Cogblog

The Official Blog of Cogmap, the Org Chart Wiki

 

Your Replacement for UDID’s Sucks

May 29th, 2012

(This is a personal opinion, not the opinion of Verve and not necessarily reflecting any particular strategy that Verve may or may not utilize. Verve’s official opinion is here: http://www.adexchanger.com/now-serving-mobile/apple-udid/)

New technology requires new approaches to take advantage of that technology. The creation of the cookie, a tool originally designed for maintaining state primarily for e-commerce platforms, allowed advertisers for the first time to control frequency exposure to consumers.

(Sidenote: My first company, Group Cortex, created SiteTrack, the first NSAPI plug-in for maintaining state in web servers – it did crazy URL modifications to maintain state pre-cookie and it was painful. I attended the first W3C meeting talking about the introduction of cookies. My obsession at the time (and an on-going “thing” of mine): A special referrer should be set when someone uses a bookmark to get to the site. Today it is set improperly to the site you were on when you selected the bookmark. Tracking bookmarks was the 1995 version of “LIKES”. I should have been a billionaire.)

Anyway, Television does not offer frequency management. Radio and print do not offer frequency management. These tools simply never existed before. And yet when we enter a mobile advertising world, the thought that we cannot track frequency of ad exposures is considered preposterous.

iPhone’s are the most common target for mobile advertising today. They are widespread and the people that use iPhones consumer significant amounts of content. Today, the state of iPhone user-targeting is this:

  • Apps are able to access the UDID of the user – a unique ID assigned by Apple – and set cookies
  • The safari web browser, by default, is able to set first party cookies but not third party cookies. It cannot access UDIDs.

While it is possible, with a bunch of work that is very unfriendly to the consumer, to tie UDID to mobile web cookies, we have already take a giant step backwards: In most situations, when frequency capping a mobile campaign, a mobile web user and an application user cannot be separated.

Apple recently deprecated the UDID, meaning that soon, access to that function may go away. This means that between applications, it will soon become impossible to tell one user from another. Advertising networks are scrambling to replace this technology with a variety of solutions, but two seem to dominate the conversation:

1) MAC Addresses: This is a hardware identifier burned into the system. It works essentially exactly like UDIDs which is why it is such a focus of interest. Unfortunately, for exactly these reasons, I suspect that anyone that uses it will find that it is deprecated simultaneously with UDID. It is harder to deprecate because some applications maybe designed to interact with the network protocol layer and hence need the MAC address for functionality, but Apple can probably figure this stuff out.

2) Pastebin Solutions: This uses the Pastebin (the copy/paste buffer of the OS) to hide an identifier for the user. This holds the promise of creating a potentially cross-platform solution, but it seems the most frought with compromise of user-data. A lot could be hidden in the copy/paste buffer and I would expect to see Apple act to prevent such inappropriate use of system resources.

So it turns out that today there is no suitable replacement. Many Advertisers seem to hope that Apple will address this. I am not optimistic. I have not seen Apple express any knowledge or interest in improving the life of Advertisers.

We may be living in a world where mobile advertising is simply less measurable in this way than Display. That is not the end of the world, but as mobile becomes the domain of digital media planners, we are told that this is some kind of horrible show-stopping turn of events. What it really means is that media planning around this becomes more important – it cannot be simply taken for granted.

Frequency cappings most powerful effect is on performance – the proof of whether a publisher is achieving reach or ever increasing frequency will be in the performance of the campaign. It is easy to imagine living in a world without frequency control if the performance of campaigns is strong and sustained. This will require work on the part of advertisers and publishers, but it is achieveable.

How off-base am I?

Engineers irrationally hate advertising

March 15th, 2012

What engineer thinks this sounds very interesting:

  • Big data
  • Incredibly complex algorithmic learning
  • Huge scale
  • Millions of users daily
  • APIs
  • A de-emphasis on the user interface – EXCEPT WHERE IT IS EMPHASIZED

The answer is most engineers. Because most engineers cannot stand the idea of working for an advertising company.

One of the things I have noticed in the course of recruiting people to work at Advertising.com, Deconstruct Media, and Verve Wireless is that engineers have an irrational loathing of working on advertising projects. Despite the fact that their rational mind recognizes that advertising funds free content (including search engines like Google), they have no desire to help make the world a better place for advertisers and help fund the development of better content.

