MappingTheWeb //

Ad network acquisition fever is reaching epidemic levels. This widespread phenomenon is sweeping the web landscape like a hungry flock of locusts. Just yesterday I wrote about the 24/7 Real Media acquisition by WPP Group. Then today, the last of the big three search engine players finally made a move - Microsoft acquired aQuantive for $6 billion.

This just about cleans out the entire ad network space. It appears as though no big Internet powerhouse wanted to be left behind with the big 3 and AOL all grabbing a piece of the pie.

And I always thought that the Internet signified freedom and diversity… This consolidation of sorts further solidifies the foundation of the big guns. Now, with less reliance on outside ad networks, these monoliths can focus on internal systems and strategies to expand the business.

What strikes me as funny in this situation is the order of events. Google usually strikes first, snatching up the biggest player in the industry. This not only provides solid positioning for Google with the industry, but also provides the best PR bang-for-buck. Yahoo jumps second, buying a secondary player at a slightly higher valuation. Some PR exposure may ensue, but this is usually drowned out by initial move of Google. Finally, Microsoft lags and lethargically purchases a tier-two firm at a huge premium. In most cases, the takeover turns out to be nothing more than a copy-cat action by Microsoft with little or no positive outcome.

Microsoft definite lags with respect to its Internet strategy. Saying it is weak is putting it mildly. The company needs to step up and start making smarter, more strategic moves in a more timely fashion.

Yahoo needs to focus on services. Trying to dethrone Google from the top search engine spot will be next to impossible. Maintaining a similar level of search engine quality is necessary, but innovation and re-invention should not be a priority. Yahoo needs to focus on core areas such as finance, travel, and shopping among other things.

And Google… well… Google just needs to be Google…

Acquisition fever in the online ad space continues as WPP Group acquires 24/7 Real Media for $649 million. This deal comes on the heels of three other big deals in the same space, involving the Internet’s biggest players. Here is a look at the recent deals:

• Google buys DoubleClick for $3.1 billion
• Yahoo buys Right Media for $680 million
• AOL buys Adtech - financial terms undisclosed

Talk about hype in a sector. We haven’t seen this much attention paid to one area since the ad-gaming got snapped up recently. In any case, I expect the chaos to die off and tranquility to return to this industry of middlemen.

Last week, Facebook launched an internal classified ad system. All new listings are free. For this reason, the launch appears to be more a marketing avenue than a revenue stream. Posting a new listing is extremely simple. The inteface is intuitive to the point that my 5 year old cousin could use it. As is the case with any newspaper classified ads, the major categories include:

• Jobs
• Housing
• For Sale

Using the system, you can view your listings, as well as your friends. In addition, you can also list things you want - like a reverse marketplace.

At first glance, my initial thought was… Aha, another Craigslist competitor. But upon further analysis, I do not think this is the class. Facebook is STILL a social network at its core. This new launch simply provides a value-added service to the main offering. On the other hand, Craigslist IS a classified ad system and although community plays a huge role on the site, many users prefer to remain anonymous and avoid the social features.

Another major difference is around the actual posting process. With Craigslist, a poster can remain anonymous and there is no need to register. Whereas with Facebook, an account must be registered. This is much more of a barrier to entry for some.

In any case, I see some definite advantages and some small disadvantages (or short-comings) to this new Facebook offering. First of all, the “For Sale” section is ingenious. Students/young adults are always buying and selling textbooks, furniture, bikes, electronics, etc… For this reason, there is a stunning value proposition. There is also a case to be made for the “Housing” section as well. This demographic is akin to living with others and is usually frequently on the move. Therefore, creating a strong communication tool to facilitate the process is powerful.

Where I see short-comings is in the “Jobs” section, and to some degree, the “Housing” section. As we all know very well, the Facebook demographic is young for the most part. Having said that, most employers or company executives tend to be of an older age bracket. There is some incongruence here. Most of the employers looking to hire students and/or young adults will not possess a Facebook account, nor will they want to have to go through the steps. This is of my opinion. Some call this added security or an extra layer of protection that Craigslist does not have. I call it a barrier to entry.

Furthermore, the same can be said for many potential landlords looking to rent their places. Facebook needs to streamline a process for these individuals to quickly and easily post listings without a registration. Otherwise, these potential posters may be missing out on a huge market and Facebook users may be missing out on potential job opportunities or housing.

Directories versus search engines. Editors versus algorithms. Quality versus quantity. However you want to break it down, the age old dilemma remains.

Google has risen to stratospheric levels because of its ingenious link-based search engine algorithm. Wikipedia, on the other hand, has achieved fame following a different path - an editorial-based path. Now Jimmy Wales (creator of Wikipedia) is looking to launch a search engine of his own. In contrast to Google, this new engine will be human-powered, as opposed to algorithm-powered. The trade-offs are very apparent. Nevertheless, a case can be made for either side - there are advantages and disadvantages to both strategies.

The most obvious trade-off is with respect to quality versus quantity. Search engines can crawl a lot more pages and websites than a group of editors can. However, quality and relevance can be maximized using humans. Furthermore, this effort would also eliminate parked and advertising-laden landing pages from the search results.
Speed and frequency are also an issue. Automated search happens at a very fast pace. Updates are always ongoing. An editorial effort would be much slower and less likely to produce updates at a high rate.

I am very interested to see how the search engine model of Jimmy Wales takes shape. This PR darling will undoubtedly grasp a loyal following from the get-go based on the success of Wikipedia. But I am still not unconvinced that a human-led search engine endeavour can keep up to the computing power of a multi-computer, algorith-based system.

Could there ever be such thing as a hybrid?…

First, Niklas Zennstrom and Janus Friis created KaZaa. Next, they re-invented the wheel and developed Skype. Today, they announced a $45 million round of financing for their newest venture - Joost. This number seems a little ridiculous for an A round, but who am I to talk? Their track record says it all. These guys could have started a social network for poodle owners and still raised the same amount of money.

After two big successes already, investors lined up to finance their newest endeavour. I’m sure they were all drooling and itching to get in on this new project. Furthermore, I’m guessing that the Joost boys got everything on their terms, including a premium valuation. Successful players in the deal included Sequoia Capital, Index Ventures, Viacom, CBS, and Li Ka-shing. Perhaps Ka-shing will change his name to KA-CHING if this investment pays off. I just hope I can get a chunk of the IPO one day…

Hey… I have an idea for a series that could be streamed via Joost. The series would be focused around two superheroes who like causing chaos, re-inventing the wheel, and making a lot of money in the process. They would call it ‘The Disruptors’. Need I say who the main characters would be?

These European boys have a passion for disrupting the party and stirring up sh!t. Nevertheless, their strategic intuition, superior branding skills, and forward-thinking abilities cannot be ignored. I can’t wait to see their fourth venture. And this time I want a piece…