Pandora Got Greedy So I Became a Subscriber

I was getting really sick of hearing audio ads on Pandora. In addition, the company is dramatically expanding its iPad ads program:

The music service is now offering display ads on the iPad to sponsors, in addition to its banner and audio ads, and now has three big takers in Starbucks, Lexus and Budweiser. When clicked, their ads open up a new page but don’t interrupt the music. While all three marketers advertise with Pandora on other platforms, the iPad offers a richer media experience, and the company is hoping it can improve on an already-high 3.4% click-through rate.

Pandora now has more than 30 million users on mobile devices — and 50 million across all media — and the company is hoping to accelerate usage by way of the iPad. Pandora founder Tim Westergren noted that the company is signing up about 100,000 new mobile users each day. “It’s just exploding for us,” he said. “And on mobile devices, the advertising — particularly advertising with video — has been really effective.”

While the iPad ads purport to be non-intrusive my growing displeasure over the audio ads was compelling me to do one of two things: abandon Pandora entirely or become a subscriber for an ad-free version at $36 per year. I decided to do the latter because I’ve come to use Pandora on so many devices.

I understand that Pandora has to make money to make a living and pay music royalties. I didn’t mind the display ads because they were non-intrusive and I could ignore them (Pandora claims a nearly 3.5% CTR). But after having gotten used to the service without audio advertising, to hear ads for travel or the Discover card on my headphones was so jarring that it actually made me angry.

Pandora was on the brink of extinction over royalties but has come roaring back as a direct beneficiary of the iPhone and, later, other smartphone platforms. Mobile is what transformed the business.

Now Pandora directly threatens the existence of satellite radio, which may find enterprise usage but will have difficulty further penetrating the consumer market.

My own behavior in this case does suggest the viability of a two-tiered model for content services. But I qualify that statement with the following: If Pandora had not gone into mobile and had remained an Internet-only service I probably would not have subscribed as I did.

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Groupon, Sure. But Is It Sustainable?

The rapid rise of the “social commerce,” “group buying” or “social couponing” (whatever you want to call it) is sort of amazing to me. One interesting question that comes up in my mind is: Will the model that these sites offer start to “bleed” into other areas of local? Perhaps a better way to frame it is the following: will these types of sites put pressure on more traditional ad models being sold and promoted by other local sales channels, including TV, radio, print — even other online?

They’re not selling leads or clicks or even calls; they’re selling customers (albeit at a massive discount so margins disappear for the SMB in some cases). There are also others in the market like RedBeacon and HelpHive, among a few others, that are taking a commission on work actually performed. These sorts of models make “advertiser” acquisition much easier: “customers not clicks.” How widespread might this become? That’s a question I’m mulling over.

Lost Remote recently  highlighted an interview with Groupon CEO Andrew Mason in which he discussed how successful a Groupon promotion was for one particular business:

“[W]e recently featured helicopter lessons in Boston and sold 2,600 in four hours. To put that in perspective, this fellow has been in business since 1985 and in the quarter century leading up to his Groupon he had acquired a total of 5,000 customers.”

On the other hand here’s a recent article from the SF Chronicle about how one local business was overwhelmed by the demand Groupon delivered:

When Philz Coffee Inc. offered half-price $20 gift cards to users of the Groupon.com coupon site, the San Francisco chain of coffee shops figured it would get a few hundred takers. It got more than 2,000.

“I nowhere near projected the amount of people that showed up,” said Philz President Jacob Jaber, who doesn’t expect to offer that kind of deal again. “We ran out of gift cards, and we just weren’t prepared for it.”

Philz Coffee’s Jaber decided his company is established enough to rely on word-of-mouth marketing. Most of Groupon users that pounced on the gift-card offer were already Philz customers, so it didn’t provide too much benefit, he said . . .

Too much demand and many buyers were already customers . . .

There’s little SMB education or “best practices” right now on how/when to use these sites and how to “acquire” new customers who take advantage of these offers. Over time I would also imagine there will also be mechanisms for managing offers to existing customers or weeding them out entirely.

I’m also starting to see Groupon ads on marquee sites, such as this ad appearing on NYTimes.com:

Yesterday I asked LivingSocial CEO and Co-founder Tim O’Shaughnessy to pick some winners in the segment (beyond LivingSocial). He said that Groupon would clearly be one because of its scale and momentum. Then he saw Gilt Groupe as another very interesting player. He also said he thought one of the larger European companies would move into the US and become successful.

