Monday, December 11, 2006

Monetizing Data - The Race for Free

Listening to Eric Schmidt, Google’s CEO talking to John Battelle at the Web 2.0 conference, I was struck by his confidence in Google’s ability to *monetize everything*.

It’s not like Google doesn’t have great credibility in the monetization space. Google’s revenues are approaching $10 billion because they figured out how to monetize internet search.

In fact, it’s possible that all Schmidt is talking about is extending the monetization of search. Here’s my hypothesis:

  • Potentially all data stored on the internet represents some value to somebody…this is the Longtail – stretching from ‘hits’ to the world’s most obscure niches
  • The more data there is, the more difficult it is to find specific data
  • The more difficult it is to find, the more important search advertising becomes to increase search visibility
  • The more important that search advertising becomes, the more marketers are prepared to pay for it
  • The more marketers are prepared to pay it, the richer search marketing networks become
  • The richer search advertising networks become the greater the competition to be a search advertising network
  • The way to win the search advertising network wars is to become the pre-eminent portal to the internet – the user desktop
  • The way to become the user-desktop – sorry Microsoft - is to become the provider – for free – of everything a user needs – from applications like spreadsheets and word processing to hardware and maybe even the networks that users access.

Schmidt asks Battelle an interesting question – “why shouldn’t your cell phone be free?”. It’s interesting, because if the cell phone is free, how is Schmidt assuming that cell phone makers will survive?

My hypothesis, is this: he’s assuming pretty much what already happens today but with a twist. Today phone makers are subsidized by the network providers who in turn are subsidized by network users. In the future, I believe he’s suggesting that phone makers can be subsidized by network providers who are subsidized by network ADVERTISERS – organizations interested in increasing their network visibility through advertising. So, here's a question: if this is true could all network access devices including computers ultimately be free?

Schmidt made another interesting comment when asked why Google purchased YouTube. His answer was simple – “we noticed a sudden breakout in user-generated video and determined that video had become a fundamental data type”….and monetizing fundamental data is exactly what Google is all about.

So what is fundamental data? E-mail? Conversations? Software? Movie listings? Pictures?

I’m thinking yes, yes, yes, yes and way more. If it’s bit and bytable – it’s data – and from Google’s perspective it can be monetized through advertisers.

So what does this mean for – say – software companies or other businesses?

I don’t know. Perhaps Schmidt provides some clues…

Although he’s confident and high on Google’s potential, he’s clear they need to build better partnerships. I’m pretty certain that’s going to make sense for everyone. It will be difficult to be an ‘island’ and still be fundamental. Partnerships extend networks, build larger communities and ultimately increase search visibility.

Schmidt and Battelle also reference the power of Google’s immense and growing user database. Databases make filtering more effective and more efficient. Having good databases will be good thing. They will be valuable. So, I can see software and other companies creating and taking much more advantage – in their product, in their advertising, and in their partnering – of well thought out and carefully mined internal databases.

Finally, I can see a race for free. OK, maybe not free, but with value being created from other sources - data, partnerships and…even on-site advertising revenue – I can see makers of certain products adapting their business models to attract network traffic and visibility, not just product sales. I can see product pricing declining as this happens and as an increasing number of applications become readily accessible to all users, not just geeky open-source users.

What’s intriguing about what Google’s doing is the breadth of it’s target market. Companies like Microsoft make by far the majority of their revenue from large enterprises. They’re the ones who can afford the large ticket prices. By making advertising affordable even to individuals, and reliable networked applications available for nothing – large organizations maybe the last ones to adopt the Google model. But by entrenching so firmly on individual and SMB desktops, its possible that ultimately even large organizations will find themselves ensnared in Google’s ‘net’.

Friday, December 8, 2006

Christmas Letter

A friend who's a serious, big-company CFO, just sent along his version of the x-mas letter. It's more like an 'anti'-Xmas letter. Some exerpts:

"Last year we chose not to do a x-mas 'brag' letter as frankly the year was a bit weak by our standards; however, this year we're feeling much better about ourselves.

Now a brief update on our 'genetic program' and the progress towards world domination...

Jordy (12) has now begun to specialize in specific sports and is focused on playing hockey, school volleyball, club volleyball, school basketball, club basketball...and soccer.

Alex (10) made the Atom A team and is clearly on his way to the NHL. He played some other sports this year but we don't care about them anymore now that we are on our way to the NHL.

Mac (6) has learned that when we go to shake hands with the other team we 'touch' gloves; we do not punch everyone on the other team.

Mac had his tonsils out this spring and still can't sing.

Pam and I spend our weekends touring local sports facilities when we're not quilting, antiquing or just sitting holding hands.

The rental property we own has given us the opportunity to meet an element of society we would would otherwise not interact with. I have taken the opportunity to write them fulfilling letters about such subjects as: paying the rent, not using small caliber hand-guns to shoot my shed, not threaten the neighbours, how to store your garbage and the joys of quiter sex.

Have a great holiday and new year!"

