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(via -
TechCrunch )
I read it on 02/15/10 at 11:10 PM
Posted on 02/16/10 at 12:33 AM
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 SFWeekly Web Editor Alexia Tsotsis (not pictured left) spent some time early this morning trying out Chatroulette, a website that connects random strangers for a video chat. The results are unlikely to surprise you. Unless you are new to this whole Internet thing. Screen shots of some of her more entertaining chats are below the post.
Harkening back to the days of A/S/L, the random vidchat service Chatroulette is one of those online arenas where not being a white male looking to get off puts you in a definite minority. Founded by a 17 year-old Russian high school student named Andrew Ternovskiy, the service is a more successful Omegle, combining elements of the MTV show Next with vidchat capabilities.
Aspiring chatees click to play and as an escape latch you or your partner can hit Next anytime if you get bored, scared, or have to get back to work. The Report video as inappropriate button also seems to provide some comfort, but by judging by the nsfw fare served to me last night, doesn't provide much of a threat.
I pressed play last night at around 3:00 am PST and after about 45 clicks on Next encountered 5 straight up penis shots, a lot of camera disabled chats, two women who automatically clicked Next once they figured out that I too was a female, and a lot of very grateful looking guys, including a Chinese fan of Google and a French guy in indoor sunglasses, who asked me whether I was a more dominate lady or submissive woman in the hope that I would be the former.
Out of the 10,920 of my fellow Chatroulette participants, my Roulettees were a good cross section of Internet humanity. And while I did not encounter the suicide hanging videos alluded to in many of the chats, things like did you hear the one about the guy who shot himself in the bath tub, were brought up in conversation quite a few times, as examples of just how crazy Chatroulette can get.
Anywhere you get a mass of people communicating uncensored (and yes much like 4chan.org, China has not yet blocked Chatroulette) will be subject to typical groupthink behavior like urban myths and requests for interaction better left to the casual encounters section of Craigslist. Nonetheless, the service's potential for more substantial acts of communication is formidable.
Chatroulette is what you'd expect it to be, micro-interactive reality TV with a large heaping of cybersex. While most people are (whether they admit it or not) voyeurs the fact that Chatroulette lets the both participants see each other limits the site's potential user base to the weirdos and despite piquing VC Fred Wilson's interest it doesn't seem like there's currently enough weirdos to turn the humble startup into something mainstream.
One Roulettee, when asked what he thought the service was most useful for, responded, connecting with people around the world. Yeah, and asking them to show you their boobs.
      
Tags: chatroulette   service chats looking video
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(via -
Scripting News )
I read it on 07/19/09 at 04:44 PM
Posted on 07/19/09 at 08:41 PM
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 I don't think I've ever written about Craigslist here.
Probably because I don't spend much time thinking about it, or worrying about it. But I know that some people do, for example Terry Gross, the host of NPR's Fresh Air. It comes up when people talk about the Internet destroying things that matter, like the classified ads in newspapers. At one point in an interview with Wired editor Chris Anderson she asks, in a bewildered way, what happened. She was saying it was a shame that Craigslist comes along and does what the newspapers were doing, for a fraction of the cost, employing a small fraction of the people who used to support the classified ads in newspapers.
I'm not surprised, and if you think about it, it's very predictable. It's called productivity, and it's what new technology is supposed to do. We used to employ 20 percent of the workforce in agriculture, now it's just 2 percent. That's because of technology. You may say it's bad, but there's also less hunger in the US now than there was then. And there probably are far more classified ads today, now that they're mostly free, than there were when they cost money.
It's productivity. It basically a good thing. And as long as we invest in progress it's inevitable.
Here's an MP3 of the segment quoted above.