Why is this? When I was at Ad.com and random people would ask me what I do, I would say, “You know all those University of Pheonix ads you see on the Internet.”, “Yeah, I see those everywhere, they drive me nuts”, “I put those there!”

I would say that because it was funny. Engineers would feel like it was the truth and be depressed by it.

When you compare some of these projects to other projects, they frankly don’t compare too badly:

  • LivingSocial: We sell pizzas at half price – is that what engineers want to do?
  • Government contracting: We are building tools to help the FDA manage case applications
  • Yahoo: We help people read their email (where success=seeing more ads)
  • Google: We help people search for stuff
  • Even Quora: We help people get answers to their questions

Call me crazy, none of those seems inspiring. But advertising seems to create a response that is 100% pure loathing.

This is particularly tragic given the fundamental interestingness of advertising technology online today.

I will add to the list of good qualities advertising companies have:

  • Clear path to revenue, profits, and fundraising
  • Huge market
  • Rapidly growing

It is easy to start a company in this space – why aren’t engineers diving in?

Social Media Changes How Job Hunting Works

February 21st, 2012

I have talked to a couple of people who are job hunting recently and I noticed some interesting things.

First, generally speaking, I have historically been of the opinion that people that quit their jobs without having their next job lined up are suckers. Here is why:

  1. Being paid is nice. You want to get paid. If you don’t believe me, believe Latrell Sprewell. Everyone needs to feed their family.
  2. I always thought it was harder to get a job if you are presently unemployed than if you are employed. This is the dating corollary: A married man is attractive to women because he demonstrates that someone else thought he was a good catch. A single guy has no external validation. Stuff like that.

However, I recently came to doubt my wisdom and here is why: With the growth of social media, the tools one can avail oneself untoward when job searching publicly are much more powerful. And that is pretty interesting.

I recently had discussions with a couple of buddies that are job hunting while employed and each time I was shocked to hear that they were job hunting and I told them, “You should have called me sooner in your process.” It made me think that they are going to miss out on looking at some great opportunities because people don’t know they are looking.

Similarly, I have a buddy who is perennially unemployed and he is always getting good job offers and talking to tons of people because he is always tweeting and blogging about how he is looking for gigs. When I sold Deconstruct Media, a few people approached me and said, “If I had known you were open to selling, I would have wanted to have a discussion with you.” You can bet your bottom dollar that I regret not engaging in those discussions!

 

Logged-In Contextual Ad Units

February 15th, 2012

Saw some new ad units on Grooveshark today:

Both of these were ad units that took advantage of the fact that I was “logged in” to those accounts to show me contextual information. Amazon showed me the last few products I looked at, LinkedIn showed me relevant job offers. (I find it interesting that LinkedIn thought it was necessary to pay some ad network to show me these job offers. Do they need a certain amount of traffic here to justify their existence to recruiters? I suppose so.)

Interestingly, it is only a hop, skip, and a jump to LinkedIn licensing this data to the ad network to drive other targeting – maybe AppSumo uses LinkedIn data to drive offers to me or something.

Frankly, I don’t love it, but this is basically the same as all retargeting. It is a good thing I wasn’t looking at some illicit product on Amazon and someone isn’t looking over my shoulder!

Is the Government even trying?

February 14th, 2012

This isn’t a political post, but it is a funny story.

So, from time to time, because I live in DC, I get sucked into reading a government RFP. I was reading one that just came out about how the government wants a tool for searching twitter for terrorists tweeting when I saw this line:

This must be a secure, light-weight web application portal, using mash-up technology.

So that is a virtually meaningless, yet buzzword compliant line, specifying how the solution is built, but not what it does – A CLASSICALLY SILLY THING TO DO. But the next paragraph put me over the top:

The application must be infinitely flexible….

Are you serious? The great thing about asking for a product that does something infinite is that I know the price: Infinity!

  • Infinite scalability: Infinite hardware: Infinite price
  • Infinitely flexible: Infinite development time: Infinite price

Clearly, someone was thinking about how flexible the product needed to be and chose the word “infinite” to describe it. Serious engineers would laugh this person out of the room.

I am telling you now that someone will probably win this contract (it sounds like it was written with a very specific idea in mind, so it may be pre-sold) and that person will build something not infinitely flexible – unless your idea of infinitely flexible is “you own the code, so you can add whatever you want to it.” In which case, everything is infinitely flexible – I could hack the binary of Batman: Arkham City to be a word processor!

Honestly, who could write something like that.

