ft.com/techblog

Technology is having a big influence on the Cannes Lions advertising festival this year – and not just because of the €220,000-a-week 132-foot yacht, which  lead sponsor Microsoft has parked in the middle of the bay.

The lines between TV spots and viral web videos are officially blurred by the inclusion of creative from any screen – from cinema to mobile phone - in this year’s Film Lions. Creatives from the offline world are getting to grips with digital tools, even if their companies’ structures and business models haven’t quite caught up.

Some agencies – and not just Microsoft-owned Avenue A Razorfish – are even wondering whether there ought to be an award for applications next year. Most of those ‘apps’ are likely to be Facebook widgets, whether to send online buddies Coors-sponsored drinking invitations or Nike’s Miles, which particularly keen joggers can install to nag them to run more often.

A more philosophical inspiration from the tech world is open source, the somewhat utopian software development movement that puts its code online for anybody to improve. The freely available Linux operating system and the Firefox web browser are the best-known examples in software, but agencies are embracing the concept as a metaphor for online collaboration and using consumers to extend marketing campaigns.

Aegis digital wing Isobar is touting open source as the thinking behind its online Isobar TV show, recording interviews with rival agencies at Cannes to foster a spirit of cooperation.

Open source was the main topic of conversation at BBH’s latest top-level pow-wow, says managing director Ben Fennell. Even with 900 employees worldwide, “we should be finding better ways to harness millions of people around the rest of the world”, says Mr Fennell. BBH’s posters for Vodafone UK’s current outdoor campaign draw on over 100 designers from around the globe.

“It’s definitely a trend,” Mr Fennell says. “But nobody’s figured out how to do it yet.”

Similarly conflicted is Richard Morris, regional director at DDB Europe. DDB can feel virtuous after the remix of Singing in the Rain used in its Volkswagen Polo ad soundtrack was used by the winner of Britain’s Got Talent. The three-year-old VW campaign’s life is extended as the Mint Royale track tops the UK charts, but DDB has not managed to hold on to the intellectual property rights.

Allowing consumers to run with an idea and enlarge its audience can only be “a good thing”, he says. “But as soon as an idea lives beyond the paid-for medium in which [advertisers] are investing, the business model on which we’re paid slightly falls apart.”

Open source is just one way in which technological developments are wrenching the organizational and business models of advertising agencies. “The above-the-line and below-the-line distinction is completely confused by online,” says Alastair Duncan, chief executive of MRM Worldwide, the digital arm of McCann Erickson, an Interpublic agency. “But the industry is structured around its output.” That can hinder the development and complicate the billing of the integrated campaigns that marketers are increasingly demanding.

Even if social media and the internet in general present as much opportunity as challenge, by enabling cheaper campaigns to achieve greater “engagement” with consumers, marketers and advertisers are still grappling with the financial consequences of technological change.

Free internet speech has a price,  the Supernova networking conference learnt today.

Comment and conversation on specific websites is being liberated by services that allow commenters to make their comments portable and aggregate them elsewhere.

But if comment is not contained and moderated, concerns arise over privacy, ownership of the data, censorship and liability.

Representatives from coComment, FriendFeed and Seesmic, three services that have opened up web conversation, discussed these issues in a debate on “Liquid Conversations”.

Matt Colebourne, chief executive of coComment, said media companies he talked to were realising the ability to censor comment was disappearing.

“As an end user, I have certain rights, I can choose to say what I like, but if I’m saying it on Dave’s blog then he has a right to say ‘I don’t want to see it here’.

“But we have had a situation recently where someone left a comment on a blog and it was disallowed, but because that was a coComment user that comment was captured by coComment and is still there, and we took the view that the end user owned that comment because it was not on the site.”

Loic Le Meur, founder of the video comment company Seesmic,  said its users owned their comments and could choose to share them or not under the same kind of Creative Commons licence that exists on the Flickr photo-sharing service.

“As a user, I should choose whether I want to participate in private or public discourse,” said Bret Taylor, co-founder of FriendFeed.

“We are creating experiences for private discourse about public content - if you went home and had read an article in a newspaper and talked about it with your family, that’s private discourse about public content.