Tags: ads newspapers craigslist classified progress
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(via -
Techdirt )
I read it on 07/16/09 at 02:24 PM
Posted on 07/16/09 at 06:48 PM
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I have to admit that it's been really kind of sad to watch journalists with little understanding of economics or business flail around blaming the likes of Craigslist and Google (especially Google) for their own failure in building better business models. The latest is a well-written, but poorly thought-out and argued, piece by Peter Osnos, the Vice-Chairman of the Columbia Journalism Review, suggesting reasons why Google needs to pay up its "fair share" to newspapers. There are numerous problems with the logic in the piece, but they can be summarized in two basic camps: a misunderstanding of the internet and a misunderstanding of economics.
The great thing, by the way, is that the comments on the article highlight pretty much every mistake that Osnos makes -- and, of course, as is oh-so-typical in these situations, Osnos does nothing at all to engage or respond to the comments that call out his mistakes. You want to know why newspapers are failing? It's not because of Google, it's because of this viewpoint that some journalists still hold that they're the masters of the truth, handing it out from on high, wanting nothing at all to do with the riff raff in the comments.
So, what's wrong specifically with the article? Well, he uses as his basis the idea that cable companies (and their subscribers, really) pay TV networks to be carried in cable packages, and suggests that Google should be doing the same thing -- paying newspapers as if they were networks. Of course, there are a few problems there. Television is a broadcast medium with a limit on what can be provided. The economics are entirely different than a communications medium with unlimited "space" for content. Suggesting the two are the same is simply wrong. The economics are entirely different. In one case, you have significant scarcities in terms of what gets "offered." That's not the case with the internet. Ignoring that destroys Osnos' entire argument.
Even more to the point, as one of the commenters to Osnos, Kimota, notes: "It's interesting that cable television was held up as a good example of how to extract subscription fees for content. The American Customer Satisfaction Index from the University of Michigan said in 2007 that cable and satellite TV suffered 'the lowest level of customer satisfaction among all industries covered.'" When your idea of how to save the newspaper business is to take a model mostly beloved by consumers and ask it to mimic a model almost universally hated... that's a problem, right?
The second big problem with Osnos' analysis is that he doesn't appear to understand how Google makes its money. He simply looks at the fact that it's making a ton of money, while newspapers are not, and assumes that Google's actions draw in the money that should have gone to newspapers (hence the "unfairness"). But as Scott Rosenberg notes in the comments again, this is a fundamental misunderstanding of how Google makes its money, which has little to nothing to do with news, but in targeted advertisements on transactional searches (searches where people are looking to buy something):
Google makes its money mostly from targeted advertising on product searches and other narrow, directed searches. The advertising on news-related searches is not nearly as valuable. Google could remove all newspapers and journalism content from its Web search catalog tomorrow and lose very little of its revenue. The links to news it provides are valuable to its users but not terribly valuable to its advertisers.
Finally, Osnos makes another big mistake, common among newspaper folks, that whoever breaks the news is obviously the most valuable source. Yet, as we were just discussing, being first doesn't always mean that you have the most useful information. Related to this, Osnos complains specifically about how Sports Illustrated broke a story, but Google News pointed more people to the Huffington Post coverage of that particular story, stating:
Most galling was that The Huffington Post's use of an Associated Press version of SI's report was initially tops on Google, which meant that it, and not SI.com, tended to be the place readers clicking through to get the gist of the breaking scandal would land.... Why did The Huffington Post come up ahead of SI.com? Because, even Google insiders concede, Huffington is effective at implementing search optimization techniques, which means that its manipulation of keywords, search terms, and the dynamics of Web protocol give it an advantage over others scrambling to be the place readers are sent by search engines. What angered the people at Sports Illustrated and Time Inc. is that Google, acting as traffic conductor, seemed unmoved by their grievance over what had happened to their ownership of the story. An SI editor quoted to me Time Inc's editor-in-chief, John Huey, noting crisply that, "talking to Google is like trying to talk to a television."
This, of course, is a gross distortion of reality, and implies totally incorrectly that somehow the Huffington Post has some power over Google that SI.com could not replicate. The fact that Sports Illustrated and other publications have made bad decisions in optimizing their content isn't Google's fault. It's their own fault. Here, let me put this in terms that old "paper" folks might get: If more people go to my store than your store because I put a better ad in the Yellow pages, it's not the fault of the Yellow pages publisher. It's your fault for having a crappy ad. By doing a better job optimizing its content, the Huffington Post effectively better "advertised" itself to Google.
