Google & Microsoft: Top Ad Networks See Double-Digit Increases

By Ron Callari

When audience measurement service, comScore, released its ranking of the top 15 advertising networks among U.S. Internet users, Microsoft Media Networks US and Google were the only two tech companies that posted double-digit growth in 2009 over the previous year.

With a 31-percent increase year over year, Microsoft was the fastest growing ad network according to this analysis. When approached for this article, several executives indicated they “never comment on comScore studies,” and “Microsoft does not have information to share regarding this.”

Neil Strother, practice director for ABI Research, indicates that large players like Microsoft are often reticent about validating or debating these types of stats. So Strother helped DMB by sharing his thoughts on comScore’s stats. He believes that the reason for Microsoft’s success this past year was due to the company “integrating their network across their four platforms: PC, Mobile, Gaming and Digital TV.” This combined synergy helped tit focus and allowed advertisers to dip into any of the company’s media properties such as MSN, XBox, Windows Live, Office Live and others,” without having to strike separate deals with each entity.

Strother also feels that during “economic downturns, advertisers and brands “will seek out the larger networks like Microsoft and Google because they are perceived as ’safe havens’ to conduct their business.” In so doing, while total ad networks increased 8 percent year over year, Microsoft most likely obtained a portion of its increase from “a market share shift from some of the smaller players like ValueClick, Tribal Fusion and AOL Advertising.”

Additionally Strother notes, since all networks showed increases year over year except for Traffic Marketplace and the Adconion Media Group, “Microsoft also benefitted in general by the increase in digital advertising over traditional media,” particularly with legacy newspaper ad revenues estimated to have fallen as much as 12 percent in 2009.

Google, on the other hand, did share some insights regarding the comScore report. And while Rachel Nearnberg, Google’s global communications spokesperson couldn’t “speak to the data point increase [13 percent] listed in the report,” she could report some of the reasons for the growth they have been experiencing. Attracting top line advertisers is a main reason, Nearnberg notes. For the “last 12 months, 94 of the top 100 Ad Age advertisers have advertised on the Google Content Network,” she says.

Google’s strategy is looking to help both brand and direct advertisers reach consumers through several innovative means. According to Nearnberg:

• Google has made recent improvements to its targeting tools on the Google Content Network to help advertisers match ad to content across the Web.
• Over the summer, Google launched contextual targeting that enables advertisers to focus on specific themes.
• Google launched view-through conversions in September 2009 to help advertisers better measure the impact of their display ad campaigns for those instances when an ad is seen, but not immediately clicked on.
• Google also launched a tool called Campaign Insights October 2009 to give advertisers reliable data about how a campaign has raised brand awareness, or active user interest, in a particular product or service. It looks beyond the traditional measures of clicks and conversions to calculate the incremental lift in both online search activity and website visits that result from a display ad campaign.

With the recent controversy in China whether or not Google will be pulling out of the country due to censorship issues and attacks on several of its users’ Gmail accounts, Nearnberg looks favorably on the future growth for Google and China. In another comScore study pertaining to the growth in the global search market, it showed China’s searches at 13.3 billion was second to the United States globally.

According to Nearnberg, “Asia [in general] has over 40 percent of the world’s Internet users and is an important region for Google.” Particularly in countries like China, “we’re excited about the opportunity for Chinese exporters to use Google’s ad tools to reach a global market.” She also adds that “the pace of mobile innovation in Asia is also extremely rapid, and mobile advertising is already a strong business for us, particularly in countries like Japan, which has a strong culture of mobile commerce.”

ABI’s Strother sees a “detente” eventually reached between the search engine giant and the superpower. With public critiques by Bill Gates and others who see this issue as overplayed in the media, Strother feels that both parties will acquiesce and over the long haul solve their differences behind “closed doors in quiet agreements.” According to Strother, “in the advertising space, there is too much at stake with wireless coming on very strong in China.”

While there are a lot of competing interests in play here and the world can applaud Google on taking the moral high ground, after the dust clears, this is “big business,” and Google will take all that into consideration in order to maintain its double-digit ad network increases in 2010.