I’ve had the debate recently with several people about whether the group buying model is sustainable. Right now these sites offer new business but I’m sure they’ll expand into CRM or loyalty programs over time as well. I suspect the model is sustainable although it will need to evolve somewhat over time — and some of the flaws identified above will need to be addressed.

I would also assume that Groupon is on a course to go public. But there are plenty of smaller companies that cannot and so there will be consolidation and/or M&A opportunities for traditional publishers (YP, newspapers) and others (e.g., IAC) that want to get into the game.

Facebook is also lurking here as a potentially major player. Right now Facebook really doesn’t have a product to sell to SMBs (notwithstanding Facebook Ads). This would be one that would also be extremely appealing to consumers; it’s a natural in a way.

Sugar Buys BookFresh and FreshGuide

Female-centric content and ad network Sugar, Inc. yesterday announced the acquisition of BookFresh and FreshGuide (also part of BookFresh):

In its first foray into providing local editorial and advertising, Sugar Inc. (SugarInc.com) today announced it has signed a definitive agreement to acquire FreshGuide Inc., which operates FreshGuide.com and BookFresh (BookFresh.com). FreshGuide.com is an online women-focused city guide that provides access to exclusive daily offers from a well-edited selection of local businesses in beauty, health and fitness, dining, travel getaways and other relevant categories. BookFresh provides an online booking service for local businesses, such as spas and salons.

BookFresh began as HourTown and is an online booking platform for SMBs. I wrote about it and the segment previously:

• HourTown Rebrands, Now ‘BookFresh’
• HourTown Adds Features for Service SMBs
• HourTown Adds Online Payments
• Hourtown and SEO (+ Time Inventory)
• Online Booking for SMBs and CPA

FreshGuide was a second effort by BookFresh CEO Ryan Donahue and team and is a group-buying site, although Donahue describes FreshGuide as a cityguide (more fodder for TheDealMap and Yipit):

Donahue will now run local for Sugar. He said the following to me in an email exchange:

[I will be] GM of FreshGuide and run Sugar’s local business. I am excited to create a female-focused local advertising platform that will leverage the offers capabilities of freshguide and the online bookings capabilities of BookFresh. I think local advertisers with an interest in wooing women, will find that we offer a compelling combination of merchant tools and a hyper-targeted female audience.

Deal terms were not disclosed.

Disney Selling Toy Story Tix on Facebook

As the NYT is reporting, Disney has begun to sell movie tickets on Facebook for the upcoming Toy Story 3:

It points toward all sorts of commerce that might take place on Facebook.

I’ve long believed that Facebook is ideally positioned as a “social shopping” platform. But this is just the beginning of transactions on the social network, which could eventually become a significant source of revenue for Facebook in addition to advertising.

Why Yahoo! Should Consider Buying Zvents

Yahoo!’s interest in beefing up local news and location-based content should lead it to consider buying Zvents. Yes, Yahoo! owns events destination Upcoming. However Zvents has more data and an ad/distribution network that includes many of Yahoo!’s newspaper partners.

Zvents is really a platform and media play that Yahoo! could develop further in many interesting ways. It could also exploit Zvents’ data in mobile.

If I were Yahoo! I would buy the site and also put CEO Ethan Stock in charge of local for Yahoo!

Zvents has raised just over $30 million to date and so the acquisition price would likely be comparable to or slightly more than what Yahoo! just paid for Associated Content.

I have no financial interest or stake in this outcome; I just think it makes sense for Yahoo!

Facebook Beats Yahoo in Q1 Display

A significant milestone, reported by the WSJ:

In the first quarter, Facebook pulled ahead of Yahoo for the first time and delivered more banner ads to its U.S. users than any other Web publisher, according to market-research firm comScore Inc.

Overall, Facebook.com served 176.3 billion display ads on its website over the first three months of 2010, or 16.2% of the total, said comScore. Yahoo served 131.6 billion banner ads to Yahoo users, and Microsoft served 60.2 billion, according to comScore. The data don’t include ads that Yahoo and Microsoft delivered to other Web sites through their networks, a major source of revenue for each.

By revenue, Facebook has a long way to go to catch up to its more established rivals. The social-networking site earned more than $500 million in revenue in 2009 and is forecasting revenue of more than $1 billion in 2010, according to people familiar with the matter. Yahoo earned $6.5 billion in revenue in 2009, mostly from advertising.

Obviously there’s enormous potential with SMBs on Facebook as well. It’s another possible distribution point for local ad networks too. Just take PaperG’s automated display ad creation tool for SMBs and distribute on Facebook — voila.

When location kicks in we should see some really interesting new ads/campaigns on Facebook. Along those lines . . . the company, I predict, will also become a mobile ad network (or its equivalent) in the not-too-distant future.

