Tag Archives: advertising

Google HUD glasses have no revenue stream? Yeah, right

Nick Bilton of the NYT on Google to Sell Heads-Up Display Glasses by Year’s End – NYTimes.com:

Everyone I spoke with who was familiar with the project repeatedly said that Google was not thinking about potential business models with the new glasses. Instead, they said, Google sees the project as an experiment that anyone will be able to join. If consumers take to the glasses when they are released later this year, then Google will explore possible revenue streams.

If they’re not thinking of the revenue streams, they must be extremely dense. This is the advertising industry’s wet dream: a billboard on every building, an offer from every restaurant you walk past – all direct into your eyes. This is the ultimate advertising channel, and advertisers will pay massive amounts of money to get right into it.

Amazon’s Ad-supported Kindle Price: Too High?

TUAW on the release of an ad-supported Kindle from Amazon:

“Still, the $114 price point seems a little silly; $99 would be a much better psychological buy-in point.”

I think that $25 is a fair reflection of the value of the ads. Remember, these ads are home-screen only, and not in the books. Pundits constantly over-estimate the amount of revenue that ads can bring in, and the expectation that Amazon could price a Kindle at $99 based on these kinds of ads is wrong.

No one in the world knows more than Amazon about pricing for a profit.

Good to see Grey London continue the fine tradition of originality in ads

Update: In what I’d describe as “a result”, Grey London’s MD has been in touch with Meg – see her blog for details!

Advertising. It’s all about creativity, originality, possibly bean bags, yeah?

So let’s compare this image, taken by my chum Meg Pickard in 2006, to this scene from Grey London‘s new ad for Horlicks:

Grey Holicks ad
Oh dear.

Sure, everyone creative takes inspiration from other people’s work. I know I do, all the time. But Grey could have taken the idea of a book in front of a face and done something interesting and creative with it. Instead, they did a shot-perfect copy of the entire thing, even down to the on-a-train location.

And yes, it’s only a single, tiny scene in the ad. But given that the shot is pretty much the only one in the entire thing which has any spark or originality (ha!) about it, it’s the one thing that lifts the ad above yet another mundane “lots of shots of kettles from odd angles” 30 second clip. It’s slap-bang in the middle of the ad, which means it’s the conceit around which the whole thing turns.

Pinching ideas isn’t a bad thing per-se. But if the only truly original element in your work is a shot-perfect recreation of something you found on Flickr, you ought to take a serious look at yourself and consider a career which doesn’t depend on creativity.

UPDATE: Meg’s response is on her blog.

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Don’t be evil. Just don’t pay your taxes

Yes, I know that every company likes to use all means legal to avoid tax. But surely a company which prides itself on not “being evil” shouldn’t also be using all means necessary to ensure it doesn’t pay UK corporation tax?

Google, which has an estimated 90% market share of UK internet searches, last year used a cross-border network of subsidiary companies to ensure it did not pay a penny in corporation tax on its £1.6bn advertising revenues in Britain.

The international corporate structure enables Google to avoid paying what could otherwise have been a corporation tax bill in the UK of as much as £450m.”

(Photo by Yodel Anecdotal – http://flic.kr/p/3d7XhU)
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Is YouTube the biggest loss-making machine in history?

Image representing YouTube as depicted in Crun...
Image via CrunchBase

Michael Hickens of Google Watch puts a positive spin on how YouTube is doing:

Google’s YouTube acquisition is looking less and less like a financial boondoggle every day. YouTube is now selling ads against 9% of its content, versus 6% a year ago (and remember, this is a market in serious recession).”

Only one problem: it’s still losing money hand over fist. As I mentioned earlier, a recent Credit Suisse report estimates it will lose a whopping $470 million this year.

The reason for that is simple: while its revenues should grow at a more-than-respectable 20% in 2009, the number of streams it serves will grow at a rate almost double that (38%).

As Credit Suisse estimates half of YouTube’s expenses come from bandwidth, this means that the growth in revenue is only just paying the bandwidth bill for the growth in traffic.

Add in all the additional costs in infrastructure, people (and now licensing) and it’s clear that it will have to sell a hell of a lot more advertising than 9% of inventory to bring it into the black.