Ron Callari is a freelance journalist and editorial cartoonist whose work has been published on AlterNet, CounterPunch and the Sacramento News & Review. He is currently a social media blogger for InventorSpot.com and the author of two graphic novels.

An Emerging Industry: eBook Brokers

By Ron Callari

Digital content distribution as an industry emerged as a result of books moving from the traditional world of publishing to online platforms such as PDFs, eBooks and other ePub formats. Some licensing brokers for eBooks like Ingram Digital grew out of their traditional publishing units that have been in the industry for more than 40 years. Others like Robot Comics emerged within the last few years to solely focus on digital formats for specific genres like graphic novels.

Some of the advantages of digital vs. traditional publishing “is the compressed time from the distributor’s inventory to the online retailer or library’s shelf, [due to] the elimination of shipping, unpacking and shelving for the channel,” according to David Burleigh, director of marketing for OverDrive, a leading global distributor of eBooks and audiobooks.

In the traditional world, “books progressed through a well-defined supply chain from publisher to printer to shipper to wholesaler/distributor to bookstore,” notes Mark Coker, founder of Smashwords, which is both an eBook publisher and distribution platform.  Because the eBook supply chain is nascent and still evolving, Coker sees the industry in a state of still fleshing out its distribution channels. “Some publishers go direct to their customers, others go direct to the retail and others use distribution and aggregation intermediaries such as Smashwords or Ingram Digital,” he says.

With hundreds of mainstream and niche eBook distributors entering the field, the aforementioned firms aggressively distinguish themselves from the competition. OverDrive sees its distinction as providing the best customer support as well as the largest collection of digital content (including eBooks, audiobooks, music and video) for libraries on a single platform. Smashwords focuses exclusively on the independently published eBooks from self-published authors and small independent presses.

Other publishers acting as their own distributors focus on specific genres. While Robot Comics publishes graphic novels and currently works with Apple, Google and Amazon, its deputy director, Dave Baxter, refers to these companies as “marketplaces” or “storefronts” vs. distributors. According to Baxter, “in the digital world, there’s very little distinction between the store and the distributor, often none at all.”

Graphic novels have the inherent challenge of adapting color images to Kindle’s black-and-white-and-shades-of-grey format. Baxter indicates that “few are flexible enough to handle the needs of a graphic novel library and allow them to shine.”

Overdrive’s Burleigh notes that “early on, romance was the clear leader in libraries, probably proportionately more than in print, but other than that, we now see growth across the spectrum of all genres.”

According to Baxter, “due to the percentage of profits taken by the distributors, the limitations imposed by the software they work with, and the lack of direct control over the material display and the ability to market on certain levels, a distributor truly has to prove their worth in order to be literally, worthwhile.” So Baxter and his company continue to search for distributors whose business models are closer to the iPhone app model, but “so far the jury is out,” he says.

Since Amazon presently represents and sells its own library of eBooks exclusively on its Kindle devices, in some respects it can be reviewed as a competitor of eBook distributors. However, according to Overdrive’s Burleigh, he believes, “Amazon has a different business model, so we can’t really compare us to them.”

On the other hand, Smashwords just signed a distribution agreement with Amazon that will one day allow its books to be available in the Amazon Kindle store. As Coker puts it, this makes Amazon, “a competitor and a partner.”

Regarding end users, a recent DMB article highlighted the innovative distribution deals between companies and schools. The Blyth Academy in Toronto was touted as the first high school to purchase the Sony Readers for its student body. Similarly, OverDrive supplies eBooks and audiobooks to several colleges, including McGill University in Montreal, the Virginia Community Colleges in addition to K-12 schools. It also has a similar program for public and corporate libraries.

As far as Sony being a competitor, Coker makes the distinction: “Sony is definitely not a competitor. They’re a distribution partner [they sell our books] and we also help power their Sony Publisher Portal, which makes it easy for authors and publishers to publish their content into the Sony Store.”

