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Microsoft Buying Rapt to Get More Ad Insights

Business software may be profitable, but the growth and sex appeal is in advertising. At least, Microsoft seems to thinks so. Amidst efforts to make headway with its takeover offer for Yahoo, the Redmond giant today said it’s agreed to buy online ad analytics firm Rapt. Terms of the deal weren’t disclosed. It’s a move that could be important for Microsoft because it would give the company the ability to see how much advertisers are paying for online ads and what their conversion rates are — an ability Google already has through Ad Manager and Google Analytics.

This worries some in the advertising industry. When a company like Google or Microsoft can track what an advertiser is paying for ads and the conversion rates across multiple sites, they can estimate how much an advertiser might be willing to pay — and raise the price to that ceiling. Transparency in markets is generally a good thing, but in this case it benefits Google and Microsoft — not necessarily the wider world of publishers and advertisers.

Technology-News: GigaOm

The Operators vs. the Media Brands


Chetan Sharma is co-author of upcoming “Mobile Advertising” (John Wiley) and “Mobile Broadband” (IEEE Press). He is an adviser to several operators and media brands around the world.

Over the last three months, there has been significant discussion around the notion of “open access,” with Apple promising to release its developer kit for the iPhone; Sprint Nextel launching its WiMAX business, XOHM; Verizon Wireless saying it will open up its network and platform; Google’s efforts around Android and a possible gPhone; and the 700 MHz auction. The two massive industries of communications and media/online are clearly at loggerheads. How this battle shapes up over the course of the next few months will define how you and I will consume media, entertainment and information.

Media companies and mobile operators think about customers differently. Operators are focused on subscriber acquisitions, while media companies are fanatic about audience acquisitions. Operators think in terms of adding a few hundred thousand subscribers a month — media companies, of millions. In the Telco 2.0 world, where service providers aspire to become media and entertainment brands, shouldn’t operators be thinking like media companies? Shouldn’t they be more focused on audience acquisition strategies — selling their goods beyond the confines of today’s existing barriers?

If we look at the strategic canvas of the mobile data industry, it’s clear that operators currently have a huge advantage over media brands. Mobile operators’ advantage in the current landscape comes from their superior reach, as well as the capability they have to segment and profile users. Their current influence over the ecosystem is a magnitude ahead of media brands. However, in other areas, such as user experience, content, and the ability to be quick to market — media brands have a stronger strategic footing, and they will use it to close the gap in the other areas.

Too much ink has been wasted on the equation of being a dumb pipe. Dumb does not imply little or no value. For operators, nothing is more troubling than the insinuation that they will be reduced to bit pipes, becoming utilitarians tasked with keeping the streets clean while the media companies zoom past them in their Ferraris. Yet operators need to realize their unique value propositions, come to terms with both what they are great at and not, and structure their monetization strategies accordingly. The growth of the nascent mobile advertising industry is largely dependent on it.

While it is conceivable that some operators can become content and mobile advertising powerhouses, the evidence points us elsewhere. Operators and media companies sit at the exact opposite ends of the spectrum in terms of cultural and media savviness. Mobile operators are very engineering focused and extremely conservative in their approach to the critical operational aspects of running a cellular network. Media companies, on the other hand, come up with the most creative ways to express a brand message in a landscape that would burst the brains of the very brightest network operators with all of its consumer nuances and related myriad creative intricacies.

To be successful over the long term, operators need to focus on the unique elements that only they can provide — such as location, presence, user profiles and platforms for applications; as well as device and network APIs — and build business models around abstracting this information so that the ecosystem can utilize them to enhance user experience and usage. Such an approach will enhance their competitiveness in the media ecosystem, keep the usage and ARPU levels up, and get more entrepreneurs and users involved in moving the industry to its next milestone.

