Procter & Gamble cutting adspend and moving it online?
It was on the WSJ a couple of days ago. P&G, a big fish in the advertising market, is rumored considering cutting ad spend this year by as much as 10%. No surprise here, considering real estate and finance are having what could be defined as a “soft” year to say the least. Apparently, retails and pharma are joining them in terms of “soft market”.
More interesting, it seems that P&G is moving dollar aggressively to the web, although an official spokesperson would not confirm.
On the other side, a recent report published by PubMatic, as US company that optimizes adnetwork placements and website inventory management, shows eCPM falling dramatically in the last couple of months, hinting at troubles in the online advertising space or, at least, in the adnetwork space.
Unfortunately there isn’t much about the methodology and panel used by PubMatic, so it is quite tricky to assess how much comprehensive their data are. Also, only adnetworks are tracked, so nothing can be said about the really big Internet properties. And many publishers put only remnant inventory (i.e. low value) on adnetworks.
Sure, there is a slow down in finance and real estate (they would be crazy to keep on spending as they were, especially considering that they are not letting money or managing any house sale!), and in the broader economy as well, but I am not sure whether it will impact the online word significantly.
When money is scarce, people look for more efficient ways to use them, and Internet appears to be one of them, so it may well benefit from a slow down. If not in absolute terms, probably in relative terms.
Sphere: Related ContentLength of real estate bear market
There was an interesting table on the FT last Saturday that reported the length and extension of house prices drop (the bear market) in 15 economies since 1970 (mainly Europe, USA + Japan, Korean, New Zealand and Canada).
On Average, the bear market has lasted 6+ years, and the prices dropped between 16% (Canada) and 50% (Netherlands). UK had 2 bear markets, lasting only 3 / 4 years each, with prices dropping 26% and 34%.
If history teaches anything, and considering the highly inflated prices of the last boom cycle, are we set for prices dropping between 30% and 40% and for the bear market lasting up to 5 years?
Sphere: Related ContentFacebook to borrow 100mn$?
Facebook is taking up 100mn$ to buy servers (?). And apparently it is burning at least 150mn$ per year. Noty bad for the enfant prodige company that was able to get 240mn$ at 15bn$ valuation from Microsoft. They had better figure out a way to make more money, pronto.
Sphere: Related ContentNomads and wireless: how your day will change
The economist published, a few weeks ago, an interesting special on mobility. The report is called “Nomads”, published the 10th of April, and all the articles can be accessed directly from this link.
I advise you to read them all. They are very interesting, and cover many different aspects of mobility driven by the new wireless era.
Fairly interesting are the considerations about the “nomads oasis”, i.e. places where they can stop, recharge, get wifi connection and get stuff done in a pleasant environment. You could think to the Starbucks. These are called the “third spaces”, as in the place between your first place (home) and your second place (office). Once great places to socialize, they have recently become lonely places full of people busy with their crackberries or their laptops. Part of the revenues of these places come from wifi access, and it will be interesting to see what happens when wimax will be released, or wireless broadband becomes mainstream in any way, shape or form. I guess people sitting with a single espresso and surfing online for 2 or 3 hours won’t necessarily be welcome.
Another interesting point made by the article is that mobility is completely change traffic patterns, and the way people use the city. Architecture will have to re-think the way cities and building are built, and spaces are used. It appears that desks are going to be a thing of the past. Although I quite fancy having one, and I am not sure I would trade if for a daily search of a spare couch in a common space, for as confy as the couch can be.
Let’s go a bit further ahead. Just a few years.
