Shahar Solomianik

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Archive for March 2009

The Problem That Triond Solves

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Many times, the first question I am asked about Triond is “What does Triond do?”  Sometimes, I’d rather the first question be, “What problem does Triond solve?” After all, problem solving is how it all began for Triond.

To understand the problem that Triond solves, let’s begin with the birth of user generated content.

Web1.0

Introducing a near zero-cost distribution model, the web completely revolutionized the traditional publishing industry. Servers delivering webpages on demand to browsers around the world turned out to be much cheaper than the old method of printing- shipping- delivery-selling. The web enabled a much cheaper and more effective publishing process.

Now that publishing costs were down, a lot of web publishers arose. The demand for writers increased, and more writers than ever before were given the chance to have their writing published. In the meantime, users found themselves generating online content through their participation in communication applications, such as public email lists, forums and message boards. The concept of user generated content became more viable.

Yet, there wasn’t any online application that allowed you to express your creativity, knowledge and expertise for the initial intent of consumption by end users. Publishers were still in control of this type of content generation. However, even with the boom of online publishers, there were many more people wishing to be published than there were publishers willing to publish them.

This growing demand encouraged the second revolution: Web 2.0.

Web2.0

No other activity marked the beginning of the web2.0 era more than blogging. While web1.0 eliminated the distribution costs, web2.0 eliminated the technology costs. The content management systems and web publishing tools that enabled online publishing were mostly proprietary and expensive during the first web era.

Web2.0 introduced the free or nearly-free blogging platforms. All of a sudden, anyone with the slightest understanding of operating a computer and a web browser could operate their own publishing service. If you couldn”t find a web publisher willing to publish your work, just publish on your own. Better yet, now that you have the chance to publish on your own, why even bother looking for a publisher?

And so blogging began.

Has Blogging Proven to be Successful?

The blogging revolution has been tracked and analyzed by Technorati almost since it began. Every year, Technorati publishes the “State of the Blogosphere” report that analyzes blogging from many different aspects.

Take a look at this innocent visualization of the size of the blogosphere, taken from the latest 2008 report:

State of the Blogosphere 2008

At first, you may be astounded to know that Technorati has tracked 133 million blogs since 2002. That’s a very impressive number. But watch as the numbers shrink significantly when describing the actual activity. In the 120 days before the report was published, as few as 7.4 million bloggers had posted new posts. That’s only 5.5% of the tracked blogosphere. Narrow the count to seven days, and the figure shrinks to only 1.5 millions – a mere 1.1% of the blogosphere.

Those figures reveal two significant facts:

  1. Blogging is something that millions of people were willing to try.
  2. Most of them – however – churned.

125 million churns translates to 125 million disappointed individuals. That makes blogging one of the most disappointing activities on earth.

Generally, blogging is perceived to be rooted solidly in web culture. Well, apparently it is not. It did leave its mark on a huge number of people, and there are many successful blogs that have a very significant impact in their niche.  However, a 95% fallout rate is not something that represents a phenomena with a lot of traction. If email and instant messaging, for example, had the same churn rate, they wouldn’t be where they are today. It seems that even social networking – the younger web2.0 brother of blogging – has experienced more traction.

What Makes Blogging So Disappointing?

People don’t get disappointed unless they have preliminary expectations that aren’t met. Understanding what were bloggers expectations from blogging may shed some light about the reasons for their general disappointment.

Technorati asked bloggers for the reasons they blog. Reasons and expectations are quite parallel in this instance:

Why People Blog?

Considering more than 95% of bloggers were disappointed and as a result churned, we can assume that in 95% of the cases certain expectations weren’t met. So we can go on and generalize that bloggers are disappointed because:

  • They don’t feel that they are being read enough
  • Their expertise and experiences are not being shared with as many people as they hoped
  • They aren’t meeting and connecting with like-minded people
  • They aren’t being published or featured in traditional media
  • Their resumes are not being enhanced to the extent they desired
  • They don’t make as much money as they were hoping to make

This is not so surprising. It is very pretentious to expect all those things to happen simply because you write something and publish it on your blog. Writing alone is not enough.

Bloggers are not Publishers. They are Writers.

Herein lies the failure of blogging as a method. It extracted the technology from traditional publishing and provided a platform that anyone could use, but that’s the only thing it extracted. It did not provide all other components that are vital for effective publishing, just the naked technology. Blogging provided the platform and expected bloggers to come up with additional services themselves.

