Ugly Step Children

It was only a matter of time till MySpace had kids. In the last week we see the launch of CarSpace from Edmunds. I personally think this is a wonderful strategy and I think cars are an area in which a lot of people will want to talk with like minded people and the advertising opportunities are numerous.

After my visit to CarSpace, I noted both contextual ad serving and a Revenue Science cookie. Congratulations Edmunds on a job well done. You know the space is going to be valuable to advertisers and you built the CarSpace site to leverage every opportunity and provide a more ROI focused product set.

CarSpace is a great move and in reality it should not have cost Edmunds that much to set it up either – it is well thought out and in my opinion much better set up than MySpace and because it is focused on a particular segment, I would say the advertising space is even more valuable than the playground that is MySpace.

Also in the last month we have seen the launch of Edgeio – this is a truly innovative classified site. The only first release draw back of Edgeio is that it was not built from the bottom up for advertisers – classified advertisers or corporate advertisers – this is easily remedied and the usage of RSS from blogs to main database and then back out is really a good idea – I wonder if Edgeio will be able to attract users easily or if it will have the budget to attract them or if it was simply built to be acquired by one of the leaders as a simply better way to do classifieds – either way the inventory from blogs, edge of network idea is really good as well

I have over and over again pitched good ideas to existing businesses who look at me totally dumbfounded and then never seem to even respond. You would think they would at least try to steal and deploy the ideas themselves. This year (2006) I am simply building and launching my ideas in the most cost effective manner I can and then sending the link to the same people – it does not make sense to me but it seems they like to acquire and spend millions versus listening and spending $250K – but works for me either way

The question is when will we see a classified site that does both? –Act as a haven for classified advertisers and for corporate advertisers – so far the closest example is still Amazon and this is exactly why the big book distributors never seem to catch up – Amazon recently released author blogs – and more and more this kind of staying on the edge activity are going to keep them ahead of would be competitors – they should let individuals sell podcasts on Amazon – so let popular individuals read their blogs in podcast form and sell them – I would also be heading in this direction if I was E-Bay

Web2.0 is a two edge sword – it really takes no work at all to set up a blog but to get anyone to read it or interact with it is not easy – not only do you have to have an angle but you must also be able catalyze either word of mouth or place links about your blog in other places where people who are interested will be. The other thing you must do especially if you are corporate entity with a blog is be willing to deal with the people who want to interact which I think is real gap in most corporate blog launchers thinking. They don’t want to deal with the negative either which is really an opportunity to create positive buzz by dealing with it for a change. Wallmart leaks tidbits to bloggers so that they will release information – this is an excellent strategy because they can disseminate information without having to be responsible for it – they even have plausible deniability – Coca cola hired bloggers for a Winter Olympics site because I am sure they deduced that no one wanted to blog about Coca cola. They hired people to blog about the experience of being at the Winter Olympics and they probably used the additional real estate to advertise – I cant say for sure as I was not even interested enough to check – so there you go

Notes on evolving classifieds to Web2.0

• The information hierarchy you employ for classified products may not work for user generated content and vice versa - it may also be prudent to keep the two classification methods seperate while allowing searching from all pages - you can also let users tag classify their products so post taxonomical search you can then refine via tags - very much the way Yahoo is presenting its "My Yahoo" beta -
• How advertising is presented is also very important - why have all this logic to help users classify product and content and then give advertisers a crappy logic to target ads - the reality is that with Web2.0 content you can move more tangibly to behavioural targeting and CPA targeting
• Click Fraud is a real opportunity for publishers who have a real finite context already in operation
• Check out CarSpace - www.carspace.com - they use Revenue Science and their offering to advertisers is spectacular

The Death of the Secret Garden

So just to re-cap we have been working out how to evolve present day web1.0 flat classified models into web2.0 networking affected juggernauts. Everyone is still hyper because News Corp bought MySpace but even though MySpace has millions of users and adds users quickly the site has no clear commercial path other than advertising space and this is getting rather boring and the greatest portion of MySpace’s users are about 17. So there is great opportunity to sell ring tones and MP3 music but every site and their mother is going to be fighting it out for these transactions and it is not going to be easy. Does anyone even click on banners anymore?

