I’ve come to know Dick Costolo, COO at Twitter, pretty well in the past year, though I’ve known him for much longer. FM and his previous company, Feedburner, had a deal in the early days of RSS, and I’ve always liked his point of view on our industry. Feedburner was acquired by Google, and Dick spent a short year or so there before moving on to Twitter.
Since he joined, Twitter has rolled out a ton of new features, (mostly) fixed its platform stability issues, launched a beta trial of its advertising platform (Promoted Tweets), and managed to grow a few orders of magnitude to over 100 million uniques.
I interviewed Dick at Twitter’s Chirp conference last month, and I look forward to doing it again at the CM Summit week after next. What would you like to hear from him? Leave me your thoughts in the comments, thanks!
Five years and about two months ago, I wrote a blog post announcing the creation of Federated Media Publishing. I will admit I was scratching an itch, not certain that it would work out. In that post I hedged a my bet – mainly because I was still smarting from the loss of my previous business – The Industry Standard – and I was not certain that I (or the world) was really ready for me to run a company again.
In short, I said that if the company succeeded, I might not stick around – after all, The Standard succeeded, and I stuck around, and that didn’t quite work out…well you can see where the psychology is going. This time, I remember telling myself, I’ll pull a Costanza and go out when I’m still ahead.
Well, that didn’t happen.
So as to not bury the lead too deeply, today marks my five-year anniversary as an employee of Federated Media Publishing, Inc. Apparently it was five years ago today that I signed some legal paperwork that officially made me an employee. At the time, I owned 100% of FM’s voting shares, and to this day, I am still the largest shareholder. That was a very intentional move on my part, and one that has served me – and I daresay FM – very well over the past five years.
By the Fall of 2005 I had assembled a team, an extraordinary group, some of whom are still with us, some of whom, after four years or so, have moved on. To my mind that is also a great accomplishment – the original team stayed for a very long time, at least in the life of a startup, and together we built a company that will endure. I’m proud of that, and of them, and of where we are today. Indulge me some pride, but the story of FM isn’t often told, and while I won’t take much more of your time here telling it, it’s certainly worth hearing should you be interested. (I’m happy to stretch this into a few hours, but the bourbon is on you).
I’m particularly proud that the core idea driving FM has not changed – thanks to search and social, media models have shifted, and a new approach was needed that understood the “conversational web.” FM set out to be a media company native to the social web, and five years in, I think we’ve succeeded.
But that’s not to say FM hasn’t changed. A few stats:
- FM had under half a million dollars in revenue in 2005. Five years later, we’re in the high eight figures of revenue. I’d love to brag about our current growth rate, but I think that’d be, well, bragging.
- FM launched with one segment – technology – and about ten blogs. We reached a few million uniques a month, and had roughly 25 million pageviews. Today, FM reaches 36 million uniques in four major segments (tech, business, lifestyle, and the real time web), and that’s just in the US (we’re past 70mm globally). We stopped counting pageviews when they eclipsed a billion. We’re the fourth largest pure play social media company on the web, behind Facebook, Blogger, and Myspace.
- FM has been a pioneer in bringing integrated, scaleable brand marketing to social media, first with blogs (2005), and then Digg (2006), the Facebook platform (2007), live events (Crowdfire 2008), Twitter (2009) and now location services like Foursquare (2010). Our partners, executions and programs have won countless awards, but we’re most proud of the tens of millions of dollars of revenue we’ve driven into the emerging world of independent content and platform creators online.
- The brilliant folks who invested in FM back in 2005 (including the New York Times, Omidyar Network, and various angels) have seen their investment increase twenty-fold, based on the valuation of FM in our last round (I’d argue we’re worth a lot more than that, but let’s stick with what’s on paper for now). Perhaps to their consternation, we have so far refused to sell the company, so they’ll have to be content with looking good on paper for the time being. And since that initial investment, we’ve brought in tens of millions of dollars through some extraordinary partners, and we’ve spent almost none of it. In fact, we’re now on track to add to our cash holdings year over year. I’m quite proud of that feat.
- FM was EBIDTA profitable for 2009, and so far this year, FM has turned a net income, with the best still ahead of us.
