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Yahoo Outlines Why It's Worth More Than MSFT Is Paying

By - March 18, 2008

When I saw Sue and Jerry at the IAB last month, I wanted them to declare a plan – show us why Yahoo deserves to be independent, yell it to the rafters, get us excited again. After all, there’s an awful lot to crow about at Yahoo. But they didn’t. Now, the company has declared its plan, to Wall St. at least.

The plan, which the company claims pre-dates the Microsoft offer, details how the company will grow over the next three years. Presumably, it also shows how the company will grow into a stock price that is higher than Microsoft’s offer. Here is a link to that plan.

Yahoo Plan

From the release:

Yahoo! Inc. (NASDAQ:YHOO – News) today filed an investor presentation that details the Company’s three-year financial plan and strategic initiatives which are expected to roughly double operating cash flow over the next three years from $1.9 billion to $3.7 billion and generate $8.8 billion in revenue excluding traffic acquisition costs (revenue ex-TAC) in 2010.

The financial plan was first presented to Yahoo!’s board of directors in December 2007, before the Company received the unsolicited acquisition proposal by Microsoft Corporation.

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The Great Firewall, Again

By - March 17, 2008

This issue is not going away, and the Olympics will only heighten it…from ars:

China has joined the ranks of countries that have instituted either temporary or permanent blocks on YouTube. The decision came as clips of the recent riots in Tibet—a “sensitive” topic in China—have made their way onto the popular video sharing site. As usual, the Chinese government has remained mum on the move to block content from the eyes of Internet users, so it’s unclear whether this block will remain in effect for the long term or if it’s merely a short-term solution.

YouTube isn’t the only site that has reportedly been added to China’s Great Firewall since the Tibetan riots started last week. Popular news sites reporting on the riots—such as CNN, The Guardian, the BBC, Google News, and Yahoo!—have allegedly had all or parts of their sites blocked. Some Chinese readers have reported that only specific articles have been blocked, including ones that contain keywords about Tibet, riots, or the Dalai Lama.

What's This Fascination with Ad Networks? (Or, the Online Media Business Will Be About Brands First, Technology Second)

By - March 16, 2008

Rc ColaBack a year ago, I wrote a three part series on the future of the media business. It began as an attempt to think out loud about a topic with which I had become obsessed, and it ended up becoming a manifesto of sorts about conversational media and marketing.

As you may recall, I started that last set of posts with the observation that major media companies – Time Warner, NewsCorp, CBS – had all fired or parted ways with the long time managers of their digital assets, opting instead for insiders or traditional media folks with whom they were more comfortable. Out were pioneers like Larry Kramer, Jon Miller, and Ross Levinsohn. In were people with whom the bosses were more comfortable – folks who, in the main, came from television advertising sales backgrounds, the very medium that built those selfsame major media companies. Not surprising – in fact, it kind of made sense. After all, brand marketers were starting to talk about moving serious dollars to the web (following their customers, who had already moved). Best to have folks in charge who have great relationships with brand advertisers, right?

Well, a sequel of sorts is brewing. And this time, the main characters aren’t the major media conglomerates, they’re the majors of the online world (minus Google – more on that in a second). They are the RC Colas, the Tabs, and the Pepsis to Google’s mighty Coke: AOL, Microsoft/MSN, and Yahoo.

And once again, the folks who are leaving or getting the ax are the folks who either built or saved those companies over the past ten years.

The much respected Wenda Millard Harris left (or was pushed out of) Yahoo last year. This was a head scratcher of sorts, because she was much beloved in the world of brand marketers. (And we all know what happened to Wenda’s boss Terry Semel late last year: the Hollywood brand genius, hailed as the savior of Yahoo just two years ago, was pushed out year later for failing to chart the right course for the newly floundering behemoth.)

And just last week over at AOL, the person charged with building the company’s entire “Platform A” strategy – Curt Viebranz – was either shown the door, or ran for it. Curt is a strong brand guy – he worked at HBO, for goodness sake.

