When Google CEO Eric Schmidt mentioned a few weeks ago that the M&A spigot is now back on at the search giant, he wasn’t talking about a trickle. Today’s announced deal to by mobile ad startup AdMob for $750 million is Google’s largest acquisition since its $3.1 billion purchase of DoubleClick in March, 2008, and its third-largest ever after the $1.65 billion YouTube acquisition in 2006.
Why such a big bet? Because Google is gunning hard to dominate mobile Web advertising and AdMob has an early foothold in the display side. By focusing on the needs of mobile app developers, AdMob has “built what is approaching a $100 million business in three years,” says Jim Goetz, the partner at Sequoia Capital who sits on AdMob’s board, referring to the annualized revenue run-rate of the company. Since AdMob splits its revenues 60/40 with publishers, that implies AdMob is on course to see $40 million of that $100 million gross. The company is also cash-flow positive, with 140 employees.
of social gaming startup Playfish for $275 million in cash. An additional $25 million in stock will be set aside for retaining the top talent at the startup, and another $100 million in earnouts are part of the deal as well if the business hits certain milestones. So the total value of the deal could amount to as much as $400 million when all is said and done. Although, earnouts have a tendency to come up short (see Skype).
One app we didn't find - and one that brilliantly appropriates the Flickr API in a delightful, infectious user experience - is Noticings. Part game, part geotagging app, part photoblog, Noticings asks users to upload geotagged photos of interesting artifacts to Flickr. Users tag the photos "noticings;" those photos are then imported, analyzed, and scored, with extra points being awarded for those who post every day in a given week, who post photos of lost objects, or who post the first pic from a certain neighborhood. It is, as the site states, "a game of noticing the world around you."
"Many of us are moving so fast through the urban landscape we don't take in the things around us," the site reads.
One of the unfortunate side effects of all the publicity and hype surrounding startups is the idea that entrepreneurship is a guaranteed path to fame and riches. It isn’t. Building a startup is incredibly hard, stressful, chaotic and –- more often than not –- results in failure. That doesn’t mean it’s not a worthwhile thing to do, just that it’s not a good way to make money.
A more rational career path for money-making is one that rewards effort, in the form of promotions, increased security, salary and status. Startups, unfortunately, punish effort that doesn’t yield results. In fact, the biggest source of waste in a startup is building something nobody wants. While in an academic R&D lab, creation for creation’s sake will often get you praise, in a startup, it will often put you out of business.
the sponsored videos to appear in AdSense units across the web, where they compete in standard ad auctions. All of this is part of YouTube’s push to monetize the site, and to make it more appealing to its growing list of premium content providers.
Kraft Foods, Greyhound Lines and Capital One Financial have bought some strange ads on the Internet lately. What's so strange about them is that they're invisible.
The companies might not have known about their invisible display ads—the kind that are supposed to appear alongside content on Web pages—if not for Ben Edelman, an assistant professor at Harvard Business School who studies Internet advertising.
Mr. Edelman says his research shows that all three marketers, and many others, have fallen victim to Web sites that use such ads as a way to sell more ad space than they have.
The Web sites can get away with it, he says, because online advertisers don't always audit their campaigns for proof their ads are appearing. It isn't clear how common these ads are or how much they cost marketers.
Verifying that ads appear is an issue that has long plagued traditional media, particularly commercials on local TV stations. But a single online ad campaign can appear on thousands of Web sites, making verification even harder.
Advertisers often buy display ads based on the number of times they are loaded onto a page, rather than the number of clicks they get. Over the past, year, an increasing number of scams have sought to take advantage of that pricing system as advertisers have started buying more of their online ads via middlemen called ad networks, instead of directly from the Web sites themselves. These networks sell ad space at cheap rates across thousands of sites, and they don't always weed out illegitimate players.
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Let’s say you have an idea for a startup. How do you begin the process of finding cofounders and employees, creating a corporation, handing investors, growing the company, etc.? There are lots of details about building a startyp that are usually a mystery to the newly initiated founder. Usually you have to learn this stuff on the job, making mistakes along the way.
But not anymore. Last night I saw a 45 minute presentation by Mint
Patzer takes the audience (and now you) from the beginning of Mint, and gives some incredibly useful device. He talks about the early days of Mint, where he lived on $30,000/yr and hired engineers at just a little more salary by offering them significant equity. He also says that, as a rule of thumb, every engineer in a pre-revenue startup adds $500,000 in valuation. Every business guy lowers the valuation by $250,000, he half jokingly quipped. In its earliest days, Mint was burning $150,000/year, he says, for 2 founders and 1 engineer/contractor.
Patzer also spoke about financial modeling, keeping costs low throughout the life cycle of the company, and Mint’s revenue model. He also gives suggested goals and milestones for each successive funding round. One interesting fact – today Mint, which is free, generates $30/year/user from various offers and value added services.