“It’s probably unreasonable to get too up in arms about this, on FriendFeed many of the conversations are private through the privacy controls for users and they drive traffic to sites through their links,” he said.

The session also spent time discussing  how to manage the noise from too much conversation. Matt Colebourne said there was no Dewey Decimal library categorisation system for comment and users would follow individuals who produced high-quality comments.

“We will have the rise of the celebrity commenters,” he said.

Bret Taylor suggested more sophisticated filters would produce the best comments, such as the Best of Day/Week/Month filter on FriendFeed.

Loic Le Meur demonstrated how comment could take many forms - he showed some of the 100s of video comments and conversations posted every day in sign language by hearing-impaired Seesmic users.

Stewart Butterfield and Caterina Fake, the husband-and-wife team behind Flickr, the photo-sharing site that sparked the Web 2.0 craze when it was bought by Yahoo in 2005, have decided to leave the struggling internet group.

I caught up with Stewart by email as he was rushing to catch a plane, and he confirmed the rumours. Meanwhile, Valleywag seems to have obtained a copy of Butterfield’s resignation letter (it’s a classic of the genre, best read in the voice of Daniel Plainview from There Will Be Blood).  

In our email exchange, Butterfield stressed that this was a move that he and Caterina had been planning for some time, and is not related to the current Microsoft-Yahoo drama.

That jibes with what we have been hearing since February: After three years inside a big, bureaucratic company, and now that their payouts from the acquisition have vested, the Flickr founders have decided to move on to greener pastures. 

Still, the decision was no doubt made easier by the collapse of the Microsoft-Yahoo talks. Kevin Johnson, Microsoft’s internet guru, is apparently a big fan of the Flickr founders, and they could have had a bright future inside a combined company.  

Storm clouds are gathering over the advertising industry. But, this being Cannes, media folk are happy to ignore the rain and instead concentrate on the accompanying sound and light show. The strong Euro and economic gloom has not prevented the Cannes Lions International Advertising Festival – run by GMG and Apax-owned Emap – from attracting thousands of delegates and 28,000 entries from 85 countries. That’s up 5.8 per cent compared to last year.

With even more parties promised this year, the ad world isn’t going to let anyone rain on its parade by pondering whether the cash blown on festivities can ever be recouped by the deals done between the Carlton terrace and the notorious Gutter bar.

Lightning has already struck twice for BBDO, the New York agency, for its “Voyeur” campaign for US TV network HBO. This huge video projection against the side of a New York apartment block, appearing to reveal the kitchen-sink dramas within, scooped a second Grand Prix in the Outdoor category, hot on the heels of yesterday’s Promotions gong. The talk of the Lower East Side prompted a million visits to promotional site www.hbovoyeur.com and, in ad-speak, strengthened “super-fans’ engagement” with HBO.

Continue reading "China and India shine at Cannes Lions"

Mozilla, the scrappy open-source software company, hoped to set a one-day software download record on Tuesday with the launch of Firefox 3, the latest copy of its popular web browser. The company even went so far as to set up a special web page to promote its Guinness Book of World Records bid.

But Mozilla’s hoped-for PR coup turned into something of a debacle as thousands of eager downloaders rushed the site. The result was an internet equivalent of the Cleveland Indians’ infamous “10 cent beer night ” in 1974, in which an inebriated mob of baseball fans - lured by the promise of all-you-can-drink 10 cent beers - laid waste to portions of Cleveland Municipal Stadium.

In Mozilla’s case, the flood of download requests for Firefox 3 rendered the Mozilla.com site inaccessible to other users for part of the day. The cock-up drew jeers from web commentators. As VentureBeat wrote:

It is both annoying and laughable when a company massively hypes its own launch, only to result in broken links and 404 pages.

Mozilla had to know its servers would get slammed around 10 AM PST (the start time), hell, it begged for it to happen. In the blogosphere, we have a word for this: FAIL.

Hey, at least no one got hurt. The latest word from Mozilla is that the company is on track to break the download record in spite of the earlier problems.

More evidence to suggest that an internet advertising slowdown is taking hold in the US: figures from the IAB today point to overall growth of only 18 per cent in the first quarter of this year, a marked slowdown from 26 per cent in all of 2007 (and more than 30 per cent in each of the previous three years.)