I would personally give 10% of the MySpace business to Apple and in exchange for revenue share on I-Tunes purchases via MySpace.

Now another interesting tid bit I have come across is that News Corp is planning to buy Monster. I would describe this as the stupidest deal ever to be done should it happen because either Google or disinter-mediated recruiters are going to put the job advertisements up for free. As a recruiter why would you spend $250K on posting jobs when you could go into partnership with three to five other recruiters and spend $30K a year? They can even contribute to an advertising fund and save money. However, after seeing News spend $600m for MySpace, I would be lining up to sell them anything. Hey News I have some swamp land in Florida for you. It’s nice but a few big storms come through every year but don’t worry about that!

Now back to the matter at hand. I have recently begun evolving a flat auto classified business in Australia into at least a web1.5 - 2.0 business. They key factors we are after are trust and participation by users. In Australia, auto classifieds spend a great deal of money on auto data – and with users adding and changing and commenting on posts and other participatory items we can limit this spend and create much more compelling content at the same time. At the same time this additional real estate creates an upsell for advertisers in the form of very targeted ad space.

The other big consideration and there is a lot of detail around all of these things is classification, search, ad serving, tagging, taxonomies and folksonomies – in a very important way these things are all dependent on each other. How to mature from taxonomy to folksonomy is a big question and whether or not to even do this is a big issues because we have already trained people that cars work via make and model aka a fixed taxonomy. Much like the way Google has taught us all that single words find everything on the net. I won’t tell you what I think but I will eventually give you a link to the finished product.

The process of evolution and (or) commercialization is not simple and many companies will end up throwing buckets of money to try to capitalize on the networking effect. My advice is create sections of your site which are “web2.0,” run your “old school” models in parallel and leverage the user created content as an upsell for advertisers and learn to embrace negative content. You cannot protect advertisers from negative content if you truly want to leverage the network effect. Artificially removing and or preventing negative content will only make the site seem contrived and this will alienate users, reduce the trust quotient, reduce participation and remove the opportunity for advertiser up sell.

The Emporer's New Clothers

Oh Yes Baron that looks fantastic on you!!

I read something recently which said the reason the Craig’s List and MySpace’s success was due in part to the fact that they created a culture not a technology. If MySpace had been in Silicon Valley there would have been nothing to talk about but technology versus the sophisticated philosophical musings of the LA scene. Maybe technology is not a good topic for site like MySpace?

So then how is MySpace a good place to have buyers and sellers meet while at the same time controlling this interaction just enough to monetize it. I just went to MySpace and clicked on classifieds and then on jobs and then on the internet engineering sections – they had one job and then they had ads for Monster and Dice running on the same page. This is a very confused model in my opinion. It seems like they care more about their percentage of clicked based revenue they get from hosting ads than they do about their own job space. Well maybe this is because the job is free to list and the “advertiser” and the job itself are not really vetted in anyway. Now maybe this is some kind of new web2.0 way of finding a job but this method has many serious weaknesses. Hence my obsession with how Web2.0 methodologies integrate with Web1.0 flat classified models.

Why not just create a big voluminous social networking site and fill it with Google AdSense code and call it day. Oh I forgot this is the new trend. Oh yes! Buy as many URL’s as you can and put them up with a whole bunch of text that coincides with the most searched terms on Google. Then put Google AdSense on your page and get the revenue from the re-direction. After all, your page was nothing but a load of crap anyway. Maybe Google’s innovation will come back and bite them. Even their highly profitable model seems very Web1.0 to me. In the old days many classified sites made the path to the actual searched item purposely long in order to create page impressions. It seems that this is a requirement for Google to grow as well.

