Category Archives: advertising

Predictions: Apple bites, Google eats

Happy 5768 everyone!

Time for some predictions.

  1. Apple bites into PC pie. Apple Computer (remember them?) will attain at least 30% PC market share by 5772.

    Probability: 40% ; Willing to stake: $Y20

    On the front lines, silver Powerbooks are infiltrating in droves. At techie conventions and computer science conferences, penetration has gone from almost zero to something approaching 1/3 by anecdotal evidence. Wandering about these venues, it’s not terribly uncommon to see a table of three or four who apparently all agree to think different. At Yahoo!, more and more of Jobs’s ministers are simply preaching to the converted. In our Yahoo! Research New York office, for example, laps are topped at least two to one with half-eaten half-glowing apples. Even tech celeb Marc Andreessen has returned to the fold.

    But can the Apple bug jump from geeks to grandmas? (Well, my daughters’ grandma is already infected.) I’m guessing so. After all, these same alphadopters led the way to mp3s, Google, Wikipedia, Slashdot, blogs, Firefox, Digg, and Homestar Runner, unlocking remarkable truths along the way like “web search can be monetized”, “Really Simple trumps Really Smart”, and “give up now, Friendster has already won”. (Oops.)

    Why is there an Apple renaissance on the desktop? A big reason is that the OS’s natural monopoly is not so natural anymore. Today, the browser is the most important piece of software on your computer, and a viable cross-platform browser (Firefox) exists that almost every web site designs to. A second reason: it turns out that Intel chips are faster and better than PowerPC chips after all, despite decades of vehement Apple fanboy arguments to the contrary. Third, Apple’s built-in iLife software suite really is astonishingly useful and well designed and speaks to the new killer apps of the desktop: pictures, music, video, web, and email. A final reason is, well, Apple is cool, and technology is at least as much about fashion as function, or at least more than geeks would like to admit.

    Disagreers can accept my yootleoffer or put your play money where your mouth is on related bets at PPX and Inkling.

    (Side note: My take on Apple’s fumbled iPhone price cut: I believe that Apple reacted in fear of the looming gPhone. However, if history is a guide, that fear may be an exaggerated fear of the unknown.)

  2. Google eats its own dog food. Google buys an advertisement by the end of 5768.

    Probability: 60% ; Willing to stake: $Y20

    Google is the king of selling advertisements. So they must believe that advertising is effective, right? Then why doesn’t Google advertise for itself? (I’m not counting recruiting ads.) I’m guessing the reason is that they don’t have to. As a media darling, they get more than enough free press to catalyze their already monstrous word of mouth. I expect that as the glow wears off, as some of the not not evil jabs — deserved or not — start to stick, and as they settle into Big Company mode, you will start to see Google spots on TV and elsewhere.

2007/09/17 Update: Sean McNee noticed that Google is advertising Google Apps to enterprise customers on VentureBeat and the Seattle Times [example ad image]. As a result, let me update my prediction to “Google buys a TV ad for aimed at mass consumers”.

2007/09/19 Update: Maverick blogger, Maverick owner, Yahoo! benefactor, and uber alphadopter Mark Cuban is dancing with the Steves.

2010 Update: I was right, just 1.5 years too early. In other words, I was wrong.

Thoughts from WWW2007 on web science, web history, and misc

WWW2007 LogoEarlier this month, I spent a few days in lovely Banff, Alberta, Canada, at WWW2007, the 16th International World Wide Web Conference. Here are my thoughts from the event. [See also: Yahoo! Research’s writeup.]

It’s becoming clear that other sciences beyond computer science, including economics and sociology, are necessary for understanding the web and realizing its full potential. This theme ran through both Tim Berners-Lee’s and Prabhakar Raghavan’s plenary talks. For every new advance in the web, once it reaches critical mass, the economic incentives to manipulate the system inevitably emerge. Email led to spam. Altavista led to keyword spam. Google led to link spam. Blogs led to comment and trackback spam. Folksonomies led to tag spam. Recommender systems and aggregators (e.g., Digg) led to shilling. It’s clear that a better understanding of incentives, game theory, and system equilibrium is needed, beyond just cool engineering feats. The University of Michigan calls this incentive-centered design and has a world-class research team exploring the topic; see Jeff MacKie-Mason’s blog ICD Stuff for an interesting and accessible discussion. Yahoo! Research is also betting on the importance of human incentives, building a group of economists and sociologists to complement our contingent of computer scientists.

