Joseph Bou-Younes's Website

Tag: advertising

  • Most of Facebook’s valuation is driven by 0.15% of Mobile Gamers

    As you read the breathless reviews of Facebook’s Q2 2014 results, remember that the entire App economy depends on a tiny group of whales who spend hundreds of dollars a month on in-App purchases.

    This is terrifying.

    Facebook’s stock price is the second derivative of in-app purchase revenue. Things are highly geared, and incredibly risky. Which isn’t to say that you can’t keep making money on $FB; just know the risks you’re running.

    It’s only a matter of time before Tim Cook makes a move to capture some of the App advertising market for himself.

    All that said, well done Facebook!

  • Apple Ads

    seanoliver:

    I have to admit that I agree with the cacophony of criticism about Apple’s latest round of TV ads. In fact, I almost had an allergic reaction to them when I first saw them air during the Olympics opening ceremony on Friday.

    They looked and felt like ads that my former employer, Microsoft, used to release in attempt to position themselves as being relevant. 

    So many issues abound:

    • They don’t show the product. This is a product ad, not a brand ad or a perception ad. And Apple has always impressed me by the way that they have (almost) always made the product the star of their product ads. Consumers need to see what’s being advertised in order to understand the messaging in a tangible way.  
    • They don’t explain the product. Apple doesn’t always show the product in its ads. A great example of this is the Mac vs. PC campaign that ran through the first half of the 2000s. But that campaign still made the product the star by focusing on each ad on a discrete feature or set of related features, and explaining how they work. That’s something that this campaign utterly fails at doing. In the ad above, the Genius asks the shopper, “It came loaded with all the great apps like iMovie, iPhoto, Garageband… Not ringing a bell?” The consumer at whom this ad is targeted doesn’t know what these apps are. As a result, he doesn’t know why he should care that he doesn’t have them. And if the ad doesn’t tell him that, he’s just going to hear marketing noise and tune out. 
    • They make the target audience feel stupid. This is Apple’s first real effort going after a less tech-savvy group of computer buyers, and this ad makes it clear that they really don’t know how to talk to them at all. The people in this segment are not idiots, in fact, a lot of them are doctors, lawyers, teachers, and otherwise very smart people.They just don’t think about the latest technology all that much, and this ad basically calls them stupid for not buying a Mac. When consumers buy PCs, they are usually doing it after lots of research — after all, it’s a big purchase for most people — and this ad is essentially telling them they made the wrong decision despite all the thought they put into making what they thought was the right one. 
    • They make the Geniuses look like unsupportive know-it-alls. In a similar vein, the Apple Genius in this ad comes off as a true embodiment of the elitist stereotype many have attributed to Apple’s core customer. When Apple first introduced the Geniuses, they worked because they weren’t that stereotype. No one wants to buy a computer from a cocky teenager who thinks their questions are stupid and that they’re wasting his time.  
    • There’s no clear call to action. I’ve alluded to this a little already, but the most important thing missing from this ad is that there’s absolutely zero payoff. No moral. No happy ending. Nothing to tell the consumer what they should take away and do next. They don’t even explain that these “friendly” Geniuses can be found right by where you live at your local Apple Store. This is a product ad targeted at people who don’t know anything about the product, and Apple fails in the most fundamental way by not telling them anything about it or even where to buy it.

    When I was with Microsoft, I saw vapid creative like this get created and published all the time. It wasn’t because people at Microsoft didn’t know what they were doing. There were and there continue to be a lot of extremely talented people at Microsoft.

    Collateral like this happens when there is no creative vision coming down from senior leaders. When leaders delegate the vision downward, middle managers end up having to make the final call, but in almost all cases they don’t have the power to do so alone. So, they go about securing buy-off from multiple teams, and the result was leadership by committee. Not exactly the Apple way.

    There’s been much said about whether Tim Cook can steer the great ship that is Apple into another decade of innovation. While he may still be getting his sea legs, this ad along with other marketing blunders over the past few months make it clear that this is no longer Steve Jobs’ Apple, for better or for worse.

  • Creating value through scarcity.

    It’s been a crazy month for me and mine as we try to plan a wedding across the continent. Now that summer is officially over it’s time to hunker down and relieve everyone’s curiosity. and catch up. So, to make for a post-free month here are two short posts sandwiched into one.

    The newspaper business is demonstrating that you can’t cut your way to growth. Newspapers and media companies spent most of the 1990’s cutting costs as a way to grow margins and revenues. As a result, most local newspapers now just reprint wire stories, attach them to local ads, and distribute them to local merchants and subscribers.

    Online, publishers are taking this “hollowing-out” a step further. Rather than selling their own ads to their audience they’re using ad networks to move “remnant” inventory, often with disastrous results.

    If you believe that tomorrow will be like yesterday – and that publishers will continue to cut down on original content as well as their sales force – then the web of the future will be a bleak landscape of AP, Reuters, or (God help us) UPI articles sandwiched between Google AdSense ads.

