Lunch with Zalan, 2.5 year old son of Miklos and Marie-Eve.

The food was great.

One of the things that most excites me about blog advertising is its immediacy.

Blogs are fast, furious and unmediated. Smart blog advertising leverages these same characteristics.

Take the latest blogad for congressional candidate Jim Newberry:
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The moral of this story isn’t that other Democratic candidates should consider running “Rumsfeld must resign” ads — although I’m sure a couple will.

The tactics to be copied are topicality and passion: carpe diem. Blogs dare advertisers actually to put their mouths where their money is, to speak immediately and bluntly about the issues of the moment.

Hope I can make it to Blogtalk this year. I gave a talk there last year and had a fantastic time. The folks organizing Blogtalk are wonderful hosts, and the speakers chew on lots of arcane but essential angles not covered by more commercially driven events. Where else would you find this range?

* Mortensen, Torill Elvira: “Dialogue in slow motion ‘ the pleasure of writing and reading across the web”
* Lumma, Nico: “The German Blogosphere – some facts and figures”
* Schuster, Michael: “Applying Social Network Analysis to a small Weblog Community: Hubs, Power Laws, the Ego Effect and the Evolution of Social Networks”
* Azhar, Azeem/Niederhofer, Max: “Does blogging suck?”

…and Vienna is spectacular.

My presentation last year covered “Blog advertising metrics: passion and hubness.

WSJ (May 10) “The trusty old tent isn’t just for camping any more. Schools, churches and even prisons are choosing tents over buildings these days because they are cheaper and quicker to erect. A new, elaborate generation of products can accommodate elevators and chandeliers. Instead of canvas, the novel tents have vinyl walls. Instead of poles running up the center, giant metal frames support the structures. Some have doors that lock, windows with screens, wood floors, heating and air-conditioning, and wall-to-wall carpeting. Strong ones can withstand winds of up to 80 miles an hour.” …

“As its membership grew, New Life Church considered putting up a metal or concrete building. But the tent won out because it cost about $800,000 less than a traditional building and shaved four to six months off the construction time. The unconventional design appeals to teenagers, who use the facility for youth-ministry meetings and concerts, says Brian Newberg, financial controller for New Life, which has a main church building, as well.”

The subscriber-only article.

For housing the tent has all the classic traits of “disruptive technologies” as defined by Clayton Christensen. Tents are weaker, cheaper, simpler, easier to use, appealing to different types of customers, sold through different sales channels, and migrating quickly up market.

We still rely on stone, concrete and wood, building materials first used by ancient man. Why not dwell in computer-optimized structures and materials?

In the drive to raise money for candidates, some folks are playing all the angles. Rewarding his readers for their donations, Atrios links to a photo of boobies for Kerry. What will the FEC say?

Film-maker Brian Flemming bought a Blogad on Talkingpointsmemo promoting a book called “Sue Me,” which is intended to shame Arnold Schwarzenegger. He’s posted the results of the ad campaign so far — lots of clicks and some of that juicy stuff that PR professionals crave: “earned media.” Any revenues from the book campaign will be plowed right back into more advertising.

Newspaper circulation declined nationally in the first quarter. The fundamental problem — there are lots of other places to get the same information.

Some of the steepest declines among big papers were registered by The Washington Post, which lost an average of about 24,000 readers on weekdays (a drop of about 3 percent, to 772,553) and a similar number on Sundays (representing a drop of 2 percent, to 1,025,579.)

Boisfeuillet Jones Jr., publisher and chief executive of The Washington Post, said in a telephone interview that several factors appeared to have contributed to the declines, including a spike in readership during the early months of 2003, which he attributed to interest in the buildup to the war in Iraq.

But citing something of a mixed blessing that will be watched closely by other newspapers, Mr. Jones said that the newspaper’s Web site – as well as a free tabloid-size affiliate of the paper, called Express, which was introduced last summer -appeared to be siphoning some readers from the main paper.