- Earlier this year, we established a new division focused on bringing the skills of publishers to marketers across digital platforms. This promises to be a very large and very scaled business. We also invested heavily in our technology platform, and while I won’t give away all that we are working on, it’s a very exciting platform indeed. In short, there’s nothing like it in market. I never thought, five years ago, we’d become a player in technology and data as well as in media, but then again, that’s the beauty of a startup.
- Perhaps most significantly, FM has evolved into a troop of 130 or so dedicated employees, led by an amazing President, who we hired this past Fall. And my work has changed, so much so that I can’t really imagine a better job than the one I have right now. I spend most of my time with partners – either media or platform and publishing, and in between I’m allowed to think a bit out loud, and work on my writing. I haven’t really changed my work hours, but I most certainly have changed what I work on.
And this, to me, is probably my greatest career accomplishment to date. I’ve never worked anywhere for five years – not Wired, where I lasted four years and change, or The Standard, where I almost made it to four. But somehow, as I enter year six at FM, I find myself energized, engaged, and thrilled to be here.
I think it’s because, way back in 2005, I made a promise to myself that I’d leave if I ever felt that I was in the way, or if I was consistently unhappy in my work.
I’ll admit, I’ve flirted with both of those demons over the past few years. And who knows, I may well again. But right now, sitting in a hotel lobby writing to you as I prepare for four meetings with clients in Atlanta, I just feel lucky.
Thanks, everyone – to our publishing partners, our clients, our investors and our employees, as well as all of you, who’ve read my thoughts here and cheered me on, criticized me, or both. I hope to make you all proud in the next five years of this journey.
The CM Summit is now just two weeks away, and already I’ve asked for your input on five major voices in digital media and marketing: Arianna Huffington, Tony Hsieh, Tim Armstrong, Omar Hamoui, and Arthur Sulzberger, Jr.Next up is Hilary Schneider, EVP Americas, Yahoo! Hilary is a crucial member of CEO Carol Bartz’s team, running Yahoo’s largest and most public business in the US, among others.
Yahoo has not had an easy time of it these past few years, and Hilary has been there for the whole of the ride, including the frenetic, off again on again negotiations over possible acquisition by Microsoft, the subsequent search deal, the shift from Semel to Yang to Bartz, and more. Yahoo has recently declared its position as “the world’s largest media company” and seems intent, with acquisitions like Associated Content, on pushing even deeper into that world. So what’s up with Yahoo, and where might it be headed? I’d love your input. Here are a few questions I plan to ask, please add your own in comments: - Why Associated Content, and why now? How will Yahoo differentiate from Demand (CRO Joanne Bradford will be at the conference) and AOL (CEO Tim Armstrong will be as well)? - Overall, how has Yahoo’s content strategy shifted from your first year there (2006)? - How is the Microsoft search deal going? What’s different now, what is the same? - What do you make of Facebook’s recent moves (Open Graph, etc) and how deeply will Yahoo be integrating these services? - You recently cut a big deal with Nokia. Why? What’s coming from that? Does Yahoo have a mobile strategy per se? - What can marketers get from Yahoo that sets it apart, besides massive scale? There are certainly more things to ask about. But I’ll ask you guys to help me with that. What do you want to hear from Hilary?
Yahoo has not had an easy time of it these past few years, and Hilary has been there for the whole of the ride, including the frenetic, off again on again negotiations over possible acquisition by Microsoft, the subsequent search deal, the shift from Semel to Yang to Bartz, and more.
Yahoo has recently declared its position as “the world’s largest media company” and seems intent, with acquisitions like Associated Content, on pushing even deeper into that world. So what’s up with Yahoo, and where might it be headed? I’d love your input. Here are a few questions I plan to ask, please add your own in comments:
- Why Associated Content, and why now? How will Yahoo differentiate from Demand (CRO Joanne Bradford will be at the conference) and AOL (CEO Tim Armstrong will be as well)?
- Overall, how has Yahoo’s content strategy shifted from your first year there (2006)?
- How is the Microsoft search deal going? What’s different now, what is the same?
- What do you make of Facebook’s recent moves (Open Graph, etc) and how deeply will Yahoo be integrating these services?
- You recently cut a big deal with Nokia. Why? What’s coming from that? Does Yahoo have a mobile strategy per se?
- What can marketers get from Yahoo that sets it apart, besides massive scale?
