Tag Archives: google

Why The Self Driving Car Might Actually Work

This week, the inaugural Code Conference took place on the West Coast and much of the buzz was about Google’s self driving car.  Google co-founder Sergey Brin unveiled the car and showed at least one video of a driver-less car which pretty much looks like a gondola.

(image from recode)

I’ve been thinking about self-driving cars for a little while now.  As you might (or might not) know, I enjoy cars.  I’ve blogged about the automotive industry a bit, I got to work on multiple automotive pitches on the agency side, and over the years frequent the Greenwich Concours d’Elegance to enjoy the culture of automobiles.  I’ve also owned my fair share of cars:  some that go fast and some that go slow.

I have a relationship with my cars.   Some cars I care about more than others.  But if I’m leasing, that relationship ends every 36, 39, or 48 months.  I’m onto my next car.   If I own a car, I’m looking at where I’ll achieve maximum value for my sale/trade-in and look to optimize for that.  Note, history tells us that the longer you hold onto an owned car, the more value you get out of it.   For me, value is not correlated to happiness- there might be a slight correlation, but I look to switch my cars more frequently than the typical American of 11.4 years.

As Google showcases it’s self-driving car, the definition of a car doesn’t change, but the value and utility it brings is very different.  Instead of having to worry about driving – and basically concentrating on the road, you now get [potentially] substantial time back in your day.

For me, I am in my car for about 30 mins each weekday.  15 mins to and from the train station.   While those 15 mins each way are not significant, when you add them up over a week, that’s roughly 2.5 hours that I’m sacrificing of my time to drive to the train.  Instead of buying cars that hug the road, sit low, and have 510hp, I can focus on the cabin of the car and basically ride in an office or living room on wheels.  Cars will have more Bentley interior amenities than Ferrari* amenities (though Ferrari is getting Apple’s CarPlay).

I digress.

My relationship is with technology when it comes to cars.  At the end of the day, a car is a set of wheels, an engine, and a lot of modern day computers. Cars today just work….. and for the most part they do.  I noticed my wife had a day-time-running light that was not working today… but that didn’t stress me out.  The car worked fine; when we have a free moment, we’ll bring it back to the dealership and have them fix the light.   Cars have become very utilitarian.

This used to not be the case.  If you ask your pops, your grandmother, or anyone else older than you, you’ll see that they had stronger relationships with cars.  Why?  Because cars used to be a lot more temperamental and they’d break.  They were also newer.  They were to the left on the gartner hype cycle.  When a car had issues, you put on your old jeans and you crawled under your car and fixed it.   You build a relationship with your car.  You might have even named your car.  Or kissed it.  My father named his old Land Rover, Sunny.  That name stuck with me.The self-driving car might actually catch on because replacing your car today is less emotional than ever (IMHO).  For most people**, your car is a utility and you are looking to maximize your efficiency in the day.  If you could check your email or text messages on the way to taking your kids to their soccer game, I’m sure you’d chose that over than actually driving the vehicle.

When we do adopt the self-driving car, the actual car itself will be commoditized (if not already) and will move to the fabric of life.  We won’t think about the car, we’ll think about everything we can do while in the car.

 

* If you’ve ever been in a Ferrari, you’ll be amazed at how little is in the car.  It’s about the driving experience, not the cabin experience.

** Not everyone falls into this bucket.  I’d personally want to keep a car that I could drive.  I get a lot of enjoyment out of driving and taking control of the road.

 

 

 

Google Controls 41.8% of total Internet Ad Spend

I was doing some financial modeling for a new initiative we’re thinking about at work and wanted to see how many ad dollars there were per Internet user.  Based on my simple calculations, it’s on average* $40.88 per user, per year.

And ….by the way, Google controls around 41.8% of total Internet ad spending.  Wow.

Internet Ad Spending

 

 

 

 

 

 

* Note, I said average above.  We know that some markets value users higher than others.
** Link to the Google doc with above information is here

#ADX Advertising Week’s 10th Anniversary

Each year, thousands of panels, keynotes, interviews, and talks are held in celebration of the advertising industry.  Thought leaders come together to discuss the future of the industry, the current state, the good, the bad and ugly.  The territories we cover have more or less stayed the same over the past ten years:  storytelling, the growth of digital, “the big idea” and talent.