Of course, this could just be rationalization. Most publishers see that for every two subscriber’s lost to the web, two or three new ones are attracted. But maybe that game is coming to an end, as the marketing effect of having a web site is wearing off.

In any case, if the web is going to be the scapegoat for circulation losses, the Post steps into a difficult paradox: try to make online readers pay, and you’ll lose out to the free competition, whether that is NYT or bloggers making fair use of excerpts of online material.

Hey, I love newspapers too. Great editors make a great difference. And newspapers fund lots of investigative stuff that freelancers can’t shoulder themselves. I ain’t sayin its right, I’m just sayin.

But things ARE changing, even as the industry has been lulled into thinking, “gee, we thought the web was going to kill us all in 1999, I guess we were wrong.”

Read Clayton Christensen’s Innovator’s Dilemma and/or Solution for an excellent framework for understanding the challenge the web poses for traditional publishers. Every now and then an industry is transformed when a cheap, lowpower solution comes along with a lower cost structure, different marketing channels and (intially) different customers who are ignored by the current marketplace… then the “disruptive” solution slowly improves and knaws into the muscle of the existing market.

My favorite reading online these days is about the random minutia of people’s lives. Matt gives a bullet point rundown of last weekend in the car and motel. Steve gets ready to mow the lawn and plays with slotcar memories. Rick discovers a new hitch for his bike.

What minutia can I share here? Have set up a new wifi for the house. Steeling myself to buy a lawn mower. Reading lots of Simenon. Ordered a new laptop to replace the creaking hulk I currently hawl around: $1100 at Dell with a nice battery and some obligatory MS software. I’m looking forward to testing Vonage softphone — does anyone know whether it stands up to wifi? Finally, Pirates now 3/0. After a game and scrimmage Saturday, we spent an hour tossing the ball — grounders and popups — in the soft rain, getting ourselves and the ball nicely coated in red clay.

Excruciating.

The net revenues generated from the fees advertisers pay us when users click on ads that we have delivered to our Google Network members’ web sites represented approximately 15% of our net revenues in 2003, and approximately 21% of our net revenues for the three months ended March 31, 2004, and we expect this percentage to increase in the future.

…

If we fail to detect click-through fraud, we could lose the confidence of our advertisers, thereby causing our business to suffer.
We are exposed to the risk of fraudulent clicks on our ads. We have regularly paid refunds related to fraudulent clicks and expect to do so in the future. If we are unable to stop this fraudulent activity, these refunds may increase. If we find new evidence of past fraudulent clicks we may have to issue refunds retroactively of amounts previously paid to our Google Network members. This would negatively affect our profitability, and these types of fraudulent activities could hurt our brand. If fraudulent clicks are not detected, the affected advertisers may experience a reduced return on their investment in our advertising programs because the fraudulent clicks will not lead to potential revenue for the advertisers. This could lead the advertisers to become dissatisfied with our advertising programs, which could lead to loss of advertisers and revenue.

We are susceptible to index spammers who could harm the integrity of our web search results.
There is an ongoing and increasing effort by ‘index spammers’ to develop ways to manipulate our web search results. For example, because our web search technology ranks a web page’s relevance based in part on the importance of the web sites that link to it, people have attempted to link a group of web sites together to manipulate web search results. We take this problem very seriously because providing relevant information to users is critical to our success. If our efforts to combat these and other types of index spamming are unsuccessful, our reputation for delivering relevant information could be diminished. This could result in a decline in user traffic, which would damage our business.

…

More individuals are using non-PC devices to access the Internet, and versions of our web search technology developed for these devices may not be widely adopted by users of these devices.

The number of people who access the Internet through devices other than personal computers, including mobile telephones, hand-held calendaring and email assistants, and television set-top devices, has increased dramatically in the past few years. The lower resolution, functionality and memory associated with alternative devices make the use of our products and services through such devices difficult. If we are unable to attract and retain a substantial number of alternative device users to our web search services or if we are slow to develop products and technologies that are more compatible with non-PC communications devices, we will fail to capture a significant share of an increasingly important portion of the market for online services.

