How Apple can turn the U2 fiasco into a business model

I've been somewhat fascinated by watching the whole Apple / U2 fiasco over the last few weeks.  In case you missed it, as part of the iPhone 6 announcement, Apple worked a deal with U2 to give every iTunes user a free copy of U2's new album, Songs of Innocence,  by automatically placing it in the user's iTunes library and allowing them to download it for free before a certain date.

Now, I've been a U2 fan ever since the mid eighties, so I was quite grateful to Apple and U2 for doing this, but many people were not.  I get this.   If they put a Jay-Z album in my account, I probably wouldn't want it either, and would probably find a way to delete it.  It would probably annoy me.

Seeing this article about how this whole move prompted a huge sales bump in U2's back catalog, though, it got me thinking about my whole music consumption and purchasing experience these days. As where I just used to just walk into a store and pick something that seemed to be marketed to me and would take a chance, these days I typically listen to something on either Spotify or Google Play, and if something grabs me I'll usually still buy it, and in many cases I will buy a bit of the back catalog.  Sometimes in one sitting, sometimes bit by bit over time.

Putting these two things together, Songs of Innocence is just and ad for the rest of U2's back catalog, and for those that like U2, it seems to have worked. The problem was that the ad was totally untargeted, and users generally don't like ads that aren't targeted to their interests, or their purchase intent.

The thing is, Apple also has this thing called iTunes match, where I can upload my entire library to iCloud.  This allows them to pitch me music I might like.   For bands that are similar to what's in my music library, why not allow me to opt-in to having Apple sell my music library as targeting to bands whose albums I don't own, and putting in albums from those bands that might make me buy the back catalog?

So the money would flow like this:   the music label would pay Apple to target me and put their album in my collection for a month, and if I download it I get to keep it.  Hopefully, I would buy more of that band's back catalog and then the band would make up the cost of the placement and more.  Hopefully they bought a fan.

I don't know all the numbers to actually work out if this would be a viable money maker for any of the parties involved, but it feels like there would be something there if done right.

Sony and AdWords Remarketing Really Want me to Buy a Nex-5N

A few days ago I did a search for the "Sony Nex-5N" camera, and most likely clicked on the promoted (when ads move from the right column to the top, they are called "promoted") text ad that Sony is running on Google search.   This took me to Sony's site on the Sony NEX line, as expected.

I didn't buy the camera from them, but they sure want me to.   In fact, whenever I go to any site that has a block of Google AdSense text ads, there's an ad for the Nex-5.  Here's four examples from sites you probably recognize.

from PCMag

from LA Times

from Chicago Tribune

from CNET

Spooky?  no.   Is Sony reading my mind?  Invading my privacy?  no.

This is Google AdWords remarketing at work. And it's working beautifully.  It's like my own private reminder that I want to buy this camera as I browse the web all day long.  It's stuff like this that is making Google's Display business $5 Billion per year.  From the AdWords help:

Next, a small piece of code called a remarketing tag is embedded on your homepage, for example. This code tells AdWords to save visitors to your "Homepage List." When people visit your homepage, their cookie ID is added to the remarketing list. Once the remarketing tag is in place you can create an AdWords campaign that targets messages only to people on your "Homepage List" while they browse the Web. Your remarketing messages won't be shown to people who aren't on the list.
The remarketing tag can be embedded on any page within your website, not just the homepage, so you can develop more detailed audiences. For each remarketing list that you want to create, embed a different tag. If you want to create a "Homepage Visitor" list and a "Completed Conversion" list, you need two separate tags -- one to go on the homepage, and one to go on the conversion page. Learn more about remarketing and users' cookies.
There's a balance between creating very detailed and broader remarketing lists. While detailed lists allow you to further target your message, you'll get the most scale and volume with broader lists. Read more on strategies for your remarketing lists, and learn how to tailor your creatives to these lists.

I'll let you know how the camera is.

Sharing Affiliate Links on Pinterest part of their model?

I got an invite to Pinterest the other day, so I decided to play around with it to see what all the hubbub was about.  The road is littered with web clipping services and bookmarking engines but this is the one that has seem to have found its niche, especially with the female demographic.