There is a real fact to the territories now:  digital can disrupt and change everything.  And within advertising, digital is at $40B+ in 2013.

The conversations we used to have about the promises and vision for digital were great, but we never really had any dollars to substantiate with.

But it’s become real, fast.

A couple of bullets to keep in mind coming out of #ADX

  • Digital is going to make formerly unmeasurable channels… measurable.  Lean back channels will become lean forward channels.  Passive channels will become interactive channels.
  • Programmatic buying (and programmatic insights) will be at least 20% of agencies business within the next 5 years.  At The Media Kitchen, we’re close to 21% already.
  • Digital has created fragmentation and with that fragmentation, new channels and properties have emerged.  Those are forcing us to think in new ways and become much crisper storytellers.
  • There will be some form of monetization for the 6 and 15 second spot.  Get ready.
  • One of the biggest opportunities I see is being able to create content at the speed of social.  Traditional agencies are not built for this, neither is their P&L.  The industry needs to rethink their go-to-market here and learn from companies like Relevant24.
  • Could Google be the penultimate winner?
  • Ad tech is increasingly becoming a closed ecosystem, with the larger data repositories having the greatest potential for winning.
  • It’s time to retool the ad stack.

It was a fun week and gave us lots to think about for the next 365 days.

 

These 6 Companies Controlled 55% of Worldwide Digital Ad Spend in 2012

When I have spare time, I like reading public companies financial reports.  They are very telling not just for the micro trends, but for macro trends as well.  55% of worldwide digital ad spending was consolidated to Google, Yahoo!, Microsoft, Facebook, Amazon, and AOL which according to Comscore, are the 6 top Internet sites by traffic volume.

I am working off the GroupM $113.5B worldwide digital ad spending number from a recent AdExchanger article.  All other numbers come from Lara’s research of these companies Form-10k‘s.

Ad Spend Chart

I ran a similar report in 2011 which is located here.  Read it so you can compare.

Google’s growth is terrific and Yahoo! took a step back in 2013.  I’m always amazed to see Google dominating digital ad spend with 41% share whereas the next closest competitor is around 4%.  That’s 10x.  10x!

Nice to see Amazon and Facebook building out their ad businesses and showing y/y growth but the larger question is of where is it coming from?  Who is losing (or is the whole advertising pie getting larger)?

 

 

 

Facebook, Ad Servers, and $344B in Media

There is $344B in media* market cap that own and operate ad serving systems now.  

Google acquired DoubleClick ($274B mkt cap), AOL acquired AdTech ($2.86B mkt cap), and Facebook acquired Atlas ($65.4B mkt cap).  ValueClick owns MOJO and retained Mediaplex ad-server ($2.05B mkt cap).

When we think about ad servers for Madison Avenue, our guts tell us DART and Atlas**.   Both of these two ad serving solutions are now owned by larger-than-life media platforms.  MediaMind, the challenger of ad serving solutions is making inroads across Madison Avenue and believe it or not, has surpassed Atlas as the number two platform.***

Having heard the speculation turned news recently about Facebook acquiring Atlas and reading Gokul’s post on AdExchanger, I still do not understand why they did this acquisition unless Facebook thinks they can convince Madison Avenue to use them as their 3rd party ad serving tool of record.

My question to Madison Avenue:  Wouldn’t you want an impartial 3rd party to be your ad serving tool?  Why would you rely on a media property who is going to make more money off media than ad serving to deliver you your attribution models?

And with this, I’m not saying Google is any better.  It’s a big reason why the majority of our clients are not on the DART ad server.

In the finance world, there is significant rules around proprietary trading (prop desk) and analyst/research work.  The two basically do not intermingle and in the recent laws, the two might have to split.   This is FINRA rule 5280.