Among conference events, nowhere was the convergence of economics and computer science more clear than at the Third Workshop on Sponsored Search Auctions. The workshop is a rare venue where terms like Nash equilibrium and NP-complete can coexist in harmony. The workshop explored the intricacies of web search advertising, a multi-billion dollar industry experiencing rapid growth. Contributions included new designs for auctioning off advertising space, new analyses of the systems currently used by search engines, new tools to help advertisers, and empirical studies of the industry. Participants included representatives from both academia and industry, including economists, computer scientists, search engine employees (including representatives from the “big three”: Google, Microsoft, and Yahoo!), and search engine marketers. Yahoo! had a large presence at the workshop: Yahoo! scientists (including me) served on the organizing committee, Yahoo! employees and interns presented six of the fourteen peer-reviewed papers, and many Yahoos attended, contributing to their voice to the discussion of this emerging field.

Bradley Horowitz‘s talk also emphasized the new web order, where artists are needed as much as technologists: artists who can envision, create, and orchestrate online communities can be the difference between mass adoption and a flop.

An interesting addition to the WWW program was the Web History track and the Web History Center. Some of the talks were fascinating. Hermann Maurer recounted stories of interactive TV products that proliferated in Europe in the 1970’s and that mirrored almost everything that is done on the Web today in a primitive form. [Some keywords to search for if you’re interested: PRESTEL, Teletel/Minitel (France), MUPID (Austria).] For example, one massive multiplayer game, which involved social exploration of 64 million virtual planets, each with a hidden secret, was so wildly popular that it crashed the network. The apparent winner of the contest returned his prize, admitting that he didn’t actually solve for the secrets, but rather hacked into the system and reverse engineered the code. This pre-Internet system even featured some things I’m still waiting for on today’s web, like micropayments.

CFP: Third Workshop on Sponsored Search

We’re soliciting research paper submissions and participants for the Third Workshop on Sponsored Search, to be held May 8, 2007 in Banff, Canada, in conjunction with the 16th International World Wide Web Conference (WWW2007). The workshop will have an academic/research bent, though we welcome both researchers and practitioners from academia and industry to attend to discuss the latest developments in sponsored search research. Attendance will be open to all WWW2007 registrants.

See the workshop homepage for more details and information.

Sponsored search is a multi-billion dollar industry in rapid growth. Typically, web search engines auction off advertising space next to their standard algorithmic search results. Most major search engines, including Ask, Google, Microsoft, and Yahoo!, rely on sponsored search to monetize their services. Advertisers use sponsored search to procure leads and manage their customer acquisition process. Third party search engine marketers (SEMs) help advertisers manage their keyword portfolios and bidding campaigns. Academic work on sponsored search has only recently begun.

You can indicate your intent to attend at, though please note that official registration must go through the WWW2007 conference.

Hope to see you in Banff!

The economics of attention

Here is a fluffy post for a fluffy (but important) topic: the economics of attention.

Yahoo! is in the business of monetizing attention: that’s essentially what advertising is all about. We (Yahoo!) attract users’ attention by providing content, usually free, then diverting some of that attention to our paying advertisers. Increasingly users’ attention is one of the most valuable commodities in the world. This trend will only accelerate as energy becomes cheaper and more abundant, and thus everything we derive from energy (that is, everything) becomes cheaper and more abundant, on our way to a post-scarcity society, where attention is nearly the only constrained resource.

Today, users generally accept content and entertainment in return for their attention, though likely in the future users will be more savvy in directly monetizing their own attention. I’ve heard a number of companies and organizations large and small discuss direct user compensation. Beyond advertising, the economics of attention is important for the future of communication in general.

I haven’t found much academic writing on the topic, though I haven’t looked thoroughly. John Hagel’s piece “The Economics of Attention” is a good start, and he looks to have compiled some nice resources on the topic, though I haven’t yet investigated closely.

An organization that has garnered some attention of their own (of the Web 2.0 buzz variety) is Attention Trust. I find the description on their own website vague and impenetrable. The best explainer on Attention Trust I could find is PC4Media’s, though questions remain. The basic concept is simple enough: users should be empowered to control and monetize their own attention, including the output of their attention (e.g., their click trails, personal data, etc.). Just how Attention Trust plans to hand this power to the people seems to be the hand-wavy part of their story.

Another interesting company in this space is Root Markets, whose business is to connect both sides of the attention market in an attempt to commoditize attention. Their first product is much more specific than that: an exchange for mortgage leads.

If the absence of formal models of the economics of attention is real — and not simply a matter of my own ignorance — than it may be that some economist can make a career by truly tackling the topic in a precise and thorough way.