Bronte Media

The short memories of the Internet are amazing.

First, Google Base was going to take over eBay. Now, Microsoft is starting a classifieds service. But with social networking! And SatelliteMaps! Look out everyone from Craigslist to newspaper firms!

I really don’t want to sell my couch to the highest bidder. I would prefer to see it in my friend’s living room. And before my friend buys it, he’d like to see it on a satellite map. God. Help. Us.

Paul Kedrosky, who usually has good things to say, said that “It is also worth noting that the service will free to users (both buyers and sellers), with all the revenue coming from ads.”

More surprisingly, he said it without flinching. Free ads, supported by paid ads! I knew Web 2.0 was different!

Not to be outdone, Gartner analyst Van Baker said: “There’s room for more than one player here, there’s room for more than two players”.

Yep that’s why Yahoo has wasted hundreds of millions of dollars going nowhere Van - because there is room for more than two players!

Classifieds properties are marketplaces. Marketplaces have network effects, meaning that more buyers attract more sellers, who then attract more buyers. The natural number of marketplaces is one. That’s the way buyers and sellers like it. Who that one is can change, but only if the incumbent marketplace gets too greedy and too irresponsive.

That’s why craigslist’s traffic has almost tripled since last year (please ignore the irony of me linking to a New York Times article to back up an argument. Thank you, we now return you to the post). And that’s why eBay is continuing to grow very strongly.

Once opportunities reach a certain scale it becomes more and more difficult for the firms to take their eye off the prize. In search for instance, Alta Vista and Yahoo lost out, but because there was no money in search then that wasn’t a particularly sad day for each of those firms at the time.

The principle makes over-taking the market leader in a huge industry with new features harder and harder, because if they are making so much money and they see that users like a feature on a startup that is betting its whole future on that one feature, then they integrate it before the leaking of users gets too much. Not to mention that in search the are no network effects, only better mouse traps, whereas in classifieds there are and the mouse trap effect is less.

And by the way, I don’t think limiting the audience of buyers to your buddy list is a killer feature. And just in case, satellite maps aren’t either.

Perhaps even scarier for Microsoft, is that in a financial sense they are competing with a juggernaut who is not motivated by profit. That’s a tough business to be in.

But if Fremont has ajax and if Bill sends an email around then people will get excited and eBay’s stock price will go down by a dollar because they are doomed and then weeks later it will go up by 10 dollars because it isn’t doomed anymore. And so the sands through the hourglass…

p.s. Perhaps we should call the AJAX’ing of prior failed ideas or strategies like “putting lipstick on a Goldfish”?

The New York Times has an article about two interactive campaigns that, gasp, placed media on blogs.

Great. The more time online advertising gets to shine, the better. But this is pathetic:

“What is most valuable about nontraditional media like blogs, Mr. Deaver said, is their ability to “actively engage the consumer” compared with “passive TV spots” and other traditional choices.”

What they are really saying is that by spending a pittance ($20k) , they can get the New York Times to write about the campaign, which is worth just as much.

The actively engaging part is interactive advertising not blogs. The ad formats on most blogs are not even particularly creative. They are using formats that have been around for 10 years. Marketers are finally learning how to use them.

Here’s another pearler:

“When you do something unusual, unexpected, with something so well known as Monopoly, you can get a lot of talk value,” said Mark Blecher, senior vice president for marketing at the Hasbro Games division of Hasbro in Longmeadow, Mass.

Talk value! Yep, by opening up the petty cash box and extending the online media plan to include a few raw blogs, they can get an article written about them. The cost of the blog media buys is about as much as they pay their PR firm to hassle the same New York Times writer every month.

Good work Hasbro and Budget Rent a car (and their PR firm and ad agency), wake-up-and-smell-the-coffee the New York Times.

Jay Weintrub posts a teaser about a rumored acquisition of Price Grabber not from “Valueclick, MSN, News Corp., or Google/Yahoo”.

The only notable online asset owner Jay seems to have left out is Barry Diller. Although he has said shopping comparison engines are over-priced and is developing his own. Perhaps the valuations have changed?

Another guess might be Marchex, whose stock price has been going crazy of late. Don’t know how they would digest an acquisition of this size, though.

Greg Yardley has news of Google testing pay per call advertising. Well, click to call to anyway.

I have never got the point of click to call; it just seems like a poor consumer experience. Why put the consumer 3-4 clicks away and then wait by their phone? Why not just put up a trackable phone number and let them dial that instead?

Either way, it’s great news for everyone except those like Ingenio and Jambo who maintain pay per call ad networks of their own. The reason is that after testing it out, Google will launch it across their AdSense network next year and call it something different and claim that they are doing something new and then Business Week and the New York Times will write fawning profiles of how the service is changing the ad industry while the true innovators like Ingenio get written out of the annals of history and oh, and don’t forget, the writers will say, the phone companies and the yellow pages firms and any other big media firm are fucked.

Oh the bitterness.

But back to why it’s good. Publishers will be able to tap into pay per call advertising through Google and mix their own direct sales of pay per call advertising with the network advertising of Google, Ingenio and others just like they do with cost per click advertising.

AdAge had a fascinating article on the decline in response rates of credit card direct mail and other types of financial service marketers.

The article, a writeup of a Direct Marketing Association report, says that response rates have dropped from 2.5% in 2003 to 1.4% in 2005.

Financial Institutions spent $13.2 bn on direct mail last year or roughly three times the entire search industry in the US if you want to relate it to online analogs.

