The Fight for Control of our Virtual LIves. Chris dixon's blog / A massive misallocation of online advertising dollars. In an earlier blog post, I talked about how sites that generate purchasing intent (mainly “content” sites) are being under-allocated advertising dollars versus sites that harvest purchasing intent (search engines, coupon sites, comparison shopping sites, etc). As a result, most content sites are left haggling over CPM-based brand advertising instead of sponsored links for the bulk of their revenue.
But there is an additional problem: even among sites that monetize via sponsored links there is a large overallocation of advertising spending on links that are near the “end of the purchasing process” (or “end of the funnel”). For example, an average camera buyer takes 30 days and clicks on approximately 3 sponsored links from the beginning of researching cameras to actually purchasing one. As with all large problems, this misallocation of advertising dollars also presents a number of opportunities. Chris dixon's blog / Selling to enterprises. For some reason when you are selling information technology, big companies are referred to as “enterprises.”
I’m guessing the word was invented by a software vendor who was trying to justify a million-dollar price tag. As a rule of thumb, think of enterprise sales as products/services that cost $100K/year or more. I am by no means an expert in enterprise sales. Personally, I vastly prefer marketing (one-to-many) versus sales (one-to-one), hence only start companies making consumer or small business products (advertising based or sub-$5000 price tags). But I have been involved in a few enterprise companies over the years.
My rule of thumb is that every enterprise (or large business unit within an enterprise) will, at best, buy 1-3 new enterprise products per year. One final note: enterprise-focused VC’s sometimes refer to products priced between (roughly) $5k and $100K as falling in the “valley of death.” Chris dixon's blog / What if online business model innovation is slowing down? There is a widely held assumption that new business models will continue to emerge online – that statements like “how will Twitter ever make money?” Will look as silly in 10 years as similar statements made 10 years ago about Google look now. There is no question that, if they wanted to, Twitter could make tens of millions of dollars tomorrow, by, say, running ads or by licensing data feeds.
The big question is whether Twitter and other social media sites will figure out how to make Google-scale money and not just Facebook-scale money. Google and Facebook get (ballpark) the same number of monthly visits to their sites. Facebook made hundreds of millions of dollars last year and reportedly lost money. Google made over $22B last year with huge profit margins. The optimistic view (which I tend to hold myself) says that where people spend time, money will follow. On the other hand, what if we are mostly done creating big new business models for the web?
Lesson 187 - Break-Up Songs. Man, there will likely be some disagreements with this one. We tried to go with not only the attitude the song would put you in, but also the description of the break-up in the lyrics. We also tried being as diverse as possible with the genres, which is why some of the songs on this chart are songs we would never listen to.
Thanks to Brent, Han, and Ron for all their suggestions. Here are Ron's complete suggestions if you're interested. The December crossword will be up today.