Thursday, April 19, 2007

Personalization of Video Search

According to Aaron Goldman, VP of Client Strategy & Development at Resolution Media, an Omnicom Media Group Company, Personalization in the video space is essentially the model cable TV was built on, where networks created and clustered their programming based on targeted audience demographic profiles. The power of interactivity has taken personalization one step further, as evidenced by TiVo and Netflix. However, mapping personal preference is easier when dealing with TV shows or movies, because of their long-form content. It is much more difficult to build a personalization engine around the short video clips that are so popular online, especially when dealing with user generated content (UGC). It can be very challenging to categorize something like a 3-minute clip of the Urban Ninja. Also, people are much more likely to watch short-form video impulsively, as it is not a big-time commitment.

Just because someone watched a clip doesn’t mean it interested her. This is why video providers must allow people to take control of their personalization. One way to do this is through user ratings. But a simple thumb’s up/thumb’s down rating system like TiVo is not enough. Even Netflix’ comprehensive ratings system, which includes specifying favorite genres and movies, doesn’t give the true picture. The key is to overlay search activity. Merely knowing that a viewer watched a video tells you very little about the person. Knowing whether or not the viewer liked it starts to give you some insight. But knowing what the viewer was looking for when she decided to watch, will allow you to close the loop and truly understand user preferences. Think of how much more powerful it is to know that a viewer watching the Urban Ninja video followed a query for “funny action video.” Couple that with the viewer’s 5-star rating and designation of the clip as a “favorite” and, the next time the viewer searched for “funny action videos,” you’ll have a much better idea of what the user is hoping to discover.

Consider ClipBlast, with its stated mission as “to organize and make the video web relevant, fast, and simple to navigate.” ClipBlast has created a comprehensive video “search and navigation” tool, which allows users to set preferences. This combines past viewing history with self-selected interests, to deliver a set of personalized results that update in real time, as new video is published on the Web. In addition to “my categories” and “my providers” settings, ClipBlast includes “my searches,” so that actual queries are incorporated. As with any emerging digital media technology, the key to continued innovation is monetization. Another critical element when it comes to video personalization is scale. ClipBlast is counting on the strong demand for point-of-query advertising opportunities to deliver sustainable revenue. ClipBlast allows advertisers to target specific categories, providers, or search queries.

To achieve scale, ClipBlast crawls the Web and accepts video RSS feeds so it can amass large volumes and diversity of video content, even indexing Netflix videos. This is because, in order to effectively create a personalization engine, users must be given the ability to choose from a wide array of video assets, including professional and user-generated, as well as short and long-form. Otherwise, there aren’t enough variables in play to drill down and make accurate predictions. The size of the video index is just one side of the scale coin. User adoption is also critical. A large user base is not only important for learning and perfecting a personalization algorithm, but for generating advertiser interest. To achieve this, ClipBlast is distributing a widget that webmasters can embed on their sites to allow visitors to easily access its index. Today, ClipBlast averages only 10,000-15,000 page/video views per day, but it is growing quickly.

This is where GoogleClick comes in, as the biggest online ad-serving company in the world, DoubleClick has tremendous scale. DoubleClick’s Motif rich media product has evolved through development and acquisition into a leading online video serving platform. Integrating the back-end analytics that DART provides to measure post-click interaction with the front-end query activity that Google captures, all the pieces are in place to map intent to content. Given Google’s innovation in the personalization space, it is well positioned to capitalize on the emergence of online video, particularly after its investment in YouTube. If Google can get the networks to share their content, it will be primed to really blow this video thing out of the water. Even Otherwise, Google can move to the ClipBlast/blinkx model and focus on simply indexing content instead of hosting it, which, is the model that Google was founded on. Think of GoogTube as a pure-play search engine!
Thanks, April 2007.

Sunday, April 8, 2007

Google On TV – Piper Jaffray Perspective

Google announced a partnership with Echostar to sell and measure TV ads on Dish Network. Google's technology can add transparency to an inefficient ad medium, leveraging 800,000 search advertisers into the more concentrated TV market, but could potentially face backlash from ad market participants as Google power grows beyond online.

Although Google has fairly quickly come to dominate online advertising, the online market is still dwarfed by the $140 billion annual global TV advertising market. As advertisers have become more accustomed to the measurability and ROI of online marketing, some have begun to question the effectiveness of TV advertising, with some (J&J is a notable example) even skipping the annual network ad buy event, the Up-fronts. Google is hoping to capitalize on this discontent by leveraging its technology and 800,000+ advertising customers (a network like NBC has at most 5,000 advertising relationships) to smoothen the TV ad-buying process by providing more advertisers to publishers, more measurability to advertisers, and more relevancy to viewers. This is a major undertaking by Google and, like the company's efforts in print and radio, will likely take several years to prove itself. However, these efforts could add another leg to Google's growth in 2009 and beyond.