Facebook Poised to Enter LBS Game

At the F8 Facebook developer event many people expected the company to announce its long-awaited location feature. It didn’t happen. But, according to AdAge, location is imminent for Facebook and marketers are already on board:

Facebook is preparing to launch location-based status updates for its users. But the social network is also planning to offer it to marketers, including McDonald’s.

As early as this month, the social-networking site will give users the ability to post their location within a status update. McDonald’s, through digital agency Tribal DDB, Chicago, is building an app with Facebook would allow users to check in at one of its restaurants and have a featured product appear in the post, such as an Angus Quarter Pounder, say executives close to the deal.

The launch of the feature is complicated to some degree by Facebook’s existing PR problems over privacy. However, let’s assume that those subside. Furthermore, “checking in” is entirely “affirmative” and voluntary.

Beyond the check-in capability (and potential advertising angle) it’s not clear how location will manifest on Facebook (online or in mobile). But let’s assume that it will look something like this:

The AdAge article and others wonder aloud (as is now an almost perfunctory exercise) . . . is this a Foursquare or Gowalla “killer”? I would say no.

I look at the whole thing somewhat differently. I would see this as the potential mainstreaming of check-ins.

We’ll obviously have to wait and see what shows up later this month (apparently). But Facebook will likely broaden the market and help expose more people to LBS and check-ins. And the McDonald’s angle is very interesting.

Couponing, deals and mobile loyalty is becoming a huge area of mobile marketing and Facebook may further expand it.

In February, I wondered over at Internet2Go how long it would be before Facebook became a mobile ad network (with its 100 million active mobile users). This could be the beginning — and it could become more “effective” than anything Facebook is doing with display online.

Update: AdAge is further reporting that McDonald’s “will be one of many marketers in on the ground floor and will be integrated into the platform sometime after Facebook turns on the feature for consumers.” These “ground floor” marketers apparently have been “stymied by the lack of scale with services such as Foursquare, Loopt, Gowalla and MyTown” and are eager to get into the LBS game with Facebook’s greater reach and scale.

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Over the past 24 hours there have been several posts about the relative sizes of Foursquare (1 million plus), MyTown (2 million) and Google Latitude (now apparently 3 million users). Google’s Steve Lee also “hinted” to the Web 2.0 crowd apparently that check-ins were on the way for Latitude.

All of this in the aggregate makes the check-in phenomenon a more mainstream part of the local-mobile experience.

New Vigor for Yahoo! Local?

I met briefly with Irv Henderson this morning as part of a Yahoo! breakfast associated with the Web 2.0 event in San Francisco. Henderson is VP of Product Development for Mobile and Local.

I was encouraged to hear his enthusiasm and some interesting ideas. For too long Yahoo! Local has just been languishing and I’m happy to see somebody taking ownership with some new creativity.

Henderson impressed me as a very thoughtful person and said that local is “an increasingly important area of search” for Yahoo! I neglected to ask him for a number (Google’s conservative estimate is 20%.) It’s also good to see Yahoo! connect mobile and local in a single individual. While these categories are distinct in many respects and the user experience and use cases are often different, there’s also huge overlap.

Henderson and I also spoke about how Yahoo! Answers, which just celebrated its billionth answer, is an underutilized asset. He gave me the impression we’d be seeing some interesting developments with that property.

Yahoo! also has more plans for the iPad, which were hinted at in an informal conversation with other mobile folks. And so I’m interested to see what appears in terms of new Yahoo! apps.

Yahoo! Mobile VP David Katz also informally told me that mobile advertising is going extremely well, although the company hasn’t put out any PR on that front in some time.

IAC Earnings Tidbits: CityGrid, ServiceMagic

Here are a couple of interesting tidbits from IAC’s earnings release:

CityGrid added more than 150 new publishers since launching its developer center on January 29th, and added Dex One as a major reseller partner, bringing the total number of reseller partners to 10. ServiceMagic grew domestic service providers 26% year-over-year, including the addition of service providers in new categories such as events and senior care.

IAC doesn’t break out Citysearch revenues sepearately. But ServiceMagic reported $42 million in Q1 2010 revenues vs. $31 million a year ago. That’s a $100 million-plus business now.

I met last week with CEO Jay Herratti who said that CityGrid was really on fire.