(a) No member shall establish, increase, decrease or liquidate an inventory position in a security or a derivative of such security based on non-public advance knowledge of the content or timing of a research report in that security.
(b) A member must establish, maintain and enforce policies and procedures reasonably designed to restrict or limit the information flow between research department personnel, or other persons with knowledge of the content or timing of a research report, and trading department personnel, so as to prevent trading department personnel from utilizing non-public advance knowledge of the issuance or content of a research report for the benefit of the member or any other person.

I understand that advertising is not finance, but wouldn’t we take clues from a more robust industry?

If you are a marketer or agency and put all your media plan data in a company who is selling you millions of dollars of advertising media, don’t you think that the data will be used against you?

Here is an example, purely from illustrious purposes:
Property A – $6/cpm $3/cpa
Property B – $8/cpm $3.50/cpa
Property C – $7.75/cpm $3.40/cpa

Imagine the three properties above have their data in an ad server controlled by Google, AOL, ValueClick, and now, Facebook.

When you go to purchase media from any of these four properties, they can see what you are currently paying and what the actual performance is.

This gives these media platforms a significant leg up on pricing & performance as they know where they need maintain or beat.

Is it just me that’s skeptical?

On a completely other note, I do not run M&A for Facebook but I would have suspected they would have built their own Ad Server and maybe acquired an attribution company such as Adometry, C3 or VisualIQ (or the many others in that space).

* Companies who own significant media properties.  Google, AOL, Facebook, ValueClick.
** There used to be a trade magazine that showed ads served each month by ad server, but I haven’t seen it in a while.  Purely based by my conversations with other agency heads, Atlas and DART are the primary ad servers that come up in conversation.  MediaMind is coming up more and more.
*** Updated after an email conversation with MediaMind.

What does $GOOG’s driverless car and marketing have in common?

I’ve been thinking about the Google Driverless Car.  Why in the world would Google create a driverless car?  I know Google maintains the 80/20% policy of creating new projects in the 20% of time but this automotive project is a bit of an anomaly when compared to Google’s other 20% projects that have gone on to become legit businesses for them.

For those not familiar with the Google Driverless Car you can check out the wikipedia page here.

Caveat:  I’ve not been in the Google Driverless Car nor have seen one in person or even spoken to anyone on the Google Driverless team; so anything I type here is purely speculation.

My hypothesis:  I believe the Google Driverless Car, or the driverless system that they eventually will license out to automotive makers will help close the loop from online to offline (and vice versa) marketing.

I speculate that whomever is sitting into the driver seat of the car has to log-into the navigation system.  Since they need to authorize, they will use their Google credentials.  Since Google has a single privacy policy and all data across its various services are stored in one platform, the Google car and/or navigational system will recognize the Google cookies and search history and match up any parking lots you might park at with cookies you’ve been exposed to.

Example:  I’m on Google.com (while on my Macbook Air or iPhone) and search for a Thomas the Tank Engine for my son.  It brings me to a host of search results and I select a page on Walmart.  I do not order the Thomas the Tank Engine online but during my errand run thru Westchester County, NY, I stop into Walmart to pick up a few things.  Since I am in a Google Driverless Car (or using a licensed navigation system), Google will know I parked in the Walmart parking lot.  This new dimension of data:  parking lot(s) and driving details will help create a significant barrier for Google (against competitors) but more importantly, will help solidify and protect marketing budgets that are given to Google.

According to the U.S. Department of Transportation, approximately 63.5MM light cars were sold (via retail) from 2000 to 2007 in the USA.  If we double the number to account for additional cars on the road, that’s about 130MM cars on the road.  I do not know if this is low or high, just guestimating.  If Google had 100% marketshare of the navigation and/or driver systems, they’d have a very solid network of knowing what parking lots and stores people were visiting to validate their online searches, display ads, pre-roll video, etc.  100% marketshare is totally unreasonable but even 25% share will allow for a significant sample that can be extrapolated for the population.

My conversations with our marketing clients and visibility into my peers conversations have shown that marketers now more than ever need to show a return on marketing investment:  sometimes via sales, favorability, or whatever metrics are important to their respective organization.  So, marketing partners such as Google need ways to validate that the media spend we invest with them are moving the needle for our clients. Dollars flow to where we can measure.

Google and their driverless car is a very powerful value proposition to measure offline marketing impact.