There are certainly more things to ask about. But I’ll ask you guys to help me with that. What do you want to hear from Hilary?
Google today announced that it gives publishers 68% of its take for AdSense advertisements, eliminating one of the longest guessing games in our industry. Everyone knew that AOL, Ask, and other large partners pre-negotiated their deals, but no one knew what “typical” AdSense players made. Now we do, apparently.
This 68% split is relatively new. How do I know that? Well, as recently as two years ago, sources I know to be extremely reliable were actively negotiating with Google to get a 65% cut – less than what was announced today. So….you do the math.
Also, what many don’t realize is that Google takes a 15% “serving” fee off the top, before splitting revenues with publishers. So if you do the math, 68% of 85% is really 57.8% – not nearly as generous as first it seemed.
UPDATE: Google disputes this, sending me this note: “For online publishers, the 68% revenue share is not new – it’s been that figure for all online publishers since AdSense for content was launched in 2003.
And there is no 15% serving, or any other, fee for those online publishers. “
I’m quite certain there was such a fee. I’ll look into this after a day of meetings.
Update: The 15% fee, also known as a “AFC Deduction”, was commonly used (and still is as far as I know) for negotiated contracts with larger publishers. Google maintains it was never used for those who signed up directly on the Google website.
Early last week I wrote a long-ish piece on the iAd – in which I both criticized and praised Apple for “re-gifting” a mobile ad format that already existed. Since then I’ve spoke with Apple’s head of corporate communications, as well as several other potential clients and agencies. I didn’t learn a lot from Apple, but I did get some context for this next installment.
Apple’s genius has always been in seeing the value of something that already exists, and taking that value to a new level (the Mac, after all, was inspired by Xerox’s work. And the iPhone? Anyone remember the Treo?).
But while we can be relatively certain that the iAd will be a quality experience, the great unknown remains return on investment: Will buying iAds be worth the price? As I write, marketers are evaluating Apple’s pitch and trying to determine if it’s worth the rather steep initial price of entry. Many have already jumped in. But others are still questioning the investment.
My conclusion? If you’re an ROI driven marketer that craves certainty and are relatively risk averse, stay away. There are more unknowns than knowns in this program, at least for now. We will know a lot more in two weeks, when Apple convenes its developers’ conference, but by then, it’ll be too late to join the launch party.
However, if you’re already a savvy mobile marketer who likes to spend into innovation, or if you have inclinations that lead you to purchase a Superbowl ad, then the iAd is quite possibly tailor made for you.
Here’s what we do know about the iAd:
* Apple is in market selling iAd launch packages for $1mm or more, depending on exclusivity terms. However, several clients I spoke with claim to have gotten into the launch for the “low hundreds of thousands of dollars.”
* Apple will charge one cent per impression (a $10 CPM) and $2 per click. These charges will back into the minimums described above for the launch program.
* The iAd unit is a banner which brings a user into a rich media webview. This is not a new format, but given the iAd is exclusively this format and will be identified to consumers as an iAd, it does claim the high ground.
* At launch, Apple will execute all creative, with client oversight and approval. This will change over time.
Assuming a 1% clickthrough rate (which is a reasonable expectation, given the iAd’s relative novelty and industry standards which can range as high as 2%), the iAd will drive a “cost per engagement” of $3 – two bucks for the click, and one buck for the 100 impressions, one of which drives that click. That’s a $50 CPM, comparable to what high end premium publishers charge on the web or in television.
So is that engagement worth $3? Depends on what you do with it, of course. Compared to search, where cost per clicks range from five cents to $25 or more, it’s all relative to what you are trying to accomplish with the attention you’ve just paid to capture. Of course, with search, the market is mature and lead conversion is a science. A search click can convert directly to a sale, and often does. So is an iAd worth the same?
We’ll get to that. But first…let’s talk about what we don’tknow about the iAd.
Here’s that list:
* The exact data Apple is using to target. Sources tell me Apple has told them many things about which iTunes store data is used in its “targeted special sauce,” but the consensus is that Apple is using the list of apps a person has downloaded to create cohorts – IE, folks who download business applications, or lifestyle (Food, Shelter, Health and Beauty, etc.).