So I found a few guitars I liked, and pinned them up.   To my surprise, I seemed to get some immediate engagement with people I neither followed nor followed me, which got me thinking...wow, what a perfect affiliate link vehicle.

So I decided it was worth a test.   I found some pictures of camera bags I like, and generated some affiliate links for them via the Google Affiliate Network.  I pinned them up.

Then I saw the related links:

and thought, wow, okay, so obviously someone else has thought of this too.

Accidentally or not, as it turns out there are a ton of affiliate links from GAN in Pinterest:

(unfortunately for whoever the original publisher was, most of the links are broken because of an encoding issue - the links on a lot of these products seem to have the ampersand URL encoded in the link so they don't work.

http://gan.doubleclick.net/gan_click?lid=41000613802215716&pubid=21000000000517668

)


My first thought was, wow, they're gonna get spammed, big time on this.  But again, as it turns out they already know this.

This is from one of the boards in the search above.  They've already detected that the links go to GAN and warn the user as such.

So smart, this is part of the plan.  See how products convert on the affiliate networks, and then probably create their own affiliate network.  I'm guessing that's their business model.

It's still all about building a loyal audience

Recently, I've enjoyed reading Dan Frommer's SplatF, a somewhat self proclaimed experiment in self publishing.  I enjoy reading Dan more on SplatF than I did at Business Insider (née SAI, which he helped create)  because it's more stripped down and not quite as blatant in its page generation schemes such as those "Top 10" articles that force you to step through page by page (and thus generating 10 page views).

Stripped from this SAI framework, Dan's a really good writer and seems really efficient at coming up with  thoughtful analysis of what's going on in tech - and recently he published a quarterly report, in which he details some observations of how it's going to far.

Will his experiment succeed?  I'm not sure what the parameters are, but for me the question is really "can he succeed without resorting to backpedaling to all the revenue generation techniques of SAI".   That is, can he succeed with catchy headlines, quality writing, and perhaps by inventing a new combination of techniques for how to monetize a blog.

I think the thing that grabbed me the most from his month-after and quarterly report is that in this post-RSS reading, social media world, he's still really concerned with building a long lasting audience.

Why?

Because a transient audience doesn't pay the bills.

Witness, he ditched Google AdSense after a couple months for Say Media placements because it didn't generate enough revenue. Well of course.  AdSense has never been a great fit for the "intermediate blogger" that doesn't do product reviews or otherwise create content that's also good for search ads OR be really really large scale like Techcrunch or SAI.   The Google Display tools for buyers are great at selling audience ads for large traffic pubs - not so good for small ones.  

His traffic spikes are still coming from link-love from Daring Fireball and a few others, but with each of these spikes comes more Twitter followers.  More Twitter followers means more clicks from Twitter and more importantly from repeat users.  With 140 characters to work with, users have to click through, and I've already found myself clicking through from Twitter multiple times per day.

Repeat users means a loyal audience to understand and monetize by CPM.  If he keeps it up, he will hit an infection point where these numbers all accelerate.

So maybe it's only surprising to me, but it's still about building a loyal audience.

Why Twitter should create their own ad network

In the past, I've written a little about why I think Twitter is primarily a protocol, and as we will continue to see innovative applications like Flipboard that make great use of this protocol, embedding links that can be rolled and unrolled to carry more than 140 characters.

Twitter is doing two things with this:

1) Writing their own applications such as the clients on the web, mobile clients on iOS and Android, and I believe a host of other clients for other devices that use the Twitter protocol in the way the company currently envisions their network being used

2) Providing an API for other application developers to create their own applications, that use Twitter data as well as data from other sources (such as Facebook, RSS, photos, videos) to create rich applications.

There's a limited number of #1s and lot of #2s.  Though Twitter's own applications will always have a lot of traffic, I think we will see the number of applications in category #2 continue to increase as the ecosystem figures itself out.

There's a lot of speculation that Twitter will start to put ads directly into the stream based on what the user is interested in, placement of which will probably be based largely on which Twitter accounts the user follows.  As twitter wraps more data to go through their own redirectors at t.co, I imagine it will also be based on what the user clicks on.