With established libraries of their own, one would think that Sony and Barnes & Noble might not need a distributor for their online downloads. However, Burleigh states, that “one of the benefits of working with OverDrive is that it simplifies the process for libraries and retailers to work with a single distributor rather than hundreds of publishers.”

Coker agrees with Burleigh, and adds, “It’s time consuming and expensive for a retailer to enter into and maintain contractual business and technology relationships with hundreds or thousands of small publishers.” This is why he believes that “Sony, B&N and others value working with distributors and aggregators such as Smashwords. With us, they only have to manage one relationship, one technical integration and cut one check.”

Ron Callari is a freelance journalist and editorial cartoonist whose work has been published on AlterNet, CounterPunch and the Sacramento News & Review. He is currently a social media blogger for InventorSpot.com and the author of two graphic novels.

Virtual Worlds Go Mainstream For Businesses

By Ron Callari

Viximo, a 2-year-old start-up company, is fast becoming a leader in the burgeoning virtual goods industry. For those who are new to this commercial space, virtual goods are digital products that are gifted, bartered or paid-for items online or via mobile phones. Videos, icons, e-cards, personalized avatars - items that allow people to better express themselves, add gravitas to their online persona, or increase their enjoyment of a game - make up the products that are now known as virtual goods.

Considered an unlimited opportunity for thousands of Web publishers, Viximo distinguishes itself from its competition in how it addresses the market. It claims it is the first and currently the only virtual goods provider that brings together everything a publisher needs for virtual goods in one complete, easy to implement, customizable solution.

Viximo is one of the only companies that offers both a system for selling virtual goods and the goods themselves. This then permits clients to either upload directly into their own virtual gift stores or customize at will.

In addition to partners such as Fotolog and Zorpia, Viximo just added BlackPlanet.com, SmartDate.com and FanIQ.com into its virtual goods platform. These deals extend Viximo’s reach to 60 million users, a new milestone for the company.

The increased interest in virtual goods is apparent by how quickly it has scaled. U.S. consumers spent $1 billion on such items in 2009, according to Inside Network, a market research company focused on Facebook and social gaming sites. Daniel Strang, the newly appointed CEO of Viximo, says he “sees these types of purchases as a potential substitute for dying revenue streams (such as subscriptions) in the publishing world.”

Brian Balfour, founder and vice president of product marketing for Viximo, speaks with DMB about how companies can capitalize on the virtual goods market.

What is the current status and future of the virtual goods market and how does it break down percentages between social networking, online gaming and online dating sites?
The current size of the virtual goods market in 2009 was about $1 billion in North America, and about $7 billion world wide. While North America still represents only one-seventh of the global market, it is the fastest growing - quadrupled in 2009 - and the youngest. There is still a lot of room to grow in North America and we expect it to double in 2010. I am unsure of exact percentages, but the majority of virtual goods purchases are taking place on social networks, which includes social gaming - probably around 50 percent. The next biggest area is more traditional gaming and virtual worlds, with online dating being the smallest piece at the moment.

What do traditional brands use virtual goods for? (e.g.  Kohl’s, American Apparel, Sears, K-Swiss, Eberjey)
There are a couple opportunities for brands to get involved in virtual goods.

The first way is a sponsorship model. Users are highly engaged with virtual goods and spread them virally to their friends, so it’s a great place for brands to embed themselves. Brands can pay to have branded virtual goods offered to the users in various social networks and games. It basically acts as a very engaging form of promotion that performs much better then banner advertising does on social communities.

The second way is a licensed model. Certain brands that have a luxury appeal to them have an opportunity to sell virtual goods around their brand to users for actual money.

Does Viximo supply Second Life with virtual goods? According to the blogosphere that site has lost popularity over the years? Why?
Viximo does not supply virtual goods to Second Life. We primarily work with social networks, online dating and casual gaming sites. These areas are where most of the growth happened in 2009 and will continue to happen in 2010. I think the fact that the public has lost interest in Second Life is a good thing for the virtual goods industry. Typically people originally associated virtual goods with something very geeky and non mainstream like Second Life or other 3D worlds. The fact is that they represent a smaller portion than other areas like Social Networking. Virtual goods is a mainstream thing and as users become exposed to it more often, it will become more socially acceptable and we will continue to see the industry as a whole grow.