Of course, old school publications like Sports Illustrated could just as easily do the same thing themselves, but they haven't. On top of that, they could offer more useful features and services that attract more people such that they specifically seek out SI's coverage. But, instead, they treat the community the same way Osnos seems to: the riff raff can comment, but they aren't a part of the "real conversation" that occurs outside of the community.
Osnos wants fairness, but the system is amazingly fair. Much more fair than it ever was in the past, in fact. The problem isn't about "fairness." It's about Osnos being upset that in a level playing field pretty much everyone but the newspapers have figured out how to play the game better. What's fair is that the newspapers haven't been able to adjust and their revenue and readership is reflecting that.
Permalink | Comments | Email This Story
 
Tags: google osnos newspapers huffington si
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(via -
TechCrunch )
I read it on 06/01/09 at 09:26 AM
Posted on 05/30/09 at 08:14 PM
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 And you thought the South Carolina v. Craigslist story was dead.
If anything sucks more than being the target of an ambitious but delusional gubernatorial candidate who has suddenly developed a bit of a fetish for prostitution, it's being ignored by that candidate. As far as Village Voice sees the world, Craigslist just got a bunch of free press. And they want their share.
When Craigslist management was facing a criminal investigation for listings on the site they did the smart thing. They talked about the law, and they pointed out that the real smut was on other sites that were being ignored by the South Carolina Attorney General. If you really want hard core porn and prostitution, Craigslist CEO Jim Buckmaster pointed out, check out Village Voice's BackPage.com.
That's all body fluids under the bridge now, of course, since a federal judge smacked down McMaster and forbid him from stalking Craigslist management.
But Village Voice is still smarting from those Buckmaster links in that blog post. Yesterday they issued a very official press release titled Village Voice Media to Craigslist CEO Buckmaster: Calm Down, Back Off; There is Nothing Wrong With a Little Competition.
In an email, Village Voice's PR firm accuses Buckmaster of leveraging the legal bind he's in to damage Craigslist's competition.
The real reason for the press release and press outreach, of course, is to get a little bit of the spotlight pointed to backpages, too. Because their official story doesn't make sense.
Backpages has adult ads, lots and lots of them, and they're proud of it: We will continue to exercise our right to accept legal adult postings, they say. All Buckmaster did was link to a whole bunch of them. And since backpages desperately needs the traffic, what they really should be doing is thanking Craigslist, not attacking them.
What we learned today: If you really want to pay for sex, backpages is the place to go.
Full press release is below:
Village Voice Media to Craigslist CEO Buckmaster: Calm Down, Back Off; There is Nothing Wrong With a Little Competition
PHOENIX, May 29 /PRNewswire/ Last Friday, Jim Buckmaster, CEO of Craigslist, fired a deliberate, unnecessary and wholly inaccurate shot across the bow of Village Voice Media and backpage.com, our online classified advertising property. Given the serious nature of what Buckmaster inferred in his post about Village Voice Media newspapers and backpage.com, we can't sit on our hands and be silent.
In the original blog post, which was later submarine edited to reword and soften some of the attacks towards Village Voice Media, Buckmaster complained that politicians are attacking Craigslist but not Village Voice Media and other media outlets because they have a need for positive stories and campaign endorsements from those very same newspapers.
Is it possible that writing stories critical of Craigslist's (relatively tame) adult service' section is more career-friendly than attacking their own employer (or journalistic media brethren) for operating a (far more graphic) adult service' section of their own?
Buckmaster and Craigslist are in a tough, and in many ways, frightening situation - they have a number of moralistic state Attorneys General threatening them over their adult ads, and a raft of bad press following the terrible tragedy in Boston that the company is admittedly in no way responsible for. But, the manner in which Buckmaster is responding to this pressure - by disingenuously lashing out at competitors and caving to political pressure - is inexcusable, and displays a remarkable lack of sound judgment.
