Posts

Showing posts from 2008

"Downturn to conclude in June" - Not my words...

Late yesterday the Wall Street Journal reported:
“On average, economists expect the downturn to conclude in June 2009, marking an 18-month duration, the longest postwar period of decline. The economists on average said the unemployment rate will peak at 8.4% in response to this recession.”

In a separate set of headlines:
“Bernard L. Madoff, a former chairman of the Nasdaq Stock Market and a force in Wall Street trading for nearly 50 years, was arrested by federal agents Thursday… Mr. Madoff told his sons he believed losses from his fraud exceeded $50 billion.”

I was not going to cover this chapter of Galbraith’s “The Great Crash of 1929” until later, but these two headlines just make me jump back to page 14- “Aftermath II”…

During the book, Galbraith points to a group called the Harvard Economic Society – a group of economists from Harvard. He also points to some other high profile economists from well regarded Universities like Joseph Stagg Lawrence of Princeton and Irving Fisher of Y…

Mollie is in!!!!

Image
Mollie just found out she got accepted to Cornell! Proud Dad!

John Kenneth Galbraith's "The Great Crash of 1929"

Image
I just finished reading John Kenneth Galbraith’s “The Great Crash of 1929”. He wrote the book in 1955 and recounted what happened and looked at the reasons why. Very interesting, and while there are many things that are different, there are a number of similarities that I will try to highlight in my next couple of blogs.

From Sept. 3, 1929 until Nov. 13, the Times Industrial Index fell from 452 to 224 – almost 50% exactly. Prices stabilized for a while, but continued a long term trend down until they reached their eventual bottom at 58 on July 8, 1932. Meaning $1,000 invested on Sept. 3, 1929 became worth $130. Ouch.

So we all know that the Dow Industrials fell from a high of 14,164 on Oct. 9, 2007 to a low of 7,557 on Nov. 21, 2008 – a little less than 50%. Of course the Dow has rallied back to about 8,600 as I write this on Dec. 11, 2008 – an improvement of about 14% above the bottom. Looking back to 1929-30, the Dow Industrials rallied about 29% from a low in 1929 of 228 to c…

Goldman Downgrades Forecasts

Some pretty sobbering forecasts from Goldman Sachs means more bad news is on the way. Highlights to me are the fact we could go over 9% unemployment (meaning 50% more people will be without a job than today), and that inflation will be negative (but they say this is not really the "D" word). The bolding is mine...

BOTTOM LINE: We have marked down our forecasts for US real GDP in response to continuing signs of falling domestic and foreign demand, labor market deterioration, renewed tightening in financial conditions, and an apparent impasse in fiscal policy pending the transfer of power to the Obama administration in late January. As a result, we expect the unemployment rate to reach 9% by the fourth quarter of 2009, profits to fall 25% for 2009 as a whole following an estimated 10% drop this year, and the Federal Open Market Committee (FOMC) to use nontraditional policy tools more aggressively, as detailed below.

MAIN POINTS:
1. A weaker growth profile...We now estimate th…

Sub 8000

Image
The DJIA went below 8000 today. A financial person told me that if you listen to the sage advice of Buffet, Lynch, etal, then you will invest now because it is tough to time market bottoms.

But I just saw a headline that makes me thing we have not hit bottom yet. The title was "Dow falls below 8,000, S&P at 5-year low". If this is the worst financial crisis since the Depression, and it is much broader than the 2000-2003 meltdown, then why would the stock market not reflect that? IMHO the world economy is far worse with no real tangible turnaround on the horizon in spite of the Goverment's efforts to free up the money supply and increase the velocity of money. So the stock market is in for more downward trends...

Pride

Image
I have never been more proud of our country.

How low will the Dow go?

Image
A frequent topic of conversation these days is the declining market. It is particularly interesting because so many people are affected by it, and certainly my own portfolio has taken a real bruising over the past year.