* What inventory will be available, and on what terms. I’ve heard conflicting stories about whether iAds will be directed (IE you can select which app your ad runs on) or if it will be a blind network (where you can’t). The consensus is that it will not be directed, at least not at launch. This is a very key point, given the next unknown:
* What publishers will be in the iAd network. Are they the same ones that currently run Quattro ads (Apple bought Quattro, for those just catching up.) This is a crucial question for app makers, especially premium publishers like the NYT or Conde Nast, who plan to sell their own app inventory directly. If Apple’s targeting gets too close to promising marketers that their ads can run on premium publishers’ sites (for example, if the “food” cohort insures that an advertiser runs on Conde Nast’s Epicurious app), then publishers like Conde Nast will most likely pull all their inventory from iAd. Which begs the next question:
* Will Apple have enough (of the right kind of) inventory. And what is the makeup of that inventory? Can that inventory satisfy marketers’ targeting needs? With a $3 CPE, savvy marketers are going to want very specific inventory. If I’m a consumer packaged goods giant trying to create brand preference for a particular brand of detergent, I’m probably going to want my message in front of women of a certain age and certain household income, ideally women who can be tagged as the “CHO” – Chief Household Officer. If I’m marketing a movie aimed at kids, I’ll want kids and their parents who match the movie’s ideal audience. Will Apple be able to offer enough inventory that delivers ROI on these audience cohorts?
* What is the right creative given the constraints of mobile devices? While Jobs showed some pretty cool executions, the truth is that those executions are still unproven (even though they’ve been available well before Apple gift wrapped them.) There’s still a lot to learn about what works, and in what context.
* How long exclusivity will last. Apple is selling iAds as category exclusive for a short period of time, but the company seems willing to let some marketers buy longer exclusivity based on investment levels. However, my sources seem to find a consensus around a period of six weeks to two months. By early Fall, I’m told, all bets are off for exclusive deals. Which begs the question – if you can buy iAds in the Fall, why get into large commitments up front?
* Will the FTC train its sights on Apple? While the buzz is about the government’s decision to approve the Google/AdMob deal, Apple may well gain the FTC’s attention should the company slip up on privacy (see above) or make moves that effectively (or directly) eliminate third party advertising networks on Apple devices. Hence:
* Will Apple eliminate third party advertising networks on its devices? I’ve heard all manner of thinking on this issue. It’d be very Apple-like to entirely control the advertising ecosystem on i-devices – much as Comcast does on its networks, or Conde Nast does in its magazines, for instance. But as I’ve argued elsewhere, that’s not very “web-like” – and it raises questions of whether or not Apple has a responsibility, with its own devices, to allow third party ecosystems to thrive (as they currently do). Were Apple to cut off third parties, Apple would be entirely responsible for driving advertising revenue to its app developers. Should it fail to do so, it could really screw the pooch. Not to mention that the lack of third party ad networks like AdMob would limit marketers’ choice and retard innovation.
Recent policy changes from Apple have raised strong speculation that the company plans to kick third parties out. Apple has not responded to my questions on this topic, though I do expect it will address this issue at its developers conference. My own take: I don’t believe Apple will do this, but then again, it’s not out of the realm of the possible. I am certain of one thing: If Jobs had his way, all the other networks would already be gone. Jobs may well use the privacy argument to accomplish that goal – “We’re not sending your data to third party networks so as to protect you.” In the current environment, such an argument could well fly.
Now, to the punchline: Is the iAd worth it, given all we do and do not know about it?
If you’re comparing apples to apples, I’d have to say the answer is no. (We’ll get to the apples to Apple comparison in a minute).
Remember, my estimated CPE is $3 for an iAd. The fact is, you can get a click which drives to an identical rich media engagement on a network like AdMob or Greystripe for up to five times less cost, on average (these figures have been provided to me by those companies). In other words, it’s a lot cheaper to experiment in other ad networks, and they won’t ask for a six- to seven-figure minimum commitment to do so.
On the other hand, $3 is, as one agency chief told me, “an entirely reasonable price to pay” for a quality engagement with the right audience. “We pay similar CPMs on television, and don’t get any engagement,” this person argued. If iAds is truly a premium environment, with premium audience and premium creative that drives premium engagement (and therefore, creates brand preference and/or conversion), the price is entirely reasonable. That’s the apples to Apple comparison – you can spend a lot less, but you’re not going to get the Apple magic.