So back to the integration of classifieds and social networking. Let’s go over the possible objectives:

1) I want to take my classified site away from being a site of discrete events and keep people their longer
2) I want to make my site ultra-sticky
3) I want to create more page impressions on which to serve ads so I make additional revenue - ugh
4) I want to cash in the network effect and create traffic with very little cost
5) I want users to classify everything and leave me out of it
6) I want buyers and sellers to meet and I want to make money from the transactions

All of the above are perfectly valid and desirable but many of them are a paradox to the way classifieds work now. If you want to say serve ads on social networking pages of your classifieds site (eg. - none classified product pages) you would need to have an ad service technology which you yourself owned or controlled in order to not compete with your own member’s products. I myself would create contextual ads which would be served against the words which people used to search but classification is a problem. I have seen portals with sponsored content who allowed a competitor’s banner to run above the sponsored content. This is just stupid and sloppy.

Every year Yellowpages sites across the globe spend millions to create cross references and synonyms so that when a person searches they find the product or bit of information for which they searched. If you allow a strange illogical classification system which works for social networking you may be sacrificing the logic of its link to the classified taxonomy. Conversely if you force classified ads into a social networking space then you either alienate your users by removing the “I own this space” feeling or you place ads with very little relevance on the page. Hey if its cost cpm then so be it. I think bad matching reflects very badly on the business. I might be the only jaded person out there but when I see an ad that has supposedly been intelligently matched to me and it is not then I loose a bit of respect and when I see an add that is placed very well then I get the heebies because they only way GMAIL can work is it has been reading my mail.

I often get email from recruiters all the time saying “Here is a job which we think matches you but if it doesn’t then maybe you know someone who it does match?” – Usually these jobs do not match me in anyway. Hence the problem of absolute irrelevance. I think people take for granted how much manual refinement is still par for the course even with glorious Google.

So the above objectives are fine but my tip in this post is the ultimate goal of the integration should be to create more users and translate this increase into more sales and (or) more transactions. The secondary goal should be to know your users better and when nominated by them help them to buy or sell something to someone who wants it faster and more efficiently. It is a great thing to have the network effect working in full force but if you try to sell an omelet to someone trying to buy a chicken you will only end up with egg on your face.

The New Religion - Handling the Classification Serpent

I had taken on the new the religion but it wasn't sitting well. I was uneasy and very woozy. The old religion was still messing with my mind and for good reason. I had had one of the apostles in my office preaching me the virtues of Web2.o, specifically folksonomy versus taxonomy. Even though I argued Mendeleev and Kingdom, phylum, class, order, family, genus, species it was to no avail. He explained that if users classified content themselves you did not need to manage a hierarchy or enforce one or any other legacy from the past. Oh and it was just plain cheap!

As a bit of background the early search engines learned very early on that taxonomies – eg. hierarchical classification systems – were both limiting and very costly. LookSmart and Yahoo had to pay people to classify websites manually. After all the people who submitted sites for indexing could not classify them and metadata was useless. It was too obsessed with keywords and sex, drugs and rock and roll. I was working for Alta Vista at the time via Digital Equipment Corporation, God rest their soul, and I had suggested using colour coded listings as a classification method. I called it TrvialPursuit-onomy. We never did get to implement it because it added to much time to result page display but we did classify listings from Australia in green and those from NZ in red. Definitely not a folksonomy but direct and useful. I was also working for the Australian Yellow Pages online directory, the first Yellowpages directory on the net in the world. The problem with Yellowpages taxonomy (heading structure) which is really the product of directory businesses is that they are not logical. So its translation to the web made searching rather problematic. During this time, and don’t bother asking me what year because most of the Web2.0 people were still in diapers, we had master degree librarians on staff. Why you ask? - Because they have a great deal of expertise in classification theory. Can you imagine a library being classified using a folksonomy? Hey authors, you choose the classification that you want and hopefully people will be able to browse around and find your stuff. If I am sounding cynical about folksonomies it’s no accident.

So let’s get back to the main game here. My main focus in this blog is to talk about both the evolution and integration of networking structures into classified sites. I am talking cars, jobs, real estate and general classifieds. Now cars are easy because it has a fixed taxonomy – eg. make / model / version/ colour / options and usually make and model are enough. Real Estate is pretty simply too. My argument with jobs is that a resume is the taxonomy of job based classified site. Oh yes there are 6000 standard job classifications and etc etc (in fact at the last US Census there was over 100K discrete job classifications) – but the big problem is the nomenclature is not fixed and the big promise of keyword or even fixed classifications on a job site delivers nothing but pain in terms of finding anything quickly and reducing manual post search refinement. You cannot just search for a nurse and get any value. Wouldn’t it be great if every resume that came through could be sifted through and attributes of these resumes could be used to drive the classification system, the menus by which we find specific opportunities? Oh my God I think I have just become a convert to folksonomy. User defined classification, driven by users, owned by users but wait my mind hurts. Yes I am sorry Mr. Spock was the father I always wanted. All that logic and that stupid human half side ruining everything… but I digress.

