Carl Fremont of Digitas thinks their might be online CPM rate contraction in 2008. Google helped provide one form of CPM contraction when they changed what part of an AdSense ad block is clickable. Markus Friend said that knocked his CTR down by about 60%.

Markus Friend also highlighted that Google controls about 40% of the (heavily consolidated) ad market:

90% of Advertising revenues are made by the top 50 sites and the top 10 sites take 70% of that, with google taking 40% of all Online US advertising.

This CPM compression is going to cause many late movers to crank out content with more ads on it, further lowering their CPM and direct readership until they are financially insolvent. But then again, the web could use another bust cycle to clean up the meaning of the word “content”. Shoddy intrusive ad networks like NetAudioAds should not be featured as the next big thing in the WSJ.

In a recent interview, Nick Carr said he expects the ad consolidation trend to continue

It’s the aggregators that are the big winners, at least in economic terms, not the legions of individual contributors.

Over the past 20 years, we’ve seen that the automation provided by computer systems has tended to concentrate wealth in the hands of a small slice of the population. I expect that trend will only accelerate in the years ahead. If you’re one of the digital elite, you’ve got it made. If not, the prospects are less bright.

What is the solution for publishers? How do prevent yourself from being absorbed by the commons? Develop meaningful relationships, be remarkable, and sell direct. Hugh on owning an idea:

Social Markers are a prime form of social shorthand, that people use to STAKE OUT the ecosystem they’re occupying. So why do I find this such a useful term for marketers? Because obviously, if your product is a Social Marker in your industry ecosystem [the way the iPhone is in the mobile world, or Starbucks is in the coffee world, or Amazon is the book world, or Google is in the search world, or Whole Foods is in the supermarket world, or Virgin is in the airline world, or English Cut in the bespoke world etc etc] you will have an AMAZING competitive advantage to call your own.

And if the product your company makes is not a Social Marker, I guess the first question would be, “Why the hell not?” Quit your job and start over.

One of the easiest ways to claim an idea is to turn its launch into an event, and differentiate it from everything else you are doing. Buy the matching domain name if you can.

Bonus cool link: Bill Slawski mentioned a Yahoo! patent about moving away from the random surfer model to a user sensitive PageRank. Now if they could only apply some good ideas in the SERPs. And no, this does not count.

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The WSJ published an article about the fraudulent research sponsored by the pharmaceutical companies which push antidepressant drugs on children:

A total of 74 studies involving a dozen anti-depressants and 12,564 patients were registered with the FDA from 1987 through 2004. The FDA deemed 38 of the studies to be positive. All but one of those studies was published, the researchers said.

The other 36 were found to have negative or questionable results by the FDA. Most of those studies — 22 out of 36 — were not published. Of the 14 that were published, the researchers said at least 11 of those studies mischaracterized the results and presented a negative study as positive.

The NYT is publishing custom branded content to help these advertisers. And, from a few months back, here was Google’s take on health marketing:

News reporters may focus on Pharma’s annual sales and its executives’ salaries while failing to share R&D costs. Or, as is often common, the media may use an isolated, heartbreaking, or sensationalist story to paint a picture of healthcare as a whole. With all the coverage, it’s a shame no one focuses on the industry’s numerous prescription programs, charity services, and philanthropy efforts.

Many of our clients face these issues; companies come to us hoping we can help them better manage their reputations through “Get the Facts” or issue management campaigns. Your brand or corporate site may already have these informational assets, but can users easily find them?

We can place text ads, video ads, and rich media ads in paid search results or in relevant websites within our ever-expanding content network. Whatever the problem, Google can act as a platform for educating the public and promoting your message.

Prozac vs Tryptophan – On June 15, 1993, the FDA Dietary Supplement Task Force published a report on the work it had been doing in the area of developing FDA policy around nutritional supplements. On page two, the report admits, “The Task Force considered various issues in its deliberations, including… what steps are necessary to ensure that the existence of dietary supplements on the market does not act as a disincentive for drug development.”