 

How Attention Was Destroyed By The Internet

February 12th, 2012

Everyone talks about how the Internet is mucking up people’s ability to focus and pay attention. To whit:

I actually recently figured out the problem: Bad writing. I have blogged at length about the collapse of journalism in the face of new media aggregation.

However, I have realized that even scanning the RSS feed headlines of Alley Insider is no longer enough to keep me from giving them untoward attention. Essentially, virtually all of these organizations pay writers by the page view. The result is that writers are incented to reblog things left and right (Note the rreblogging of the Verge’s commentary on this unfunny ad that they prop up anyway) – in particular, reblogging their own stories with new headlines in a transparent attempt to drive additional traffic. This is something we are seeing more and more on alley insider and it does nothing but diminish the value proposition of the site.

Here are two clusters of alley insider articles. These articles came out, in most instances, within hours of each other:

Or how about this:

Why can’t we just have one well-written article with a link? Instead, these are all a paragraph, with two paragraphs of interlinking to the other articles driving them. This is woeful.

UNSUBSCRIBE.

New Economies and New Consultancies

February 7th, 2012

Lots of people have talked about how the economics of start-ups have changed. As costs have come down thanks to tools like MySQL, Amazon AWS, and free frameworks like Rails, where it used to require millions of dollars to build an early stage product, now a product can be built for virtually nothing.

The bottleneck now appears to be access to engineering talent.

There are no hardware constraints. The only thing that stands between an entrepreneur’s idea and the realization of that idea is convincing technical talent to devote their time to it.

One could write a whole host of blog posts around this, but I want to talk about a few interesting side effects I have seen.

There are more tiny consulting companies than ever. I am talking about free agents (1 person) and small shops (2-10 people). I have noticed that many of these are managed poorly. I would say a common thread in many of these is that the people that start them either never worked at a large consulting shop or they were a person that hated all the process and machinations at their prior employer, did not value them, and quit to go their own way. These companies are easy to start – you can simply hang around on oDesk or something worst case and build relationships from there – because demand for technical talent is so high.

But an interesting side effect of this is that as the technical talent gets distributed to these tiny companies, the process and project overhead diminishes significantly. That sounds great to engineers, but do not doubt that there is some value in process – particularly as regards to the creation of visibility in the process (which usually is completely unvalued by the people doing the work). The result is that the burden is placed on the client to “manage” the project and make sure that they are getting bang for their buck. I have also seen a sharp transition away from the trend toward fixed pricing of projects and de-risking the project for the customer to a time and materials model and “scrum-ey” project methodologies. This is great for the developer and CAN BE great for the customer, but only if the customer has the infrastructure needed to manage the project well.

So as technology frameworks have simplified the development of technology, the trend in consultancies has been toward smaller and smaller organizations, but increasingly these consultants are providing only technology development, not the infrastructure that many have come to expect that results in complete delivery of the final project. Customers own project management, QA and other typically core engineering functions – the consultant is just manpower.

 

Yahoo! And Product Leadership!

January 31st, 2012

Disclosure: I know a few sales people at Yahoo! and one engineer. This post has no biases in it.

Citi analyst Mark Mahaney said about Yahoo! this week:

Its core Display Ad biz seems like a Deteriorating Asset – a possibly perpetual market share loser – while its Asia Investment Portfolio would seem to contain significant Shareholder Value creation opportunities. We applaud YHOO’s significant share repo activity and would encourage the consideration of a dividend.

Mark Mahaney is a fellow Wharton alum (Go Quakers!) and a Hopkins alum (My wife’s school), so you would think he would be super smart, but I hate this analysis. This analysis is what you do when you are losing: Milk the deteriorating asset and give the cash to shareholders before the company throws it away. This is not how to win at all. Turnarounds require cash hoarding. Should Apple have paid a dividend a decade ago?  Should Apple be paying a dividend now? Cash should go to investing in the business if there are places you can invest it that return a reasonable IRR (theoretically not hard given the interest rate at the moment). If Yahoo doesn’t have these, and Scott Thompson can’t figure out what they are, they truly are doomed, but I continue to think of Yahoo! as one of the most valuable media properties on the Internet today. Ironically, a Citi analysis tells the story:

 

There you go: Yahoo! is just behind Google and Facebook for time on site in the U.S. Admittedly, the inventory is not as valuable as Google’s directed intent inventory, but still, don’t go throwing in the towel. I vote for turning it around! That requires investing in awesome, not milking the business dry. You need to give Scott Thompson a fighting chance here.

