The Official Blog of Cogmap, the Org Chart Wiki


Archive for June, 2009


Models for Hyperlocal Online Publishing

Friday, June 26th, 2009

Outside.In is launching a new tool to make it easy to become a local newspaper.  Is that smart?  They convince AllThingsD to make it sound reasonable by sharing a spreadsheet. Great marketing!  I thought the spreadsheet was super wrong, so I revised it:  Google Doc Spreadsheet

Their original spreadsheet seemed wrong to me in a few respects:

  • 40m pageviews is the average number of pageviews?  That means they get as much traffic as the LA Times web site.  Is that realistic?  Here is a spreadsheet with pageviews by newspaper.  This data is two years old, but very few get that many pageviews. indicates that last month the Baltimore Sun got 3.5m unique visits.  That means it is quite unlikely that they are anywhere near 40m page views.  If an institution with a huge marketing vehicle, tons of marketing support, and city institutional status can’t get anywhere close, it is really, really hard.
  • The network model is preposterous.  First, they imagine that their sales force can build an ad network of 80m additional monthly impressions.  Then, they can do a 50/50 rev share with these publishers and get all their inventory, even though they only have a 20% fill rate.  Then, their sales force can sell it for $10 cpms.  Is there really that much local inventory available?  Seems like if it is, it is across a long tail, requiring substantial sales and publisher service to support and acquire.  Next, is getting it at 50/50 realistic?  I would expect a publisher would probably ask for more.  Furthermore, if you only had a 20% fill rate, then the publisher would probably put you on a daisy chain and use networks themselves.  Why share 50% of your revenue with this local entity if they are just collecting pass-through from Google or  Finally, can the sales force really expect to sell weakly branded network inventory for $10 cpms?  I have found that sales forces accustomed to selling a premium brand struggle to sell network inventory due to the changes in the business model.
  • Is the remnant monetization realistic?  They claim to get $5.00.  Certainly there are parts that are contextually effective and will see an aggregate page CPM of $5.00.  Other inventory will go for $0.50.  In fact, I would say that most inventory will go for $0.50.

Let’s just say that their model is not conservative.  It seems pretty aggressive, actually.  If you decrease all of these numbers just a little bit, the business is suddenly bankrupt.

Fred Wilson, an investor in, says:

As you might imagine, it’s a “honey we shrunk the kids” story. The topline goes down by an order of magintude and so do the costs. The profits are still there (at least in theory). In Mark and Peter’s strawman model, a local media business with 40mm monthly page views does about $7mm in annual revenues and almost $3mm of pre-tax income. You can go click on that link in the above paragraph if you want to see the model.

And if that is true, and I think it is or will be, then the local media companies that leverage their audiences for their content, create communities and conversations, will win. And they’ll be profitable businesses worth owning and investing in.

Fred is an awesome VC – one of the best.  There is not a chance he makes a single investment in a business like this.  Even if things went their way, is investing in a business that, at scale, generates $3m profit really a business?  Fred might invest in the roll-up of 300 of those companies.

Managing Product Overload and Your Sales Force

Monday, June 15th, 2009

securedownloadI walked into my local Starbucks the other day and realized that they had made some serious changes to their menu: They had devoted 1/3 of the menu to Frappuccinnos (iced slushy beverages), 1/3 to teas, and 1/3 to coffee.  The result of this menu distribution was they no longer offered all of the “flavored” coffee drinks in a non-Frappuccinno form.  When I asked them about it, because I am somewhat partial to their “Espresso Truffle”, the barista’s indicated that they still, in fact, had all of these drinks, they are simply no longer on the menu.

My reaction to that was, “how are they going to sell any of them if they don’t tell people they are for sale?”

This is an interesting decision by Starbucks that gets at a larger sales force decision.  To wit: Starbucks could have simply added more menu space, covering their walls with the hundreds of drinks they serve, but would exposing every drink they offer actually cause more or less confusion?  Would it increase sales?

in-and-out-menuCompare and contrast this with In-N-Out Burger.  They have super simplified their menu.  It only has 4 products that are not drinks on it: Double meat/double cheese burgers, cheeseburger, hamburger, fries.  Doesn’t get much simpler than that.  They also have a “secret menu” that you can order from if you are “in the know”.  Amusingly, even the secret menu on their web site does not have all of the secret things you can order.  There are literally hundreds of discussions about the secret menu all waiting for your google query.

Let’s bring this back around to the enterprise.  At AOL Advertising, we literally have hundreds of products for sale.  Almost any combination of behavioral data (and we can generate basically any behavior) and web sites (and we work with almost every web site), geographic targeting, custom dynamic banners, whatever.  Netblocks, clutterbusters, morphing logos, sponsorships, takeovers.  People can buy this on a CPA, CPM, or CPC basis.  Besides display, we have a search product, an affiliate product, a mobile product, and a video product.

How can our sales force, much less our customer base, hope to understand the myriad products available for purchase.  Yet, if you split the sales force, you have multiple sales reps calling on the same customer competing for a single budget.  Not having one person sell everything de-optimizes the sales force in the eyes of the customer.  Certainly, AOLs attempts to address this have been well-documented.  And every customer wants something a little different.  I am partial to the Espresso Truffle.  If AOL Advertising took some products off the menu, some customers would be angry, some would think we lose business because people want those products, and some would not buy from us because that is what they want and they just don’t know it is available.  Yet our customers only have a limited amount of time to spend learning about our products.  What products should we talk about if we only have an hour to educate the customer?  30 minutes?  15?

If there is one thing I have seen, it is that customers love the new stuff.  Our sales force would love it if there was a new, hot thing every two weeks that they could call their customers about.  Yet every new thing makes something fall off the back that a salesperson forgets he could sell.  Keeping the right things top of mind in such a world is a challenge for every sales organization.  And typically the new stuff is not the best stuff, it is just the new stuff.

I know, for me, I try very hard to avoid introducing new products.  And I run New Product Development!  How does your company manage the challenge of keeping the menu manageable and optimized?

Not All User Generated Content Forms Social Networks

Wednesday, June 10th, 2009

twitter-addictsGreat post on the O’Reilly site on how “Twitter is Not a Conversational Platform“.  It made a number of points that resonated with me:

  • I can count on one hand the number of people that I have “met” via Twitter.  In fact, it might be zero.  I haven’t thought of one yet, but I am not saying unequivocably.
  • I suspect that this has increased since Twitter made the decision to cut down on feed spam and stop showing @replies.  Now, your ability to serendipitously discover new Twitter users has decreased dramatically.  At least, with the new Facebook, I am reading comments by people I don’t know and get to know them a bit vicariously.
  • The nature of how information is shared, but relationships are not really built is certainly true, and it made me want to go read Clay’s book.  Twitter is rarely building shared experiences.  In the same way, while Cogmap allows people to “collaborate” on charts, there tends to be little actual collaboration, much like Wikipedia.  The result is a site with lots of fans, but not a lot of community.

Interesting to think about how to drive truly shared experiences in a way that constructively builds community.