What types of sites are “hot” right now? And why?
The three verticals [that we] mentioned are where we will see most of the growth in 2010. There are still thousands of these sites worldwide that have yet to institute virtual goods. But looking forward beyond 2010 there is a question of how virtual goods will expand into the broader social Web and content arena. It will happen, but just how we don’t know yet. Other areas of potential opportunity in North America would be consoles (xBox, Wii, etc).

Ron Callari is a freelance journalist and editorial cartoonist whose work has been published on AlterNet, CounterPunch and the Sacramento News & Review. He is currently a social media blogger for InventorSpot.com and the author of two graphic novels.

Twitter & GeoAPI’s Great Land Rush Of 2010

By Ron Callari

Some call it the Great Land Rush of 2010. Others don’t quite understand what all the fuss is about. And others yet still feel that “location-based services” are an intrusion on our privacy. Whatever your perspective at this moment in time, I can almost guarantee you that you will be feeling entirely different about geolocation apps by year’s end.

And the leader-in-charge here is not any of the location-based social networks like Foursquare that have caught the early buzz (even though I and others have called it ‘the next Twitter‘). No … the player that is going to mix it up on a grand scale is Twitter itself.

Back on Christmas Day, in a blog titled, “Twitter’s 50,000+ Will be “Location” Game Changer in 2010,” I predicted that Twitter’s acquisition of Mixer Labs and GeoAPI would be a game changer in 2010, due to the number of third-party app developers that potentially have access to this platform. This small army of techies at last count numbered 50,000+. While I don’t suspect that all of them are fully equipped in tackling geolocation app development, I am sure any developer with the smallest amount of location-based knowledge is going to want to take a stab at creating a GeoAPI app for Twitter.

The rationale supporting my assertion is based on a number of factors that have surfaced through leaks and speculative activity over the course of the last 45 days. However when all these pieces are viewed collectively, it becomes clear that Twitter’s ‘westward ho’ wagons are out front leading the charge to absorb the greatest ‘land-mass’ in the location-based space this year.

For the full story, click here.

Textbook Technology: Schools Embrace eReaders

By Ron Callari

The 21st Century learning environment is changing to meet the needs of the times. It wasn’t too long ago when computers were first introduced to school systems and hand-written assignments were replaced by high-speed word processing, spellcheck and online research.

Hand-held portable devices, however, while widely popular for commuting have been prohibited from use in the classroom. That is, up till now.

Embracing the learning experience that could be obtained from electronic reading, the school administrators at Blyth Academy, one of the Canada’s largest providers of private education decided to transition from the traditional printed textbook to the digital content that can be read on the Sony® Reader and found in Sony and Google e-libraries.

Aside from the obvious environmental reasons for transitioning to digital reading, Sam Blyth, CEO at Blyth Academy indicates that “kids loved the proposition of free access to millions of books, ease of transport to international venues, and the ability to mark up and highlight the text and download notes to a student’s computer.”

According to Blyth, his school system is the first in the world to make the switch to eReader textbooks and equip all the students and teachers with the personal devices. The students receive the Sony® Readers and the e-textbooks free of charge but have to return them at the end of the school term or make the choice to purchase them. Sony Canada’s spokesperson Candice Hayman says the company has received “a lot of interest from schools all across Canada wanting to know how they can launch similar programs, [but] we’re allowing the Blyth pilot program to mature, so we can get feedback from the students about their experiences.” The school has acquired 110 Readers from Sony for the first round of testing.

“My Sony Reader helps me get organized,” says Michael Tyrrell, student at Blyth Academy. “I have all my textbooks and class material on it — it’s really cool. I feel like somebody just personalized school to fit me.”

As far as impediments to receiving a full curriculum’s worth of content, Hayman indicates “the next step really lies with the content providers — meaning the textbook publishers need to create a process and business plan for making their content available in the proper electronic formats for schools.” The textbook rights are purchased direct from the publishers and presently the free downloads are generally everyday reading and anything that is out of copyright. Paid content will be considered by Blyth through direct content with textbook publishers.

