Moses Kagan's Aurora Borealis

Ecstatic reports today about the NY Times finally dropping Times Select, the paid subscription wall hiding the NY Times Op-Ed content. Paidcontent has the numbers.

And, according to Alleyinsider, Murdoch is going to go in the same direction, trading the subs revenue from 1m online readers for ad sales revenue on an audience of 10-15m.

Everyone will, of course, be writing about how this is a big victory for the Internet, openness, blah blah blah. But what about reports that CPMs are trending down, at least at AOL? What happens when the newspapers, attempting to recoup the lost subs revenue, walk right into a (potentially) declining ad market with more volume to sell?

Not sure I'd like to own NY Times Co. stock right around when earnings reports next come out.

Labels: advertising, internet, newspapers, ny times

Somewhat embarrassingly, I read Grisham's King of Torts over the past few days and I've got a new business idea.

First, some background. The class-action lawsuit game works like this: Someone figures out that a company has done something wrong that effects a large number of people. A lawyer gets involved. He files a suit and begins trying to sign up as clients people who have been effected by the company's misbehaviour. When a settlement is eventually negotiated, the lawyer takes 30% of the settlement due to each of the clients he has signed-up. So, a mistake by a company which results in a settlement of $1,000 per effected customer would result in fees for the lawyer of $1,000 x 30% x number of clients effected. This is a big money game!

As you can see, being a good class-action lawyer is about signing up clients - which is really a marketing problem.

I therefore propose the following business model:
1. Buy a domain like "classactionclaims.com"
2. Hire one or more bloggers to write blogs about 10-20 of the most promising class action cases - these should be set up as sub-domains
3. Promote the network by sourcing links from prominent class-action firms in exchange for write-ups
4. Insert Google adsense
5. Profit as free traffic starts rolling in and clicking on (very high CPC) ads

Labels: adsense, advertising, blog, Google

Zhang Yin, the richest woman in the world, made all her money by turning an astute observation into a business model. She saw goods being shipped to China in paper packages. And she saw the ships coming back to China empty. And she thought, "Why don't we load the used paper back on the ships, bring it back to China, and recycle it to make new packaging?" That was a $3.4b idea for her (personally).

Why do I mention Zhang? Because I believe that there is a resource on the internet every bit as undervalued as the rubbish paper and empty ships that Zhang saw: banner ads.

Right now, anyone can go onto Google, Advetising.com or any of the other advertising networks and purchase the right to show banner ads across the internet. Prices are as low as $0.25 per 1,000 impressions. And, you can target the impressions, so that they are shown on sites with whichever demographic profile you desire.

This is an amazing opportunity!!! You can show your ads 1,000 times for $0.25. Imagine a product selling for $100, with a gross margin of 80%. Each time a product sells, you make $80 in gross profit. So, you would be willing to spend (in the real world), at least $50-75 on advertising. That's 200,000-300,000 ad impressions. Which means that if you convert 0.0003-0.0005% of the impressions into sales, you have a great business.

This has to be one of the best arbitrage opportunities on the internet - and one that you only need some flash skills and a credit card to take advantage of.

Labels: advertising, banner ads, display, internet

Six months after Google's acquisition of Youtube, Mark Simon at SearchInsider decries Google's Shaky Investments, arguing that Google overpaid for Youtube and still lacks a revenue model to support the $1.65b valuation.

Two thoughts:
1. Paying $1.65b for the market leader in a rapidly growing segment of the internet when you're worth $175b is no big deal. In fact, I'd argue it was probably cheap when viewed in the slightly longer term.

2. Google itself did not initially have a revenue model. Rejecting VC pressure to run banner ads, Google waited until the advent of the PPC auction model (by GoTo / Overture) several years later to begin monetizing the enormous traffic volumes it was generating. The Google team are wisely repeating the same strategy: focus on the user experience while waiting for an ad model to emerge that doesn't screw up that experience.

Labels: advertising, Google, Youtube

Just met with Ben Turner-Brown, Sales Director at Pitch, the recently (November 2006) launched, London-based, mobile social network. By advertising on MTV and other youth-oriented TV channels, Pitch has managed to get 40k users to opt in to its service. Pitch allows all of the usual social networking functionality, plus access to a large catalogue of mobile content, including ringtones, wallpapers, etc. Users are monetised via sale of their attention to brands in the form of advertising in various formats. [Note - this theme of the value of attention is one to which I'll return later.]

So far, Pitch is serving 700k impressions per month to the 40k users - meaning 17.5 impressions per user per month. Since Pitch messages all users roughly 3x per week (12x per month) and counts those as impressions, the actual number of 'active impressions' (where the user actually goes to Pitch) is only 5.5 impressions per user per month.

The questions, as always, comes down to how many of those 40k users are generating 'active impressions' - and how valuable those active users are to brands.

Still, it's a great start, one that bodes well for the mobile content space.

Labels: advertising, content, mobile, social-networking

Just read this article about Yahoo launching a mobile advertising network: http://www.nytimes.com/2007/03/27/technology/27mobile.html

Call me skeptical, but I’m not a buyer of Yahoo traffic for the direct-to-consumer mobile video service we've set up for a client.

The quality of the traffic we’ve seen from every mobile advertising platform we’ve trialled in the UK, with the exception of Google search, has been awful. Over the last three months, we’ve run banner ad campaigns across several of the more established mobile advertising networks. The conversion rate on the traffic has been around 0%, with the basket size coming in at around 0 items.

For now, the strategy is: bid up those Google keywords.

Labels: advertising, Google, mobile, Yahoo