Mike On Ads

Ok, so first off — I think I’m back to blogging. I needed a little break after leaving Yahoo, starting new things, but I’ve had a lot of interesting conversations in the past few months and some interesting new thoughts about the industry & life in general.

I know this is somewhat unrelated to advertising, but Andrew Chen motivated me with a great post on why Myspace is still more popular than facebook. I’ve thougth about this a bit as well and agree that Silicon Valley people simply aren’t Myspace people. I’m not one either, I hate the fact that it’s so ugly and unstructured — but as Andrew points out, we’re not like the rest of the world. I also don’t like NASCAR, Oprah or Self-Help books, but each of those are billion dollar markets.

So I thought I’d throw out a couple other reasons why Silicon Valley should stop hyping Facebook for a few minutes and take another look at myspace:

Myspace has had full unhindered third party functionality for years

Facebook apps are great, but by being so incredibly structured they are also incredibly limiting whereas on Myspace non-limited third party apps have been a possibility for years. I can place any HTML on my myspace profile, which means I can embed any sort of dynamic third party content. Sure there are some security concerns, profiles get hacked and all that fun stuff, but users don’t care. This super simple method of allowing third party developers to provide applications for Myspace users in many ways works much better than the very structured Facebook App.

Myspace has built a solid behavioral ad-targeting platform

While Facebook is getting hammered in the press for their “Beacon” product, Myspace quietly, and with no complaints has rolled out a new behavioral platform based on their SDC acquisition earlier this year. They just recently announced that the “FIM Serve” platform will power the rest of Fox Interactive Media’s properties as well.

Considering it’s been less than a year I think this is a rather impressive feat. Building a massively scalable ad targeting platform isn’t easy. Myspace also managed to do it in a way that didn’t piss off it’s users, and with minimal negative press.

Myspace didn’t waste time building a CPC ad platform

Look, lets all admit it, Google is the best at CPC, contextual & all that fun stuff. Everybody tries, but nobody can even come close. So while Myspace goes off and signs a $900 million deal with Google, Facebook builds it’s own platform. Combine the Myspace search & cpc deal with the behavioral ad platform and there’s a solid revenue generating strategy.

Where’s Facebook? Microsoft reps their ad-inventory (and word on the street they’re losing money on this), they don’t have a search partner and have built their own CPC engine which from what I’ve heard isn’t that good.

Myspace makes money

Lots of it. It’s hard to find accurate numbers out there, but estimates lie in the $500-700m for 2007. I can’t find a reliable source, and it’s hard to tell now that Myspace has been acquired by News corp, but they’re supposedly quite profitable. In the meantime Facebook with all it’s hype is getting $15 billion valuations, and raising money to help their own cash flow.

Building for the sake of building

In the end, the big difference between Myspace and Facebook is that one is a technology company, and the other is large social network. Silicon Valley loves the tech company, but this is a great lesson that a lot of companies in the ad-space should consider as well. It’s generally not the best technology that wins — it’s the one that solves the right problem. Your end users will often not care whether you did that elegantly or not, they will care that it works.

Facebook clearly has the better technology. The Facebook platform is fast, elegant, and chock-full of features. Even so, the ugly Myspace page with an IFRAME on it manages to both attract more users and provide a better feature set. I myself may not like it, but then again I’m one of the few people who appreciates the elegant execution on the technology side, your average person does not.

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• Maximizing network revenue
• How do behavioral networks work?
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