Cameron Peron

I’ve been thinking recently about the basics of Econ 101: when times get tough - gambling and alcohol always win. That was an off the fly comment made by one of my professors made regarding financial busts and booms. A few years later when I graduated in time for 9/11 - the message to all of us was: “SURPRISE! Try and find a job in the recession wrecked and frightened economy.” The small economic bust of 9/11 proved my professor’s point:

The red line is Anheuser-Busch, and the blue line is Brown-Forman Corp., the parent company for Jack Daniels.

He was totally right! I’m not going to even bother putting a chart up for international alcohol companies, but let’s say you could easily diversify your portfolio with a few international brands, even in emerging countries and the principle yields the same results.

The value of our investments and cash are based on variables far beyond our own control. With trillions of dollars lost in the last 12 months it makes any investment, even cash or gold look scary. All investments, no matter the type, have a price that is subject to change.

I see too many financial and tech bloggers, in addition to financial “experts” giving frantic and contradictory advice. None of their answers address a simple question: what good are the investment decisions you make today worth when the entire world economy can turn upside down tomorrow? There is simply too much information to consider and little relevant historical data available.

The difference between now and the 9/11 recession, the recession of the 90s or Great Depression is that we are at a major technological advantage to learn and act financially. With finance 2.0 management and research tools like mint or yahoo finance with have the ability to get highly personal up-to-the minute information and the ease to act on what we learn. The real issue is our skill in interpreting information, making responsible decisions and investments for the long term.

Disclaimer: This purpose of this entry is strictly to provoke thought – not a provision for financial advice.

How do you monetize a huge volume of users that aren’t in the mood for seeing or interacting with ads? Ask Google. They announced earlier today that they’ll start running ads with flash games. It’s an attempt to copy/past the success of AdSense in a market undervalued by larger players.

What this deal is really about is testing passive and unengaged traffic.  Everyone interacts with web properties hosting games, funny videos and entertainment. But this traffic is not actively seeking information to make a decision. They’re simply screwing around, taking a break, playing with friends or relaxing.  Traffic volumes for passive traffic like this is decent when compared to a high volume news sites like the NY Times:

The big question is how to monetize this traffic. Higher numbers often indicate a higher chance for monetization.  Companies like Digg (valued at $40M) have the investment behind it - but results still need to be proven.  The same can be said for the other web 2.0 models like social networks and photo websites that draw massive amounts of untargeted traffic and investment - but shy away from boosting revenue figures.  These sites are cool, but I won’t believe they are an effective business model until I see the money line in action.

Another issues is how ad placement will be achieved. In the worse case scenario, ads will be placed in a seemingly disruptive way - totally distracting happy flash gamers playing their favorite free games.  Arrington gave us excellent example pointing to the tasteless ad display in movies like Idiocracy and 1990s old school style websites. Let’s hope it won’t be something like this:

Can you imagine ads being implemented in your favorite game - popping out of no where or as, characters, objectives and other in-game tactics!?

I believe there is a business behind passive traffic like flash games and other entertainment sites.  The numbers are there but the engagement is not.  On the bright side this deal will be good for everyone: Google will invest a few zillions to attract, test and monetize.  If and once the results are successful, smaller time media companies have room to move in.

In the mean time I doubt Raft War players are going to bite anytime soon :)

It didn’t take long for the Yahoo-Google ad management deal to get scrutinized by the Department of Justice.  The deal - allowing a certain allocation of Yahoo!’s ad space to serve Google managed ads - has some in Washington doubting its fairness and contribution to a competitive environment.

Can’t say I’m shocked. I spoke in the past about how consumers and businesses lose when Google nears monopoly status.  I just had no idea it would happen so soon. Everyone knows that Google has been growing disproportionally out of control with their hold on search and content advertising.  Few outside of the media business understand it.  But can any attempt at regulation or breakup at this point really achieve anything? With such a huge amount of means of interacting over the Internet it might be too late.

Regulation if done effectively could set a new precedent. This could be an excellent chance for regulators and federal authorities to make a ruling over Google that can create a competitive environment.  I hate regulation, and prefer for market economics to level the playing field.  In this case there is simply too much out of the control of consumer’s hands.  Seriously, is there enough market force to boycott the two largest names in search - :) ?

In the best case scenario the fact the DOJ is reviewing the case may give an incentive for an adjustment in the market without intervention.  Maybe Google will back down and Yahoo! consider new options for strategic partnerships with other media companies.  Worse case, a poor decision will be handed over by officials who barely understand how the Internet works let alone have the wisdom to see it’s direction in the next few years.