    But then, what about the bloggers. A couple weeks ago, Nic Brisbourne made the point that the Future of News is Scarcity. Specifically, he claimed that the way to make money as a content creator is to pick a niche, create (or source) high-quality, original content or opinion, and then generate multiple revenue streams from it. He goes on to discuss how “news” today is ubiquitous and free, but analysis and intelligence is – or can be – highly valuable.

    And finally, the FCC held several workshops on online privacy, security, and openness. My boss was invited to a few of the sessions. In typical DC fashion, the discussion centered around whether or not the government should restrict behavioral targeting, or at least allow users to opt out (like the national do-not-call registry). But Chris Kincade offered a different idea — what if BT providers were forced to describe the data that they collected, and how they planned on using it? And what if they did this in a scalable way, using a standard protocol, so that browsers could allow users to intelligently manage the data being collected about them. It’s kind of like the FCC Broadcast flag, but, you know, not stupid.

    And that brings me to my final, random point — way back in June the U.S. Supreme Court ruled that Cablevisions “virtual DVR product,” which allowed subscribers to record video in the cloud — was, in fact, legal. This is pretty mindblowing. A colleague of my described this as nothing less than the supreme court extending eminent domain into the cloud. “I pay for cable, I ‘own’ that episode of Heroes, so I should be able to record it into the cloud and retrieve it on demand.” This poses an interesting question on the legality of p2p file distribution. For example, if I subscribe to basic cable, and choose to download House instead of DVR’ing it, or watching it on Hulu, is that also now legal? What about Mad Men? Or any HBO content? And if this is legal, what is it going to do to the cable company’s own on-demand businesses? Or iTunes?

    It’s an interesting world we live in. Enjoy it.

  • Youtube gets down to business.

    It’s incredibly difficult to create a product that both delights customers and generates revenue. As a result, the usual way to build a digital media business is to first create something that users love and then, months or years later, find a way to really monetize it. Youtube followed this model for years. It now looks like Google is serious about making money from Youtube. And just in time.

    As audience and time spent continues to shift from TV to the web advertisers are looking for scalable but innovative channels through which to reach consumers. Youtube is best positioned to do this. It will be interesting to watch and see what happens.

  • What the Underpants Gnomes can teach you about business on the web.

    I’ve been thinking a lot about the kinds of businesses that will start and thrive in this economy. The bulk of web 2.0 companies were built (and bought) based on the thought that they would aggregate and re-sell people’s attention. As we moved through the business cycle, some companies developed exotic ways of targeting their users (Facebook), others used AdSense to generate a trickle of revenue, others based their businesses on driving search revenue (AVG, w3i, Conduit, Dynamic Toolbar, Freecause) and still others just left the problem for their future owners to solve.

    As the economy slowed, AdSense yields plummeted and publishers became frustrated with the quality of the ads. Advertisers became more conservative, cut their “experimental” budgets, and avoided new targeting techniques. Folks like AVG became more aggressive and successful, and have spent the last few years creating new toolbars, virus scanners, and other tools to drive search distribution. But outside of search distribution, the “attention” businesses have been getting creamed.

    On the supply side, you’ve got dozens of new channels (mobile ad platforms, dozens of new ad networks, Facebook, and so on) generating record levels of ad inventory. On the demand side, all of the major brand advertisers have pulled back, and two of the biggest categories – autos and financials – have slashed or eliminated budgets. I shudder to think of what will happen if the U.S. pharmaceutical industry is finally subjected to price controls.

    Dharmesh Shah wrote a great post a couple months back about the challenges of building a business for the attention economy. The crux of the problem is that people only have a finite amount of time – and attention. On the other hand, people can always – at least in theory – make more money. Shah goes on to list out three major difficulties with building a business for the attention economy:

    “1. Attention Is A Scarce Resource: Attention is a bit limited and fragmented. I’d argue that it’s getting increasingly harder to get people’s attention…

    2. Battle of User and Advertiser: There’s a conflict between getting monetizable attention and solving the user’s problem…

    3. Advertisers Make Lousy Customers: Even with all the fancy content-matching algorithms that pair up a given ad to a given context, I still don’t like advertising. I really don’t. I can see why it’s important in a lot of industries — but I don’t know that software is one of them. Given the choice between solving a user’s problem (which I understand, and hopefully care about) and an advertiser’s problem — I’d choose solving the user’s problem…”

    Selling attention is hard – but everyone accepts that it’s hard. So they just include it in their business plan as the second step of the “Underpants Gnome Business Model.” For those who haven’t heard, the model is:

    Step 1: Steal Underpants
    Step 2: ???
    Step 3: Profit
    http://media.mtvnservices.com/mgid:cms:item:southparkstudios.com:151037

    Unless you have some very deep pockets, and have a multi-year technology or science problem to solve, this just shouldn’t fly. That’s one of the reasons I’m spending more time looking at wallet-based (as opposed to attention-based) business models over the next few months. Amazon and ebay are big, but they’re not everywhere – yet.

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