Of course, I have to comment on the ridiculous things said by Business Insider as well. Here is the best part of that article:

This exec said: “I would like to know what the Yahoo board was looking for that this guy is the answer. Because I just don’t understand.”

This exec’s primary complaint is that Thompson has spent most of his career on the product development side of the tech industry and he has exactly zero experience in media or advertising.

“He doesn’t really know the company. He thinks there’s opportunity but was not specific about it. I think he doesn’t even really grok what business Yahoo is in.”

In this person’s view, Yahoo didn’t need an executive with product development experience as CEO because “there is very little that is wrong with the Yahoo product.”

“Maybe a year ago they had product problems, but [Yahoo product boss] Blake [Irving] has done a great amount of work and what Yahoo has in the product pipeline is more compelling than another other media company.”

In this person’s view, what Yahoo needed to grow its revenues again was a CEO who can “better position” the company’s various advertising offerings to agencies. After meeting with Thompson, this source said that could be a problem for Yahoo’s new CEO.

“He is not really familiar with the kinds of sensitivities in the agency business. This is a very relationship heavy industry and I don’t know if he’s best equipped for that. “

This guy is hoping they re-hire Terry Semel. I liked this hire because I thought they needed the second coming of Tim Koogle.

Yahoo! is not in the media business, it is in the new media business. Unlike movies and TV, where the format has really changed minimally in the last 50 years, new media is changing drastically every 5 years. The advent of online video like Youtube and Hulu, the emergence of the mobile Internet, and more mean that being a new media conglomerate leader is about having a vision of how technology will evolve more than it is about being a mac-daddy networker. Continuing to evolve the product pipeline over the next decade is at least as important, if not more so, than simply shilling what they have.

The job of Yahoo’s CEO is to change the world, not sell what they got to agencies. They need the Steve Jobs of media, not Greg Coleman. You want a guy with tight agency relationships? This guy is the CEO of Yahoo!, he can hire that guy. Can’t hire vision. Can’t hire game-changing. Plus, as many of the commenters point out – while agencies have lots of options, winning is about the audience. How are Zucks agency relationships? Bet he is not going to have too much trouble taking money out of agencies pockets. Eric Schmidt’s big fat agency rolodex? Non-existent. How is that Google advertising business doing? OK?

If you have the audience, and you have the products, you will overcome.

I wish Yahoo! the best of luck. The world needs more innovation and I would hate to see companies simply go “poof”. I feel the same way about Tim Armstrong at Aol. No one wants Aol to stop existing. The world is more fun when there is more stuff going on. We just want them to suck less.

A Funny Story About Patch and Aol

January 24th, 2012

This is a funny story from about 3 years ago at Aol. If you are a lawyer or PR flack at Aol and want me to remove this, just let me know, but I don’t think this really hurts anybody and it shows a little bit about Tim Armstrong’s commitment to the cause, which I don’t think is bad.

I attended a senior leadership offsite at Aol shortly after Tim Armstrong joined the company. The first order of business for Tim was deciding on the three or four things we wanted to focus on as a business to be great. One of the areas that Tim proposed was “Local”. Keep in mind, this was before Patch, etc.. Tim used the exact same verbiage to describe local as he does today: “It’s a big white space with no winners”.

So he had all 100+ senior people vote on “what we should focus on” and local lost. So, in deference to senior leadership, Tim took local off the table. We came out of that meeting with three areas of focus for Aol as a business. But you could tell that Tim thought we could have local and he was deferring to people to show that he could compromise, etc.

I think it only took a few months before he acquired Patch, re-engineered the senior leadership team around Jon Brod and made huge, sweeping investments in local.

Moral of the story: Maybe people should just let the CEO set the direction and then people can move on with their lives. Trying to explain to a CEO what an organization isn’t good at is like talking to a wall sometimes – and with good reason! The CEO is the only person who has the power to make an organization good at something.

You can make fun of Patch, but Tim followed his heart and his gut with where the market opportunity was and other than that one moment when he wanted to show people he was a nice guy in the first few months of his tenure, he has never looked back. I suspect he looks back on that meeting with regret. Don’t ask people’s opinion if you aren’t interested in hearing them! Or maybe, more importantly, don’t tell them their opinion matters if it doesn’t.

