Coin of the Realm

The online advertising world was all abuzz this week with the revelation that a number of very high traffic websites have been obtaining large percentages of that traffic through pop-ups on other sites. Apparently, by including actual site content in the pop-ups rather than an advertising message, these pop-up pages got counted as site visits, radically inflating overall site traffic counts.

There's no allegation of fraud here; the discussion seems to be centered more along the lines of "who knew this was even possible?" Intriguingly though, it's far from the first time we've all been surprised to learn the way we were counting site traffic was badly skewed.

The first incident I remember is back in the early days of the Internet, when it first became widely known that many ISP's, AOL in particular, were caching web pages. In those days when most everyone had dial-up lines, ISP's could deliver huge performance gains by delivering cached pages from their servers rather than constantly fetching them from destination websites. Result: vast under-counting of site visits.

The second big seismic event I remember is when a programmer casually pointed out at an industry conference that hits and page views were radically different things. Up until that point, hits were thought to be the same as page views, and much of the software of the day was focused on measuring these hits. The problem? A web page with no graphics on it generated a single hit count, but a web page with 10 graphic elements on it generated a hit count of 11. Talk about over-reporting traffic!

Having seen these and a whole host of smaller such "discoveries" over the past ten years, what amazes me -- and to some extent scares me -- is that at this late date, we are still struggling to both define and count traffic. It's all the more remarkable because our industry has so totally bought into the "traffic economy," where your success and even the value of your business is directly linked to the amount of site traffic you can attract.

If traffic is truly our new currency, we are all going to need to work a whole lot harder to stamp out counterfeiting.

Picks, Pans and Passes

Another week full of activity, so here's a report card on some of the more interesting developments, graded as either a "pick" (thumbs up), "pan" (thumbs down) or "pass" (it is what it is):

Reed Business Information has announced the acquisition of 2006 Model of Excellence award winner BuyerZone, which has an underlying business model that neatly side-steps a lot of the issues that have dogged other e-marketplace initiatives. BuyerZone is a great business, and more importantly for Reed, a real platform to leverage its central market position in many industries to quickly build out powerful transactional offerings. This deal's a pick.

The Commonwealth Business Media unit of United Business Media has announced the acquisition of Official Airline Guide (OAG). A long-time high-flier in the information business, OAG thought the Internet was just a little turbulence, and tried to ride it out rather than changing course, a bad strategy for a subscription-based provider of print airline schedules. What Commonwealth sees in OAG is the raw data for high-value business intelligence, and it's providing that analytics overlay by putting OAG into its BACK Aviation consulting group. This deal's a pick.

Another 2006 Model of Excellence award winner, Zillow, is continuing to roil the real estate industry. First, it launched a free national database of home valuation data to great fanfare. Now it seems to be lifting a chapter from Craig's List, and is offering to let homeowners and real estate agents post real estate listings for free. Further confirming how publicity savvy it is, homeowners can either post a traditional sale listing, or a listing of their home with a "make me move" price. This is all very fun and frothy, but it's going to take a lot more than great PR to win the huge prize that is the real estate listings business. Jury's out on this one, which is why we rate it a pass.

Microsoft has launched a beta of Live Search Books this week, its answer to Google Book Search. Initially, searches will be separate from the main Windows Live search engine, but Microsoft wants to move quickly to integrate book content so a single search on Windows Live will return both book and Web content together. And yes, Microsoft plans to scan the full text of books, but with a twist: Microsoft plans to ask publishers for their permission first. This kinder, gentler Microsoft sits well with us, and suggests its "House of Hubris" label should be assigned to some different company. Any company spring to mind? Respect for copyright makes this new service a pick.

Garbage or Gold?

A recent article in the Sunday Times ofEngland points out the dark underbelly of user-contributed content. An undercover reporter posing as a salesperson for a marketing company called a number of hotels and offered to post favorable reviews about them on user-driven travel websites in exchange for a fee. None of the hotels contacted dismissed the proposition out of hand, and many of them were more than a little intrigued.

That's just one unseemly aspect of what the Sunday Times sees as a larger problem: user-contributed content in the travel industry is becoming more and more widespread and popular, forcing companies that conduct their own independent ratings to either adopt user-generated ratings or go out of business. This might be dismissed as the invisible hand of the marketplace at work, except for one major issue: in many cases, bad data is replacing good data.

The Times article found a number of examples of hotel owners submitting reviews on their own properties, and notes that for most travel sites even two or three reviews can radically alter the rating for a hotel for better or worse, creating fertile playground for fraudsters. In an even murkier twist, some hotels are now offering various incentives to guests who post positive online reviews. The newspaper also contacted a number of travel website operators that claimed to monitor all user-supplied content and found that some weren’t living up to that promise, Those that did monitor all user-submitted content admitted they couldn’t really spot bogus submissions. There are even cases now of hotels threatening legal action against their guests who chose to post legitimate, negative reviews.

