a lot worse if you have high delivery and storage costs like video.   The NYT did a good story on this.

The most efficient will survive.  My rule of thumb is that a company (with an office) should have less than one to two writers for every 1 million visitors their site has per month from the US.  Make your business work under this guideline and you’ll be fine.  Under this guideline, the New York Times online should have 12 - 24 fulltime writers.  I’m curious what AOL is doing with 1500 writers.

I’ve been surfing the web and watching tea ads follow me around.  I actually drink quite a bit of tea, but I don’t drink diet drinks, so the diet tea ads are no good.  But.  But if they had really good targeting, they might know that my car could die any moment, and although I check out used 911s with tiptronic transmissions, I’m much more interested in an Accord.  And.  I don’t have a watch, but there is an off beat chance that I might buy a dress watch from Costco if they had that Omega that I saw at the Mountain View Costco available.

Perhaps I’m leaving a trail online that indicates I may be in the market for an Accord and an Omega (besides this explicit post).  For behavioral targeting to work, three things have to happen.  Some user data has to signal intent (my searching and browsing).  That intent needs to be captured (cookies and pixels).  Then another event needs to trigger the delivery of an ad (Ad exchange recognizes me).  If all of these things line up, the chances of a relevant ad increases and it might just lead to a sale.

This leads me to two beliefs, the person with the best data can deliver the most relevant ads.  The person with the most ads has the best chance at being able to match an ad to the data.

With Yahoo’s deal today, did they increase their data asset and will they create access to more ads?  If they did, this may very well be a good deal for them.