If you go to t.co it says:

Twitter uses the t.co domain as part of a service to protect users from harmful activity, to provide value for the developer ecosystem, and as a quality signal for surfacing relevant, interesting Tweets.

It's the last part that is most relevant.  Remember, whenever anyone lists three reasons, the first two are just filler.

So, while I'm sure that Twitter will experiment with putting interest based ads into the stream, I'm somewhat less confident that direct response based advertisers will find the click through rates and conversion rates they would hope for there.

Brand and awareness advertisers may find more success here, but their usual medium is through display advertising such including rich media units with audio and video.   Those type of units in-stream where the payload is 140 characters just don't make a lot of sense to the user experience.

Integrated advertising is certainly all the rage, but I think it's difficult to put integrated advertising into a protocol, especially when the applications that use the protocol are myriad and vary greatly in presentation.

I actually think the right approach in the end will be not to monetize the protocol, but the applications that use the protocol.

My hunch comes from looking at a lot of "in-stream" data over the years in RSS feeds that ran through the FeedBurner Ad Network and Google's AdSense for feeds products, which share some of the same characteristics from a user's point of view.

Performance of ads varies greatly from application to application and it's naive to think that a one size fits all approach in the stream is going to give user or advertisers exactly what they want.

A lot of this has to do with user intent at the time they are interacting with the content, as well as the mode and mobility of the user.   So an ad you put in the stream better be different on the desktop than it is in the mobile client which must also be different in a third party application such as Flipboard if you want advertisers to keep coming back for more.

I think ads in the stream will just be part of the story.

So back to the title of this post which is "Why Twitter should create their own ad network" and what I mean by that.

I think for Twitter the right approach to monetization should be to look at all the different use cases of client applications that use the Twitter protocol, and build appropriate ad units for ALL those specific types of applications.   They should of course use these units in their own applications but then also allow developers to embed the best ad unit for the developer's application with a revenue share.

So for instance, I would slice up the ecosystem into Web Stream Readers, Tablet Magazine Applications, Small Screen Phone apps, Television Applications,  Vertical News Aggregators, Curation Applications, Photo Sharing Applications and everything else that the Twitter Business Development team has seen come through the office - and then build appropriate ad units for those applications with the right offerings for advertisers on the back end.

There should be something for mobile local transactional advertisers, as well brand display advertisers. but it shouldn't be one size fits all.

Specialized advertising networks always outperform generalized advertising networks.  This is why at Google, each particular advertising product that exists in it's own medium and mode has it's own full time product manager (sometimes many!) whose job it is to analyze the specific data for their product and then tune and optimize the heck out of it with their engineering team(s) to optimize revenue and performance.

Twitter should organize the same way and on the back end of this all should be their own relevance engine, which uses all the available signals, such as the aforementioned list of subscription topics and click data, to create the best advertising product for each specific application use case.

There's nothing stopping a third party from creating this network, but I believe Twitter's strategy should be to simply create the best ad network that outperform's any potential competitor.

They are in the best position to be able to create this network as they have the most complete view of all the data and applications that are in the pipeline.  Their own applications will serve as a proxy to performance for each type of unit, and then they will also have data signals from all their developer's applications that use the network.

If they can start to pump advertiser money back into the ecosystem, it will fuel development and innovation even further in that same ecosystem.   Not to mention silence the pundits.

Wow, that's a helluva roadblock by Samsung on techcrunch.com

Wow, that's a big roadblock takeover of the techcrunch.com home page by Samsung advertising the
Samsung Galaxy Tab .  You have an expandable masthead banner on the top that pretty much takes over the huge Widgetbox powered masthead ad, and then they also got the medium rectangle there on the left.  I guess if you want to get in front of TC's users, that's the way to do it.

Btw, the Tab is a pretty cool device - a first mover in the many Android tablets I have a feeling we will see in 2011.   If 2010 wasn't already, 2011 is going to be the year of the tablet app.  We're going to see some innovative stuff for this form factor like we saw with Flipboard (my favorite) on the iPad this year.

Trying out Blogger's new insert YouTube feature...

I thought I'd try out Blogger's new insert YouTube feature announced today and at the same time show off some of the cool features of what AdMob can do on the latest Android handsets.  Enjoy.