Thursday, November 23, 2006

Appreciating Tech in Waterloo

I appreciated getting invited to Deloitte's Tech Appreciation dinner last night at 20 King in Kitchener/Waterloo. Waterloo is the home of RIM, Open Text and Bill Gates favourite university - the University of Waterloo. UW has an awesome reputation for maths and computer science. Deloitte are the accounting rock stars of the Waterloo tech space having figured how to stay close to entrepreneurial techies moving out of the unviversity - and how to keep young companies alive through SR&ED tax credits.

The Waterloo tech crowd is - a typical tech crowd - bright and interesting. I was fortunate enough to sit beside an ex-client and good friend Flavio Gomes of Logisense Corporation. Flav is turning Logisense into a serious player in the IP billing space.

Hot off Pubcon last week, I was pretty clear that if there's a threat to the internet as we know it - it's from Google's overwhelming dominance.

Flav disagrees and his perspective makes a lot of sense - the real, and serious threat is from the carriers, and the ISP's - the guys who've layed the road, own the road and control the toll booths - and have stood by to watch Google and others create billions of dollars of value while the highway business has been turned into a commodity. From Flav's perspective the road owners and the tool booth guys aren't going to stand around forever - they're going to claim their share of the action. The technology exists to do it - including categorizing all the different types of traffic, and charging a fee for each. If he's right - and the logic seems compelling - the wild west days of the current internet business boom could be in serious jeopardy - or not, providing you're in the business of helping collect tolls, like Logisense is.

Other interesting conversation was with Tobi Jenkins - banker, VC and wife of Open Text CEO Tom Jenkins. Tobi has gone into property development - setting up a cool spot called TechTown near UW's incubator center. Tech town is high tech offices, day care, banking and a state of the art health club all in one spot. A consumate business person and marketer, Tobi had brochures at hand for anyone and everyone. If I heard her correctly, TechTown is scheduled to open in May 2007. Get your runners ready.

All in all an outstanding evening put on by the Deloitte group in Waterloo for their technology clients.

Tuesday, November 21, 2006

Checking out LinkedIn

LinkedIn, the business oriented social networking site is up to 7 million users and is even making money. My question is what's it doing for me?

Like a lot of people on the site I signed up based on someone's invitation. From there I did nothing. Actually, less than nothing - I'm pretty sure I managed inadvertently to create multiple identities by responding incorrectly to invitations and I know there's people I invited who said yes but don't show up on my contacts list. Not sure how I lost them. I'm just afraid if I go looking hard enough I'll find another me with another list. That would make me a LinkedIn bozo - not a category I've seen on the site.

So what's LinkedIn's value? Most people I know are like me. They just know they belong. LinkedIn's greatest value seems to be in recruiting. Recruiters and managers doing recruiting seem to have the best stories about the value of LinkedIn - which suggests that there are some happy recruitees out there too.

LinkedIn is also a decent way to stay touch. Try updating your profile. When you do, a communication goes to your contact list letting them know about the update. Don't lie. They will know. And you will get emails from long lost contacts getting back in touch to tell you that it was a crappy job anyways and you're better off unemployed and on the street. They're lying.

LinkedIn and social networking in general is evolving. There are more tools and services that have and will be introduced to enhance the site's functionality. In the meantime, check this out - it's one of my identities. If you check out Google here you'll see there's likely another?

Wynn some, lose some

Wynn Casino Las Vegas Last week, Wynn resorts announced a $6/share dividend, netting Steve Wynn $145 million. Just enough to help him forget the $139 million he lost putting his elbow through a famous Picasso the week before.

The Internet Advantage - Intent vs Content

Thanks to Google, 'search' has fundamentally changed how products and services are marketed and purchase decisions are made.

In his keynote address at WebMasterWorld last week, John Battelle, Chairman of Federated Media articulated simply what many of us have been struggling for years to get across.

What Battelle nailed is that traditional marketing is all about content - putting your product or service in front of your target audience and hoping that their next purchase decision will be influenced by your message. Advertising on Oprah is expensive, but it works to some degree.

What makes search marketing so powerful, and why more corporations need to pay more attention to their internet positioning is that search influences the buyer at the point of intent - when a purchase decision is being made. At this point, conversion rates are high, and thanks to Google especially, the search advertising models are efficient.

For corporations, successful 'intent' marketing means learning how get good rankings in Google and the other search engines and spending a few dollars - nothing close to what 'content' marketing costs - on pay per click and other internet advertising.

As a result, the world of SEO - search engine optimization - is exploding and corporations are being forced to adjust traditional IT vs Marketing organization design. Too many companies have turned execution of their internet strategy over to IT departments - when successful intent marketing requires a new set of highly refined technical skills - SEO - and strong collaboration with Marketing on goals, strategies and site design.

While search and intent marketing clearly drive sales, it's too early to see how they can be used exclusively to build brand. However, there appear to be tremendous opportunities right now for organizations who learn to put the right balance on both.