In 2002, Village Voice Media recognized the forces that were changing the classified advertising market and created backpage.com to answer that challenge. We've put a lot of work into making it the No. 2 free classifieds site in U.S. We're fine with being No. 2, proud in fact. Buckmaster, apparently, is not. Instead of working with his competitors to find a way to solve, or at least mitigate issues surrounding adult ads - the shortcomings of automatic content filters is something we are all trying to fix - Buckmaster simply attempted to take the competition down with him. And, his methods leave much to be desired.
First off, our newspapers don't endorse politicians and rarely have anything nice to say about them, so to say that politicians aren't going after Village Voice Media because they need our endorsement isn't viable. Secondly, Buckmaster is only complaining because a competitor is challenging his economic advantage in the free classified arena - which he built in part on adult ads - and has made him a very wealthy man. His talk of building community and serving his users rings hollow. It now appears that, as is so often the case with New Age entrepreneurs, it's all about the money.
We will continue to exercise our right to accept legal adult postings from our users and concentrate on growing backpage.com. We are aggressively building additional technical solutions as well as increasing our manual site inspections to improve efficiency of removing content that is illegal or otherwise violates our Terms of Use.
About Village Voice Media
Village Voice Media is a collection of 15 weekly newspapers and daily Web sites, including New York's Village Voice, the LA Weekly, Denver's Westword and the Phoenix New Times. Online, in print, and on mobile devices, VVM's products combine music, food and events coverage with gritty, hard-hitting journalism to create the most powerful city guides in each market. While the focus of the brand is local, its free classifieds site backpage.com, partnership with social recommendation engine LikeMe.net and national sales force, Voice Media Group, extend its reach on a national level.
Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.
Tags: voice village buckmaster craigslist media
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(via -
Portfolio.com: News and Markets )
I read it on 05/01/08 at 08:48 AM
Posted on 05/01/08 at 12:00 PM
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The mystery of the legal clash between eBay and the online classifieds service Craigslist has been solved.
At the heart of the dispute, as Megan Barnett speculated last week, was that eBay liked Craigslist so much that it launched a direct competitor, Kijiji, in some U.S. markets in 2007.
In a redacted lawsuit that was released late on Wednesday, eBay does not deny that Kijiji would compete, but contends that Craigslist went too far in its response under the terms of a 2004 agreement that gave eBay a 28.4 percent stake in the company. Kijiji has reportedly grown to 10 percent the size of Craigslist in just six months.
"The original agreement between the two parties always envisioned that there could be competitive activity," an eBay spokeswoman, Kim Rubey, told the Associated Press.
Months after Kijiji's start in the United States (it began in overseas markets in 2005), Craigslist's owners, Craig Newmark and Jim Buckmaster, "engaged in clandestine transactions" to dilute eBay's stake to 24.85 percent, and prevent it from nominating a new member to Craigslist's board, the suit says.
"We are no longer comfortable having eBay as a shareholder, and wish to explore options for our repurchase, or for otherwise finding a new home for these shares," Buckmaster, Craigslist's chief executive, told Meg Whitman, the C.E.O. of eBay, in an email last July.
Whitman's response, according to the suit, was an offer to buy the entire company.
"We would welcome the opportunity to acquire the remainder of [Craigslist] we do not already own whenever you [and Newmark] feel it would be appropriate," she wrote.
Speculation about a sale or initial public offering of Craigslist has periodically swelled in the wake of rich valuations given to YouTube after Google's $1.5 billion acquisition and to Facebook after Micosoft's investment in it.
Craigslist's top executives have consistently mocked such ambitions, expressing a complete lack of interest in cashing out.
The lawsuit cites an appearance by Newmark on The Charlie Rose Show just days before Whitman's overture. Nemark said that people are always asking Buckmaster how they are going to make more money.
"And we say, 'hey, not interested.' Because once you are living well, and maybe providing for your future, what's the point in more," Newmark said.