More on Facebook, Privacy & Data Mining

Here are two unrelated pieces on Facebook that I ran across nearly simultaneously:

• An Online Alias Keeps Colleges Off Their Trail
• Facebook VP: Why We Want Marketers to Like “Like”

The first is from the NY Times, about how high-school students and college applicants are trying to make it harder for colleges to find them on Facebook (using aliases), for fear of the adverse consequences of institutions knowing too much about them:

For high school students concerned with college acceptance, Facebook presents a challenge. It encourages making public every thought and every photo, an opportunity for posturing and bravado nearly irresistible to teenagers. But this impulse for display clashes with the need to appear circumspect and presentable to college admissions agents, who some high school guidance counselors have warned are likely vetting applicants by trolling the Web.

Whether admissions officers really do plumb Facebook is up for debate, said Dr. Frank C. Leana, a prominent independent college counselor in New York City whose services cost $1,000 (for a one-time consultation) to $9,000 (for ongoing counsel throughout the college process). His students believe they are being watched, he said, but “it’s really hard to know how accurate their suspicions are.”

One of the big pitches for the Open Graph is “making the Web less anonymous,” more transparent. But Facebook being the de facto identity management platform across the Internet is not so desirable to everyone, as the above article suggests. And young people do care about privacy it would appear — or at least that third parties not be able to access their information.

Real and open identity is good as an abstract matter until the “big brother effect” kicks in and others are passing judgment and denying jobs or college admissions, potentially because of one-too-many drunken party images on Facebook. While there’s no documentation of the latter, the fear is clearly present.

The second article, an interview of sales VP Mike Murphy by eMarketer, reveals some of Facebook’s ambitions surrounding data mining and ad targeting vis-a-vis the “Like” button. Here’s eMarketer’s summary conclusion of Murphy’s comments:

Whenever a person clicks to “like” something they see on the Web, that information will go into their Facebook profile and marketers will be able to use the information to target advertising within Facebook.

This is a key point: all off-site “Like” activity will factor into targeting on Facebook. In other words, Facebook is mining actions across the Internet for targeting on its site. Brilliant and/or creepy? A little of both I think.

What many (most) people don’t realize also is that “Liking” something across the Internet will enable marketers or publishers to push content and “publish into [users’] news feeds.” This requires prior approval but it may not be clear that people are signing up for an ongoing stream of information or marketing messages.

Predicting Twitter’s Impact on Local

Andrew Shotland has “penned,” as they used to say, a provocative post at SEL this morning on Twitter’s potential impact on Local with its various geo-related announcements from Chirp (stay tuned for Facebook this week). To summarize this is what Andrew says:

Points of Interest. With Twitter’s points of interest feature, the game is finally afoot. Essentially this means that Twitter will need to create a page or profile for each local business. While it will be cool to see the Twitter stream and the accompanying links, photos, tips, reviews and other info that accompany these geo-tweets, sooner or later (methinks sooner) Twitter is going to want to add standard yellow pages listing data to these profiles to round them out and make them truly useful.

Essentially Andrew is arguing that Twitter will be creating its version of Google Place Pages, with YP listings data.

Promoted Tweets. Now the local chiropractor can have a significant voice in discussions that involve his business (I can hear the reputation management consultants salivating) and he can also target geo-specific discussions about his specialty (e.g. a guy in his service area tweeting about his aching back) . . . Of course, the only way for businesses to do this kind of stuff is to verify that in fact they are the business—you wouldn’t want your competitor impersonating you and buying your keywords would you? And this leads me to believe that Twitter is going to have the equivalent of Google Local Business Center’s verification process. Which again leads me to believe that Twitter is on its way to creating a local search monster. They could quickly become a significant source of accurate, up-to-date business data . . .

Three predictions here: Twitter local business center, Promoted Tweets as paid marketing tool for SMBs and master database

Annotations. The thing I find intriguing for local is that “annotations” is just a fancy word for “tags.” And in local tags can be things like “cool bar,” “best dui attorney,” etc. Now it’s unclear if these tags will start showing up on Twitter, or just on third party applications. But when I think about it, this kind of stuff starts sounding like a yellow pages on steroids.

On the last point (Annotations), I agree that we’ll probably see lots of “reviews” (more like tips) coming out of Twitter associated with particular places and maybe with particular businesses. We’ll have to see the context and structure that gets developed around it. I also think that Twitter will be generating lots of data/metadata but don’t agree that the company will eventually generate a master local database.

On Points of Interest, I don’t agree that Twitter will be creating Place Pages with YP listings data. However a third party (or multiple third parties) might do something like that and Google will likely add related tweets to its Place Pages. Other third parties will do some version of the same. Citysearch was the first among the local sites to do so. (This also raises and implicates the @Anywhere strategy.)