Kudos to the Blogger team, who spent a few years creating plumbing so they can now add features very quickly.  All that under-the-covers work has really paid off for them.

It's probably one of the tougher things to pull off - transforming a product from being semi-popular to working at really large scales - because you constantly have to defer some "features" while this infrastructure work is going on.   Users don't see the benefits while you are remodeling.

The Blogger team, which includes a large set of both former and current team members, has done a great job of this.   As a user, I've totally forgotten some of the clunkiness that used to exist in this product.

Another way the iPad is killing the newspapers

Truth be told, way before I worked as a digital vampire, I never really liked paper newspapers all that much.   They were big, bulky, and dirty.  The ink rubbing off on my hands made me never want to touch the stuff. Figuring out the perfect fold so that you could actually read the paper while upright, fuggetaboutit.

Growing up, the rest of my family was into reading the newspaper though, and especially the Sunday Chicago Tribune.  I don't know many people in the Chicago area who didn't group up getting the huge Sunday Tribune, in many cases on Saturday night.  However, the only part of the paper I ever really read was what we called "the Coupons", and in Chicago, that's pronounced "Q-pons."

I guess what I really liked was not the coupons themselves, but what I now know as the "Sunday Circulars" - that is, really just the ads, mostly from electronics stores like Best Buy where you could see what was coming out on "Tune-in Tuesday" and the other odd electronics that you could only see here way before Engadget existed.  I guess that's what stuck with me the most from the newspaper era.

Really, the only ones I look at these days are from Target (and still Best Buy).  I still make weekly trips to Target to get the week's family supplies.

So when I saw Target's new iPad app appear in the App Store yesterday, I was intrigued.  After loading it up, I could see what it was: an iPad version of the Sunday Circular.   Yes, I had downloaded an ad from the App Store.

At first, I felt slightly let down, but after playing with it for 5 seconds I quickly changed my mind.  This app is cool.  And useful.

It just looks like a circular ad

First, it automatically uses your location to find the nearest store to you.  From there you can not only look at the ad itself but search for anything Target carries, and it will tell you if the item is in stock there.

There's also the shopping list.  This isn't a static image like I first thought.  You can actually drag and drop any item from what you are looking at to the shopping list below.   In the screen shot below, the Assassin's Creed game is mid drag and drop.

Dragging and dropping Asssassin's Creed to the list.

Finally, when you are done, you have a shopping list, that you can email, most likely to your phone so you can go to the store and work through your list.

Your list, go ahead and mail it.

So that's pretty interesting to me - that Target got to me with their brand, I downloaded an app that is really an ad (or is it an ad that is really an app?) and the sure end result of this is that I will probably buy more from Target.   

The next step here of course, is for them to start promoting this app in other iPad apps through display ads inside of those apps.  It will be difficult for Target to track purchases from running these campaigns, but I think the number of downloads will act as a pretty good conversion indicator.

I think we've just seen the tip of the iceberg on driving transactions from tablet devices.  There's a lot of interesting thinking going on here, and this is just one example of how innovation is happening specific to these devices.

At any rate, Best Buy has an app for this too, that works with the iPhone and iPad, but isn't quite as flashy - so I guess between these two, I'm officially done with paper newspapers.   Rest in peace.

Twitter Promoted Trending Topics

Not that anyone asked me, but I like this new ad model being used by Twitter:  promoted trending topics that lead to the conversation led be a promoted tweet.   It's mostly user driven - that is, you have to look at trending topics, and then click through to see the promoted tweet.  You've already registered your interest, so at that point, you don't mind seeing the ad.


The challenge here is that I think this works really well for top, known, brands, less well for the long tail advertisers, but that's okay.

They need to keep this as a facility for premium brands - there's enough to go around to prove this out.

I could easily see Twitter creating a dashboard for top brands that display organic trending topics and give them a chance to get in the game with a large buy.

If you ran the spend for Disney and got an alert that said "Toy Story 3 is a trending topic - promote this now" - you can easily see how that can build upon these non-organic (promoted) trending topics.

This also needs to be added to the Twitter API so all clients can display these.  The question is, will those clients want a cut to display promoted tweets?