There are lots of additional details, including, for example, various hidden costs in financings (mostly legal).
If you are a startup founder, you’ll want to bookmark this and refer back to it. It’s absolute gold.
A new class of tools intended to surface influencers and the people they are influenced by are focusing on a hub of rapid, connected conversation that's wide open for analysis - Twitter. Could analysis of individual behavior on Twitter become a valuable tool for business development and marketing? A growing number of startup companies are making a case that it could.
Last week Twitter announced that it will soon allow users to create lists of friends that they can share with others. It's an attempt to make user discovery easier and it's cute, but it looks pretty rudimentary at a time when some companies are building enterprise-scale software for real-time discovery and analysis of circles of Twitter users, their expertise, influence and sentiment on topics.
On the margins of the developing Twitter-as-business tool ecosystem are startups building light-weight influencer discovery and analysis tools. Two of the most interesting yet have launched in the last 24 hours, in fact.
WIth the rise of Web phones like the iPhone, Android, Blackberry, and Palm (Verizon’s CEO says that 40% of its new phone sales are such smartphones), mobile advertising promises to be a huge growth area. The Kelsey Group
Of course, that is just an educated guess which will turn out wrong. But there is no doubt that mobile advertising will be much bigger in four years, perhaps even ten to 20 times bigger than it is today. Where will all of that mobile ad money go to? Here I think the Kelsey group is more on target. It projects that mobile search will go from 24 percent of the total mobile ad market last year to 73 percent of the much larger pie in 2013, according to a recent research note put out by Citi analyst Mark Mahaney, which is where I’m getting all of these numbers.
Search continues to take nearly half of all Internet advertising, with 47% of the total ($5.1 billion). Display ads, classified listings, lead generation and email took 34%, 10%, 7% and 1%, respectively. Search took just 44% of total advertising revenue in the first half of 2008.
Digital video jumped from 3% to 4% of the total in the first half of 2009, to $477 million.
2008 was the peak year so far for Internet advertising in the U.S., with $23.4 billion in total revenues. That’s up from just $6 billion in 2002.
Retail advertisers represented the largest category of spending, at 20%. Telecom (16%), Leisure Travel (6%), Financial Services (12%), Automotive (11%), Computing (10%), Consumer Packaged Goods/Food Products (6%), Entertainment (4%) and Media (4%) made up most of the rest.
The rivalry between AOL and Yahoo is on prominent display this week, as the two struggling Internet companies compete for advertising dollars on Madison Avenue.
They are pouring on the glitz as they vie for the attention of
thousands of ad-industry professionals at the Advertising Week
conference in New York.
Marketers typically don't negotiate specific deals to buy ad space
or time during the annual event. But media companies use it to tout
themselves to the many ad agencies and advertisers in attendance,
including Coca-Cola, Procter & Gamble, Verizon Communications, Bank of America and MasterCard Worldwide. The aim is to establish relationships and secure business down the road.
Facebook will provide that data, including responses from those who
didn't see an ad, to Nielsen, which will package it for advertisers,
say the companies.
Facebook Chief Operating Officer Sheryl Sandberg is planning to
introduce the product, called Nielsen Brand Lift, in a keynote address
at an advertising conference Tuesday and to pitch it to marketers this
week in New York.
Facebook had a 9.1% share of display-ad views in the U.S. in July,
up from 6.8% in January, according to comScore Inc. That put it in
second place behind Yahoo and ahead of Microsoft Corp. and Time Warner Inc.'s AOL, comScore said.
In recent months, the site has launched new ad formats that prompt
people to take an action -- such as a forthcoming ad that allows people
to sign up to receive a free sample of what's being advertised.
It has also overhauled a tool that allows brands to build pages to
communicate with their fans and has rolled out a targeted-ad feature
that gives advertisers more control and guarantees over who sees their
ads.
The preliminary aggregated statistics of the six participating
sponsors (excluding Hakia), covering a 40-day period, demonstrate that
the Contexa system has met ReadWriteWeb's objectives:
"Advertising networks are big aggregators. We have to emphasize that
we are premium," says Nada Stirratt, executive vice president of
digital ad sales for Viacom's MTV Networks. "We produce original content and attract fans, not just fly-by-night users."
In a bid to appeal more to advertisers and visitors, Web sites have
added pages of news or entertainment during the current downturn,
expanding their ad space and thus their reliance on ad networks.
At the same time, many big advertisers, eager to save money, have
shifted more online business to the networks. Ford now buys about 40%
of its display ads through ad networks, up from about 5% three years
ago, in part because it is "more efficient," says Scott Kelly, Ford's
digital marketing manager.