Finally, Joanne Bradford left MSN last week – again, she was an executive who operated at the highest level of trust with major agencies and brand clients.

That’s all three people in charge of revenue at all three Google-chasers, all leaving within a span of half a year.



Huh.



Now, why are folks in charge of advertising sales shown the door? For not delivering sales, of course. But not all these folks were fired. In fact, I’m guessing that most of them left after losing a very clearly delineated strategic battle over one very simple question:

How do we truly create value in the media business?

Do we sell inventory to the highest bidder via algorithms, automated processes, and platforms? Or do partner with marketers and creators of media to build brands – both media brands, and consumer marketing brands?

I know how the folks who no longer work at AOL, Yahoo, or MSN feel about this question. They’re all brand people. And it’s entirely clear how the Google-chasers have answered that question: They’ve collectively spent billions of dollars amassing “access to inventory” and “ad platforms” in single-minded competition with Google.

It seems the future, according to AOL, Yahoo, and Microsoft, is in ad networks.

It has to be, right? After all, after buying a ton of ad networks, isn’t AOL betting its future on “Platform A” – a one stop solution for all your advertising needs? And, after buying a ton of ad networks, isn’t Yahoo betting its future on “Apex” – a place where, in Sue Decker’s words, “ad operations is sexy” and Yahoo can “eliminate all the friction and complexity that advertisers, publishers, agencies, and exchanges deal with so they can focus on reaching the right audiences and driving greater monetization“? And, after buying a ton of ad networks, isn’t Microsoft betting its future on weaving a platform out of aQuantive, AdECN, Rapt, and Yahoo itself? (Not to mention all the chess moves blocking Google out with non-economic deals on Facebook, Viacom, and others – a practice has Yahoo engaged in as well.)

The reason for all these moves, of course, is that Google already had the biggest ad platform of them all – Adsense – and last year, it won Doubleclick to boot. Google is building the biggest, baddest, most futuristic network of them all.

And every single one of their competitors – AOL, Microsoft, and Yahoo – are chasing Google’s tail.

Straight down a rat hole. (A direct response rathole, I might add – the majority of dollars on the web are still in DR).

Because while it makes perfect sense for a company like Google to build out a killer ad platform, it makes a lot less sense for companies like AOL, MSN, or Yahoo to do so. The reason is simple: AOL, MSN, and Yahoo are in essence media-driven companies. Google is driven by scale and technology. Brands are about media. Ad networks are about scale and technology.

I see the logic in why AOL, MSN and Yahoo are chasing the ad network dream. They have a ton of inventory. Most of it is making money at very low CPMs – as low as 50 cents on average. If they can drive that CPM to 75 cents through an ad network strategy, their margins go way up, and they all come out looking like heroes.

But then what?

The future of marketing isn’t going to be built by ad networks, exchanges, or platforms. These scaled technologies are not going to address most pressing issues that marketers now face online. In fact, ad networks have become the problem. Not because they don’t have a place, or don’t add value- they most certainly do. No, ad networks are the problem for one simple reason: the very companies who just two years ago were best positioned to help major brands move online have turned away from the principles dearest to brand marketing, and instead convinced themselves that if they only build the coolest platform with tons of inventory, scaled pools of market liquidity, and the best algorithms to sew it all together, they too can achieve what Google has done: win in the marketplace.

But they’re wrong.

While technology and ad platforms are essential components of digital marketing’s future, they fail to address the core needs of brand marketers: engagement. And they fail to address the core needs of digital publishers: the support of marketers that allow them to make a decent living. And while Google is amazing, Google isn’t a brand marketing-driven company. It’s revolutionized direct response, to be sure. It’s the most efficient harvester of brand equity in the world, but it’s not built to create that equity. It has pulled the curtain back on many of the foibles and follies of brand marketing. But until someone writes an algorithm for human conversation, Google will not lead the way toward the next step in marketing brands online.