Henry Blodget on the Silicon Alley Insider website last month estimated that Craigslist has $80 million in annual revenue and $25 million in operating profit. But Craigslist is run like a nonprofit, he notes.
To get a look at Craigslist's true value, one would have to make certain assumptions about its earnings power, which leads Blodget to conclude that it is a business with the potential to $750 million in revenue and $500 million of operating profit, giving it a valuation of $5 billion.
Related Links
Did Craigslist Dupe eBay?
ReplayTV
Idle Chatter: Craigslist, 'NYPD Blue,' Metro...
 
Tags: craigslist ebay million newmark kijiji
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(via -
Caroline Middlebrook )
I read it on 02/05/08 at 02:12 PM
Posted on 02/05/08 at 06:32 PM
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Matthew Sherbourne saw my posts about the ebook I have written and very kindly offered to send me a free review copy of his own ebook - all about writing ebooks! Of course I jumped at the chance. I really enjoyed the book so this review is quite long!
Instant Money Reports
The book is called Instant Money Reports and sells for $37. It has one of those annoying long sales letters which I dislike but as Matthew kindly sent me the book directly, I didn't have to read any of it :-)
I did flick through it however and I must say I think the sales letter itself is a little vague. He emphasises a wealth-creating system but almost mentions the reports' part as an afterthought - it would be easy to miss. I think he would be better off clarifying that this is all about writing reports for profit and talk less about a generic wealth system'.
The reason I say this is that there are many ways of making money online but writing is not for everybody. There are a ton of people out there for whom English is not a first language or they simply find it hard to write. So this is not necessarily a great option if you are one of those people, where as affiliate marketing may be better for example.
Content of the Book
It is a standard PDF-ebook, weighing in at 89 pages, and split into four major sections:
- Your Report Topic
- Gathering Information
- Your Info-Product
- Make Money
With a fairly long ebook such as this you are not likely to read it in one sitting so it would have been nice if PDF bookmarks had been inserted. You can see these in action in my own WordPress ebook.
Technical niggles aside, I'll now review the actual content of the book itself:
Part 1 - Your Report Topic
Matthew goes into quite a bit of detail about picking a topic for your reports. He describes the various kinds of topics and the way they tend to generate income (an initial rush vs a steady stream for example) and explains when to use the various kinds of topics.
There is a strong focus on profitability within this ebook. Matthew is touting report writing as a standalone business and encourages you to think about how you can branch out within a niche and eventually dominate it so that you can be regarded as an expert within the niche. This is something I did not really think of with my own ebook - I just got an idea and went with it on the spur of the moment.
He also identifies key ingredients that are necessary in any report, such as popularity and goes into depth to help you ascertain if your chosen topic has these ingredients. This is basically the research phase of your ebook - get it wrong and you may be doing a lot of work for nothing so it's nice to see this area covered in such detail. For instance, recall how recently I did a case study of a niche site and I pointed out that perhaps the site would not get much traffic due to a poor choice of topic.
At the end of this section there are some practical tests for you to run against your chosen report topic for you to determine whether or not it is a viable one. This is a nice touch which encourages the reader to actually DO something with the information in the book rather than just reading it and then forgetting about it.
Click here to buy Instant Money Reports for $37
Part 2 - Gathering Information
I think one of the golden rules to selling anything online is giving people what they actually want as opposed to what you think they need. I've had this message drummed into me a lot recently as I was being told the same thing for the Teaching Sells course that I am working through.
This section of the book gives workable methods for figuring out exactly what it is that your market wants rather than you having to resort to guesswork. This again is something I simply didn't do with my own ebook.
What I also like about this section is that the methods in here can be applied to all sorts of things such as what to write about on your blog for example, and is not just applicable to writing ebooks. I'm also going to use these methods to determine exactly what to teach in the course I am developing for Teaching Sells. I really need to do a blog post about that shortly
Once you have figured out what the market wants, Matthew suggests that it is then your job to answer the biggest questions that they have. At this point I think many people can fall over. You see the Internet is full of information - we have an information overload and in all honesty an Internet savvy person could probably find the answer to any question they have absolutely free starting with Google.