Mobility is going to change the way we do many things, and I am particularly interested at how it will change the way we use the internet. And it will also reinforce the need of the “cloud”. The very simple fact that you cannot squeeze 1600×1200 pixels into a 3inches screen, and that, even if you manage to do that, you couldn’t probably make good use of it (unless you carry a microscope with you, at which point you are probably better off carrying your whole pc) will require ubiquitous access to your data, files and applications. So that you will have your 3 / 4 inches mobile for the “on the road” stuff like quickly skimming through a PowerPoint presentation, reading emails, making phone calls, reading news. And then you will use a laptop -if you carry one- or a desktop at a “third space”. Clearly, all your stuff will need to be remotely stored, to make sure you can easily access them from any device around the world. Your mobile device will also carry your music and videos, and they too will be remotely stored, or the more frequently used will be locally stored while the whole archive will be sitting in a server somewhere around the world. Clearly your mobile will be able to connect via bluetooth to your camera stereo, if the stereo is too old to access your cloud. No need to buy CDs. Your camera -if you are not happy with the 5MP in your mobile you’ll probably have a tiny 14MB handy- will take geo-referenced pictures that will be uploaded in your cloud and properly categorized and tagged by a product like flickr, for example. Of course, new pictures would update your social profile online. This is, in a nutshell, what the “cloud” means for a user, and it is being made possible by a few key things: the Internet (as an infrastructure and as a collection of services), ubiquitous wireless access (wifi, 3G, 4G, wimax when it will come) and devices. Interesting times.
Sphere: Related ContentRecession probabilities for the US
Ok I admit it, I am passionate about the economy too, not only about the internet. So I cannot stop posting about it and, these days, more frequently than about the internet. There is a lot going on in the internet, especially with the recent Yahoo-Microsoft story. But I cannot and don’t want to comment about “my” company.
The problem is, there is probably much more going on in the economy nowadays, and these are probably the most interesting times of the last 20 years. I make no secret that I am bearish on the economy of the developed countries, especially US. More positive about the emerging markets. I am a believer in the decoupling, although it might not be perfectly realized, yet.
Today I wanted to just post a chart of a model that predicts US recession. I discovered it on “the big picture“, an interesting blog about economics.
Jeremy Piger is an associate professor at Oregon university, and he knows a thing or two about Macroeconomics and Econometrics. He has developed a model to forecast US recessions, and the output is presented in the picture at the top of the blog. If you cross reference it with the Wikipedia record of US recessions, it seems to match quite well (although some might question the size of the sample).
Just thought to share it.
Sphere: Related ContentNestoria - smart house search
Nestoria is a vertical search engine focused on real estate with operations in UK and Spain. Founded by a few Spaniards -amongst which friend and former top dog for Yahoo Search Europe Javier Etxebeste- it aggregates information and data from other vertical engines and estate agencies, properly and smartly aggregate and present in a pleasant way. Extremely easy and intuitive to use, not useless bell and wistles, it gets the job done, nice and quickly.
The search results page has the classical drag and drop map with icons on where relevant houses are located. A big button allows to update the search every time the focus of the map is moved. Usual filters: price and number of bedrooms, sale, rent and flat-share.
A click on any of the icons on the map shows a summary of the house details, and a click on this little window will redirect you to the real estate agent website. That is what triggers monetization (and therefore revenues for Nestoria).
A very interesting feature is the information box in the bottom-right of the site. It brings you all sort of interesting information about the area: census, political, parking lots and prices, pictures of the area and, very important considering its focus is on UK, pubs and their ratings.
But probably more interesting of them all are the historical offer prices for different type of flats/houses in the area. You can have a front seat watching house prices going down 
AdMob Analytics
Surely AdMob is moving swiftly and smartly in the mobile space. Just shortly after having announced the 20th billion ad served, they are rolling out a very interesting product: AdMob Analytics.
The product is now in beta and, not having a mobile site, unfortunately I can’t try it, but some information is given on the website. Beside a couple of screen shots, there is a clip from Omar Hamoui that cover the more basic features of the product. Page views, users, engagement. You name it. The GUI appears clean and cool.
I’ll leave to the beta tester to comment on the functionalities and quality of the product.
From a strategic standpoint, this move makes a lot of sense, and somehow resembles what has already happened in the on-line space. It’s an attempt to close as much as possible the value chain.
You’ve got a platform with distribution, and advertisers sitting on top of them. You have to provide analytics to the advertisers: they want to know how they are spending their money, and if the get the bang for their bucks.
But you can’t forget publishers either. Providing good an valuable analytics to publisher will increase their switching costs, and will create some barrier to entry. Not only, there is the side benefit that with good analytics, good publisher will be able to improve site performance (i.e. user engagement and therefore ad-impressions), hence strengthening AdMob network.
On top of that, there is the value of all the information collected from all the websites that will adopt AdMob Analytics. That information will eventually generate incremental monetization for AdMob.
