Always New Mistakes

November 7, 2007

Facebook’s nextgen ad platform analysis

Filed under: Business — Tags: , , — Alex Barrera @ 2:21 am

Today, Facebook unveiled at New York their new ad platform. There is a great fuzz around this and hundreds of blogs are posting about it. That’s why I wont be talking about the actual system. For those interested in knowing how it works, I encourage you to read Owyang’s summary about it. Instead I’m going to try to analyze how, why and what can be done with the new system.

The social ad platform is structured around two ideas, brand awareness and friend’s trust. Some days ago I was discussing with a friend what this announcement really meant to Google. Would Google’s ads revenue be damaged by it? After reading today’s news I understand that Facebook is trying to build a brand awareness machine. This means that the objective for advertising in Facebook would be different from that of Google’s adSense network (based on purchase intentions). Now, the question is, which one will bring more revenues to advertisers? Generally speaking, it’s harder to trace the effectiveness of brand awareness ads than Google ads, so will the investment pay off for marketers?

To solve this itchy problem, they are offering what they call Facebook Insights. Here is where things get funny: “Facebook Insights gives access to data on activity, fan demographics, ad performance and trends that better equip marketers to improve custom content on Facebook and adjust ad targeting“. Ok, let’s analyze each one:

Activity
At first I though this was about ad performance, but it seems it’s different. Making a wild guess I can imagine they can track which pages you visit most (friends profiles, brands pages, groups pages, etc.). They might track your actual normal activity within your profile pages (page views, how much time you spend on each page, what sequence of pages you navigate more often, at which hours you are most active, in my case from 11am to 14pm for example, which parts of a page you give more attention to, etc.), so they know which are the best spots/time slots to feed you ads.

Fan demographics
Of course, data mining to the rescue. They are going to drill down the users profiles and retrieve all their information, including country, state, city or town, political views, relationship status, etc. Pretty scary isn’t it? This is something I’ve been ranting about for some time now. People aren’t really aware of the value of their personal information or the wealth of information they put on the Internet. But, most people that are screaming right now about this, should read the Facebook’s terms, as they clearly state that the information you pour into Facebook is theirs to use. I’m wondering what more interesting things they can retrieve from your profile. Lets see, which networks are you linked via your friends, which might give you which type of friends you normally interact with. In my case, most of my friends are from Berkeley, so you can infer I get along quite well with people from Berkeley, or I’m interested in Berkeley. My posted items can also be analyzed to see which items are the ones I like most. Of course, the likeness application is a gold mine. They can extract (I suppose with consent from likeness developers) which friends are “more like me” and easily target them, or vice versa. The same can be applied to the Wall application (no consent needed here as it’s from Facebook).

Ad performance
How are they going to track this? I assume they’ll pull all the hits either on a banner or the user’s news feed. Standard procedure here. Interesting to see which one gets a better hit ratio. Intuition tells us that the news feed will be the winner, but intuition isn’t always right. We’ll have to see some numbers. I haven’t seen any indications yet of price differences for banners and news feed ads, I’m assuming here they’ll probably be different.

Trends
I speculate they’ll show some nice graphs where you can see how the campaign is going. Brand tracking might fall under this category. Zuckerberg said on the press release you would be able to track your brand through Facebook’s public forums. I wonder if this would extend in a future to personal walls or even inboxes. That’s a scary thought, even though the marketer won’t be able to track which wall or inbox the buzz came from.

FacebookTrends

Some wild guesses on the outcome of this new ad system. I think it really hits on a sweet spot, but as some people have already said, it’s going to depend on implementation and the way the roll it out. For example, they are creating a new niche for application developers that want to target business and brand profiles. I wonder if the interaction between Facebook members and business pages will make websites like getSatisfaction.com go away. I have some doubts about the viral spam spreading. Facebook has been clear on their privacy policy about this new features: “Facebook users will only see Social Ads to the extent their friends are sharing information with them. […] In keeping with Facebook’s philosophy of user control, Facebook Beacon provides advanced privacy controls so Facebook users can decide whether to distribute specific actions from participating sites with their friends“. Now my question is, will I be able to change my news feed preferences to limit or filter spam noise? I currently have around 88 friends on Facebook, not too much, so I might bare with the noise, but what will Robert Scoble do with his 5000 friends (myself included)? Maybe he’ll finally thank Facebook for setting the 5000 friends cap. Another question that comes to my mind is, will marketers be able to control the text that gets injected into someone’s friends news feed? That could be very interesting, as personalized messages or specially crafted texts can make a big difference in marketing.

All comments are welcomed, I want to know what people think about the future possibilities of the system, or even if they are thinking about using it. New ideas for more data mining on my Facebook profile?

UPDATE: I received the first spam message from Robert Scoble. He created a brand page for himself so you can join and be a fan of Scoble. It’s going to be very interesting to see how all this develops.