…

We believe the factors that influence the success of our advertising programs include the following:

‘ The relevance, objectivity and quality of our search results.

‘ The number of searches initiated at our web sites or our Google Network members’ web sites.

‘ The relevance and quality of advertisements displayed with search results on our web sites and of Google Network members’ web sites, or with the content on our Google Network members’ web sites.

‘ The total number of advertisements displayed on our web sites and on web sites of Google Network members.

‘ The rate at which people click on advertisements.

‘ The number of advertisers.

‘ The total and per click advertising spending budgets of an advertiser.

‘ Our minimum fee per click, which is currently $0.05.

‘ The advertisers’ return on investment from advertising campaigns on our web sites or on the web sites of our Google Network members compared to other forms of advertising.

Advertising revenues made up 77%, 92%, 95% and 96% of our net revenues in 2001, 2002, 2003 and in the three months ended March 31, 2004. We derive the balance of our net revenues from the license of our web search technology, the license of our search solutions to enterprises and the sale and license of other products and services.

…

We have experienced and expect to continue to experience substantial growth in our operations as we seek to expand our user, advertiser and Google Network members bases and continue to expand our presence in international markets. This growth has required the continued expansion of our human resources and substantial investments in property and equipment. Our full-time employee headcount has grown from 284 at December 31, 2001, to 682 at December 31, 2002, to 1,628 at December 31, 2003 and to 1,907 at March 31, 2004. In addition, we have employed a significant number of temporary employees in the past and expect to continue to do so in the foreseeable future. Our capital expenditures have grown from $13.1 million in 2001, to $37.2 million in 2002, to $176.8 million in 2003 and to $86.0 million in the three months ended March 31, 2004. We currently expect to spend at least $250 million on capital equipment, including information technology infrastructure, to manage our operations during 2004. In addition, we anticipate that the growth rate of our costs and expenses, other than stock-based compensation, may exceed the growth rate of our net revenues during 2004. Management of this growth will continue to require the devotion of significant employee and other resources. We may not be able to manage this growth effectively.

…

We expect that international net revenues will continue to grow as a percentage of our total net revenues during 2004 and in future periods. While international revenues accounted for approximately 26% of our total net revenues in 2003 and 30% in the three months ended March 31, 2004, more than half of our user traffic came from outside the U.S.

…

[how unautomated is google?]
Sales and marketing expenses increased $6.7 million to $47.9 million (or 12.3% of net revenues) in the three months ended March 31, 2004, from $41.2 million (or 13.4% of net revenues) in the three months ended December 31, 2003. This increase in dollars was primarily due to an increase in labor and facilities related costs of $4.9 million mostly as a result of a 14% increase in sales and marketing headcount. The increase in sales and marketing personnel was a result of our on-going efforts to secure new, and to provide support to our existing, advertisers and Google Network members, on a worldwide basis.

…

We have put significant effort into developing our sales and support infrastructure. We maintain 21 sales offices in 11 countries, and we deploy specialized sales teams across 18 vertical markets. We bring businesses into our advertising network through both online and direct sales channels. In all cases, we use technology and automation wherever possible to improve the experience for our advertisers and to grow our business cost-effectively. The vast majority of our advertisers use our automated online AdWords program to establish accounts, create ads, target users and launch and manage their advertising campaigns. Our direct advertising sales team focuses on attracting and supporting companies around the world with sizeable advertising budgets. Our AdSense program follows a similar model. Most of the web sites in the Google Network sign up for AdSense using an automated online process. Our direct sales force focuses on building AdSense relationships with leading Internet companies. Our global support organization concentrates on helping our advertisers and Google Network members get the most out of their relationships with us.

(No mention of how many searches Google performs each day. They’ve convinced the underwriters (and themselves?) that Google is not a search company, but an advertising network.) Read the rest of this entry »