Lot’s going on about the deal between Yahoo! and Google.  Google even setup a page about it. The deal is definitely bad for consumers… something like  Costco or WalMart annihilating every nearly every grocery store, including your very own local spot.  Only in this case it’s on a massive scale where the distribution of media, content and the ads you interact with everyday are essentially only a few steps away from being controlled by just 1 large player.

In this agreement, a portion of Yahoo!’s search and content inventory will actually serve Google sponsored ads in addition to Yahoo!’s. The situation gets gets even worse on a corporate level:

1. Google is coming close to “evil empire” status. I’ve written about the possible consequences of Google becoming that “one guy” we’ve all seen taking home leftovers from the all you can eat Chinese buffet.  I’m sure it’s lonely on top.  But rather than focusing on what makes them great in the eyes of the world – like enhancing a few key products and innovating killer new ones – they’re stalking out competitors in a take all or nothing approach, with the capacity to destabilize the internet.
2. Ruins margins for publishers. Totally out of Econ 101: Google’s massive inventory of traffic and ad distribution via publishers gives them too much power in controlling prices.  Everyone knows that Google takes a much larger commission of ad revenue from publishers hosting AdSense ads than affiliate networks performing the same service.  No doubt Google can get away with this and still compete against performance based networks given their superior optimization technology, bidding system and reach.  It’s an explosive combination for any single entity to take an even larger portion of search traffic which strengthens their control over pricing.  The results will certainly put publishers in a more vulnerable and reactive position in addition for possible regulation calls.
3. Another strong blow for Yahoo as a player. A possible deal between Yahoo! and Microsoft had the chance to maintain a competitive landscape in high volume search potrals as well as the internet as a whole.  With dismal results and the subsequent board room drama that still ensues – Yahoo! is only a shadow of player it used to be in terms of validating a much needed higher value share price on paper.  This deal not only downgrades their position, but literally sells their inventory/client base to their biggest competitor.  Where are they going to be in another 12 months?  Who else can step up to the plate and maintain a competitive online media environment?

The Yahoo! Google deal is just another another desperate and cheap attempt by Yahoo! to raise stock value in hopes of landing some magic deal.  Time will tell if this is their first step in becoming a giant Google Adsense publisher.

Controlling every point of our online experience without focusing a few critical elements can transform Google’s position as a cool company in San Francisco into a Costco style provider that we reluctantly accept due to its convenience and commoditization.

What do you think about when you hear the word Google? Entry point to the web. Creativity, innovation and serious $$. Maybe even people buzzing around in a really cool work environment.

I tend to think about a group of guys hell bent on breaking the rules and proving that the American dream still exists for anyone who has a great idea, a clever approach, determination and the skill to make it happen.

Today Google wants to be everything and everywhere online. They started with a search engine. Now they’re a toolbar, email client, GPS/mapping system, a scheduling solution, web-browser… and almost mobile phone amongst other things.

What made them cool was the search engine.

What made them that $$ was their ability to scale and target traffic.

What made them warm and fuzzy was their near Che Guvera revolution approach of going to head to head with the likes of Microsoft and other large companies. I love Google products like Gmail, their RSS feeder, calendar and even media tools like GoogleInsight which we’ve written about before. They’re far superior to other conventional services – especially one you have to pay for – like from Microsoft. Not to mention I feel like I’ve taken something back when I use them.

But seriously… can’t it go too far? Who wants a one stop shop for life? Do you want only your favorite cereal for breakfast every single day? Do you really want the Costco/WalMart experience applied to the internet? It can happen. And it starts by competing against people who not only do a better job but also provide strategic value to one’s business. Most recently it’s happened here:

The Google web-browser. Sure it’s good – but I’m willingly to bet it’s not make a ding in hard core Internet Explores user market. Most likely it will take a larger portion of Firefox, Opera and other browsers.

Google phone. What… iphone 2? I can appreciate that it’s a great entry point to mobile media. But why not focus on creating WAP based client or downloadable applications on a huge variety of phone modes so everyone can access mobile content in a form their already familiar with?

Google’s stands in a position to fit its brand somewhere between that warm fuzzy feeling you might get when walking into a small time local coffee shop and that somewhat sold-out feeling when ordering a coffee you can’t pronounce form Starbucks.

Obviously it’s their creativity that got them started. This same creativity combined with the shear scalability they control could be transform them into one of the same large companies they’ve grown accustomed to taking down in the first place.