The point is that neither taxonomy or folksonomy will work in context and purpose specific classified websites wishing to convert to the new religion. One must be very careful about choosing how to classify and how to enable search. The apostle of the new religion in his mad spouting of books I had to be reading and relevant other facts mentioned that humans can maintain 150 concepts in their head at any one given time. I am sorry, call me cynical, but I am thinking this is more like 7- at most. With this in mind I suggest that taxonomies will be profoundly more successful especially considering that Cletus and Byullah know nothing about the new religion at least not at this point. Maybe once the snake handlers start to tame and control the serpents of the new religion they will embrace it but at this point just give them shallow classifications systems. Make / model / price works for me and if it ain’t broken…..?

E-Bay probably does have some soul searching to embark on very soon. General classifieds will have to embrace the new religion sooner because finding a specific item may become more and more difficult but my advice is go back to old school and try hiring a librarian. One other thing worth mentioning is search. Your search tool should return results no matter what the user has searched for. There are several search tools which generate a taxonomy on the fly so that click based refinement is possible. I am currently working on enabling many different verticals with the new religion and I will be documenting the details of my torpor. I mentioned Mendeleev at the start and I will finish with Darwin. The key to success with the new religion is evolution. One must move slowly so that the value equation of finding stuff and buying it is not completely lost. My final word to the apostle was "if clothes pins are cheaper on site X who cares about blogs?"

How the old web economy becomes next generation

So Google floats and everyone gets giddy again. They said that search was dead after CMGI acquired Alta Vista. You may be saying CMGI-who? Yahoo had switched for zillionth time to some new backend. Remember when Inktomi was actually worth something?
Now enter the “new” economy. News Corp buys MySpace for $600M and E-Bay buys Skype for $2.4B all based on the fact that some theorist says that the network is everything. Well my feeling is that the Cluetrain may need to get a bit of clue. “A powerful global conversation” may have started but when the street meets Indian call centre many people may be hanging up and quick. Wouldn’t Karl Rove be getting excited about now!
So the promise of the internet returns in the form of social networking sites. Aren't free unfettered networking businesses fun? Well they are fun because they are not clouded with really obnoxious revenue models like animated advertising on every page and they don’t email you every ten minutes with some new offer and they don’t secretly sell their mailing lists to anyone who wants them. Part of the secret of their popularity is the straight forward presentation of their use case and the possibility for total anarchy. You can talk about anything and it is likely that there is someone out there who wants to hear it and the biggest plus is you own it!!
As the rich established portals / media companies acquire these businesses and (or) try to integrate social networking models into existing classified structures they are going to come up against the problem of trying to teach an old dog a new trick.
How do you take a model like MySpace and integrate into it classified ads from regional newspapers? I guess finding these items would be easier and potentially the speed of access to the item is much increased but what about the fact that I don’t want my explicit information and implicit and tacit behaviour used to make me a target for lawn mower ad.
I personally do not want to use a service which uses my desire to control my network space as a vehicle to push products on me or my metrics as means to predict what I will do next.
There is a huge push to take advantage of the user owned / defined content and the cheap user acquisition costs of these social networking start ups but there is going to be significant difficulty and potential mistakes in trying to integrate old school models into these new environments.
Integrating the old school and the next generation is not going to be simple and just because I am talking about Ferrari does not mean I am going to buy one. Trust is a big issue but so is convenience and what about good old price?
Most of these networks will eventually fail as independent businesses. A few will survive and they will be acquired by larger media partners who want to take advantage of their cheap success but this is where the fun will begin.
The key question now is how will they make them work? Stay tuned.