Monday, November 20, 2006

Boardroom Metrics Feedback

I'm always happy to answer questions that come into my info @ boardroommetrics dot com account. This past week I received the following from a foundation in Seattle:

Subject: Boardroom Metrics Feedback

Comments: Do you have any resources for how to write a policy assessing an organization's performance and effectiveness?
Thank you for any help you can provide
Submit: Submit

Here's my response:

Claire - I don't have specific resources that I can point you to but org performance and effectiveness is part of the consulting work I do. Recently I completed a small project for a well known foundation in Toronto (which has certain similarities to your organization). Here are some thoughts based on that experience:

  1. we started with vision and mission - in their case "to brighten the lives of seriously ill children" - and (working with the Board) completed an assessment of how well we were achieving the vision/mission (we used objective and subjective measures)
  2. defined the core competency/competitive advantage of the foundation and
  3. completed a SWOT analysis of the foundation
  4. reviewed/graded each program delivered by the foundation based on contribution to the vision/mission (again objective and subjective measures like # of children/families involved, focus group feedback, etc)
  5. based on the different assessments, developed recommendations for upgrading programs, marketing and governance around improving effectiveness and delivery of the vision and mission.

Maybe there's something in this approach that's helpful? It's always good to start these assessments at vision/mission.

Guy Kawasaki - Mission vs. Mantra

Keynote speaker at the web publishing conference last week was ex-Apple guy, VC, tech and motivational guru Guy Kawasaki. Living up to the hype, he delivered an interesting, lively, thought provoking and somewhat self-depracating address that was fun to listen to. I'm sure it's a speech he's delivered a hundred - or more - times before.

One of Kawasaki's key points of 10 things successful organizations must do is develop a 'mantra'. By mantra, Kawasaki actually means mission and his real point was to take a whack at all the really crappy mission statments that are out there.

Like Kawasaki, poor mission statements have always worried me. They're a waste of time to develop, stick up in the lobby and print onto business cards.

Crappy missions are lousy because they don't mean anything. Kawasaki pointed out how easy it is to get a crappy mission - just go to the Dilbert Mission Generator - here.

Here's a beaut that I just picked up: The customer can count on us to synergistically leverage other's performance based opportunities such that we may continue to assertively administrate market-driven information

Good missions actually have meaning, and if you ask the delivery guy or the receptionist there's at least a 50/50 chance they get it. From Kawasaki's blog, here are some missions with meaning:

Federal Express: “Peace of mind”
Nike: “Authentic athletic performance”
Target: “Democratize design”
Mary Kay “Enriching women’s lives”

Armed with a good mission, I'm a strong believer that organization's are in good shape to keep on the right track. As the post above shows, I believe that fundamental evaluation of corporate performance begins with questioning: "how well are we doing what we say we do?". When the answer is 'we're not actually clear what it is we do' - then improving performance is a snap!

Sunday, November 19, 2006

Pubcon 2006

Spent the past week in Las Vegas attending a convention called Pubcon. Pubcon is for web publishers - and suppliers to the web publising industry. Web publishers own websites. For me, a very interesting and exciting conference. Some general - and not very deep observations:
  1. VERY entrerpreneurial crowd - this is still early days for making serious $ on the internet - the business models are many and varied
  2. serious $ being made by web publishers who have found ways to 'monetize' their traffic - in many cases from advertising - whether through Google or through successful affiliate and/or referral programs
  3. the heart of this crowd is programmers - entrepreunerial geeks who have shunned corporate jobs and bosses to do it on their own - and have found making serious $ is a realistic goal
  4. corporations need to figure this stuff out and tap into these geeks - there's some serious marketing and advertising implications to what these people are doing - when forward thinking corporations tap into this crowd, they will create a lucrative competitive advantage
  5. the crowd is limited - I foresee attracting and retaining people with internet advertising skills as a serious growth business
  6. the high traffic web site mantra: content, links, links, links
  7. most forward thinking and (at this point scary) web notion - destination sites - those sites you get to by typing in the url - will decline in importance with the advent of tools (called widgets) that will move site content easily to other community, personal and aggregator sites like Diggit and My Space
  8. second most scary notion - success will be all about technologial innovation - new tools for making access to web content simpler, more usable, more accessible - where would YouTube be without the viewer??

All in all, very exciting space. Some key links to check out if this stuff interests you - and if you're a CEO - you should be interested:

Saturday, November 18, 2006

Boardroom Metrics Blog

I've finally got a blog associated with my website at Boardroom Metrics. It's something I've been planning to do for a while but had not gotten around to it. Impetus for finally doing came from a couple of sources, most notably spending the past week at Web Master World's, Pubcon conference in Las Vegas - topic for a future blog.

Boardroom Metrics has been up and running as a business now for something like 2 years - let's call it the marketing face of my consulting business. Mission is helping Boards and CEO's with governance and performance issues. Competitive advantage is personal experience - as a CEO, board member, consultant, web publisher, business partner. Result is a no-BS approach to making things happen.

I'll use this blog to post ideas, observations and rants based on day to day experiences. Blogging software - I'm using Google's blogger - makes regular posting extremely easy. I've got a couple of other blogs - not business related - but interesting learning here, and here. Also, using Yahoo's Flickr, to post some photos here.

Leadership Smeadership

Okay. I know it’s a settings thing. Sometime, a long, long time ago – probably when leadership was being invented – I must have indicat...