Basically, at the moment, every time someone watches a video on YouTube, it costs Google about 10¢. Delivering ad revenue of 10¢ per view is going to be a really big challenge, even for Google’s mighty ad sales machine.

What’s interesting is that Michael notes that major content creators are coming on board to YouTube, having opposed it for years:

“It also seems like the commercial content producers that were so up in arms about YouTube’s “theft” of their copyrighted works are not only backing down, but stepping up. The latest word is that Sony is going to experiment uploading full-length feature films to YouTube.”

Of course, content like legitimate movies makes it a lot easier to sell ads than, say, chipmunks. If Michael is right, and the content creators ride to Google’s rescue, that will represent a remarkable turnaround – from the dream of “user generated content = revenue” to having to the reality of being rescued by content from major studios. Won’t that be something?

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Some quick thoughts about Google versus the newspapers

Image representing Rupert Murdoch as depicted ...
Image via CrunchBase

Rupert Murdoch has really put the cat amongst the pigeons with his comments about Google:

Rupert Murdoch threw down the gauntlet to Google Thursday, accusing the search giant of poaching content it doesn’t own and urging media outlets to fight back. “Should we be allowing Google to steal all our copyrights?” asked the News Corp. chief at a cable industry confab in Washington, D.C., Thursday. The answer, said Murdoch, should be, ‘Thanks, but no thanks.’ “

Some people will paint this as an old-media dinosaur not understanding new media, but I’m not so sure. If you’ve read Michael Wolff’s biography of Murdoch, you’d realise that he rarely says something like this without thinking it through, and without having an agenda.

There’s a few points of context which should be considered:

Google is a competitor to newspapers

The pool of advertising money online is finite. At the moment, Google takes a very large chunk of that money. If content isn’t paid for, then that makes Google a competitor to newspapers as well as something which delivers traffic.

Traffic is a double-edged sword

You need readers to make money from content, but even online every reader has an incremental cost. If companies aren’t making enough money from the additional readers they get from Google, then Google represents a cost to newspapers, rather than additional revenue. In other words, if the ad revenue isn’t there, every page view costs money. So why should newspapers care about the loss of page views from blocking Google?

Search feeds off content, just as content feeds off search

If a user can’t find the content that’s most relevant to them from a search engine, that search engine is useless. Relevance is everything – and that works both ways. Taking their content out of Google would hurt a newspaper (unless they’re making nothing from the page view), but it would hurt Google too.

What I think is clear is publishers are starting to think that the present position is unsustainable, as it offers the worst of all possible worlds for them. They don’t get paid by readers. A large chunk of the advertising revenue goes to Google, rather than them, in a world where ad revenue is hurting overall.

Interesting times, and lots of open questions. If someone says that the status quo can be maintained, I’d take that with a pinch of salt.

UPDATE: Just to add fuel to the fire, Alan Patrick has done some back-of-the-envelope calculations to work out how much Google makes from a typical site, in this case, TechCrunch.

“In other words, if all hits to TC are via Google, then Google is making 10x more money than TC is. Or, put it another way, if Google has only 10% of the traffic going to TC via its site, it makes the same amount of money.”

While Google obviously adds a lot of value to the customer, does it really add as much value as the content that the customer is actually interested in – let alone more value?

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The Hulu and Boxee fight continues

Image representing Boxee as depicted in CrunchBase
Image via CrunchBase

The TV producers’ decision to block Boxee from using Hulu content appears pretty shortsighted, but there is method in the madness, as VentureBeat points out:

“The truth of the matter is that Hulu’s new encryption efforts make dollars and sense for its content parters. Networks like NBC and Fox might have snagged viewers by partnering with the video portal, but Hulu’s slightly airy ad library hardly compares to the revenue generated from their broadcast cousins. For these networks, as well as their partners, protecting broadcast advertising’s revenue stream will always be a priority. At least, while the advertising market continues to stay solvent.”

At the moment all the money is actually in television. Hulu/Boxee is potentially huge in the future, but now? Nothing much.

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The Microsoft “Lauren” ads are right

Joe Wilcox is right: The Microsoft “I’m not cool enough for a Mac” campaign has really struck a nerve. The Mac sites are abuzz with rebuttals, cries of foul, and general wailing and gnashing of teeth.