Regarding Promoted Tweets, I believe that Twitter will become a more and more useful marketing tool for SMBs. But this may not extend to Promoted Tweets. As Twitter gets more distribution and tweets become better organized and filtered it’s natural that many SMBs, among others, will adopt it. For example, Bing is starting to index tweets on SERPs that are related to the query, in a more structured way than Google is now doing. Google will probably do something similar over time.

What that means as a practical matter is that SMBs (and others) can use Twitter as a tool to distribute promotional messages in search results potentially tied to their category or business name. In the future someone might do a search, for example, for “San Francisco Dentist” and see a tweet on Bing and maybe Google that read: “50% off a cleaning for new customers.” That’s not being done today but it becomes very possible in the near future.

If Promoted Tweets is very simple to adopt and/or there are enough marketing channels that are helping do it (e.g., Yodle, YP, etc.) you might see adoption by local businesses directly or indirectly. More likely in my mind, however, is greater adoption of “organic” Twitter usage at the local level.

Regardless of whether any of these specific predictions come to pass, I agree with Andrew that Twitter will be impacting local in a potentially significant way.

We’re going to see tons more data at the local level from Twitter and soon Facebook. When you add that to Foursquare, among many others tagging locations, checking in and providing “tips,” it means we will be awash in location information. Not long ago there was limited local data, beyond the listings database and some reviews. Soon we will be swimming in local data and metadata and the challenge will be to organize, filter and make it useful for everybody.

UBL Expands Scope of Mission

The company behind Universal Business Listing, which began with the idea of being the single place for SMBs to submit and manage their data online, is broadening its mission. Here’s some information from a curious press release that went out early this morning:

BounceBack Technologies, a global technology company specializing in business intelligence, today released an open letter to shareholders, customers, and employees announcing that the company is changing its name and expanding with innovative new services and expanded capabilities. Moving forward, the company will focus its efforts on acquiring and developing services that improve the way businesses promote and protect their identity online. This new direction is designed to strengthen BounceBack Technologies, renamed as Name Dynamics, Inc., and help shape the future growth of the company in demand markets such as online search, interactive marketing, and business identity security.

BounceBack acquired the assets of UBL in January, though UBL co-founder Doyal Bryant is CEO of the venture, which is being renamed “Name Dynamics.” At any rate, the mission now appears to be much broader than listings data submission:

Moving forward, the company will focus its efforts on acquiring and developing services that improve the way businesses promote and protect their identity online. This new direction is designed to strengthen BounceBack Technologies, renamed as Name Dynamics, Inc., and help shape the future growth of the company in demand markets such as online search, interactive marketing, and business identity security.

The concept behind UBL was pioneered by the old LocalLaunch (acquired by RHD, now DexOne) with its “master business profile.” And several companies have been trying to executive on a variation of this theme for some time: the idea of a “one-stop shop” that provides access to a broad network of sites for SMBs (or multi-location businesses).

I briefly ran into Bryant at the SMX West conference and he was promising new/big things, which this release hints at.

SuperMedia Getting Vertical

Not long ago DexOne (formerly RHD) launched a vertical strategy with a weddings site. I didn’t talk to the company but assumed this was the first in a series of verticals that it was going to pursue. Now, SuperMedia is doing something similar but more aggressive. It has built a new “AskLearnHire” platform and three new verticals at launch, all with the “prefix” Super:

• SuperMortgages
• SuperRemodelers
• SuperHVAC

They all follow the same “template” and these are the first verticals in a larger planned rollout. The sites try to capture and address different stages of the consumer research and decision-making cycle with Q&A, content and lead-gen, hence the tabs Ask, Learn, Hire:

Consumers can ask a question and get it answered by a service provider; they can read content (written by writers but later by SMBs) and/or they can submit an RFP/lead-gen form:

According to the press release out this morning:

During the beta phase, leads will be sent to participating businesses at no charge. After official launch, businesses can purchase exclusive leads at a competitive market fee. Leads are only offered to one business at a time with information about the consumer’s needs so businesses can evaluate before deciding to accept that lead. Businesses are only charged for the lead if they decide to accept. The consumer’s contact information is only shared with the business once the lead has been accepted, which eliminates consumers being contacted by multiple businesses.

As you can see from the presence of the cape-wearing fellow, the SuperGuarantee is a prominent part of the entire offering. SuperMedia is trying to build lots of brand equity around the SuperGuarantee, which I’ve been told independently by several people at the company is very popular and “working.”

During a call last week, I was cautioned by SuperMedia VP Robyn Rose that the sites are a work in progress and in beta. The initial three categories were chosen because they’re popular on Superpages and involve varying degrees of research and consideration.