Helping lead the way in delivering digital content for education are publishers like Pearson Canada. “Pearson Canada is taking students beyond the four corners of the printed textbook,” says Anne-Marie Scullion, vice president of Field Services, Pearson Canada. “Our focus is on developing flexible and adaptive content to engage students in a 21st century learning environment.”

In questioning Sony whether ‘brick and mortar’ libraries might consider purchasing and renting Sony® Readers, she mentioned interest from Canadian libraries considering this route. “At the moment, you can ‘check out’ eBooks from libraries across Canada [and the U.S.] for free with a library card.” She adds, “libraries now offer eBooks optimized for the Sony® Reader, meaning you can directly load them onto the Reader from your PC because the file formats are compatible.” The Sony® Reader accepts numerous file formats including ePub, the publishing industry standard. Students or the general public can easily check for libraries equipped with the device by using Sony’s Library Finder services by OverDrive.

As far as other types of organization considering a similar initiative of acquiring a volume purchase of the devices for a large group of people, Hayman indicates that in 2008, “Random House Canada supplied their employees each with a Sony® Reader to make reading long manuscripts more convenient.”

Other devices that have ventured into the school markets in a less limited way are Kindle and Nook. Amazon has reported that it is giving select students at a variety of universities its Kindle devices with pre-installed textbooks for chemistry and computer science. The range of universities is a cross-section of schools that includes Pace, Case Western, Princeton, Reed, Arizona State and University of Virginia’s Darden.

The game changing aspect of Nook isn’t its Android foundation, its touch screen interface or its backing from a major book retailer. It’s the technology called LendMe, which lets users share books between Nooks, iPhones, iPod Touches, BlackBerrys and Windows/Mac PCs with Barnes & Noble’s free eReader software. Books can be lent to other devices for 14 days at a time. This would allow high school or college student to share text books and pertinent documents with fellow classmates.

For high schools and universities that are embracing the eReader and eTextbook technology, we can easily see a universal transition to the digital reading. As the Blyth experiment proves successful, it would also appear that textbook publishers and online stores will address the market need as mass appeal gains traction in the next decade.

Ron Callari is a freelance journalist and editorial cartoonist with work published by AlterNet, CounterPunch and the Sacramento News & Review. He is currently a regular Society and Trends blogger for InventorSpot.com and the author of two graphic novels.

The Year of the API

By Ron Callari

2009 will probably go down as the year of the open source API. An application programming interface (API) is an interface implemented by a software program to enable interaction with other software, much in the same way that a user interface facilitates interaction between humans and computers. Open source APIs allow third-party developers outside a company to develop apps for a client website.

Google’s OpenSocial was one of the first to work with open source APIs. It standardized its own API for “containers” to easily implement the same API across multiple sites. Facebook and Twitter did the same with their platforms, and in November, LinkedIn, one of the largest business-oriented social networks finally launched a two-way integration with Twitter and opened up its API to allow for third-party developers to tap into its vast exchange.

Location-based social networks, which also made their mark in 2009, learned quickly from their predecessors and are steadily adding useful features that help transcend their platform’s technology with innovative applications. Foursquare, the popular game-like location-based social network, in an attempt to scale faster than its competition, signed up 10 third-party APIs after they issued the following welcome to developers on their website: “You can use the API to create new ways to check-in to Foursquare or visualize the data generated by the Foursquare community. Our API is still a work in progress and we look forward to your feedback.”

In the eyes of the more conservative social media players, adding ‘location’ to the API mix is a somewhat controversial component. While Facebook is looking to dominate the mobile medium space as successfully as it has with its Web apps, it is being cautious about the privacy issues when users communicate their coordinates (longitude and latitude). According to Dominique Bonte, ABI Research’s principal analyst in telematics and navigation, “location-based advertising is going to be the driving motivator for Facebook to get involved once they resolve their privacy guidelines.”