Ever the optimists, the IAB and PwC, which puts the numbers together, expressed their habitual confidence in the secular shift of advertising online. Apparently this was “not so unexpected,” given the seasonally softer first quarter and “an overall economic slowdown.”

However, this was the first time in four years that first quarter revenues were actually lower than they had been in the preceding three months, so the numbers shouldn’t be shrugged off too easily.

John Riccitiello, Electronic Arts chief executive, seems more interested in playing his company’s new Spore game than closing a deal for rival Take-Two.

“I’ve created 10 creatures already,” he told the William Blair investors conference today.

EA has just released its Spore Creature Creator, which should increase anticipation for the game’s September release by allowing players to begin building the inhabitants of the strange new worlds made possible in Spore.

EA also extended its tender offer to Take-Two shareholders to July 18. Fewer shares are being tendered each time it does this. The figure of 6,139,824 represents just 7.9 per cent of the outstanding share count.

EA has said it is willing to pay around $2bn for Take-Two, but it has reduced its original offer of $26 a share to $25.74 a share. “Our offer price remains unchanged,” it said today.

Clearly, shareholders expect more and Take-Two’s board reiterated today that it viewed the price as significantly undervaluing the publisher of Grand Theft Auto IV.

It also hinted again that there were alternative suitors to EA. However, there is no evidence that any other company has begun any meaningful negotiations, which means Mr Riccitiello can bide his time, continuing to design odd characters with sticky-out eyes.

AMD and Nvidia unveiled next-generation graphics chips today, with both claiming their uses would reach well beyond the traditional gaming audience.

AMD aimed high and fell short with its Cinema 2.0 event. It claimed its technology was responsible for a defining moment in graphics when films would extend seamlessly into interactive gaming experiences and games and their characters would achieve true photo-realism.

Video of movie industry figures including Robert Rodriguez, director of Sin City, talking about Cinema 2.0 was shown, along with the filmed opinions of gamers and top developers about when photorealism would make characters in games lose their “uncanny valley” appearance.

The estimates ranged from three to 10 years, but presenters at the Cinema 2.0 event said it was only months away with the new technology. However, a demo supposedly updating the AMD demonstration model Ruby to photorealism fell flat when she appeared in an earlier unlifelike incarnation superimposed on a photorealistic street scene.

“We’re still in the process of updating her,” was the rather lame explanation.

I was more impressed when a presenter delivered “a teraflop for 200 bucks” line -  the price the basic ATI Radeon HD 4850 graphics card will go on sale for in about a week’s time.

This is more likely to appeal to the mass-market consumer – a trillion floating operations  per second made possible by a chip around a centimeter square. Twelve years ago, a whole roomful of computers fitted with 10,000 Intel Pentium Pro processors were needed to create the world’s first teraflop supercomputer.

Nvidia  announced its graphics had evolved “beyond gaming”  but more sensibly talked about how this level of computing power would simplify day-to-day tasks, like running Windows Vista or converting movies to show on an iPod. Instead of taking five hours, movies could be transcoded in 35 minutes, it said.

Its  new GeForce GTX 260 and 280 cards are priced at $399 and $649.

Both companies also see scientific and industrial applications for the increased parallel processing powers of their graphics processing units (GPUs).

In games, it seems certain that these newer chips will allow PCs to regain a graphics edge over the fixed-specification next-generation consoles, but proclaiming them as an advance equivalent to the introduction of sound in movies is a little far-fetched.

An alliance with Google might serve to deliver Yahoo from Microsoft’s clutches, at least for now, but is there a longer-term cost? There are at least three reasons why today’s deal could come back to haunt Jerry Yang.

Scale. If scale is essential for effective monetisation in the search business (the higher the volume of ads, the more efficient and liquid the market - the reason Microsoft gave for trying to buy Yahoo) then anything that increases Google’s scale even more - while reducing Yahoo’s - could tilt the balance still further in favour of the market leader.

Yahoo’s response: According to Sue Decker, Yahoo is already pretty competitive with Google when it comes to the most actively searched terms, and it is mainly the “long tail” of less frequently searched terms where Google can help.

Google’s response: According to Eric Schmidt, “It’s not obvious it makes a significant difference in monetisation” to have the higher volume.