Sidebar: I love the Aol logo. The Google/Microsoft/Yahoo! logos bore me to death. When I talk with start-ups about logos, I always tell them that most people can’t do what Aol did. Aol could have a million logos because when you spend that much on consumer branding, people will get the message. With my last start-up, I always felt like I would spend so little on marketing in the life of the company that almost no one would even see the one logo. When you have a huge brand, that ain’t a problem. And I love the playful spirit and ability to do fun things with that.

 

Millennial Media: Good luck, and thanks for all the fish!

January 18th, 2012

Disclosure: I know tons of people at Millennial and am good friends with many of them. And I hope they all make crazy bank.

But as they say, “No conflict, no interest!”

Anyway, I haven’t talked to anyone there since the S-1 filing and I am not an employee, so I can complain about the coverage that Millennial is getting from the Business Insider. They have written a couple of articles that I take exception with. Also, Business Insider is a rag and I wish I could stop reading it.

Finally, I have been wanting to do a blog post about Millennial’s IPO and how their Q4 was probably boffo.

The first article I take exception with: http://www.businessinsider.com/millennial-medias-ipo-is-dependent-on-accounting-gimmicks-2012-1

I think the URL says it all: Millennial Media’s IPO is dependent on accounting gimmicks.

This is a bullshit article.

Business Insider is dismayed that that an ad network recognizes dollars that pass through as revenue and then the publisher payments as COGS. Although they note that this is how every ad network does it.

But folks, this IPO is not about small revenue – although I actually agree: The revenue is smaller than I expected.

This IPO is a growth story and a story of needing cash. Historically, networks have a negative cash cycle. Publishers expect to get paid by networks quickly and agencies pay slowly. The result is that you need a lot of cash to front the business.

But let’s talk about the growth story: In 2010 Millennial did 40% of their revenue in Q4. I expect more of the same and a key part of their IPO is putting the puck on the ice with a great announcement in a few weeks – immediately prior to their IPO – about a blowout Q4. How do I know this?

  1. This business is seasonal. Q4 is when it happens. You saw it in 2010.
  2. I had a great Q4. Q4 was great for mobile advertising – I have seen a number of anecdotal industry data points.
  3. Millennial knows what they are doing. These are the same guys that hit it out of the park at Ad.com and they ran that business with strong operations. I am telling you right now: They know exactly how much money they make every day. When they filed their S-1 in the beginning of January, they already knew what Q4 was and they filed knowing they were going to have a great announcement to make prior to the IPO. They know. Their bankers know. This is orchestrated.

The second article I take exception with: http://www.businessinsider.com/this-chart-shows-the-no1-problem-at-millennial-media-right-now-2012-1

“This Chart Shows the No. 1 Problem at Millennial Media Right Now”

What is that problem? Let’s quote.

The real culprit is general and administrative expenses — “product, operations, developer support, business development, administration, finance and accounting, legal, information systems and human resources employees,” as Millennial describes them. G&A expenses (in orangey-brown, below) are growing faster than any of the company’s other operating costs:

millennial media

This ought to be CEO Paul Palmieri’s No.1 issue right now: Controlling his bloated admin costs. If Palmieri (pictured at top) can’t get those down as a portion of gross profit then it doesn’t matter how successful his salesforce is.

This is pretty much 10000000% wrong. The hypothesis that a business needs to cut these costs imply that a business is mature. Millennial’s plan is not to control costs to generate profits. It is to grow. GROW. GROW.

This is the Amazon model. If you want to win, you spend. They will grow their way to profitability, but Business Insider talks out of both sides of their mouth: This company is tiny! This company has bloated admin! What no one can deny is that they are growing super fast. They could be 10x bigger in 4 years. Bet they will throw off tons of cash then. When you raise money and when you build a business, people always need to be thinking about optimal velocity. This spend is about maximizing market opportunity, not maximizing quarterly profits. That will come soon enough!

Did they hire people to work in Publisher Services and lock up tons of inventory for Q4? Yep.

Did they scale up operations like crazy? Yep.

Did they hire finance people to get all SOX-compliant? Probably. My understanding is the business is swarming with finance people now.

Is this a bad idea? Nope.

It is the top of the first inning. They have a chance to be a dominant player in the industry. Why would you underinvest?

They are going after it. That is totally the right thing to do. In a market like this, you grow your way to profits. Skimping on the business is a recipe for disaster. Why Business Insider would encourage this demonstrates their naivety toward the opportunity in mobile advertising.