I told my broker my original thesis last March that the credit "issues" back then would have repercusions in the real earnings power of companies and bring down stock prices to the Dow 10,000 level. We made a lunch bet on it - I won that one. Now the question is how much further it will fall - or have we reached the bottom.

There are many pundits in the market today. They talk about the pressure of Hedge Funds, and the deleveraging of the credit market. I think about the habit of history repeating itself. Maybe not in the terms of the Great Depression - but possibly in the terms of the 1970's and early 80's. So I thought I would do a bit of research and share it...

First, I decided to look at the DJIA price 20 years ago and what the Inflation rate…

Social Pass

Shaun decided to put up what we were almost ready to put into Beta. You can watch a very good example video here.

Although Ringside is winding down, this technology may see the light of day - and might help with the socialization of the web (I know, Sarah Palin won't like the sound of that!).

Ringside Winding Down

A year ago, a group of us met in a pizza parlor to discuss how we could bring the social web to every website and business. In January, we launched Ringside Networks with seed funding from Matrix Partners, one of the best VC firms in the country. By the end of March we released into open source an initial beta of our Social Application Server – a very ambitious project. We got some very positive reviews on our approach, our implementation and the need in the marketplace for every website to become social.

We were ready for our Series A round of funding, and in late May we received a number of term sheet offers from the very best VC firms. As we were about to finalize our funding, one of the biggest non-evil Internet companies asked if we would have interest in being acquired instead. After a lot of thought and debate, we decided that the larger company would enable us to get our technology to market sooner and with more impact.

The story sounds almost too good to be true. And it w…

Ringside Site Connect

Image
Ringside is bringing the power of the Social Web to any website in two very simple, yet powerful services. Yesterday, we released a demonstration of the idea that any website could easily integrate the idea of Social Activities. Today, we are releasing a demo of our new Ringside Site Connect, which is meant to allow any website with a set of users to allow those users to become social.

Many websites have large and dedicated user bases. Ringside Site Connect provides a simple way for those users to connect with each other within the website, as well as reach out and map users in the large Social Networks like Facebook and MySpace.

In this demonstration, we have shown how the Food Network website could be extended to allow their users to connect thru a social application for people with similar tastes in recipes.

In this application, the Food Network:
- Enables users to login
- Chooses which applications are available (they can use any Open Social or Facebook application, or develop their o…

Go Ringside for Social Activities

Image
The goal of Ringside is to bring social capabilities to the entire web. Today, we are introducing an early demonstration of our Go Ringside Service that lets any website very simply add a social aspect to any activity.

As we talked about earlier, people are social in small groups around specific activities – going to dinner, traveling on a business trip together, asking friends for advice on buying something, talking about a video on YouTube, etc. There are millions of websites that offer a set of services to individual users for all of these things. As opposed to the large Social Networks, our Go Ringside Service let’s any of these websites simply add a JavaScript tag to their website and suddenly become social.

What does that mean? Well, you can see an example of adding social capabilities to the TicketMaster website. The demonstration shows a user buying a ticket and wanting to also invite some friends to go to the concert. The Go Ringside Service offers the user a way to not o…

Social Payment - Part 2

Image
As we pursue our goal of moving the Social Web forward, Ringside is focusing on two things. First to enable websites with user communities to become socially enabled. Second, to enable applications to become socially enabled.

As we had previewed a month or so ago, one of the applications we are trying to socially enable is Payment. One of our great developers, Brian Robinson, has done a video showing the current progress of this project - http://wiki.ringsidenetworks.org/display/ringside/Payment+Services. We are now to the point where we are looking for early customers to collaborate with on deploying this technology and integrating it into their existing infrastructure.

There are three interesting elements that I will highlight:

1. The payment service is designed to work across websites and social networks. In this example, premium sports content is available to users on the SportsNet website as well as Facebook and MySpace.

2. The social payment service provides companies a variety of w…

Social Activities

All of the social networks have three intersecting concepts of Friends, Groups and Activities (sometimes called events). We have been thinking about this a lot as they apply to the broader Social Web and how what we do in our normal social interactions gets reflected on the web.