In other words, blogging forced writers to become publishers. Effective publishing incorporates a lot of elements: writing, editorial, marketing, distribution, sales, monetization, optimization, communication and much more. However, bloggers are not publishers. They are simply aspiring writers. Bloggers who weren’t willing to take on tasks other than writing, and furthermore, to become good at those tasks, didn’t stand a chance.

Triond: A New Approach for User Generated Content

With these millions of disappointed people in mind, my partners and I looked for a solution. We decided to implement a new approach for user generated content, something completely different from blogging. Something that will enable writers to be published effectively without forcing them to become full scale publishers.

And so we created Triond, our approach to solving the problems associated with blogging.

Did we suceed? You tell me.

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Written by Shahar Solomianik

March 26, 2009 at 9:20 am

Posted in Triond

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The Future of In-Text Advertising

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In-text advertising is a controversial niche advertising market that on one hand has huge reach and on the other hand has absence of big players. It was a virtual paradise for in-text players during the last several flourishing years, but how will this niche market survive the downturn?

What is In-Text Advertising?

In-text advertising according to wikipedia is:

A form of contextual advertising where specific words within the text of a webpage are associated with advertising content.

In-text advertising is not a new type of online advertising. In its primitive form, it dates back to the early 2000’s when a company named eZula distributed an adware client that turned words into links while surfing. Later on, VibrantMedia launched intelliTXT, probably the first ever online in-text advertising product. When eZula morphed into Kontera,  they joined VibrantMedia as a leader the in-text advertising market.

The basic idea behind in-text was to bridge the traditional separation between content and ad space derived from the newspaper advertising industry. Advertising was merged into the content itself. Kontera explains this nicely in their website:

In 1982, to increase the sagging sales for Reese’s Pieces, Hershey’s accepted a product placement deal in Steven Spielberg’s “E.T.”. After Elliot used Reese’s Pieces to lure E.T. from his hiding place, Reese’s Pieces experienced a 65% increase in sales and succeeded in reinvigorating the brand. Though this wasn’t the first case of product placement, it is one of the best examples of increasing sales and supporting brand marketing objectives through contextually relevant product placement.

Low click-through rates on graphical banner ads, in contrast to the relatively high rates and conversions of CPA ads embedded as text links, gave an additional push to in-text innovation during the early days. In-text innovators tried to implement an online advertising service that could take advantage of those high click-through rates from textual links.

The Controversy

In-text advertising was, and still is, somewhat controversial. For the content consumer, it may not be so obvious that a hyper link is a sponsored ad. Some publishers and critics claim that these links are deceiving in nature, and users’ reactions are mixed. I believe this is the reason that in-text advertising is not embraced publicly. Market leaders are also aware of this.

Yet this controversy served another purpose. It appears to have prevented the big players from joining the market. The absence of Google, Yahoo, Microsoft and AOL allowed VibrantMedia and Kontera to increase their distribution and control over this niche-market. In fact, VibrantMedia and Kontera have become so dominant that regardless of their niche, they are both considered to be among the top advertising networks today. With impressive numbers such as 42% US reach for VibrantMedia and 34% US reach for Kontera, they have proven that publishers do end up implementing in-text advertising, regardless of how controversial it may be.

Today

When the online advertising industry started to flourish we saw many other networks launching their in-text services. These networks were all trying to get in on one of the only niches from which the big players were absent. Exponential’s EchoTopic, AdBrite’s Inline Ads, Clicksor and others are examples of these smaller networks.

None of these companies threatened VibrantMedia and Kontera. But on the other hand, none of them relied solely on in-text.

The lack of real competition from the big guys had its drawbacks. It didn’t drive VibrantMedia and Kontera to increase their efficiency. One of the strangest things to me is that neither company introduced a self-service interface for advertisers. Both still rely on their sales force and target only large advertisers. Moreover, they seem to prefer sharing their CPC revenue with other providers over getting higher rates themselves. Kontera is known to link its ads to Yahoo CPC ads:

The company also has access to thousands of advertisers through a partnership with Yahoo.

We can assume VibrantMedia does the same.

The Downturn

Now with this economic downturn upon us, the in-text advertising market is fragile. Because it is a controversial niche market, it may be one of the first cut from an advertiser’s budget. Moreover, as their partners begin to focus on their core business rather then nurture their in-text partnerships, VibrantMedia and Kontera will realize that relying on deals with other networks may have been a major error. Perhaps they should have developed direct relationships with advertisers as well.