SuperMedia is trying to learn from consumer and SMB interaction with them whether and how to modify the sites before proceeding with a larger rollout. Conceptually this is very creative and interesting and trying to go beyond and provide more utility than the typical profile page details and content that are common to directories. There’s also broad SEO potential here in the Ask and Learn categories.

The sites will also gain exposure on Superpages.com and vice versa.

Taking a broader view, the changes and new efforts at Dex, Yellowpages.com and now SuperMedia reflect a time of transition and change in the US directory industry. The local market is now incredibly dynamic and competitive (as it extends into mobile) and these efforts are new attempts to bring more content, relevance and value to consumers and advertisers. In the case of SuperMedia, in addition to its various syndication programs, this vertical strategy is an effort to not only provide a useful consumer experience but also something of a hedge against reliance on a single consumer destination.

What do you think of this new vertical approach?

Promoted Tweets: ‘Pull’ and ‘Push’

Twitter’s business model has emerged. Ironically, yesterday, Bill Gross of IdeaLab (and founder of Overture) announced TweetUp, a keyword-based search marketplace built on a proposed better search engine for Twitter and a group of syndication partners. Last night Twitter announced its own, very similar idea with Promoted Tweets:

Q: What are you launching? What are Promoted Tweets?
A: We are launching the first phase of our Promoted Tweets platform with a handful of innovative advertising partners that include Best Buy, Bravo, Red Bull, Sony Pictures, Starbucks, and Virgin America — with more to come. Promoted Tweets are ordinary Tweets that businesses and organizations want to highlight to a wider group of users.

Q. What will users see?
A. You will start to see Tweets promoted by our partner advertisers called out at the top of some Twitter.com search results pages. We strongly believe that Promoted Tweets should be useful to you. We’ll attempt to measure whether the Tweets resonate with users and stop showing Promoted Tweets that don’t resonate. Promoted Tweets will be clearly labeled as “promoted” when an advertiser is paying, but in every other respect they will first exist as regular Tweets and will be organically sent to the timelines of those who follow a brand. Promoted Tweets will also retain all the functionality of a regular Tweet including replying, Retweeting, and favoriting. Only one Promoted Tweet will be displayed on the search results page.

Image source: AdAge

The NY Times echoes how this will work:

When a Twitter user searches for a word an advertiser bought, the promoted message will show up at the top of the results, even if it was written much earlier. The posts say they are promoted by the company in small type, and when someone rolls over a promoted post with a cursor, it turns yellow.

This is paid-search advertising around keywords (though pricing is apparently CPM to start). Ads will also appear in third-party clients and syndicated streams.

This is all very familiar, well established, no big deal. That’s the “pull” dimension. But there’s another “push” (AdSense-like) dimension to all this (per the NY Times):

In the next phase of Twitter’s revenue plan, it will show promoted posts in a user’s Twitter stream, even if a user did not perform a search and does not follow the advertiser.

For example, if someone has been following people who write about travel, they could see a promoted post from Virgin America on holiday fare discounts.

Anyone who uses Google has grown accustomed to seeing ads alongside their search results, but Twitter users could resent seeing promoted posts in their personal content stream.

Twitter is aware of that risk. It is still figuring out how to determine which promoted posts should appear. It could be based on topics they are writing about, geographic location or shared interests of people they follow.

This second, “involuntary” dimension of the program will apparently roll out later and very carefully. Though all the ads are substantially text-based, what you’ve got in the two components is direct response and awareness ads.

Predictably there’s positive and negative reaction to the second part, which is premature. We can’t begrudge Twitter a way to make a living.

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It’s worth revisiting the Twitter “business model contest” that happened a little over a year ago. Search and contextual advertising are of course among the many suggestions in the submissions.

A Quick Look at the IAB FY2009 Numbers

I was out a few days this week and didn’t get to a lot of the news. One of those items was the release of IAB Internet ad spending numbers for FY 2009 ($22.7 billion). Here are some of the charts (click to enlarge):

The graphic above shows the Internet now in third position after TV and newspapers in the US. Next year it will be number two as newspapers continue their decline.

Here are the revenue breakdowns by category and pricing model:

Most of the local advertising (listings, YP) is grouped within the “Classifieds” category by the IAB, worth 10% of the overall $22.7 billion. The other main category where local or geotargeted ad revenues would appear is search, which was far and away the dominant category of online ad spending.

Source: Google Shutting Reseller Program

This is a follow up to my earlier post on the rumor that Google was shuttering its AdWords reseller program.