In our real lives, we have lots of “friends” and are involved with many groups where those friends are intermingled. For example, I have my family, my personal friends, the folks who work at Ringside, the various companies I work with, the various people I meet on behalf of Ringside, my running friends, the high school runners that I help coach, the people I meet at the running store, etc. What makes those groups meaningful are the activities that we have together. The family vacations, the dinner with friends this weekend, the planning of the next release of software, the kick-off run and party for the new runners on the team, etc.

Many websites offer activities – buy a pair of shoes, book a hotel room, buy…

Joe's Eugene Pictures

Joe Halin, the manager for the Moorestown Running Company, went out to see the Olympic Trials. You can see some of his photos on our store website. He has pictures with Ryan Hall, Alan Webb, Gabe Jennings, Nick Symmonds, and Anthony Famiglietti. Very cool...

Shaun's Beefy Middle

Image
Shaun Connolly joined the Ringside team a couple of months ago, and has had a huge, positive impact on what we are doing and where we are going. He has come up with another blog that describes the "Beefy Middle". No, this is not referring to the 20 pounds Shaun has lost since leaving Red Hat this winter and taking up an exercise program. It refers to the area of the market above the long tail and below the skinny head.

Shaun explains it all in his latest blog.

Cloud Status

Image
This is not one of my usual social networking blogs, but I thought it was semi-related. Clearly the "Cloud" is one of the biggest changes happening on the web today. However, one of the concerns is how to track down if my application is down or the cloud service is down?

Hyperic has just released CloudStatus BETA. This is the first tool that I know if that actually checks the availability and performance statistics of cloud services. In this first Beta, they do the 5 core Amazon cloud services: EC2 (Compute), S3 (Storage), Simple Query Service, Simple DB, and Flexible Payment Service. You can drill down one ach of these to see thruput of I/O in Europe and the US for example.


Think of the next step - providing a common management platform to monitor my own apps as well as the cloud - all correlated together to make sure Web 2.0 operations teams have the best visibility to manage and monitor their critical services (like Social Web;).

Note: I am on the board at Hyperic, so y…

fbOpen API Analysis

Jason Kinner, our CTO, is leading our analysis of fbOpen, the recent open source project Facebook released to help the Facebook developer community. He has published a blog that describes the implementation in terms of number of API’s implemented.

Our goal at Ringside is to enable the Social Web. To that end we want to make it easy to develop socially aware applications that can run on any website as well as the big social networks like Facebook, MySpace, Orkut, etc. We let any website have their own social graph and also tie into the big social network graphs as well.

To make this possible, we want to make sure we implement the Facebook API in cooperation with the fbOpen project. Like I wrote in an earlier blog about Shindig and Open Social, fbOpen feels a lot like the early reference implementations of the J2EE specification that Sun put out. Something that obviously was not meant for production purposes, but could serve the community to assure compatibility and interoperabil…

Ringside implements Open Social

While Open Social is still getting started (there are less than 300 open social applications on Orkut for example and nearly 30,000 on Facebook), it is going to be an important platform in the coming Social Web.

Ringside has been working on letting any website be a container for Open Social and to hook into the emerging Open Social ecosystem. Bill Reichert does an excellent job of explaining it in this video.

Open Social reminds me of the old J2EE specification. Sun released a reference implementation – similar to Open Social’s Apache Shindig reference implementation. Like the Sun version, Shindig is meant to be used as a framework for large social networks like Orkut and Hi5 to implement their own version of Open Social – just like IBM, BEA, JBoss and many others did with the Sun reference implementation. Ringside is filling in the role of implementing a production version of Shindig that any website could use to build their own little mini social network among their own users. We…

Facebook Open Sources Platform

I just got a call from Ami Vora of Facebook, who has corrected me on following the advice of this other article - http://ostatic.com/163756-blog/cpalss-whats-thatss#rss. Apparently the CPAL only applies to open sourcing the files that are changed. So if a class is extended, or the database access logic is put into an API call, then that gets open sourced under the CPAL as well.