In a separate issue, both VibrantMedia and Kontera rely heavily on VC funding which may also fall short in the near future.

Launching a self-service option for advertisers could help, but it may be too late. Advertisers traction is hard to gain in this environment.

The apparent solution for both companies is acquisition. Yes – their valuation may not be as high as it was last year, and yes – maybe they will not be hurt so badly from the downturn. But after all, they are VC funded start-ups looking for an exit and this downturn could be precisely what they need – a special opportunity for them to be acquired by a big player, despite the in-text controversy.

Acquisitions?

Lately, Google has demonstrated an increasing willingness to experiment with innovative, questionable and controversial advertising products. Just a few days after launching expandable ads, they also announced behavioral targeting. They are becoming more aggressive in penetrating advertising in new ways. This is understandable since Google started laying off employees and shutting projects down, proving it is not immune to the downturn. Don’t be surprised if Google enters the in-text market as well.

The question is, will Google acquire an existing player? Or will they develop their own product?

Google has shown that it acquires companies either for their distribution (YouTube, FeedBurner) or for their technology (Urchin). The bad news for VibrantMedia and Kontera is that Google neither their technology nor their distribution.

While in-text technology is not a known Google product, it may have already been developed. Even if it wasn’t, it’s not difficult for them to do. I don’t believe that Google will aquire VibrantMedia and Kontera for the amount they would like to see, especially when the technologies are so similar and could be implemented much better by Google themselves.

As for distribution, Google’s publishers network is much bigger than both VibrantMedia’s and Kontera’s. This certainly does not justify an acquisition.

So Google won’t be acquiring any of them. Who will, then?

Maybe another network will see value in their technology or distribution. Lately, Yahoo is a mystery, which leaves us with Microsoft – a great candidate for the first buyer in this market. They have the cash, they wish to expand their ad network reach, and they may be interested in in-text advertising. And, they already are working with Kontera in some capacity, which could be a catalyst for acquisition.

The Future of In-Text Advertising

If Microsoft ends up acquiring Kontera, another player (AOL? IAC?) will follow and acquire VibrantMedia. In this case, Google won’t sit on the sidelines; they will launch their own in-text advertising solution for sure. By the time we’re out of this downturn, all major players will run in-text advertising, thus legitimizing it for the future.

So all in all, if these predictions play out, the downturn will serve in-text advertising well. It won’t be lead anymore by relatively anonymous companies, and it may loose some of its charm, but it will become a legitimate way of advertising and will gain public acceptance.

And what if my predictions are wrong? Can the in-text market survive? What do you think?

Written by Shahar Solomianik

March 16, 2009 at 9:10 am

Zemanta: Crowd Sourcing Contextual CPA Advertising

with 87 comments

Introduction

In my last post, I wrote that CPA needs to be the next revolution in online advertising. I stressed that because CPA is the most efficient pricing method for advertisers, a wide adoption of CPA by publishers will drive the entire online advertising industry forward simply by helping it to gain market share over offline advertising. This is especially true in the current economic downturn, when advertising performance is becoming more and more significant.

I suggested that due to the lack of a scalable system that deploys CPA ads on publishers’ sites in a way that will generate high returns, CPA is therefor not widely adopted by publishers. A lot of innovation is required in order to make it scale.

However, I didn’t suggest any real innovative solution. I still don’t have a suggestion for a solution. But, I think I just found a company that does.  Let’s take a look:

Effective CPA Implementation

CPA can be used very effectively as of today, but it doesn’t scale for most publishers. Filling pre-allocated ad spaces with graphical or textual CPA ads, contextual as they may be, simply doesn’t do the trick. Successful CPA publishers will tell you that the highest eCPM is gained when they manually embed a minimal number of text links and banners that link to the single most relevant product, in the right spot within the content.

Any solution for scaling CPA must answer these three questions with great accuracy, for every web page on which it is implemented:

  • What product is the most relevant to be sold on the page?
  • Where is the best location to link to the product within the content?
  • Which linking method is the best for the product?

What product is the most relevant to be sold on the page?

Things that are very obvious to the human mind are not always so obvious to a machine. While a machine may be able to suggest some products after extracting keywords from a given text, it has no way of determining which of those keywords is a relevant product to sell. A machine can’t understand tone, humor and cynicism from the text. It can hardly tell if a product is mentioned in a positive or negative manner. Furthermore, it’s even harder for the machine to name a single product with the best chance of being sold on the web page.

