MSFT is bolstering its search capability by offering behavioral targeting. Read more.
I am expecting - and have not ruled this out yet - MSFT to acquire one of the following companies:
- aQuantive
- Valueclick
- Tribal Fusion
- Revenue Science
- Tacoda
- etc.
MSFT won’t invest in content, it sold Slate.com which was its little political / content experience to the Washington Post. But to ride the online advertising wave, I could see it buying some of these firms. In fact, it might be crazy, but buying Tacodo to add a Dave Morgan - who founded Real Media - is not a bad idea. VP of Sales Joanne Bradford is seen as a star at MSN, and I’m not taking anything away from her, but if MSFT wants to get serious about online ads, they could use all the help in the world with Google continuing to fire on all cylindes and Yahoo!’s much vaunted Panama seeing the light of day.
Disclosure: I own shares of AQNT, and have owned VCLK in the past, but not now.
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December 31st, 2006 at 3:46 am
[…] Now comes news that Microsoft is getting serious about it. I guess they’ve been testing it for over a year, but I was surprised that they weren’t already offering this to advertisers. After I got over that, I read an interesting post on HipMojo.com that theorizes that Microsoft will acquire an advertising network to expand it’s reach. Being that reach has been a problem for behavioral marketers, this seems to make sense. Especially when most people think AOL’s purchase of Advertising.com was a smart move for AOL. Who does HipMojo.com suggest they might acquire? […]
January 3rd, 2007 at 12:16 pm
How Google will come to own TV
Google must have big plans in online video if spent $1.65 billion to become the industry leader by purchasing YouTube.com. Obviously Google wants to sell targeted streaming ads for videos just like it now sells targeted static text ads. Not so obvious is how much more profitable Google’s network will be when it starts running streaming ads instead of merely running static ads. — And how that increased profit will pay for the birth of the Internet economy envisioned by many in the 1990’s. You see, the targeted streaming ad system will be the financing mechanism that pays for all the mega-bandwidth and free streaming content – The television, movies, music, games, ASP software, tutorials, virtual reality, and dollar services, that all remain elusively just over the horizon. These targeted streaming ads are actually the overlooked prerequisite for the prematurely touted new economy.
But lets start first in the immediate future, and back on earth. It seems obvious that Google will soon combine YouTube with AdSense. This will cause YouTube’s already rapid growth to accelerate because video clip posters will start to make Ad Sense money by posting popular content. And the niche advertisers will come because they will be able to combine Google ad precision and interactivity with streaming ads. Google will certainly not be unique in selling narrow audience streaming ads in mix and match fashion across the Internet, but it looks likely to be in control of the biggest network doing so by far.
The key to the increased revenue that will bring the new Internet into existence is the efficiency of multiplexing streaming ads (showing different ads in the same slot to different viewers). Multiplexing will simply generate more revenue than broadcasting on a per viewer basis. This is because ad slots can be sold to say 1,000 market segments, many for a lot more than 1/1000th the price — netting many times the revenue.
I know you are thinking that this is what people predicted about the demise of print advertising in the 1990’s. And after a decade of Internet competition, even the 2nd tier newspapers are still around, if not CTD (circling the drain). The big difference is that the broadcast industry has channel-multiplexing vulnerability that the print media never had. This is because print was already multiplexed when the Internet came around. This print multiplexing is represented by the many tens of thousands of narrow niche publications in the world. Television’s lack of multiplexing is represented by the fact that even if you have a whopping 150 TV channels via cable, television programming is still usually broad audience stuff. This means that TV programming is generally now financed with broadcasts of spam commercials. The Internet only had a minor multiplexing advantage over print, while multiplexing television ads to thousands of segments will net many times more revenue than spam broadcasting. Unlike the publishers, the TV broadcasters will not be able to compete against online ad multiplexing once the Internet goes video.
The producers of “real” TV content will soon start co-posting on GoogleTube because the AdSense revenue from multiplexing will simply be higher than the broadcast revenue on a per viewer basis. In fact, TV producers will start posting on GoogleTube before allowing airwave broadcasting, because maximizing GoogleTube viewers will maximize high value multiplexed viewers. This will make Google tube content both on demand, and available well before airwave broadcast in many cases. Google will probably attract normal TV sponsors (the folks that push brands with highly styled video spam) by adopting a sliding price scale based on audience size. They will sell the narrow audience cream for premium prices, while the left-over, run-of-the-mill mass-sponsor spam slots will be sold for the same prices as the airwave broadcasters. In this way, GoogleTube maximizes revenues for the content producers, while offering the current television sponsors a painless alternative to airwave broadcasting. Everybody wins, especially Google.
At first, airwave television viewers will outnumber GoogleTube viewers. That will change quickly for the reasons above, but also because GoogleTube’s higher revenues per viewer will mean that there will either be fewer commercials, or much more money available to get the best content. And those commercials that viewers do see, will tend to be more targeted and interesting and not endlessly re-run. This will cause viewers to pay attention to commercials more on GoogleTube. Once GoogleTube gets a large enough market share, the content producers will not even want their content broadcast, because broadcasting will simply not pay enough. At that point, even the television networks will stop airwave broadcasting and migrate to GoogleTube as their dominant delivery channel.
All of the $61 billion/ year now being spent on broadcast advertising will soon migrate to GoogleTube and the other streaming Internet ad aggregators, if any. Far from suffering a slowdown in growth as some predict, the current $8 billion/ year Internet is about to experience its greatest growth phase. Online advertising will grow something like 8 fold once online video takes hold.
With streaming media, the Internet advertising industry will finally find its legs. Because TV ads will be multiplexed, supply of useful TV ad slots will explode driving costs down. Because TV ads will be more accurate and entertaining, people will pay more attention, thus increasing the value proposition of streaming advertising. It is hard to imagine how much more cost-effective advertising to your customers will be if TV advertising prices are cut by 85% and the effectiveness is simultaneously doubled. Certainly that $61 billion/year is only the starting point as a whole raft of new advertisers discover that marketing their wares through video is now profitable through a range of yet to be introduced digital video and VR sales services. It is also not to hard to imagine that a advertising, virtual shopping, and entertainment will all blur together.
The biggest problem with the new economy has been turning information (which is entirely development cost and zero reproduction cost) into revenue so that you can keep distributing that information. GoogleTube will automate this monitization process for a range of applications far beyond video….
continued… on TheOfficialBlog.com