The vagueness on both sides is telling. They don’t dispute the scale effect, only minimise its significance. Without clearer facts, though, the real impact can’t be judged.

Platform reach. If advertisers can buy Yahoo inventory through Google, why wouldn’t they abandon Yahoo’s Panama system and just feed everything through the AdSense network? After all, it takes more effort to learn and manage two systems when one would do as well.

Google’s response: Larry Page was strangely ambiguous. He explained that “sophisticated” advertisers like to use two sources. But then, in a non-sequitur, he tried to extend that thought to other advertisers as well: “I think the effect there is relatively minor for large customers, and the vast majority of the customers there.”

Again, the vagueness is telling.

Investment in Yahoo’s Panama system. All of this creates a paradox. On the one hand, Jerry Yang said that the deal would leave Yahoo financially stronger and so better able to invest in Panama. On the other, for the reasons given above, Panama might be diminished by lost traffic and reach.

What that means for the long-term competitiveness of the system is impossible to judge.

The FriendFeeding frenzy currently consuming the Valley seems more like excitement about the possibilities of a new and multi-faceted service than the usual hype about the “next big thing”.

While some have described a service with 300,000 visitors as a challenge to Twitter (1.8m) or Facebook (32m) or even Google (600m+), the overstatements do point to how FriendFeed can be different things to different people.

How do they love thee FriendFeed? Let me count the ways.

Lifestreaming: FriendFeed itself falls into the nascent lifestreaming category. It is the glue that usefully combines all of a person’s social networking and Web 2.0 activity, up to 40 services from Flickr to Netflix, Last.fm to LinkedIn, Yelp to YouTube.
Essentially, this is a parasitic model, except FriendFeed gives something back. It actually helps to sustain the services it aggregates by promoting them and making them more useful as part of an open holistic social networking model. The ability to add comments to imported feeds increases the value of something as simple as a 140-character Tweet from Twitter.

Microblogging: FriendFeed can be a useful substitute for Twitter, which has suffered an inordinate amount of downtime lately. A number of desktop clients make it as easy to share a Friendfeed thought as a Twitter tweet - AlertThingy, BTT, Feedalizr and Twhirl seem to be the most popular. FriendFeed has not suffered any noticeable downtime - a tribute to the team of ex-Google employees who are used to handling far greater demands.

Comment: FriendFeed’s founders created Google’s Gmail, whose most original feature was the way it threaded together emails into conversations. It is not surprising then that conversations are the major original feature of FriendFeed and bring to life what would otherwise be an unappealing list of events. Paul Buchheit, co-founder, talked about FriendFeed’s take on how comment and conversation should work, in this feature on the rise of the Commenter.

New Forms: FriendFeed is only around 100 days old in its public form and is constantly evolving, adding new services and features. Rooms were added last month, enabling a discussion forum around a particular topic. While there is nothing startlingly original about this, adding features such as feeds from services will allow new media models to develop. As blogs have begat micro-blogging, Rooms could develop into a new form of destination for news and discussion. This blog is already experimenting at FT Techfeed.

Search: I find myself increasingly using FriendFeed for search on current topics. It is not only a source of sources, but of opinions of those sources as well, adding the value of friends. Again, as you might expect from the Google background, the search works really well.

Thomas Hawk, the photographer and blogger tells me he uses FriendFeed for search the way he used to use Digg, the news recommendation site.

“If somebody bookmarks or shares or Twitters something on FriendFeed, they are making an effort, they are screening things so interesting articles come up through this social filter, compared to Google where it’s going to come up with all kinds of stuff,” he said.

Paul Buchheit told me: “We’re trying to use social mechanisms to help organise information, Google is very focused on the technology, whenever a problem arises people at Google think ‘Well, how can I apply 10,000 computers to solve this?’”

FriendFeed does not need Google’s horsepower when its users are acting as that social filter for results. It may need to copy Google’s ad technology to monetise them though.

Steve Rubel on his blog argues that Friendfeed, Facebook and perhaps Google will all build businesses around “social contextual search advertising”.

For me, FriendFeed, although a couple of thousand times smaller than Google and featuring no ads at present, has built the perfect prototype to exploit this.