This is where the manual editing of search results gets tricky. The multi-billion dollar company rarely gets edited, but in many cases their information is much less honest than that provided by the independent PageRank 4 website

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If you have ever wondered how the mainstream media works, watching Manufacturing Consent does a great job of displaying its sordid underbelly. The bias is not always this obvious, but it is always there:

The most recent issue of Harper’s has an article by Eric Janszen about financial bubbles throughout US history named The next bubble: Priming the markets for tomorrow’s big crash. A couple key quotes:

We have learned that the industry in any given bubble must support hundreds or thousands of separate firms financed by not billions but trillions of dollars in new securities that Wall Street will create and sell. Like housing in the late 1990s, this sector of the economy must already be formed and growing even as the previous bubble deflates. For those investing in that sector, legislation guaranteeing favorable tax treatment, along with other protections and advantages for investors, should already be in place or under review. Finally, the industry must be popular, its name on the libs of government policymakers and journalists. It should be familiar to those who watch television news or read newspapers.

The media rides the story up and rides it back down. We always need something to talk about. It happens to the media offline just like it does to niche publishers online. But the memory and analysis are short and shallow, quickly pointing a finger at a false cause, fixing symptoms like antidepressant drugs do:

The U.S. mortgage crisis has been labeled a “subprime mortgage crisis,” but subprime mortgages were only a sideshow that appeared late, as the housing-bubble credit machine ran out of creditworthy borrowers. The main event was the hyperinflation of home prices. Risks are embedded in the price and lurk as defaults. Even after the faith that supported a bubble recedes, false beliefs continue to obscure cause and effect as the crisis unfolds.

It puts the formation of the alternative energy market in a fascinating perspective, especially as I finished reading about the demise of ACA and hung up the phone from an automated call from a sleazy telemarketer company calling me at 8pm, stating their partnerships with non-profits to help consolidate the debt that I don’t have due to the country’s current credit crisis.

When economic fraying appears at the weak edges of the market it hints that more is to come. Long time bulls are turning bearish and the stock markets are hurting worldwide. And so history repeats itself for the people, yes.

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After seeing the underwhelming launch of Wikia Search, I think Yahoo! should push further in human aided search. Relevancy is based on perception and marketing. Yahoo! needs to do the following if they want to compete in search:

1. Increase the relevancy of their directory by actually featuring it (the directory looks like a sidebar to a blog that occupies most of dir.yahoo.com), and by becoming more selective with what sites they accept. You can appreciate their bad marketing of the Yahoo! Directory by the fact that the Google Directory (a DMOZ clone) has a higher PageRank.
2. Yahoo! is testing integrating Del.icio.us data in their search results. Brand Yahoo! search as human edited safe search and find a way to pay end users for their contribution. Payment does not need to be monetary. Take a look at the success of Yahoo! Answers and Del.icio.us and apply those toward search. Google gives Checkout advertisers free ads and a higher ad CTR (which leads to a lower ad cost). Win search marketshare from your users by giving them rebates on your other products as well.
3. Create a branding and awareness campaign around the new Yahoo! Search. Hire someone to do a fake study proving that Yahoo! Search is more relavant than any of the other players. Make sure Ask or Microsoft is ranked #2 ahead of Google.
4. Let users comment on search results AND on listings in search results. Controversy surrounding this will lead to more people talking about and evaluating Yahoo! Search for quality.
5. Launch a new toolbar with a meter like PageRank in it…call it YourRank (or something the emphasizes to the user) that it is their web and what they like. Heavily push that branding message to users locked into Yahoo! email, Yahoo! Stores, and other verticals they interact with.
6. Create a well branded specialty search for bloggers with innovative features that make it easy to follow the conversation both ways. Also launch creative ideas to buy mindshare with other high authority communities (universities, open source projects, etc.).
7. Easily allow advertisers to do keyword research on Yahoo! outside of while they are setting up search campaigns. Create a reliable publicly accessible keyword tool which actually markets the Yahoo! Search product.
8. Give away a lot of useful search market data (like Microsoft recently did with their Ad Intelligence plug-in).
9. Put the Yahoo! brand on the millions of syndicated domain landing pages they power each day.
10. Increase the relevancy of their contextual ad product and increase payouts to 100% (buy marketshare) BEFORE Microsoft openly launches their network. Perform case studies with publishers who saw their Yahoo! monetization go up AFTER switching from AdSense (and other inferior networks) to the NEW Yahoo! Publisher Network contextual ads program. Perhaps pay key leading bloggers 150% just to get them using, talking about, and giving feedback on your ads. Buy marketshare…