Image Credits: Wikipedia.org, Techcrunch.com, Blogpulse.com

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November 5, 2007

Powerset’s internal problems

Filed under: Business — Tags: , , — Alex Barrera @ 3:15 pm


Powerset
is a San Francisco based startup that is trying to build the next generation search engine. Co-founded by Barney Pell, Steve Newcomb and Lorenzo Thione in late 2005, they have already raised $12.5 million in a series A investment round. Powerset is attempting to develop a public and global semantic search engine. Current search engines like Google are based on keywords. You need to type the right keywords so you can find what you are looking for. Even though this approach works great (just take a look at GOOG’s soaring stock), with today’s information rivers, we need smarter ways to find what we are looking for. For many, semantic searches are the next logical step. Instead of searching for keywords, you ask, in plain English, what is you are looking for, just in the same way you would ask a human.

I don’t want to jump into any conclusion, building a search engine is a really tough job, but applying AI and natural language processing algorithms to it, is even harder. I’ve been there and I know it well. So I understand why it’s taking so long for them to release a product to the public. But creating the fuzz Powerset did, and not delivering a product in a year’s time is a tough call. And if that wasn’t enough ammo for good critics, the recent stepping down of their CEO and the departure of one of the cofounders doesn’t adds very well.

Let’s analyze the situation in detail. Why would Barney Pell step down as CEO? As he exposed in his blog: “After extensive thought and reflection, the Board and management team decided that the time was right for us to bring in a new CEO to take the company to the next level and for me to transition into the role of CTO“. Well, why would that be? After all, Powerset doesn’t has a public product yet (not until 2Q of 2008), isn’t making any revenue, isn’t getting ready (AFAIK) for a new round of investment and much less for an IPO. What next level is that then? Most rumors point out at pressures from investors which are getting nervous. I don’t have all the facts, and as such, I won’t jump into conclusions, either way, I do think it’s a very unwise move for a startup that is against the ropes in terms of credibility.

To make matters worse, Steve Newcomb, one of the co-founders is leaving the company. It’s funny how all other related posts have only focus in Pell’s stepping down, instead of the departure of a co-founder. I personally think this is much more relevant of what the inside situation “might” be. It’s quite strange that, as Barney puts it: “Steve lead the company internally and brought strengths in execution on several other fronts“, but nevertheless he’s being “expelled” from the company. At least that’s the image that’s being projected. It isn’t usual that the co-founder and leader defects the company before they have a product. I’m quite sure the work isn’t finished yet and that there are more reasons for his departure. As I’ve said before, I’m only speculating on this as I don’t have all the facts. Still waiting for Steve to post something on his blog.

For me, not only the external image of the company is being damaged by this management change, but worst than this is the fact that people inside the company might be suffering from this restructuring. I would love to hear opinions from Powerset engineers and what are their views in all this.

Just for the record, I’ve been following Powerset for some time now. I think they have a brilliant technology and very good strategic partners. I don’t think they should go to the deadpool (yet), as they are still to show their technology during 2008. As I’ve said, it’s a tough field and I’m confident they’ll produce some nice technology in a near future. Again, inside views of the matter are greatly appreciated.

 

Image credit: Powerset.com

November 4, 2007

Radiohead and their bagels

Filed under: Business — Tags: , , , — Alex Barrera @ 9:52 pm

Hello everybody!

Finally I’ve decided to start my own blog, so if it’s your first time here I welcome you to my personal blog. Today I was watching episode 122 of Diggnation when Alex Albrecht talked about Radiohead’s newest album commerce scheme. For those of you that haven’t heard of it, Radiohead has ditched the music industry and is selling their latest album, “In Rainbows” on their website. The cool part is that if you want to download it, you are asked how much you want to pay for it (including $0 or free as in beer). Alex raised a very good question, why should you pay for the album? Why should people pay for it if they have the option of getting it for free? He gives an example of a friend that downloaded it for free the first time and after listening to it, he went and payed for it. When asked, he was fast to answer (as well as Kevin Rose did in the same situation), that although he had downloaded it for free, he was going to pay it.

So now you might be thinking, what the hell has this to do with bagels? Well, here it is. Currently I’m reading Freakonomics from Steven D. Levitt and there is a story about an economist called Paul Feldman and his bagel business. Mr. Feldman’s business model was quite unusual: “[…] he would deliver some bagels and cash a cash basket to a company’s snack room; he would return before lunch to pick up the money and the leftovers. It was an honor-system commerce scheme, and it worked. […] “. Pretty amazing by it self, but the interesting point is that as an economist, he was able to analyze the percentage of customers that payed and the ones that stole from him. His conclusions where pretty staggering, the overall rate of paying customers was around 87% by the summer of 2001 and went 2% higher after 9/11. So, with these numbers at hand, we can say that humans are, in general, honest, which might go against what intuition tells us.

Nevertheless, I’ve been wondering if such a high rate was because of fear of being accused of theft by coworkers or because of innate human honesty. Now, back to Radiohead, Alex’s question reminded me of the bagel business. Do people pay for it because they are honest of because of another reason? I would love to see Radiohead’s numbers on their experiment. Would they yield the same rates as of Mr. Feldman or by contrary be far lower due to the anonymous nature of the Internet? Humans can do terrible things if they know no one is watching, so, do people pay because of fear of what friends might think about them or because they are really honest and value the album? It’s interesting that prior to downloading the album they ask you for all your personal details, including your country and zip code. So, not only are they getting free marketing, but they are also harvesting a pile of very valuable data. It could even be sold to other artists/bands willing to follow their path (like Madonna). Here you go, another way of making revenue with this experiment.

What do people think about this?

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