Web publishers have grown very stingy with links, because since Google’s AdSense launched, traffic really does equal revenue (even at lower levels of traffic). For this reason, the one site that got a lot of free link juice was Wikipedia, because it was a non-profit.
Wikipedia over time became the #1 result from a wide array of topics, as Nick Carr illustrates here.
This could have gone unchanged, frankly, but as Google looks for more and more ways to generate revenue from the Web, it’s no longer logical to funnel traffic to a site that refused to run ads, let alone Google’s billboards.
The “evil” option would be to do a Google Shuffle and make Wikipedia tumble down the organic search results. Clearly, a lot of people would go bonkers. The next step, basically, is to launch a Wikipedia-killer. I’m not sure if this will work, but it might, because writers want to get paid and Google will essentially be siphoning a lot of web pages, content, traffic and revenue from the Web to Google’s properties… but ultimately, I think this has a lot to do with what Jimmy Wales and Wikia will do too. Right now, Wikia is, well, what is Wikia, I don’t even know.
But next time Wales decides to say that he’s building a Google killer, he’ll be more careful. More importantly, I anticipate seeing Wikipedia magically slip down the Google results page in the months and years to come. It won’t be overnight, but if Mr. Carr runs the same comparison in a year or two, my guess is that Wikipedia pages will be MIA, or at least replaced by Feedburner, YouTube, Knol pages… that’s not evil, it’s business.
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WatchMojo NewsletterThe rule is: build an audience, and they will come. They, of course, being marketers. Apparently, there seems to be an exception to that rule, and that is social networking.
Some facts according to eMarketer, then the fiction, then the reality.
Facts:
- 70% of all US teens visit social network sites on a monthly basis.
- 37% of the US adult Internet population used online social networking at least once a month. That figure will rise to 49% in 2011.
- By 2011, one-half of all online adults and 84% of online teens in the US will use social networking each month.
These are staggering numbers… you would think that a proportional share of online ad dollars would follow to such sites, right? Wrong. That’s the fiction, and that is the myth that has been propped by so many of the me-too, web 2.0 social media wanna-be projects trying to pass off as businesses.
The reality is that despite all of this, eMarketer projects that worldwide online social network ad spending will grow from $1.2 billion in 2007 to $2.2 billion in 2008, 82%. Worldwide spending will top $4 billion in 2011. In the US, spending is projected to rise to $1.6 million in 2008, from $920 million in 2007.
These are indeed large numbers, but compared to the massive online advertising pie, they are quite quaint.
Let’s compare, first the figures for Worldwide Social Networking Advertising Revenue:
Compared to US Online Advertising Revenues:
Let’s project that US advertising is about 50% of global ads, that would imply that worldwide total advertising will grow to:
2008: $50B
2009: $60B
2010: $75B
2011: $80B
Breaking down the worldwide contribution from social networking, this implies that social networking will yield:
2008: 5%
2009: 6%
2010: 7%
2011: 8%
When you consider all of the VC activity in social media and what not, that does seem to suggest much ado about nothing.
How does WatchMojo.com address it? Building the most valuable apps on the social networks.
When it comes to startups, I think a likely cause of a VC-backed company’s downfall is a result of the following:
Most venture backed investments fail because the venture capital is used to scale the business before the correct business plan is discovered. That scale/burn rate becomes the cancer that kills the business.
That’s something that Fred Wilson said here, we added some color commentary here and here. That’s what I would call the B2B advice for startups (as in you are selling to investors), or rather, the macro cause of failure.
On the B2C front (or in other words, when you are selling to consumers), a very good description of a micro cause of failure hails from another VC, Rick Segal:
As you are putting together that plan where you tell the VC suits why people are going to a) flock to your site/service and b) pay for it. If there is an existing habit/behaviour you have to change, you need to plan for it.
People’s habits are very hard to break. Friction Free is even harder.
I’ll take this one step further, if your plan actually entails that you change consumer behavior, you’re better off changing your plan, company or product, than the behavior. Human beings have not really changed, we’ve adapted, for sure… but online, we’re pretty much set in our ways.
More importantly, there are some pretty massive trends taking place, as an entrepreneur, you want to identify these and build a business plan around them by leveraging these, and not going against the grain. Don’t get me wrong, where some people see fear others see opportunity, but within that opportunity, don’t try to make the world spin in the opposite direction, add to the velocity of your business plan’s execution by riding the wave.
Google’s been buying up more and more assets away from its core search competency:
Search? Check.
Video inventory? Check.
Software to serve ads? Check.
Feed management? Check.
When it bought Feedburner, it only further encroached itself on organic ad results, after all, with YouTube, Google was showcasing its own properties front and center. I personally never objected to this, because YouTube was in fact a great source of content… so it did not make sense for Google to handicap one of its units to please a vocal minority.
Yesterday, Google attacked Wikipedia by launching a platform that allows writers to create encyclopedia-like pages on topics. There’s definitely a “target: Wikipedia” feel about this.
But I think by now, despite the amount and respect and fear that Google commands and instills respectively, time will tell whether this will succeed or fail, but a couple things come to mind.
Google launched Base, to compete with Craigslist, and that has gone nowhere.
Google launched Checkout, and Paypal has not even noticed a dent in business.
But, after launched Google Video, and that became a #3 in the marketplace, it then threw in the towel and bought YouTube, wisely.
Of course, Google cannot buy Wikipedia (though we did ask what is it worth?)… so this begs the question: will Google do everything to make Knol a winner… or are they laying down the foundation to evaluate an acquisition of Mahalo? After all, Mahalo might not be have all of the traction in the world, but Mahalo was - like YouTube - funded by Sequoia… and that usually created a connection in YouTube’s case from investment to exit, so it might prove to be the case again with Mahalo. Time will tell.
But one thing is certain, I previously wrote:
Advertising is based on matching marketers with an audience given the demographics of the audience (be it readers, listeners or viewers).
But, the audience’s demographics are largely driven by the content. However, the content has historically been created, edited and presented by the publisher.
Translation: Google thinks it has a strategy in place for video advertising, the fastest growing segment in online ads, but to really scale and dominate in display too, it needs to have such content and not simply rely on search.
PLAY