Let me elaborate. I’ve spent the past three years in a very deep conversation with two types of media players. First, the creators of a new kind of media property. I call this kind of property “conversational media” but you may as well just call it a “publication” – sites on the web that, at their core, are about passionate audiences engaged in the creation and consumption of media that feeds them in some way. Properties that are, in essence, brands. Brands like Dooce, Boing Boing, Protrade, Watercooler, Ask A Ninja, Left Lane News. I am drawn to these brands – I believe they represent the best the Web has to offer. Everywhere you look, new ones are popping up, driven by entrepreneurial creators who, sure, would like to make a buck, but in the end, couldn’t really see themselves doing anything else but make media.

I love these folks.

The other type of media player with whom I have been in deep conversation is the brand marketer. From GM to Procter, Intel to Sears, Ogilvy to Carat, McCann to Media Kitchen, I have spent countless hours in extremely engaging conversations with the people who are charged with creating, nurturing, building, and curating consumer brands. And you know what? I love these folks too. These are the folks who truly believe in media. These are the folks who helped us build the magazine industry, the television industry, and the first version of the online industry.

And I have to tell you, neither the publishers nor the brand marketers believe that a magical ad platform will somehow address their needs online. Sure, brand marketers will spend 5-15% of their budget on lower-CPM “pray and spray” DR and awareness campaigns. And sure, publishers are happy – thrilled! – to see algorithms drive up their backfill or remnant inventory CPMs. But none of them believe that ad networks provide the same kind of engagement and brand building opportunities that a simple two-page spread or 30-second spot does in the offline world.

So what *are* their needs? To address that, we need to step back, and think about media brands and marketing brands, and why there’s such a symbiotic relationship between the two. Clearly, brands have built what I’ve called “packaged goods media.” And in the past few years, I’ve come to the same conclusion about online media. In short, I think brands will also build the next batch of great online media companies. And up until recently, I thought Yahoo, AOL, and MSN were best positioned to be those companies. Now, I’m not so sure.

And as much as I’d like to keep going, that will have to come in the second post in this series (and that may be a few days, as I am traveling, again, for at least half of this week). This post is already 1500 words long, and I’m as tired as you all are, I am sure. So thanks for listening, and let me know what you think so far in the comments….

Web 2 Expo Early Reg Discount

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Web 2 Expo

Hey gang, if you plan on being at the Web 2 Expo in SF next month, best sign up asap. My partners reminded me over the weekend that the early registration discount expires at the end of the week. Head here to get the discount. The Expo is a big event, last year there were around 10,000 folks and tons of exhibitors. I interviewed Eric Schmidt onstage, and this year I’m going to be doing the same with Marc Andreessen. Should be fun! More on keynotes and schedules….

Right On, House Dems

By - March 15, 2008

Immunity for the telcos is taken off the table, for now. It’s my guess that the backwards immunity for telcos pushed for by the Bush Administration is far less about protecting the telcos, and far more about making sure that court cases don’t end up revealing the really dark shit that our goverment has been doing.

AOL Acquires Bebo

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Anyone else sense, that given two major senior execs in charge of ad strategy have left (and they just “cleaned house” there), that this was not an, er, unanimous decision around AOL Land?

Hulu Is Up

By - March 12, 2008

Hulu-1

One of my favorite parts of Hulu is that it’s halfway to the video grammar in which I hope our culture gets to participate. What do I mean by that? Well, imagine the ability to take bits and pieces of video content and mash it up to create new stuff. How cool would that be?

It starts with the ability to share discrete portions of content. With Hulu, we can do that. Check out this bit of The Office. I selected the scene at pretty much random, but it shows how discrete units can be shared:

This is a big step.

Open to A Deal

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It’s all happening! Just, a bit late. From my predictions:

1. (a) If Microsoft does not buy AOL, Yahoo will, and failing that, AOL will go public, but the IPO will receive a lukewarm review.