The reason for the attention is probably because there’s a grain of truth in what Microsoft is saying. The argument is pretty simple: the limited range of Mac models means that you can end up paying way over your budget to get a single feature. If you want a 17in machine and don’t want to pay an eye-watering £1,949, you’re out of luck. Yes, you get a lot of machine for that £1,949 – but some people just don’t require all the features that you get with a Mac.

This is exactly the argument that I made in my post on why I switched from Mac to Linux, and it’s one that the more fervant Mac promoters either don’t comprehend or willfully ignore.

I needed a 15in screen. However, I didn’t need two graphics cards, a 1GHz system bus, or the absolute top-end performance that I could have got from a MacBook Pro.

That meant that paying £1800 for one would have been bad value for me, giving me features that I just don’t need or want. In the end, I paid £900 for a Dell XPS 1530 which gives me all the features I needed at half the price. As I put it in my swtiching post:

“This, incidentally, is one of the often-forgotten twists to the whole ‘are Macs value for money?’ question. Compared to an identical-specced PC, they sometimes are. But often, users don’t need the features or power one of the Macs delivers. It’s not ‘value for money’ to pay for a machine with features you don’t need, unless they’re free or very cheap. In my case, for example, paying £1400 [the price has since risen] simply so I could have a 15in screen, when I don’t need a 1GHz system bus or two graphics cards can’t be considered good ‘value for money’.”

But does this mean Apple is doing something wrong? Not necessarily. Apple’s strategy since Jobs’ return has been to limit the number of different models deliberately, refusing to be driven into the “niche” market strategy of a Dell or HP where there’s a large (and often confusing) range of machines. This makes sense when you’re a small player, as it makes buying decisions easy for the customer and reduces the company’s overheads (lower stock, lower marketing costs, etc).

However, it also means – and Mac fans might not like to accept this – that there are plenty of people for whom buying a Mac makes no sense. I was one of those cases, and “Lauren” is another one. The key question is whether, in a tight economy, this kind of definition of value becomes more important – whether getting “the best machine for your needs and budget” triumphs over “the best machine, period”.

There is, though, one cloud on the horizon which makes me wonder if Apple’s strategy is sustainable. For the past month or so, I’ve temporarily put Linux to one side to do some serious testing of Windows 7, and there’s no doubt in my mind that as a consumer operating system it significantly closes the gap between Windows and Mac.

With Windows Vista, the difference was obvious. Vista was a pain in the behind to use, thanks largely to an over-zealous implementation of User Account Control and performance issues on slower machines. Win7 fixes those, adds in some nice features of its own, and generally looks like a serious contender.

This leaves the Mac with two key advantages: security, and applications. Apple and its advocates have done a great job of beating Microsoft over the head about security, but it’s really a non-issue day-to-day as long as you have up to date anti-virus software. And Microsoft has seriously raised its game with regard to writing more secure code.

Where Apple’s advantage still lies is in applications – quality, rather than quantity. Much as I loathe its stupid use of a non-open default formats, iWork really rocks. Despite silly quirks, iLife is lovely, and Final Cut Express is a great piece of software. Third parties keep churning out exceptionally cool applications, from Omni Group’s brilliant OmniGraffle, OmniPlan and OmniFocus through to the delicious Bento.

Mac applications beat the crap out of their Windows equivalents. Despite the fact that Windows has many times the number of applications, I can think of no occasion when, given a free choice, I’d use any Window app rather than the Mac alternative. Even Microsoft’s own Mac applications are better than their Windows counterparts.

I still have lots of issues which Apple’s failure to use and encourage open formats, which will keep me off the platform. But I think that Apple needs to recognise that, as with the iPhone, applications are a strength on the Mac – and promote the platform accordingly.

Quote of the day

Rory Sutherland: Let’s put sales promotion at the heart of the agency:

"The second assumption is just as dangerous: it is the dangerously linear assumption that the best way to build a brand is to set out to build a brand. I really don’t believe this. I think if you set out to build a great business, you’ll stand a fair chance of building a great brand. I am not equally confident that someone aspiring to build a great brand will build a great business."