Facebook’s use of the CPAL open source license is a step in the right direction. We love the fact that the community is required to donate changes back to the open source project. This is the reason we use the LGPL at Ringside.

The downside of the CPAL is the requirement to give attribution. This means a little Facebook badge comes up on all websites that use the Facebook software. This makes sense from a Facebook perspective because it helps them to build their brand in return for donating their software. On the other hand, if every open source project required this, then there would be nothing on web pag…

Facebook vs. Google - Who's the Big Dog?

Shaun Connolly just joined us at Ringside, and he is already developing some interesting perspectives on the Social Web. Read his big dog pick...

To add my two cents, I think it is clear that Facebook is the big dog for Social Networking and Google is the big dog for the Social Web.

Facebook of course gets points for the rapid growth of their prime target social graph and extensive developer community - which are all targetted at making THEIR social network stronger.

Google gets points for trying to make Social a real part of the entire Web. The strong community they have built around Open Social is impressive. The ideas of Friend Connect open up social capabilitites to any website. These are efforts that make Social a part of the entire web.

Facebook has fought back. First by locking down Friend Connect from being a part of the Facebook community. Their current statements about moving to open source could put them into contention with Google in terms of "big dog" leaders…

Facebook to Open Source Platform?

Michael Arrington at Techcrunch posted that Facebook will be open sourcing their platform.

This is fantastic news for the Social Web. Facebook started this whole process a year ago when they launched the Facebook Platform – a set of API’s that application developers could use to develop social applications that work with Facebook. Google and others responded with Open Social, and took the extra step of providing an open source implementation. So far that implementation is mostly useful to the big social networks so they can open up to application developers like Facebook had done a year ago.

Having been in the open source business for over 16 years (anyone remember OSF Motif?) and more recently JBoss, we understand the many, many benefits of open source. Facebook had taken the position that others just had to rewrite the implementation based on their API. That is what Bebo and Ringside have done. But what a waste of time! One of the things that drew me to open source is being…

Facebook Takes a Swing at Google

Facebook came out swinging yesterday to defend their users and their turf. http://developers.facebook.com/news.php?blog=1&story=111. They have basically shut down Google’s use of their API to collect user profile and social graph information on the new Friend Connect service. Here’s my take on the background and what is going on…

Google has made a nice business out of an open Internet. Facebook carved out a nice little corner of the Internet with a social network that does not give Google the type of visibility they would like into that little corner. In addition, that little corner looks like it might be kind of valuable. Google makes a few moves like buying Orkut and amassing all the other social networking vendors and creating Open Social. Those things are OK, but not really opening up that corner that Google now has become to covet.

Well, the world of social network walled gardens kind of exploded last week. MySpace, Facebook and Google all seemed to rush announcements t…

Becoming Part of the Social Web

As my colleagues Jason Kinner and Rich Friedman (and many others) have pointed out, last week’s announcements by MySpace and Facebook to open up their user’s identity, friends and privacy to any website is a major step toward a Social Web. Now any website can start to offer socially aware applications, like putting a Facebook user’s profile picture on that user’s webpage, or listing friends to buy a gift for.

We are very excited because it gets website business owners thinking about the possibility of a more social website. And if enough websites start doing that, then a Social Web really starts to form. This is exactly the scenario we mapped out at the Passariello’s pizza parlor a year ago when we first started talking about this.

Website business owners will start to ask the same questions we were asking:

If some of my users are on Facebook and some are on MySpace, how do I hook them together? What about my website users who don’t use a Social Network? Can they benefit? Can I offer my …

Social Payment - a simulated WSJ example

One of our stellar developers, Brian Robinson, is working on putting a payment service into Ringside Networks. When we release at the end of June, this should hopefully make it very easy for any application to embed a social payment service. It is still early, but you can see a demo at http://wiki.ringsidenetworks.org/display/ringside/Payment+Services.

Like many of the things we are doing at Ringside Networks, this is new stuff. To help people understand what a social payment service might enable, I will make up an example.