Financial services are a key driver of search spending, both when companies like Amex and Citibank spend with Google but more so when others like Nextag and Lowermybills do. These are two of the company’s largest advertisers and they try to turn the click into a mortgage lead that they then hawk off to a network of brokers and institutions.

Even though response rates offline are declining precipitously, spending is still growing at a vast rate. And although it seems counter-intuitive, it should. As long as marketers are getting positive ROI they should continue to spend unlimited amounts of money on it because it is measurable. Marketers will eventually drive down the conversion rate to a low whereby people break even, but from the figures it seems we are not there yet.

Interestingly, in the search world, conversion rates are headed upwards because there is a natural protection against glut - the consumer determines the inventory. Credit card mailers simply send more offers. But in the search world, what the engines have to sell is limited by the number of people searching for credit cards. This keeps the user experience tolerable and because of the improvements in web technologies and people’s increasing propensity to transact online, the conversion rates go up.

Either way, the direct mail financial services dollar figures are a sober reminder about just how far search has to go (read: a lot).

Jim Buckmaster, CEO of Craigslist and star of the Oodle crawler controversary, should take a leaf out of Hilton Hotels book.

They have just announced an expansion to their agreement with Sidestep to provide a direct feed. Travel is a particularly crawler sensitive category because in some cases the providers a paying a per use fee for searching on the GDS (Global Distribution Service).

Sidestep were heralding themselves as the first with permission to crawl the feed but let’s hope Hilton have allowed Kayak and others access too.

By working together, crawling becomes more effective and timely and ultimately Sidestep refers more consumers to Hilton Hotels (where the company wants them).

Michael Arrington, who writes the very good TechCrunch blog, has been thinking about whether content should be centralized or not.

His view, along with 2.0 tree-hugger Jeff Jarvis, is that content wants to be de-centralized.

As far as I can tell, the only reason why it should be de-centralized is that in web 1.0 it was centralized and that web 2.0 is different from web 1.0.

Arguments that one thing will destroy another are usually wrong. I agree with the statement that review content will become more de-centralized but I don’t agree that centralized content sites wont thrive.

The two are not mutually exclusive. Microformats, Structured Blogging or whatever you want to call it might be the Most Improved Player but review sites like Tripadvisor, Amazon and Yelp will always be the MVP.

Even though the blogosphere is growing like a weed less than 5% of people have one. And that growth has come at the expensive of homepage sites like Geocities and Tripod, suggesting that users of those services are switching over to folks like Blogger and Typepad.

Even if blogging extends the number of people who regularly publish online there is still going to be a majority of people who might want to review a DVD or a dry cleaner that have no interest in starting a blog (a hard concept to imagine, no doubt). Even for the majority of bloggers, the importing of a structured blogging format is a more sophisticated version of tagging - a concept that they already don’t get.

No doubt it will get easier. No doubt the counter argument will be that the early adoptors are a sign of what’s to come. But in the end it is very hard to argue against the casual reviewing population being larger than the tech savvy regular reviewing population.

Business 2.0 has an interesting lifestyle piece about the Direct Navigation industry, including a mini-profile of Yun Ye, a Chinese citizen living in Vancouver, whose domain portfolio is now the backbone of Marchex’s Direct Navigation business.

The piece also rustles the bushes to shake out some of the more colorful characters in the industry, whose humble beginnings were made with domains like “ass.com” but now tastefully wear a “$65,000 Rolex on [their] left wrist, a $32,000 diamond bracelet on [their] right”. And others with “shoulder-length blond hair” who live in the “Ritz-Carlton in Naples, Florida”.

The article even has a graphic that shows how regular people, like you and me, can make money with direct navigation in 5 steps. GET RICH QUICK PEOPLE. 5 easy steps! Anyone can do it! What are you waiting for?

Pamela Parker of ClickZ has a very good profile of Root Markets and the lead generation space overall. Pamela reports that Root Markets have acquired Leadfilter.com, a mortgage lead ad network founded by Robert Wilson who also founded Lendingtree. Lewis Ranieri, the (in)famous star of Liar’s Poker, is the lead investor of the firm.

In Seth Goldstein’s (Root Markets’s CEO) coming out post he describes how Ranieri created the mortgage backed securities market. He re-writes history a little with securitization but the points are still nonetheless powerful. Securitization allowed competition in the mortgage market, which before was impossible to enter because of the balance sheet needed and the regulated banking industry. What securitization allowed was the mortgage industry to splinter into specialized parts, splitting the marketing and acquisition from the financing and risk management. And of course, consumers won in the end with lower rates.

I am not sure that lead generation is directly akin to securitization - the analogy is stretched. The price of entry is not high and it is not exactly a hard business to get into (it is a hard business to make money in, don’t get me wrong). There is a danger that it will turn into just-another-ad-network.

But that doesn’t mean Seth will fail. The lead generation industry is borderline black market and there is a huge opportunity to be had in cleaning it up with transparency.

I still have a hard time how this has anything to do with the consumer though, who fills out a form and from there the black magic happens. Even if you clean it up they are still filling out a form where they are contacted by an unknown amount of unknown people. That’s a pretty tough basic premise and why I believe that pay per call is the ultimate natural cleanser for the lead generation industry. We shall see. This is one of the most interesting subset of online advertising industry at the moment.

John Battelle has the very interesting news that Google has formed an acquisition fund to buy early stage companies (by way of a Yahoo MD).

The Yahoo MD, Simon Levene, also frankly stated that: “Folks like Yahoo will be competing with you for deals.”

Good to see refreshingly frank candor.