Google is worth over $200B based on the marketing dollars it attracts from clients, so protecting (and growing) that is what Google needs to do.  It’s a media technology company.  The driverless car can help protect (and grow) their current business.

Ghostery, Google, and Privacy

A couple of months ago, I wrote up a report that talked about the marketing technology behind $35 billion in 2011 holiday e-commerce sales.  I pulled the data from Ghostery, a browser plug-in that allows users to understand what trackers and beacons are on individual websites.  After I released the report and got some initial traction, Evidon, the owners of Ghostery reached out and asked me to be a guest editor for their Global Tracker Report.  Fast forward to today, their first report is out and you should download it.  Also, the New Media Age wrote a solid piece on the report.

Why?

Not only is it a good read about the current state of privacy, advertising technology, and data, it’s a piece that both the novice and advanced marketer can understand.

Based on the data, the top 5 most prolific trackers are owned by both Google and Facebook.  Google has 3 of the top 5 including Google Analytics, Google Adsense, and Google +1.  Facebook includes both Facebook Social Plug-ins and Facebook Connect.  It’s amazing to see the dominance of Google on this list, as their Google Analytics tags are down on a disproportionate amount of websites scanned by Ghostery.

I’ve recently stated on this blog that Google is both the house & the card player (in relation to a casino).  They know the odds, the cards in the deck, in the current hand, and are playing the game.  The more and more data that Google has access to, the more they can optimize for a Google beneficial outcome.  Note however, this argument falls a bit when you realize that Google can do this short term, but will lose advertisers long-term if (Google) only optimize outcomes for themselves.

If you have a second, download the report to learn more.

Google's Dominance and Why I Will Continue To Invest in Ad Tech

There have been a couple recent announcements in the marketing and advertising technology worlds.  Salesforce/Buddy Media last week, and now this week, DoubleClick Digital Marketing Suite.  For those of you not following the DoubleClick announcement, read here and here.  This morning, Digiday came out with a an article entitled, “Is Google Running Away With Ad Tech?” which I’d like this post to generally respond to.

Google is Intent Rich
As a media buyer, one of the best performance signals we have for buying media is Intent.  Murthy Nukala, CEO of Adchemy wrote a visionary piece recently that explained a bit about Intent and you can read it here.  Intent is way far down the purchase funnel and in a last click world, it generally gets all of the credit.  Being that Google is an Intent harvesting machine, it will continue to manufacture dollars.   Most of the Intent comes from its search engine, so the biggest risk to Google’s advertising dominance is if Google remains a top search engine.  As of now, it does not look like it’s going anywhere.

Google has Vision
I have a few very smart friends who have sold companies to Google for ad tech.  They are true visionaries and have a common vision.  Inside of Google, they are harnessing that vision and leading the way with it.  Neal Mohan has one of the best jobs in the world, IMHO.  He gets to execute this vision, not just talk about it, with Susan Wojcicki and continue to build one of the largest ad tech stacks we know of as an industry.

Google’s Enemy Is Themselves
At some point, which is unknown, there is a good chance a modular home falls apart because there is a stress fracture.  With Google, they are basically building a modular home with ad tech.  They are buying fantastic companies and piecing them together.  The recent announcement about rewriting their backend onto their own platform is extremely important, but one would have to think that mixed cultures and many different technologies will eventually be a potential kink in their armor.

There size is another reason to be concerned.  Publishers are realizing (some have realized a while ago) that Google is a big threat to them.  Google is the casino and knows both the dealer and the player.  They have the data.  This data can and will (might) be used against either party when it benefits Google.  This is a serious issue, essentially as Google continues to satisfy both the demand and supply side.  If publishers pull away, this means Google has less data.  The less data Google has, the less significant they become.

Google Needs to Watch the Government
We know that Google is big.  They are big enough that they need to seriously be concerned with how they are fronting to the industry.  In many circles, the term “monopoly” comes up.  From an entrepreneurial perspective, monopoly is pretty phenomenal because it means you’ve out executed every competitor and basically have won the war.  However, we know the USA doesn’t like monopolies and there needs to be competition in our economy.  Privacy concerns are serious and Google needs to keep these in mind going forward.