Let’s say the Wall Street Journal has a social payment service. In addition to letting me subscribe for a year of on-line access for $99, it also offers me a $199 option to subscribe myself and 5 co-workers. Makes sense from a business perspective for WSJ, since they will get additional revenue right now and additional eyeballs for their ads.

Here is how it could work. Let’s say I go to WSJ.com and sign up for this service. The first question the website would …

Microsoft and Yahoo Get Social

No, not another blog predicting when Steve Ballmer and Jerry Yang will hug.

Last week, the lead technologist for each firm announced major initiatives to go social.

Ray Ozzie, Microsoft’s Chief Software Architect said:
“Community on the web once meant “group communications”, largely through rudimentary tools such as email, IM and IRC, message boards and newsgroups. Today, the action has shifted toward using composite communications tools and platforms that mash together content, applications and commerce, all within the context of group interaction. These social platforms are altering the way we connect and coordinate, establish identity and affinities, and build reputation.”
Ari Balog, Yahoo’s CTO said:
“We are rewiring Yahoo from the inside out with a developer platform that will open up the assets of Yahoo in a way never done before, making the consumer experience social throughout.”
At Ringside Networks, we are building software that is making this vision possible not for Microsoft and …

Social Networking Enterprise Market Sizing

Larry Dignan put out a blog - reporting on a recent Forrester Report.

"Enterprise 2.0 will become a $4.6 billion industry by 2013 and social networking tools will garner the bulk of the money, according to a report by Forrester Research."

It is encouraging to see this new market starting to take shape and people seeing the type of potential we saw when we started Ringside.

The Cure to Facebook Envy

Image
We are announcing the first two sites to go live with the Ringside Social Application Server on Tuesday morning. Both of these websites had Facebook envy, as much of the world does these days. They took the approach that if you can't beat them, join them! Both websites have deployed applications that run on Facebook and on other websites. They also both take advantage of Ringside's Identity Mapping technology to let users link their accounts to Facebook.

Up and Running

The first is an example of a Facebook application that wanted to go beyond Facebook. Jonathan Otto wrote a very cool application for runners, swimmers and bikers called Voomaxer. You can access it at http://apps.facebook.com/voomaxer/. Local specialty running stores wanted to give this type of functionality to their customers – to tie them closer to their stores. Jonathan wanted a revenue model beyond selling ads on Facebook. Ringside gave them both what they wanted.

With Ringside, Jonathan was able to tak…

Why Develop a Facebook Application?

The original reason to develop a Facebook application was to generate advertising revenue. Many college and even high school students have made some decent money doing this.

However, with the Ringside Social Application Server there are several new reasons for developing Facebook applications.

1. Run your Facebook application on other web sites and charge money. This let’s existing Facebook developers make money other than from Facebook advertising. Let others deploy your application easily – charging the web site to run your application, or charging the end users for that application. This includes charging for virtual goods.

2. A Facebook Application is better than a Facebook Ad. I’m not sure if that many advertising agencies or corporations who do on-line advertising realize this – but creating a Facebook application is free. And if it is a decent one, it can be seen and used by a LOT of people. It is also much more engaging than banner ads (and more targeted since they are sel…

Identity Mapping

Image
Your website wants to start taking advantage of social networking, but you don’t want to put a drag on your users and make them create a whole profile over again.

Ringside Networks has implemented Identity Mapping to simplify the job of a website as well as make things easy for your users. This is a practical, secure, and private way to making your website more social and engaging and enabling your visitors to spread the news via word-of-mouth easily. Let’s look at how it works:

For example, a new user visits your web site and you offer them the opportunity to register with their Facebook User ID. Your users don’t need to remember two passwords anymore! You can present them information from your website and Facebook mixed together where it makes sense, and update information to their Facebook account as it makes sense. You can also take data from them for your web site directly - for example an order for your product and their credit card.

