Current Events

AdSense, Self-Optimized

google behavioral targeting options

It’s obvious when you think about it. Instead of spending your energy throwing up hundreds of ads that dance around the edges in the hopes that one will magically trigger a random click of interest, why not ask your readers, “What do you want to see?”

Google announced a new program which changes the way they pick which Adsense ads appear on the websites you visit. Instead of looking at the content on the page and simple IP-based geo-targeting, the new program looks at your browser history and targets advertising based on your browsing interests. It’s known in the industry as behavioral targeting but Google has re-labeled it “Interest-based advertising.”

The system works using tracking cookies which is anonymous and tied to your browser so if you switch browsers or jump to another PC, your browsing history will not follow you (although technically it’s possible if they tied the cookies to your Google Account). Likewise, your browsing history is going to get muddled on shared PCs such as one you might find in a family room.

The most interesting thing about this new program is that they are allowing you to edit your profile using a new Ad Preferences Manager. As you can see in the screenshot above, you can pick and chose from 20 major categories and 600 sub-categories that are interesting to you and begin to shape the type of ads that are served to you. There is an option to opt out completely in which case you’ll get the regular content matched advertisements we’ve been seeing all along but having the ability to customize what you see is a bold step forward in transparency.

Arguments against such a system when I had brought it up in the past were that if you let everyone pick and chose your ads you run the risk of not serving a well-balanced mix of advertising, running dry in popular categories and having a glut of units from less popular categories. By putting direct user feedback into the equation, you could no longer tune your ad servers to optimize for maximum profit.

My counter to that argument is that by putting your readers in charge of what they see, you stand a much better chance of not only having people look at your ads (to see what type of ads get served) but also getting a much better sense of what interests your readers.

So here’s my crazy idea. Why not go a step further? Why not let people to search for ads directly? Every magazine has an Advertiser’s Index in the back, why isn’t there a web-based equivalent? It’s been done.

For more detail and commentary, Barry Schwartz has an extensive write-up on this development over on Search Engine Land.


Facebook, Twitter send more traffic than Google

Liz Gannes posted that Perez Hilton is now seeing more traffic coming in via Facebook than Google.

My colleague Udo Szabo at Nokia HQ in Finland has a theory that I call the Unified Theory of Interweb Economics. The theory goes something like this:

  1. Advertising is a function of your traffic volume, the more traffic that comes to your site, the higher rates you can charge.
  2. Social sites such as Facebook and Twitter have a lot of link sharing going on as friends post links to share them with each other.
  3. When Facebook and Twitter send more traffic than Google search referrals, advertising dollars will follow the source of that traffic.
  4. Google’s dominance in online advertising will be threatened.

One would think we’re seeing the first hints of that with and it will take a long time before we see this trend across the board. But in hindsight this is obvious and looking at my stats for the past month I find that 44% of my visitors are coming from search engines and 45% from referring sites with a vast majority coming from StumbleUpon, a social site for sharing links.

The more you think about it, the shift in balance of power has already taken place.  SEO is still a big industry but now there are companies that will help you with SMO (“social media optimization”).  On twitter we’re starting to see scam artists try and insert themselves into the conversation just as they used to do with Splogs.

And so the wheel turns round once again and there appears to be a new king of the hill – AOL Keyword > Yahoo Category Link  > Google Keyword Ranking > Social Site referral.

The jury’s still out as to which social site will send you more links but it’s looking more and more like Facebook. We used to have the Digg effect but no one talks about that anymore. Twitter certainly has the ability to send you a bunch of traffic in short order but the audience is still mostly the early-adopter set and any traffic will most likely be short-lived as the re-tweets scroll into the past.

Facebook, with 175 million users, certainly has the right broad-based distribution to broadcast a link and send back traffic. They have added new features such as FriendFeed’s “like” feature to make quick sharing easy. The Facebook Connect and Comments widgets also will help insert new links into Facebook for redistribution.

But while it’s great to get an influx of new visitors via a social site, it’s no good if it’s not a lasting reference. Has the pendulum swung to far the other way? There are some searches that work great on the real-time web, the latest viral video comes to mind, but others such as the listing for your local plumber just don’t work on something like twitter. Not that it’s worth anything but I still get a regular influx of traffic because I’m the #2 listing for insulting british slang even though the post is over three years old.

I think it’s fair to say that the social sites such as Facebook and Twitter will erode Google’s monopoly on online advertising. Google’s never been really good at building social sites and have shared in the growth of social networking in the past by providing the advertising engine for the most popular social sites. What happens with these sites start to go direct to the advertisers? Will Facebook advertising revenues come from traditional cost-per-click/auction model or is some other type of model required to succeed in a social networking site?

The Startup Scene in Helsinki

Arctic Evening
Arctic Evening - March 2009

I was lucky my trip to Helsinki overlapped with a meeting of Arctic Startup, an occasional meeting of high-tech entreprenuers. The event was held in the Dubrovnik Lounge, a cozy event space in downtown Helsinki which had room for about 100.

It reminded me of other Web 2.0 events that I’ve been to outside of silicon valley in Tokyo and on the East Coast of the US. A gathering of the faithful who spend their days virtually tapped in to what is going on in the valley come together face-to-face to compare notes and talk about the latest news and gossip. Everyone wants to know how things are in the Valley and if it’s really like what they’ve read. The organizers do a great job of bringing everyone together and encouraging people to help each other out and share stories of what works connecting people.

The evening’s event centered around a panel discussion about the state of VC funding in Finland and I was suprised to learn how active the Finnish government is in helping get startups off the ground. It’s difficult for a nordic startup (there were visitors from Sweden and Estonia) to secure VC funding from overseas so their best bet is to use the University system to build a prototype and secure an grant from the “tekka” (I know I’m spelling this wrong) that has become more open to funding alternatives to the pure R&D projects they have traditionally funded.

I met with Indrek Vainu from Estonia who implored me to let people I know that there’s government grants available for businesses that establish themselves in Estonia. As long as you can bring $2M to the table, the Estonian government will match that amount as a grant, doubling your runway. The application process takes some time but it’s worth it. Indrek consults on helping with the application process so if you’re interested in getting in touch, let me know and I’ll put you in touch.

I also learned about the rather infamous case of Riot On, a mobile entertainment startup in early 2000 which famously swindled its investors and ended up giving startups a bad reputation that they’re still trying to overcome. There’s a great documentary about that crazy time and how it all went down. You can see the whole thing on Joost.