Such an ecosystem will also empower entrepreneurs to keep pushing the boundaries of technical and business innovations to make mobile media and advertising a sustainable, vibrant and scalable industry at a much faster pace — and will help deliver on the promise of “open access” better than any rules in the 700 MHz auction. This shift in mindset (and subsequent execution of the resulting strategy) will have a direct impact on any viable mobile content and advertising strategy. Advertisers look for an audience, precise targeting, and measurement. If operators can help deilver that, then their media strategy will flourish, but if three years down the road, media brands have five times the audience…well you know what happens next.

Technology-News: GigaOm

Does HD On a PC Screen Matter?

YouTube co-founder Steve Chen during an onstage chat at our NewTeeVee Live conference responded to our questions about video quality by saying that YouTube will boost the quality of the videos, but not at the expense of user experience. Buffering and video playback delays were an anathema to the popular destination site, and YouTube would be careful about how it tackled the issue of video quality.

The company was experimenting with ways to gauge the speed of broadband connections and improve the video quality accordingly, he said. He told C/Net WebWare that this technology would be available widely over the next three months. Somehow it all got misconstrued into YouTube offering high-definition videos on their site, an erroneous message that was repeated quite a few times, and eventually settling into a debate about high-definition vs. high-quality videos.

What matters more? It all depends on the screen the video is destined for, opined panelists on my Network Makeover panel preceding our conversation with Steve. They were almost unanimous in pointing out that that HD video on a PC screen doesn’t matter.

Verizon’s Jeff Harris summed it up best when he said that resolution is dependent on the destination screen. A big plasma screen should get HD video, but most laptop screens don’t need HD and you can’t really tell the difference between higher quality and HD videos on, say, a 14- or 15-inch screen. Cisco’s Kip Compton rightfully pointed out that the trend is towards higher quality. I think that is something we can all agree upon.

What do you think? What is the minimum acceptable quality you want from your web video?

Related Posts:

Technology-News: GigaOm

Hulu Hands-On Review in One Word: Brilliant

This morning, between fielding phone calls, answering emails and writing blog posts, I have been watching TV, a lot of TV…on Hulu, the new online video portal backed by NBC (GE), News Corp. (NWS) and $100 million in funding from Providence Equity Partners.

Before I go any further, a mea culpa: I mocked the service, and its backers, all through the summer. From the moment I learned about the new company, I was skeptical. And now, after spending three hours or so on the service, I am ready to eat crow. And not just any crow, but rotten, six-month-old crow: I have never been more wrong.

Now to my first impressions: This is an awesome service, one that worked flawlessly on my Macbook Pro and ThinkPad T61 without a hitch. The quality of the video shows is good enough to enjoy without straining the eyes, and even in the full-screen mode, the Flash video looks pretty amazing.

As Liz had noted yesterday, the site is clean, sparse and well laid out, taking a cue from the on-the-air (old TV) roots of its parents. And I can use this service to catch up on all the episodes of “Scrubs” I’ve missed.

Hulu doesn’t seem like a YouTube (GOOG) competitor. (This is yet another thing I was wrong about.) What it really is trying to do is time shift — and place shift — television on a massive scale. It’s basically an attempt to counterbalance the tight control that cable and satellite networks have over distribution.

It’s the kind of service that should scare startups trying to develop their own distribution platforms, such as Joost. It is also the kind of service, if it can attract enough viewers, that could succeed in relegating YouTube and others like YouTube to the “user-generated content” world, at least in the U.S. market. The social media features alone, such as sharing, are good enough to get Hulu some traction. I loved the ease with which you can create short, embeddable clips from full-length TV episodes, and the slider-based clip-and-share feature is pretty awesome.

Hulu has a long way to go before it can claim an audience as large as YouTube’s, and no one knows how much pressure it will face from its distribution partners, such as the cable companies. There are already rumblings about the draconian terms of service, and it’s unfortunate that its big media parents are restricting the site to web-based streaming and expiration dates for fresh episodes of new shows. But I think that when the beta becomes publicly available, you are going to be pleasantly surprised. For once, I am happy to be wrong.