The picture says it all. The user sees a p…

Fractured Users

Every user of the web complains about it. Sign-ons for every web site we use. We have dozens of logins and passwords, with many of them being different. And we store valuable information on many of these sites – like our credit card numbers (how many web sites have your credit card number?).

Social networks are taking this to the next level because of how much personal information we put into them. Of course the cost of these free services is that we give up the right to transfer our profile with the help of software to another service in a permanent way. Neither MySpace or Facebook allow any software to take all of a person’s profile data and transfer it to another web site and store it there in a permanent fashion.

"you may not continue to use, and must immediately remove... any Data Repository in your possession or under your control... within 24 hours..." - Facebook Developer Terms of Use

So while a user "owns" their data, there is no automated way they can…

Wow!

I’ve just gotten back from our announcement of Ringside Networks at OSBC and SNAP in San Francisco. The feedback and encouragement was very nice, and it seems we may have hit a need in the market. We are only at Beta level right now, but will be in production by June. Hopefully we will have a couple of sites up and running our software in the next week or two.

Our team worked very hard – a big thank you to Rich Friedman, Jason Kinner, Mark Lugert, Mike Schachter, Bill Reichert, Brian Robinson, Jeff Kiesel, Rich Frisbie and the dozen or so “Friends of Ringside” who helped us get so much done. I’ve always believed that killer teams can produce a lot in a short period of time – and this team has delivered. Try out the software today by downloading it here.

Here are some of the highlights from the press and blogosphere:

“This sounds incredibly cool. It means that existing corporate websites can be made socially aware.”
http://www.cnet.com/8301-13505_1-9900858-16.html

“Ringside Networks …

Ringside Networks Brings the Power of Social Networking to Every Website

Today we launch the Beta version of our Ringside Networks Social Application Server. This is the first open source platform that enables businesses to weave social capabilities directly into their existing websites while seamlessly integrating with social networks such as Facebook. The open source software is available for immediate download at www.ringsidenetworks.com and www.ringsidenetworks.org, the corresponding open source community website.

Companies have spent far too much time and effort building their brands, websites, content and applications to hand over social networking to some third party. Ringside Networks gives them a way to get control over this important new way of interacting with their users and customers, while still being able to tie into the big social networks.

By integrating social networking as an integral part of the user experience of corporate websites, companies will be able to directly engage their global communities, enabling them to interact and commun…

March Madness

Image
We have a bit of March Madness at Ringside getting ready to launch tomorrow. But for the rest of the country, it is the NCAA college basketball tournament - and of course CBS Sports big deal with Facebook.

CBS has provided this year's bracket system on Facebook (a Facebook application). Hundreds of thousands of Facebook users (including my 11th grade daughter) have made their choices and anxiously compare themselves to the rest of their friends, or within their high school or across the world. CBS is going to make $25 Million this year from on-line advertising of the tournament, and the Facebook crowd is a big channel for them. It also engenders the type of engagement and virality we have been talking about in this blog.

Come tomorrow when Ringside Networks launches our Beta open source project, folks like CBS will have a common platform that they can build applications like this on. A platform that will enable them to build one application that runs on both Facebook and their …

Social Networking for Every Web Site

Next week Ringside Networks will release a Social Application Server in free and open source that will allow any web site to take advantage of social networking.

I read this blog from Mark Brooks that says we may be on the right track.

“Consumers are sick and tired of being advertised at. Traditional advertising is dead. If you can't afford the time to have ambassadors and evangelists for your brand converse with your users directly through social networks, your brand will die.”

Ringside Networks is going to enable any web site to enhance their communications with their user base by creating and deploying social applications, and expand it beyond by allowing web sites to integrate with the large social networks like Facebook.

More coming on Tuesday, March 25th!

Open Source Meets Social Networking

Next week we will bring open source to the Social Networking market.

I was questioned about the choice of this by a friend who said something along the lines of open source being good for markets that were already established – referring to Red Hat, JBoss and MySQL as examples where the open source project was a business driven way to undercut the pricing of larger vendors in $Billion markets. He was implying that open source was not good for new markets or for innovation.