How Could Yahoo! Become Relevant?

Do you still use Yahoo! Search? What could Yahoo! do to make you want to use them and talk about their search product?

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Yahoo!’s Downward Trend

Yahoo! killed off their brand universe project, and recently fired 30 people. Rumor has it that about 2,000 more layoffs might be coming soon. Yahoo! shares are nearing $20, trading at $20.78, and giving them a market capitalization of $27.8 billion.

This WSJ article highlights that about half of Yahoo!’s value is in cash and equity stakes in Alibaba and Yahoo! Japan. Over the last year Yahoo! lost significant momentum and marketshare in search. They need to outsource search and search ads, fire a bunch of employees, gain search marketshare, or there is going to be a buyout or merger before the year is out.
Pageviews Still do Not Have Much Value

Sidebar: to anyone hyping the value of pageviews and social media, think of how many pageviews Yahoo! has. If you pull out the value of Yahoo!’s large equity stakes in other companies and cash on hand, Amazon and eBay are each worth about 2 to 3 times Yahoo!, and Google is worth about 13x.

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Does it make sense for MySpace profile pages to rank on the first page for one of the 10 most competitive terms on the web? Should English to English page translations inherit domain authority from another domain? I don’t want to out anybody, but I see way too many tag pages ranking in Yahoo!’s search results. The easiest way they can improve their search results is to simply delist any page with tag in the URL.

If they continue down this path inside a few months they will link to nothing but internal site search / tag pages on other sites. Where is the value, innovation, or thought process in that? What percent of Yahoo! searchers want to see WordPress.com tags pages and how many Yahoo! Pipes pages are tagged with a brand name? What does a searcher do when they land on a page like this?

If you are going to trust user generated content on authority sites, expect a lot of users to create content just for Yahoo!.

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Here is a great speech by Chris Anderson about how reputation and attention are becoming the new economies upon which much of the internet (and potentially offline) world may be based upon.

Freemium consists of giving away value (and possibly wrapping it in ads), as a lead generator to sell premium products and services. The model minimizes consumer risk by allowing them to become familiar with and reliant on the service before paying for it.

* Fred Wilson, the VC, describes it as his favorite business model.
* Some of the biggest challenges with freemium based business models are deciding how much to give away free and how much support to give away for free.
* Typically freemium offers have ~ a 3% conversion rate, which is typically packaged as a recurring revenue stream.

A Startup Nation article explains why the model is so powerful:

David Beisel, principal at Masthead Venture Partners in Cambridge, Mass., says the freemium model is attractive to VCs for the same reason it’s attractive to entrepreneurs. “Giving away a free version of the service allows consumers to not just learn about it through collateral or a free trial,” he explains, “but it presents them the opportunity to fully adopt the service and incorporate it into their lives.

“Those types of customers are ones who begin to evangelize the product to others. Entrepreneurs then greatly benefit, as powerful and inexpensive word-of-mouth marketing kicks in.”

One of the things I believe is that just like services that move toward free, all forms of content (even specialized high value niche content) will follow the same path. Information that is sold as a product (not a service) will keep seeing its margins decline as self satisfying hollow chucking and local substitution (ie: wikipedia editors rewriting your content, or someone uploads it to a torrent site) drive the value of most information to nothing.