To me, the question comes down to the long list of unknowns when it comes to that magic. So far, marketers don’t know much, if anything, about the targeting, inventory, or creative that will pay off those premiums. That’s an awful lot of unknowns to be writing seven figure checks against.
My recommendation? If you’re already a confident mobile marketer who is familiar with rich media creative and have a strong sense of the inventory you want, and a strong guarantee from Apple you’re going to get it, jumping into the iAd pool right now most likely makes sense. If you’re not in that camp, I’d wait till the Fall, and start experimenting now on other networks, while they can still offer you strong reach into Apple devices. One never knows how long that might last.
I love Fred’s thoughts on being an entrepreneur – he backs some of the best. I don’t write often here about my own experiences, but I can tell you, I certainly will, once the dust settles and I am not actively running a company. Upon reflection, I realize I’ve been doing this a long time. In fact, I’ve been starting companies since 1987, though my first real startup as a founder was in 1992. (That was Wired).
In today’s post, Fred writes:
If I look back over 20+ years of entrepreneurs I’ve backed, the ones who were anxious and afraid of failure most certainly had worse outcomes than the ones who were agressive and confident. You simply can’t be tentative in a startup. You have to go for it at every chance you get.
And if the leader of the organization is anxious, his or her fear pervades the organization. Everything comes from the top in a company. So it is best to have to have a leader who exudes confidence….So if you are starting a company or building one, face your fears and move past them. It’s critically important to your company.
I agree – in the day time, at work, in front of your staff, your investors, and your partners – you must exude confidence. They are looking at you as True North – and your company is the ship sailing by that particular bearing.
But what Fred doesn’t reference – though I know he is well aware of it – is what happens in the dead of night – at least for just about every successful entrepreneur I know. As dark gathers and you attempt to put the work away to steal a few hours of sleep, you are inevitably visited by questioning spectres – waking apparitions of failure dancing in the shadows of your doubt, dodging your attempts to force them into the light of reason. For more nights than I (or my wife) care to count, I’ve entertained and processed a thousand failure-filled scenarios, each frolicking endlessly in my mind, each disappearing as quickly as they came, unless captured, quickly and with mixed results, in scribbled notes on index cards, or, if I truly capitulate, in the gloaming of my newly awakened computer monitor.
It’s enough to make you mad. But then again, this particular madness is embraced, again and again, by a certain breed, and folks like Fred keep giving us money to embrace it. Were I more devious, I’d call Fred a pusher of sorts, a dealer in madness and joy. In fact, I’m quite certain that’s what he is.
I’ve been starting companies for a solid 18 years now, and for at least half of those years, I’ve been visited by these spirits nearly every single night.
May they never yield.
If you’re coming to the CM Summit in a few weeks, or if you’re just curious about the lineup and content (which is sure to drive quite a conversation in the world of marketing), you should download the CM Summit mobile app. The app provides access to speaker, attendee, agenda, and sponsor information as well as twitter and news feeds. I’ve used it in beta and it’s pretty darn slick. Check it out! (Cross posted from FM blog).
Google has fired a broadside across Apple’s bow by announcing the Google Chrome Web Store, a great idea which, to my mind, has a mediocre name – one consistent with Google’s ongoing struggles with branding in general. If I’m a typical consumer, I might be a bit confused by a name that 1. has “chrome” in it 2. has the word “store” but sells only apps and 3. has the word web in it – does that mean I can buy things on the web through it? Given Google’s lackluster performance with Checkout and its recent closure of its Nexus One store, I’m guessing the store might get a brand makeover before it launches later this year.
Nevertheless, I’m guessing Google called it a “Web” store to highlight the difference between the web as a platform for applications, compared to the term
“App,” which is almost universally intertwingled with Apple’s brand.
But the concept is quite clever – Google is reminding us all that “apps” can and should run on the open web, and not just in closed, vertically integrated and controlled environments like the iPhone/Pad/Touch.
I for one hope that this new app store will flourish. Game on.
As I do every three Signals or so, here are the links for you RSS readers out there. And for all you readers trying to decipher what I’m on about, there are hints all over these roundups. Not that you’re paying attention that closely, but still, the threads are there.