I got an email this morning from someone, who asked not to be identified, and who said that Google confirmed the local AdWords reseller program in its current form is being shut down. The individual added that Google said the program may be reconstituted at some point in the future, although the timing of that was uncertain.

It thus does appear that this program, which was developed as a scalable way for Google to indirectly bring more local-SMBs into paid search and as a way for local publishers and media companies to bolster their online ad offerings, will be coming to an end.

I’ll be reaching out to Google for more information and potential confirmation. However, in response to the earlier rumors, Google issued the following statement:

“The Google AdWords Authorized Reseller Program is still active. We remain committed to building relationships with third party partners that enable small and medium-sized businesses to realize the benefits of cost-efficient, targeted and measurable online advertising solutions like AdWords.“

This is all double hearsay, as they say in the law, but the source is highly credible.

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Update: From another source I just was told that the program in its current form will end in a couple of days at the end of March. Existing resellers will lose free API access at that time, which is potentially significant. (Publishers will still have access, they’ll just have to pay now.)

This same source said there was discussion that a new version of the program would be introduced at some point later this year.

Overall, this is a potentially significant development for the local market. For some players it will represent an inconvenience and for others it could have a more serious adverse impact. It will likely motivate further “diversification” of traffic sources among local publishers and sales channels.

Update 2: Here’s a more upbeat perspective from another party involved:

Google previously provided higher levels of support (and in some cases incentives) to local resellers and has decided that local resellers should be treated like other agencies where they have and account manager and pay for API access, since the local channel has matured.

I view this as a sign of success for local that the channel does not need extra care and feeding but can stand on its own. The churn issue is not a channel issue – Google has high churn for smbs who use adwords directly.

Where.com Now Local Destination

In the local space the URL Where.com is a great one. It’s owned by uLocate, which is run by MapQuest Alum Walt Doyle. Where operates a range of mobile apps or local portals across smartphone platforms. Today two things are happening: the company is formally changing its name to WHERE, Inc., and the “Where experience” is now available on the PC at Where.com.

Previously that URL was a promotional site for the company’s mobile offerings. Now it looks like this:

It’s a local portal and search site that offers a number of categories of activities and content:

• Restaurants and reviews
• Events
• Shopping and offers
• Personalization/history

In the last category is “my placebook.” It shows places I’ve checked in and reviews I’ve created:

Registration allows for two-way access to content, either online or via mobile app. As an aside the Where mobile apps have been getting progressively better over time. 

Recently the company also launched “hyper-local” mobile ad network Where Ads, which I wrote up at Internet2Go. 

If the company were launching purely as an online destination you’d hear a great deal more skepticism out of me. But because Where has an established mobile user base this now becomes a kind of “dashboard” for planning and activity later experienced on the go. It’s also one of several examples of how local content providers and publishers need to view their offering through a kind of “reciprocal” lens: activity in the world and online informing and supporting one another.

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Where’s Dan Gilmartin will be on a panel I’m running at the appropriately named Where 2.0 show in early April. The panel is:

Monetizing Location and LBS: How Do We Get There from Here?

With Google and Apple buying major mobile ad networks just in the last couple of months, mobile advertising is finally on everyone’s radar. Yet the long-held notion that LBS apps and services will deliver “the right ad at the right time and place” is still an unrealized promise. What will it take in a practical sense to provide locally and contextually relevant ads to people on mobile devices with this kind of precision? We have been talking about this opportunity for years. Is it getting closer or does it remain as elusive as ever?

Panelists will discuss the range of technical, data, and business-related hurdles that remain, as well as whether and how they might be overcome.

In addition to Where, Google, deCarta, 1020 Placecast and Citysearch will be featured in this roundtable discussion. To use the vernacular, it should “kick ass.”

Where Launches Mobile ‘Hyper-Local’ Ads

uLocate, which operates popular mobile site/app Where, has launched WHERE Ads, which it’s positioning as a new “hyper-local” ad network. Last week I spoke to Where marketing kingpin Dan Gilmartin about it.

Gilmartin told me this initiative grew out of the company’s (and it’s users’) frustration with conventional mobile display advertising and third party networks that too often supplied ad inventory wasn’t very relevant, he said. The company has thus created its own solution and is going to make it available to third parties. As part of that Where also distributes local ads from other networks and sites (e.g., CityGrid). 

The rest of this post is at Internet2Go. 

Citysearch Revamps SEM, Buys into OrangeSoda

This morning Citysearch is unveiling a new local online ad program called “CityGrid Complete,” managed and fulfilled partly by OrangeSoda. The IAC-owned company has also invested in OrangeSoda as part of the new relationship. 