People buy the reputation, experience, story, and relationship. It is more emotional than logical, and so publishers will become interactive media artists.

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The WSJ let the “our content will be free” story spread for months to generate public relations related coverage and to misdirect competitors before announcing that they are going to keep their subscription service:

Mr. Murdoch made his latest comments at the World Economic Forum in Davos, Switzerland, in answering a question. “We are going to greatly expand and improve the free part of The Wall Street Journal online, but there will still be a strong offering” for subscribers, he said. “The really special things will still be a subscription service, and, sorry to tell you, probably more expensive.”

The Wall Street Journal has enough trust, connections, and signifigance to keep charging for their best stuff.

Many other websites do to, but as exclusive content rather than part of a package. Bundling packages of similar content channels (like blog feeds) will not work for the following reasons:

* there is already virtually an unlimited amount of competition that is free
* the free content plays an important role in making it easy to subscribe
* Easy subscriptions provies lots of subscribers, social proof of value, and limited risk to subscribers. From those, cumulative advantage kicks in.
* Free content cuts marketing costs to ~ $0.
* People hate micropayments.
* Taste is personal. Some people who like sites similar to this one absolutely despise me. And the other way around is true.
* The incremental cost of having more customers means that you need to charge more than $1 if you are going to establish a sustainable relationship with them.

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Central hubs on the web fight off manipulation to keep their status and profit margins in tact. A side effect of this war on control over information access is the butchering of the English language.
Digg is Illegal?

Digg’s CEO Jay Adelson said:

I’m sure there could be blackmailers out there. We absolutely know that every single day, people try to game our system. Users are involved in illegal or inappropriate activities all the time. They try to set up fake accounts to promote a story. The thing is, we make changes to our algorithm on a regular basis. We plan for that.

Notice how he put illegal and inappropriate right next to each other, as to equate them. This comes from the same company that published this:

We had to decide whether to remove stories containing a single code based on a cease and desist declaration. We had to make a call, and in our desire to avoid a scenario where Digg would be interrupted or shut down, we decided to comply and remove the stories with the code.

But now, after seeing hundreds of stories and reading thousands of comments, you’ve made it clear. You’d rather see Digg go down fighting than bow down to a bigger company. We hear you, and effective immediately we won’t delete stories or comments containing the code and will deal with whatever the consequences might be.

If we lose, then what the hell, at least we died trying.

Sure you can buy votes on Digg, and they arbitrarily ban websites. But does controlling a bunch of worthless traffic give them the right to butcher language to push their business objectives?
Google is Illicit?

Michael Gray’s continued debate about the war on links spurred on additional conversation.

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Open source content management solutions like Drupal get more powerful each day. But everyone has access to it.

Firefox has extensions like Firebug that allow you to test modifying page layout or CSS in real time.

Custom feeds, leading blogs, personalization, recommendations, aggregators, filters, and alerts allow us to consume a firehose of information.

Search engines are giving away a lot of valuable data to try to win marketshare. But everyone has access to it.

You can buy full feature affiliate software for under $300.

About 40% of retailers do not have a physical store location.

Companies like 1ShoppingCart offer an affiliate program and hook into on demand publishing and fulfillment companies like Vervante. Selling an information product means no shipping is required.

Amazon reduces hosting costs to virtually nothing, offers an order fulfillment service, and now they are pushing their WebStores aggressively, which really automates a big piece of the workload of most businesses. Amazon also owns BookSurge, a print on demand publishing company.

Lots of people are solving common problems and giving publishers a wide array of choices that keep driving costs down. Just about everything is getting cheaper and easier – except marketing. Audiences fragment, people ignore advertising, and everyone is so busy that they have no time for you.

Public relations and search marketing are the new advertising because unlike most ads they are not ignored. They are seen as editorial content even if it is bought and sold on a per article basis or per ranking basis. And so you have smart business deals where you slap Lance Armstrong’s name on a bunch of user generated content. Generate the PR buzz and watch the ad dollars roll in:

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