With recent moves into Print, Radio, and TV advertising, combined with an online platform that is expanding beyond search to include image and video (on YouTube) advertising, Google hopes to become the One-Stop-Shop for advertisers and publishers, particularly those looking to address the "Long Tail." Although Google is not expected to step into the network ad buying marketplace soon, the company may begin to aggressively go after remnant inventory to prove the efficacy of its approach. Through market forces and better targeting, Google believes that they can improve relevancy of ads to advertisers and consumers alike.

Google's most significant hurdle could be to overcome the rising fears from media giants, agencies, and advertisers that Google is becoming too powerful. These fears may slow Google's growth in non-search ad markets. However, if the company can provide a significant improvement in ad buying/selling, measurability, and targeting, then longer term publishers, agencies, and advertisers will jump on board.

In the announced partnership with Echostar, Google will get a portion of Dish Network's ad inventory, which Google will put up for bid through an online auction-based purchasing system. Using available information on Dish Network's 13M subscribers, Google will enable advertisers to target their purchases based on daypart, geography and demographics. With the help of Dish Network's set-top boxes, Google will be able to track actual impressions for each ad as opposed to more traditional market share estimations from Nielsen, and will only charge advertisers for actual ad views, effectively porting the CPM pricing model to television. Google will likely either be acting as a commission-paid agent for Dish or as a reseller.
Thanks Piper Jaffray Research, April, 2007

Friday, April 6, 2007

DoubleClick’s Ad Exchange – Jefferies Perspective

DoubleClick announced the DoubleClick Advertising Exchange, an auction-based marketplace for advertisers and publishers to buy and sell online ad inventory. The DoubleClick exchange was launched in beta test with a select group of advertisers and publishers, including The exchange is a natural development for DoubleClick as it leverages its access to both publishers and advertisers through its ad-serving technology. The exchange will also be completely integrated with the DART platform - an advantage for publishers who can manage yield across channels, and for advertisers who can use DFA features when buying from the exchange.

The concept of the ad exchange got Wall Street’s attention when Yahoo! invested $40M for 20% of Right Media in 3Q06. It is sometimes perceived as a threat to the viability of ad networks such as ValueClick’s (VCLK), 24/7 Real Media’s (TFSM) or aQuantive’s DrivePM (AQNT). The exchange is viewed by Jefferies Research as an additional way for publishers to monetize remnant inventory. In fact, these exchanges could improve overall monetization levels online and increase the total online advertising pie -- a strong positive for the industry. To be sure, the concept could someday pose a risk to the ad networks if embraced in full by publishers and advertisers. However, both publishers and advertisers may continue to favor the simplicity of working with an ad network. This is especially true with respect to networks that do not operate under the arbitrage model (such as VCLK or TFSM), and are thus less dependent on remnant inventory. At the same time,’s participation in DoubleClick’s beta proves that arbitrage players could also be interested in participating on such an exchange and working with it as a partner rather than a competitor.

The timing and launch of the exchange is clearly designed to fit in with Hellman and Friedman’s efforts to sell DoubleClick to the highest bidder, with Microsoft (MSFT) and Google both competing. Such a combination is not viewed by Jefferies Research as a threat to companies such as AQNT, VCLK, or TFSM. Indeed, the speculated multiples of a potential deal imply significant premiums to where the public “comps” trade. Versus the primary player in the ad exchange market, Right Media, DoubleClick should be able to compete effectively due to its large installed base of publishers, and to certain tweaks in the model that may improve upon the basic concept. For example, DoubleClick will allow advertisers to view other buyers’ bid for certain inventory, and learn about completed transaction bids. DoubleClick will also offer publishers the option to remain relatively anonymous on the agencies.

Strategically, DoubleClick’s acquisition by Google, Microsoft or AOL could act as a precursor to other moves by competitors. For example, the company with the losing bid for DoubleClick may go after Right Media, but given Yahoo’s 20% stake, the latter is likely to walk away with the prize. Others may become targets as well, particularly aQuantive, ValueClick and 24/7 Real Media. Bottom line, the sale of DoubleClick is likely to spur the large players into action, possibly driving up valuations for the group as a whole.
Thanks Jefferies & Company, Inc, April, 2007