In order for a machine to do all these things, it will need to understand the context of the page. One can suggest that Google does this. After all, they run the best contextual advertising system out there. But even Google is limited. And the fact is, their system is not so contextual.

Google’s alleged contextual abilities are a derivative of its great search technology. Search technology is all about matching search queries to indexed pages and assigning a score to each match. When AdSense ads are embedded on a web page, the relevancy isn’t gained by understanding what the page is about, rather it is achieved through matching ads to pages as if the ads themselves were search queries. That’s about all that Google’s technology does.

In a sense, Google doesn’t try to find the most relevant ads for any web page. On the contrary – it finds the most relevant pages for any given ad.

If Google can’t deliver the most relevant product right away, then there is still work to do.  It seems like we need a whole new technology in order find the single most relevant product on a web page, something which is more contextual in its nature, and not based on search technology.

Where is the best location to link to the product within the content?

Let’s say we have a machine that understands what product to link to. Now, where should it embed the link? It’s a difficult decision for a machine, even harder than finding the relevant product itself.

It’s one thing to match ads to web pages (or web pages to ads) and fill pre-allocated ad spaces, but it’s another thing to actually allocate the ad space based on context. And we pretty much understand by now that even Google can’t do this.

This challenge doesn’t stop others from trying. In-text advertising is a somewhat new approach, implemented by companies like VibrantMedia, Kontera and even Amazon. All based on the assumption that a good link from within the content is worth more than a bunch of ads around it. Yet, those companies also don’t have the technology to determine the best spot for the link to be embedded.  All they do is turn extracted keywords into links. Those are not necessarily the right words to link, and not necessarily in the right spot. Again, we see that technology can not yet deliver what an advertiser needs, in this case placement.

Which linking method is the best for the product?

Is this a product that requires a visual instead of a text link? And if so, which of the available visuals will perform better? Surely, no machine can provide the answer, yet…

Crowd Sourcing

It seems to me like machine scalable CPA is a romantic idea that belongs to the future. The requirements are just to much for the current technology. Nevertheless, we need a solution now. So what can be done? Crowd sourcing.

If the technology doesn’t exist yet, there is no other way to achieve scalable CPA but to outsource the job to people. This has already been done in other areas of online activity, for example Digg, Delicious and uTest.

How can we use the crowd for contextual CPA? Using Mechanical Turk? Perhaps. However, I believe Zemanta offers a better and more organic way.

Zemanta Crowd Sources Contextual CPA Advertising

Since every page that contains content is generated by humans, what could be more natural than outsourcing the contextual CPA ad embedding to those humans – the authors themselves?

I can think of one problem; authors are not always commercial savvy. They are mostly concerned with writing and not with marketing.

What Zemanta does, however, is provide them with a tool to enrich their content with tags, images, links and more. Zemanta integrates smoothly into the author’s domain and provides them with a great value. What if  Zemanta offers some CPA links and banners in addition their other offerings of pictures, links and tags? And what if those links and banners would be seamlessly merged into Zemanta, thus providing a way for the author to integrate CPA in a truly organic fashion?

In an earlier post, I suggested that Zemanta would eventually look for revenue from the point of content consuming, despite that they recently announced a paid API model. Andraz Tori, a co-founder of Zemanta supports my assumption with his comment on CenterNetworks:

But we are definitely working on monetization.
For example when suggest link to Amazon and you specified your Affiliate ID, we insert it. If you haven’t specified it, we insert our own.

Presently, authors from around the world are using Zemanta and organically embedding CPA Amazon ads within their content. They embed ads to the right product, they embed them in the right spots within the content, and they decide whether or not to add a textual link or a product image. Best of all, the authors don’t do it with the intention of selling. They are doing it with the intention of increasing the value of their own content. As a result, ads are organically and naturally embedded within their content.

Of course this is just the tip of the iceberg. Those are just Amazon ads for now, and Zemanta’s method of revenue sharing is not yet solid. However, they have just recently started – and as far as I can see, Zemanta provides a great service, and it’s byproduct is crowd sourcing of contextual CPA advertising.

If that’s not CPA innovation, then what is?

Written by Shahar Solomianik

March 5, 2009 at 1:42 pm