So of course some people believe that because the information is freely available that nobody will pay for it. Not true! Most people don't have time to wade through all the information, to weed out the crap - and that's where you (and me) come in. The average surfer can't be bothered to look for it all himself.
What Matthew does in this book is show exactly where to find the information you need to answer the questions being asked by your target market. If research is not your strong point it will be after reading this chapter! I thought I was pretty wise when it comes to the Internet but there is a ton of resources in this chapter that I had never heard of before.
Click here to buy Instant Money Reports for $37
Part 3 - Your Info-Product
This section of the book is all about the physical production of your report. Matthew starts by giving some practical advice on the organisation of the body of the report, ways of dealing with writers block and so on.
He also covers how to write a proper introduction for the report, the conclusion, and various finishing touches such as copyright and disclaimers.
This section also discusses how to increase the perceived value of your ebook and additional monetization via affiliate links.
Next up we have the packaging - how to actually turn your report into downloadable PDF file and then how to grant usage rights to the users. This is something I did not consider with my ebook but as a free offering it is not so important. However, it is very important if you intend to sell your report and Matthew goes into great detail about licensing.
Part 4 - Make Money
This part starts of with the sales message that accompanies your report so it is really lessons in sales copy. For example, apparently its very bad to use the word buy' in your sales copy which is just what I have done within this review, oops!
There is a lot of information here about appealing to the emotional needs of your audience - giving them what they want rather than what they need. I skimmed over a lot of this stuff as I'm not really likely to be creating long sales letters anytime soon.
I was far more interested in the practical aspects of setting up a secure download page. One of the services that Matthew recommends is called E-Junkie which is spooky because they just so happened to take out an ad with me today! He also explains how to provide instant delivery of your report even if you do not have your own website or blog.
The very last section in this ebook is the most valuable to me - here Matthew shows exactly how to market your report on popular forums such as the Warrior Forum which just happens to be one of the action points that I had in my project page for my ebook. My problem is that I find the Warrior Forum intimidating and you only get one chance to promote something so of course I don't want to screw it up! The information in this ebook is brilliant here.
As well as forums, he also discusses ebay (another one of my marketing todo's!), something called Lulu which I had never heard of, classified ad sites such as Craigslist, and again, lots more that I didn't know about. I will be re-reading part 4 of this book several times over the next couple of weeks as I continue with my ebook marketing.
Click here to buy Instant Money Reports for $37
Action Points to Take Away
I really should have read this book a couple of months back before I started on my own ebook project. The problem is that it was just a spur of the moment idea and I wanted to run with it while the enthusiasm was there. To be honest, it's been out for quite a few weeks now and has already been updated so many times that I don't think there is much point in applying what I have learned here to my current ebook. So instead, I will take these action points and apply them to my next one:
- Do better research to determine a good topic - look at profitability potential
- Find out exactly what the market wants to know rather than assuming that I know what they want to read
- Research online sources of information rather than just relying on my own knowledge which may be flawed.
- Add polish to the content thereby increasing perceived value
- Put more effort into crafting a good title for the book
- Write a proper copyright and disclaimer section
- Fully investigate the security options when turning into a PDF file
- Provide a secure downloadable paid ebook and not just a feebie next time!
- Sell the book in forums such as the Warrior Forum
- Sell the book on eBay
- Sell the book on classified ad sites
Conclusion
I was given the book free but if I had paid $37 for it I would be very happy. My favourite part was the last one all about how to market the book and make the most money from it. I didn't much like the stuff about the sales page but that's just me, and not because it's bad information.
I suppose I should also mention the extras. The book has some bonus reports such as a 26-page guide to cashing in on Craigslist which looks interesting and there is a toolbox' which is basically a PDF with lots of worksheets, diagrams etc to help you clarify your thoughts. This toolbox is referred to throughout the text of the ebook.