I spoke last week with Citysearch CEO Jay Herratti who said that the company chose OrangeSoda because Citysearch believes it has the best SEO solution in the  market. OrangeSoda has been offering SEO, paid-search and what it calls “loccal search maps optimization.” The latter is now the chief focus of “local SEO.” 

According to the press release: 

The first of its kind, CityGrid Complete is the only online advertising solution that gives local businesses the ability to reach millions of consumers monthly by building customizable content ads that are distributed across the web. In addition to content ads, CityGrid Complete includes SEO services designed to drive consumers from all the major search engines directly to their own websites. CityGrid Complete customers also receive access to an integrated web-based dashboard allowing advertisers to actively monitor and manage their campaigns, ensuring they receive the highest quality leads for their advertising budgets.

CityGrid Complete will source leads through Citysearch’s CityGrid network, which the company says has “500K paying advertisers, enhanced listings and content for 15M businesses, and reaches more than 140M unique users across 100 web and mobile sites.” OrangeSoda will be managing SEO and paid-search campaigns. CityGrid  Complete is, as the name suggests, the most complete of the Citysearch ad programs. There will be less ambitious programs for those with smaller budgets.

Herratti was asserting to me that this new offering is the most effective and comprehensive for SMBs available online — a true “one-stop shop.” To the SMBs themselves Citysearch’s ad programs may not look very different than before, but the platform, sourcing and fulfillment on the back end is going to be quite different. 

It appears that through CityGrid Citysearch has now built a way to deliver leads to its advertiser-customers that is substantially cheaper overall — without a corresponding loss in quality — than pure PPC reliance, which is the way most of these programs began. (ReachLocal and V-Enable also offer “local ad exchanges.”)

This is also great validation for OrangeSoda, which is always mentioned as the fourth local SEM firm: ReachLocal, WebVisible, Yodle . . . and OrangeSoda. 

I’ve been writing quite a bit about the evolution of the ad products that are being offered to the local market and how they’re “diversifying” into SEO, data monitoring and reputation management. The new CityGrid Compete program is another general example of that phenomenon. 

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See this previous, related post about CityGrid.

Facebook Expands Local Reach

Facebook has added an unspecified number of locations — think: many — to its geotargeting capability. According to a blog post today:

We’ve been listening to your feedback and have recently expanded the number of cities available for you to target when creating an ad! There are now many more cities available in a number of countries.

Facebook offers location and demographic targeting around the globe:

IP address and information provided in the profile (which is going to be more accurate) is what the company uses to determine location: 

Separately a recent study by Rice University’s grad school of business, sought to assess the marketing impact of a Facebook fan page on a Houston area local cafe chain, Dessert Gallery:

Facebook changed customer behavior for the better. People who had replied to both surveys and had become fans ended up being DG’s best customers: Though they spent about the same amount of money per visit, they increased their store visits per month after becoming Facebook fans and generated more positive word of mouth than nonfans. They went to DG 20% more often than nonfans and gave the store the highest share of their overall dining-out dollars. They were the most likely to recommend DG to friends and had the highest average Net Promoter Score—75, compared with 53 for Facebook users who were not fans and 66 for customers not on Facebook. DG fans also reported significantly greater emotional attachment to DG—3.4 on a four-point scale, compared with 3.0 for other customers. Additionally, fans were the most likely to say they chose DG over other establishments whenever possible.

To summarize, Dessert Gallery Facebook fans:

• Were more frequent customers and, in the aggregate, spent more than non-fans
• Had a greater emotional attachment to the business and were more likely to recommend it to friends

Caveats:

• Correlation doesn’t equal causation: did these people become fans because they were already more loyal to begin with?
• This is a single case study.
• The Rice biz school researchers coached the Dessert Gallery in some best practices and provided some general assistance around updates: 

We launched the Facebook page and invited everyone on the mailing list to become a fan. DG updated its page several times a week with pictures of goodies, news about contests and promotions, links to favorable reviews, and introductions to DG employees. 

To be sure Facebook is a powerful marketing tool and platform for SMBs. Most, however, don’t know how to “work it,” in the way that Dessert Gallery did. That learning will come over time. 

And to remind everyone there are 1.5 million “active” SMBs with Facebook pages. Despite the impressive targeting options, most of them aren’t going to really understand how to use Facebook Ads in an optimal way. 

But just imagine a suite of SMB services that Facebook might offer at, say, $25 per month. If 500K adopted that would translate into $150 million. Right now Facebook is on target to hit $1 billion in revenue soon. That hypothetical $150M number would thus represent 15% of total revenues.