Why I Will Continue to Invest in Ad Tech
We believe that Google is strong.  There is no doubt.  Using a sports analogy, they are a team that you can bet on to make the playoffs each year and have a good shot at the Finals.  However, one has to bet against them.  There needs to be competition in the space and there are many companies impacted by Google’s dominance and won’t let Google take over the entire industry.  Each one of those companies, either direct or indirect competitors of Google will be stepping up their M&A game over the next 12-36 months to build an ad stack that’s comparable or better than what Google has.  Remember, in ad tech, features are very important – and Google with their early lead may have a legacy stack fairly quickly because the features they acquired might get old and stale.   This leaves the door open for many players.

Additionally, we don’t know where the next search engine might come from.  Twitter, Facebook, Amazon, Apple, DuckDuckGo (no cookies, I know), and maybe a few other players are building this.  If Intent breeds dominance in advertising, then these players cannot be overlooked.  Either Google buys them (probably not most of them), or they could be the foundation for the next big advertising tech companies.

Some of the players I’m watching to make moves are:  Apple, IBM, Adobe, Accenture, WPP, SAS Institute, Salesforce, Microsoft, Experian, ValueClick, Amazon, eBay, Walmart, Akamai, SAP and Oracle.

One Buying Platform for All Media

Back in June 2011, I wrote a post titled, The 87.5% Category According to Luma – Lots of Acquisitions.  The purpose of the article was to highlight that ad serving systems for online/digital media had a high propensity to be acquired or realize a significant exit.  87.5% of all ad servers on the chart had gone through an exit.  Not bad.

Over the last week of December, I spent some time at home and caught up on my favorite blogs and online content in between playing with my two kids.  In doing this, I spent time reading a December 20th post on AdExchanger by Google’s VP of Display, Neal Mohan.  While I’ve personally never met Neal, I have a lot of respect for what he’s doing at Google.  He has a great quote that I couldn’t agree with more:

We also know that advertisers and agencies ideally don’t want a separate buying platform for each type of media — they want a way to buy across all formats, and in 2012 I think they’ll get it. Real-time bidding (and by extension audience buying) has proven to be a transformative technology for buying desktop display — on our exchange, it currently accounts for 60 percent of all transactions. In 2012, we’ll start getting into that ballpark for mobile and video as well.

If you recall, when I wrote the 87.5% article, I highlighted an area in particular stands out to me as a killer opportunity:

If I personally was to start a company tomorrow, I’d probably create the next 3rd party ad serving system built for the future of all media (able to serve site-direct placements, social media and RTB) and include the opportunity for biddable, rich media, video, and full reporting & analytics.  I believe no ad serving system delivers superior reporting and analytics so this is an area that I’d specifically make sure I’d nail.

I think this is an area for massive innovation because the vision that the industry hasn’t recognized the full vision for the future… I believe that all media will be served, tracked, and optimized across all channels.  Television, print, radio, and out of home will all in some way or another be served, tracked and optimized.  This obviously cannot happen overnight as there are quite a few barriers and obstacles to go thru, but the opportunity is huge.  There is a reason why 87.5% of the companies in the ad serving segment have been acquired.

It looks like Neal and I are thinking the same thing and if any of you entrepreneurs are as well, I’d love to meet you.  This is an area that we are searching to invest in at kbs+ Ventures.  You can contact me here.

Google Controls 5.85% of Worldwide Advertising

According to some simple excel calculations (see below), Google controls about 5.85% of the worldwide advertising billings.  According to a recent article I was reading, ZenithOptimedia has 2012 advertising expenditures pegged around $485 billion.  Google derives 97% of its revenue from advertising so they are around $28.4bln.  Do the math and it comes out to 5.85%.

The majority of this is derived from their search engine marketing practice, which is otherwise known as AdWords.  If Google nails display, can get TV seriously off the ground, participate in organic search (take a look at our, kbs+ Ventures,  portfolio company Yieldbot), and dominate the tablet/mobile market, then they could realistically get up to 10-20%.

Pretty amazing for a company that was founded in 1998.

Calculations