There is also a 30 day money back guarantee, as you would expect these days :-)
With my current ebook the main revenue stream is an affiliate link to my hosting company Bluehost which pays out $65 per referral. Obviously just a single extra sale that comes from the information in Matthews book would pay for the book almost twice over.
Over the next few weeks I plan to do a lot more marketing of my ebook (as well as work on some other projects) and I will certainly be referring back to part 4 of Instant Money Reports to make sure I get it right.
I am an affiliate for this ebook so obviously I want you guys to go out and buy it but I really do recommend this one, there is so much information in it that I simply didn't know and it is written in an extremely practical way so that it can actually be applied.
Click here to buy Instant Money Reports for $37
Tags: ebook book information report money
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(via -
Techdirt )
I read it on 01/31/08 at 08:40 AM
Posted on 01/31/08 at 02:11 PM
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With the entertainment industry's new push to force ISPs to somehow filter or block the transfer of any kind of copyrighted material, Charles Arthur is wondering why other industries facing massive business model challenges can't do the same thing? Newspapers, as has been well documented, are facing challenges from the likes of Craigslist and Google -- so why not have ISPs block those sites? And plenty of people are discussing news articles, even to the point of copying-and-pasting articles. Clearly, ISPs should be protecting the newspaper industry. But that's not all. Arthur points to some other industries that ISPs should help protect, such as auto mechanics and needlepoint pattern makers -- both of whom have faced market changes thanks to the internet. If only ISPs would block the sharing of information on how to fix your own car or how to create needlepoints -- both of those important industries could be protected. Or, as Arthur concludes, perhaps all of these industries could adapt to the changing market. But what are the chances of that happening?
Permalink | Comments | Email This Story
Tags: isps industries arthur block challenges
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(via -
Valleywag )
I read it on 12/30/07 at 07:56 AM
Posted on 12/30/07 at 04:25 AM
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(via -
Portfolio.com: Market Movers )
I read it on 12/26/07 at 03:56 PM
Posted on 12/26/07 at 08:00 PM
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Holly Sanders has found a TV paradox: as ratings fall, ad rates rise. Specifically, ad rates in both the fourth quarter and the first quarter are running 18% above their previous-year levels, even as ratings are 14% lower than they were a year ago. Sanders explains:
Although it seems counterintuitive, it's the law of supply and demand. As the TV audience shrinks, advertisers have to buy more ads to reach their target number of viewers. But that increased demand for ad slots creates scarcity, which in turn leads to rate hikes.
But if you read closely, it turns out that ad prices haven't really increased by very much at all. Says Sanders:
Advertisers use a measure known as cpm, or the cost to reach each 1,000 viewers, on which to base advertising rates.
If you're basing your advertising rates on cpm, then prices will naturally rise as ratings fall: it's got nothing to do with supply and demand at all. Simply keeping the cost of a 30-second slot constant in dollar terms would equate to a rise of 16% in cpm terms if ratings fall by 14%. If the cost of a slot merely goes up in line with inflation, then that's your 18% cpm rate hike right there.
In other words, what Sanders has discovered is not the price of ad slots going up, it's just the price of ad slots staying constant, even as the number of viewers they reach goes down.
This doesn't actually surprise me. Network TV is the last mass medium, and certain advertisers, like Procter & Gamble or McDonald's, need a mass medium for their ads. Jeff Jarvis says that they should "work a little harder and move past the one-stop-shopping of TV and upfront to put together networks online" - but the fact is that we're still a very, very, very long way from the point at which a FMCG manufacturer can achieve the requisite level of brand awareness with any kind of online campaign, no matter how expensive.
On a cpm basis, then, I reckon TV ad rates are going to continue to rise for the foreseeable future. In turn, that will be good for newspapers and websites, whose ad rates will look increasingly attractive in comparison. Everybody wins - except, maybe, the advertisers.
Related Links
How Newspapers Could Beat Craigslist, Though They Won't Do It
Future Plans for NBC's New Duo
Which Candidate Is Leading With Small-Screen Spending?
 
Tags: ad rates tv cpm ratings
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