Obviously, I don’t see it quite that way. We at Ringside Networks view Open Source as a way to not only bring innovation to the market, but as a way to enable others to unlock the power of social networking in new and innovative applications. Open source has proven to do this in the past (remembering these is the only advantage I can think of being old). I figured that I would share some examples…

UNIX was the first big example. When AT&T first developed the initial versions in 1969, there were certainly exi…

On-Line Advertising Spending up 28% in 2008

Good blog by Henry Blodget giving data on the continuing shift of advertising revenue to on-line. Last year on-line was $18B out of the total $58B according to this market data.

Again, I ask if there is real return on this that creates a competitive advantage?

Search Advertising vs. Social Applications

In an earlier post I argued that search marketing is a break-even business for those investing in it. In this post I want to get down to some hard numbers and determine where the break-even is for investing in your own social networking tools.

Analysis 1: Let’s look at the costs of search advertising. The costs range from $0.10 to $5.00. Here is a sample average cost currently on Google:
$0.55 – “Nike”
$0.85 – “running shoes”
$0.72 – “social networking”

Commerce sites have a range of making a sale from a click-thru typically between 1 in 50 to 1 in 250. In the case of “running shoes”, the cost would then be 50 X $0.85 = $42.50. Figure a pair of nice running shoes is about $100, with a gross margin of about 50%. So an on-line retailer would make $7.50 gross profit. And that is for an excellent conversion rate and not counting the overhead of fulfillment and running the business. If the rate falls to 1 purchase in 60 click-thrus, then it is a loss. Competitors simply bid up the rate…

Creative Advertising

I had a number of comments about my last post. People thought I was saying that advertising did not deliver a competitive advantage.

Let me state clearly – creative, targeted advertising is a competitive advantage. My point was that social networking might be a more efficient way to spend at least part of the advertising dollar.

Taking your own web site to a higher level by introducing a social context is something that aggregates value directly to your business. How you go about that still needs that very high level of creativity that the advertising industry has always delivered. In fact leaving social applications to a bunch of software developers is probably not the right method to getting a return on social networking.

Think of social networking as an integral part of your advertising program. Think about how social can take advertising to the next level. It is not just putting an ad on TV, a newspaper and a web page. It is about how to really engage your current customer…

On-line Advertising - No Competitive Advantage

As pointed out in my previous blog, online advertising is a BIG business, and social networking is becoming a significant part of that market.

The question is whether spending ad money with a social network is really the best way to take advantage of Social Networking. Is it better to spend at least some of that money on your own company’s web site to add social networking capabilities?

Let’s look at Search Advertising. It is based on a model that takes all of the profit from competitors. Company A and Company B will both bid up the price of the ad for an item that they both sell until the point that they do not make a profitable return. I know there are many e-commerce businesses who sprung up and took advantage of early leadership in search ads, building up spending to be 25%+ of their total revenue. They initially made money as they built up sophistication on using Adwords, finding profitable keywords ahead of their competition – but those advantages decrease over time. Then Co…

Social Networking and On-Line Advertising

On-line Advertising is a big business. Actually, it is a HUGE business. And the big and small Social Networks are trying to take their cut of the pie.

There are many estimates of On-Line advertising:
- Rayport estimates the US market to be $28 Billion, with the Big Three (Google, Yahoo and Microsoft) commanding 85% of that market. (Business Week)
- Jerry Yang estimated the worldwide on-line advertising market to be $45 Billion this year and growing teo $75 Billion by 2011 in his recent letter to Yahoo! stockholders.
- Google had revenue of nearly $5 Billion last Quarter – so a $20 Billion run rate by themselves that is mostly advertising based. Yahoo is at a nearly $7 Billion run rate.
- "Google, Yahoo, Microsoft, and AOL each regularly see a minimum of 100 (sic) million unique visitors each month, according to research firm comScore (SCOR). Advertisers that want to reach a big audience are still likely to gravitate toward an established portal.” (Business Week)

Advertisers are spen…