This is why AdMod has smartly decided to make the product available for free. Good move. Wish you well.
Sphere: Related ContentPanedia - see the world from your desk
I just came across a company with an amazing product. Panedia. It is really amazing. They organize high resolution and high quality geo-referenced pictures. They are made by professional photographers. The company is Australian, or at least I think so as all of the pictures they have in their archives are from Australia.
You can select a point, and they will show panoramic pictures of the location with clickable “bubbles” that allow you to explore other parts of the area. By clickingh the bubbles you can take a virtual tour of the area with very high quality pictures. Most of them are panoramic, and the focus can be changed with your mouse. You can move the focus right or left, up or down, and explore the whole surrounding area. They also produce wallpepares.
It is really worth paying a visit. I am not sure how they monetize it, or if they monetize it yet. Maybe they will earn service fees by providing content to travel websites, tour operators and many other services that will surely benefit from their great product. Imagine being able to see the places you are going to visit and plan your trip according to what you see from Panedia.
Sphere: Related ContentUS house prices still down
This chart, courtesy of Standard and Poor’s, shows the severity and magnitude of US house prices adjustment overt he last 18-24 months.
Standard and Poor’s also issued a press release just yesterday about the continued fall of US house prices, now reaching 18-20%+ YoY in cities like Los Angeles, Las Vegas, Miami and San Francisco, once thought rock solid and recession-proof.
Sphere: Related ContentThe Masdar initiative, aka Abu Dhaby renewable energy bet
You would never expect that one of the major hydrocarbon-producing (oil!) nation in the word starts a clean and sustainable energy project.
Well, it is true. It has happened, and it is extremely smart. Abu Dhabi launched the “Masdar Initiative” in 2006, defined as a “global cooperative platform for open engagement in the search for solutions to some of mankind’s most pressing issues: energy security, climate change and truly sustainable human development.”
The declared goal is to make of Abu Dhabi a world leader in new energy technologies research and development. This is not limited to just energy production, but also touches carbon management and water utilization.
Abu Dhabi has oil reserves of about 92bn barrels, and a production of circa 2.5mn a day. This makes for a reserve life of about 100 years at current production and consumption. Both production and consumption will clearly grow because of the growing appetite of emerging markets.
Yet I don’t think that fear of running out of oil is what drives this decision. Even with a very pessimistic view, you can expect Abu Dhabi to have oil reserves for several tenths of years. What I think drives this decision is the realization that expensive energy is boosting research for alternative forms of energy, and climate issues are making oil “less friendly” to say the least.
With oil at 120$ a barrel, almost every form of energy production becomes profitable. It costs less than a dollar to produce a barrel of oil in Saudi Arabia, about 6$ in US, and about 35-40$ from the Canadian tar sands (which are estimated holding about 180bn of barrels in reserves).
While Abu Dhabi has reserves for 100 years, the whole world has apparently enough oil for just over 30 years, and this is what really matters (to the whole world). The closer you get to that deadline, the more expensive oil will be, and the more profitable will be investing in new energy technologies. The more you invest in them, the less expensive they will become, and the cheaper alternative energy will be. And it will also be greener, thanks to the growing attention to the environment. Cleaner, greener and renewable. This is happening now and at an ever growing pace. The risk (or certainty maybe?) is that oil will be displaced as the main source of “cheap” energy well before the world runs out of reserves.
Now, it doesn’t really matter that you have 100 years of oil reserves if the focus has shifted to other form of energy. This is what Abu Dhabi has understood and is smartly fighting against: loss of importance.
Abu Dhabi has understood that the focus will shift away from oil towards other form sof energy over time, and has decided to put the huge capitals it is accumulating at work in the smartest way possible: researching on those technologies that will eventually displace its source of wealth.
The long term goal of a project like Masdar in an oil-producing country is building the conditions to remain the centre of gravity for energy production even beyond the limit imposed by its natural resources. And by doing this, the project is speeding up the very same process that will eventually displace the older energy production technology whose proceedings are right now being used to displace itself!
It’s a very smart play, and if well carried over we will all benefit from it. I think other countries in the area might follow suit, to make sure they will be able to play on a levelled field in 20 years time.
Sphere: Related Content