What's going on here is that these travel sites are beginning to have real influence in the marketplace, with significant financial consequences for hotels. Hotel owners are frustrated by a system they don't consider fair, where just one or two dissatisfied guests can totally trash a hotel's reputation. Worse yet, the system is wide open to many forms of fraud and abuse. Operators of these websites are publishing information they can't vet, and consumers continue to lap up all free and easily accessible content with no apparent concern about its provenance or accuracy.

With user-generated content and community now two of the hottest concepts in the data publishing business, it's important that we all take a look at the critical issue of quality, because the current "garbage in, garbage out" model can't be a basis for long-term success.

The Trojan App Trap

Google's newly launched service to sell print newspaper advertising puts a new spin on its earlier failed effort to sell print magazine advertising. But it's a strategy that apparently plans to charge a lot for doing very little.

Google's prior effort to sell magazine space had all the elements we have come to expect in new Google offerings: innovation, audaciousness and hubris. Google's plan was to buy advertising pages then resell those pages in smaller units to its base of advertisers, using an auction model as icing on the cake. While we suspected Google wasn't going to find the move to the world of offline advertising easy, we did respect the idea. That's because Google was making print magazine advertising more accessible by not only simplifying it, but by carving big expensive pages into smaller, more affordable units. Google was taking risk and adding value. The software that made all this happen was important, but it wasn't the main act.

Contrast this with the new Google program for print newspaper advertising. Auctions? No. Sub-dividing pages to make them more accessible to small advertisers? No. Google taking a financial risk? No. In fact, all we can see here is Google offering a self-service online ordering utility. Pick your paper, pay for your ad, upload your artwork. That's it. While the service is currently free, Google plans to extract a sales commission from newspapers at some point in the future.

What are these newspapers thinking? In exchange for an online application that from a functional standpoint is pretty mundane and could be developed by anyone, major newspapers are poised to hand over control of some of their advertising to Google, and will be on the hook to pay Google a commission to boot.

From our perspective, Google is facilitating sales, not generating sales, a subtle but critical distinction. Do newspapers really think that Google has privileged access to some large base of advertisers who've been yearning to advertise in local newspapers but didn’t know how? We contend the New York Times and the Washington Post (both participants in this program) aren't suffering from a lack of visibility among advertisers. We further contend that neither is difficult to locate or contact. Do these newspapers really think their sales forces are so ineffectual that all it takes is a self-service ordering page to find new advertisers?

There's nothing here that makes print newspaper advertising more attractive to small advertisers. Newspapers are selling existing ad units at full rate card prices. And if this program is really designed to be used by larger advertisers, then Google will probably end up peeling existing advertisers away from the newspapers, and selling them back to the newspapers in exchange for a commission. Not a great business move for publishers, but Google could end up laughing all the way to the bank. If Google can truly generate new sales for newspapers simply by throwing up a glorified online shopping cart, then that is less a victory for newspapers than a huge indictment of their existing sales operations.

There is a lesson here for all publishers: Don't get misled into paying sales commissions for software applications, because you’ll end up paying commissions for new business you could have generated yourself, as well as business you may already have.

The Many Faces of Social Networking

Social networking, better referred to as professional networking in the B2B world, is fascinating and still in its infancy. The poster child for professional networking isLinked In which harnessed the "six degrees of separation" concept in a programming tour de force that let you quickly determine how you might get introduced to someone you don't know through someone you do know.

Linked In was quickly followed by others with variant professional networking models. Jigsaw provides an online swap meet of sorts where participants trade business cards, tossing in those of no value to them, and removing others of higher value to them. Spoke Software offers a mixed model of contributed information augmented by compiled information.

Now Hoover's, partnering with a company called Visible Path, is introducing a new service called Hoover's Connect. The new service is very much in the style of Linked In, but utilizes slick technology from Visible Path that generates and evaluates business relationships by monitoring the user's email traffic patterns.Intriguingly, despite its long head start and a base of nearly 8 million members, Linked In seems to be actively searching for applications more compelling than professional introductions. It's pushed hard over the past few years to position itself as a tool for executive recruiters. It then introduced a job board component. Most recently, it's launched an intriguing referral-driven professional yellow pages product.

This evolution of the Linked In model suggests that professional networking is a tough nut to crack. There's no doubt professional relationships are highly valuable, but that may be the exact reason people don't want to routinely share them. How disposed would you be to introduce a good professional acquaintance to a near or total stranger, knowing that stranger wants to sell your friend something? Are you going to spend your valuable time vetting this stranger and his offering so you can make a referral to your friend with confidence? Probably not. And that's exactly what I heard from a number of people who tried to use Linked In for its original networking purpose: generally the intermediary party never responded, or said "yes" and then never followed-through. Automated professional referral networks still fall short in the trust department versus true personal networks.

What does all this mean for Hoover's Connect? I'm not writing it off before it even launches, and it's got some neat elements that might produce a different result than Linked In. At the same time, I wouldn't be surprised if Hoover's ultimately finds gold by mining the information value of its professional network a number of different ways from where it's starting out. There clearly seems to be power in professional networking; the challenge is finding and packaging it so that it consistently delivers value to users.