Technology-News: GigaOm

700 MHz Auction: Google Takes Another Shot At Verizon

The Verizon (VZ) vs. Google (GOOG) squabble over the 700 MHz auction is getting nastier and nastier. A few weeks ago, Verizon went to the courts, seeking to block the Federal Communications Commission from adding open-access provisions to the auction of airwaves that are considered beachfront property when it comes to wireless broadband.

RCR Wireless reports that Verizon might have been doing some behind-the-scenes lobbying in order to get the provisions watered down. In a blog post, Google is taking issue with Verizon’s contention, and points out that they have been in touch with the FCC.

Verizon appears to be arguing that two of the key provisions in the auction rules designed to spur competition — the requirements for open devices and open applications — should not apply to a licensee’s own devices that use this block of 700 MHz spectrum. Their theory is that so long as “unlocked” devices (those that can be configured to work with any network) are theoretically available to consumers through other means, the winning bidder in the auction shouldn’t be required to make its devices open as well. From our perspective, this view ignores the realities of the U.S. wireless market, where some 95 percent of handsets are sold in retail stores run by the large carriers.

We should expect a volley from Verizon any moment now.

Technology-News: GigaOm

Google Phone An Attempt To Take On $100 PC?

Google Phone has been a subject of many rumors lately. Mark Hopkins, a technology podcaster, says he got the confirmation of the Gphone after talking to an insider Google (GOOG).

He said that the Google (applications) Suite is going to play a huge role in the usability of the GPhone, and the thought process behind it’s functionality is less about beating the iPhone and more about beating the $100 Laptop, which provides a huge clue behind what will be the pricing structure on this…regarding the two week timetable on it’s release, he said he could not confirm that part of the story.

If that indeed is the case, then it makes sense for Google to be talking to mobile carriers in countries where PC density is marginal. By tightly integrating the Google Apps, Google Phone could become a viable rival to the much ballyhooed $100 PC being promoted by everyone from Nicholas Negroponte and Microsoft (MSFT), and will also over come the connectivity problem facing most of the $100 PC schemes. Of course, I have no way of confirming what Hopkins is claiming, so take this post with a big pinch of salt.

Technology-News: GigaOm

VideoEgg SNIPES At YouTube: Who Thunk It First? Maybe Old TV Guys

YouTube last night said it’s offering a new kind of embedded in-video advertising that’s going to help its parent company, Google (GOOG), and its media partners make money off what has thus far been a fallow field — online video.

YouTube’s in-video advertising techniques have resulted in many pointing out that VideoEgg, a San Francisco-based startup that goes through identity changes more often The Talented Mr. Ripley has already offered these kinds of ads. (It’s a Facebook-ad network now!)

VideoEgg is “welcoming” YouTube to the party, pointing out that Google’s YouTube is imitating them. That’s nothing new, however. The text-links-as-ads were someone else’s idea, too, but Google ended up making billions off of it. Nevertheless, it is interesting to point out that the source of inspiration for the in-video ads of both VideoEgg and YouTube is actually a business they are both trying to take to the cleaners: broadcast and cable television.

If you watch baseball games on Fox or some of the cable networks like TBS, they use a technique (known as “snipes” in broadcast lingo) in which a promotional ad is overlaid on top of the regular broadcast stream. GE Co. (GE), parent of NBC, has a patent (United States Patent 20070143786) that talks about advertising based on this methodology.

A technique is provided for advertising. The technique includes a combining of two or more video streams to form a unified video stream and broadcasting the unified video stream. At least one of the two or more video streams is a program content stream comprising program content that is filmed by a camera and at least one of the two or more video streams is an advertisement material stream comprising advertisement material.

Does this patent apply to Internet video? I am not sure, but if it does – oh boy, have we got trouble. Wired News’ Epicenter blog also points to patents filed by VideoEgg. Interestingly, this whole issue might end up becoming a patent nightmare.

Technology-News: GigaOm