In 2010, third-party developers may gravitate quicker to location-based social networks over traditional social networks due to the greater monetization opportunities. Chris Hallgren, third-party developer and founder of Hallgren Networks, recently developed myKite for the location-based network Brightkite. The myKite app is a social networking tool for Blackberries that is geared to facilitating meeting people based on the places you go. The fact that it ties into other existing social networks - like Twitter and Facebook - means myKite will complement with, instead of compete, those more popular social networking platforms. According to Hallgren, he also thinks “due to advertising, and how ‘location’ provides so much information about the end user, it provides a very targeted advertising platform.”

With other location-related products, Bonte sees Personal Navigation Devices (PNDs) falling behind in the API race. “With devices like Tom-Tom, as a self-contained system, their platforms are presently closed,” he notes. “By opening themselves up to APIs, these companies would be able to enrich and enhance their product offerings,” Bonte adds.

Looking to the future, while reach and revenue are goals, there is a delicate balance between novelty and long-term usage. This makes retention a key factor. While apps traditionally experience a high level of initial downloads, it’s more important that the app has stickyness. Whether or not the apps are free or paid, getting users to keep launching an app is the key to its success.

Greg Yardley, CEO of Pinch Media, offers some stats based on the 30 million+ downloads his iPhone app analytics startup has followed. One of the most telling points of his research is only about 20 percent of users return to use the app the first day after they download it. And that number quickly drops off from there. By 30 days out, less than 5 percent are using the app.

For third-party developers, many develop APIs that are free and hope to monetize with advertising once they’ve come out of beta. As noted by Hallgren: “Right now myKite is 100-percent free with no ads. In the future, I plan to provide a paid app with more features but that time hasn’t come yet.”

According to Yardley, “For all but the most successful apps, the free route does not make much sense because there is not enough time to recoup the costs of developing the app from advertising.” On the other end of the spectrum, to bombard users with excessive advertising is most likely a turn off for users.

Google believes in offering everything free, and Bonte sees the search engine giant making major strides in 2010 in the navigation app arena. Since they own and control their own location-based social network Latitude, coupled with search engine prowess in local search and their newly acquired real-time search feeds from Twitter and Facebook, they are in a prime position to seize opportunities in growth and acquisition.

Once APIs are established, social networks like Twitter and Facebook can consider acquiring them. But what is the decision-making process? According to Bonte, “Price is important and looking for affordable deals.” But even more important is whether or not the larger networks have the capability to develop the API on their own. Bonte notes that it takes, “a lot of due diligence where double and triple checks are required to determine the viability of the product for the company.”
One of Twitter’s smartest moves to date was acquiring Summize, the real-time search API that filters and interacts with the volumes of news and information transmissions to Twitter, every second. It was that monumental decision that not only positioned the microblogging platform as a viable source of news, it also prompted Google to strike a deal to obtain that feed for its own search results.

2010 will be a year of integration for open source API. Ravit Lichtenberg, founder and chief strategist at Ustrategy.com, believes that “social media will no longer be ’social media’ - it will be an integrated, unquestionable component of your online and offline experience.” Since open APIs and OpenID made that possible - “2010 will be about integration and a single, cohesive experience across platforms as well as across products and services - Web, mobile, TV and video - will be become near-inseparable experiences,” he adds.

As apps continue to evolve, APIs will become more robust and more transparent. With 50,000 registered applications to date built for Twitter alone and announcements to open up its firehose of real-time updates to everyone in Q1 2010, rest assured that app developers will be lining up for the opportunity.

The exponential increase in third-party developers will be most evident as a result of increased attendance expected at developer conferences for Twitter and Facebook. On April 21-22, Facebook will launch its Open Graph API at its two-day developer forum, and Twitter’s Chirp Conference in San Francisco (TBD) has already launched a dedicated page for the conference where users can sign up for updates. If 2009 was any indication of the importance of APIs, it appears that events like these are going to make significant strides in prompting future enhancements in the years to come.

Ron Callari is a freelance journalist and editorial cartoonist with work published by AlterNet, CounterPunch and the Sacramento News & Review. He is currently a regular Society and Trends blogger for InventorSpot.com and the author of two graphic novels.

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