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April 25th, 2008

Going viral at Web 2.0

followers.jpgIt has been more than a year since we flagged Twitter as the most buzzworthy social application in Silicon Valley. Thirteen months later, the micro-blogging site, which allows users to follow each others’ short online updates, has become an indispensible tool for the online cognoscenti who have gathered at San Francisco’s Moscone Center for this year’s Web 2.0 expo.

Jenn Van Grove, a social media consultant, says Twitter helps her follow the latest online buzz and keep in touch with hard-to-reach people. “If I need to get in touch with someone, Twitter is much faster than email,” she says. 

Ryan Kuder, a former Yahoo who is working on a new web startup, assured me that time invested keeping track of contacts on Twitter returns dividends.  ”People ask if you can spend too much time on Twitter,” he says. “I say you can’t spend enough.”

Sceptical journalist that I am, I signed up for Twitter in March of last year but never really got into the service. Intrigued, I dug out my Twitter ID and passed it along to Jenn, Ryan and a few other bloggers seated at our table inside the Web 2.0 blogger lounge. I have now been Twittering for all of two hours, and thanks to my new Twitter friends, I’ve managed to attract more than 50 followers.  Better late than never, I suppose.

March 19th, 2008

Facebook Chat

Facebook’s users are bound to be excited by news that the social network is planning to roll out its own chat service in the coming weeks; Facebook developers, perhaps not so much.

There are dozens of developers offering chat applications designed to run on the Facebook platform. Facebook’s decision to get into the chat business for itself means those developers will now have to grapple with an 800 lb gorilla in the room, sucking up all the air

As revealed to reporters on Tuesday, Facebook’s new chat service looks to be a no-frills affair. The service doesn’t allow group chats, and users will only be allowed to chat with other Facebook friends. Still, Facebook’s decision to make its chat service a full-fledged feature of the site means that it will be in pole position to capture users from rival applications that sit on the Facebook platform.

The situation is reminiscent of that faced by developers writing applications to run on Windows in the 1990s. Back then, if a particular application market got big enough, the chances were that Microsoft would move in to try to capture it for itself. That is why Microsoft muscled its way into the highly profitable market for word processing and other office productivity software, where it was able to gain a huge advantage by tying shipments of Office to Windows.

None of the third-party chat applications on Facebook have met with huge success yet. But there are signs that chat could become an important feature on social networks as it has on the rest of the internet, where usage is widespread. AOL, for example, has said that close integration with its AIM messaging service is one of the chief rationales behind its $800m acquisition last week of Bebo, a Facebook rival.

In addition to its new chat feature, Facebook already has applications that let its users share photos, video, and other information with their online friends. The question vexing Facebook developers is, what other popular applications does Facebook plan claim for itself?

March 5th, 2008

Facebook’s new fixer

sheryl sandbergMark Zuckerberg scored a coup on Tuesday by recruiting one of Google’s top stars to take the number two spot at Facebook, the fast-growing social network.

Among other things, Sheryl Sandberg’s appointment as Facebook COO will bring some adult supervision to a company that, for all the buzz and excitement,  manages every so often to remind the world that it is being run mainly by twenty-something computer geeks.

Sandberg, 38, graduated near the top of her class from Harvard College and Harvard Business School before serving as chief of staff to US treasury secretary Lawrence Summers during the Clinton administration. She joined Google in 2001, where she was responsible for developing the search giant’s wildly successful ad sales programmes. She also played an important role in launching Google.org, the internet group’s philanthropic arm.

Having captured the attention of millions of internet users, Facebook’s biggest challenge over the next year will be to deliver its own equivalent of AdWords - a technology capable of turning all those eyeballs into a reliable revenue stream.

Facebook tried to do just that last year with the launch of several new ’social’ ad technologies, including Beacon, a messaging service that broadcasts purchases made by users on outside web sites to their Facebook friends.  Mr Zuckerberg hailed the new technologies as a once-in-a-hundred-years innovation in advertising, only to see them overshadowed by a user revolt over privacy.

With Ms Sandberg on board, Facebook has an opportunity to move beyond this somewhat ham-fisted attempt and find a sustainable revenue model that takes advantage of the social connections between the site’s millions of users. There is no doubt that the raw materials are there. It may just take an experienced hand like Ms Sandberg to make things fall in line.

February 27th, 2008

Google’s nasty fall

The downbeat report on click-through rates that sent Google’s shares down 4.6 per cent on Tuesday is sure to rub salt in the wounds of shareholders who were already stinging from a sharp drop in the search group’s share price this year. Many will be anxious to determine whether the data from ComScore, which showed flat growth in the rate at which web surfers click on Google’s ads in January, is merely a blip or a sign of something more ominous.

Google chart

Setting aside the very real possibility that ComScore’s report was a statistical anomaly, there are two scenarios that might explain a fall-off in the click-through rate for Google ads. Neither of them is encouraging.

The first scenario is that the apparent drop in click-through rate is due to Google’s recent attempts to boost ad quality by cutting down on the number of ‘accidental’ clicks made by users. Google said earlier this month that its crackdown on unintentional clicks had contributed to its disappointing results last quarter. But the magnitude of the drop reported by ComScore - from 27 per cent growth in November to 13 per cent growth in December to decline of 0.3 per cent in January - suggests that the trend could be more severe than previously thought.

A second - and probably less likely - scenario is that the decline was caused by a change in the shopping habits of online consumers. The reasoning is that consumers who are worried about a recession might be less inclined to click on Google’s ads because they have decided to delay online purchases. If this were the reason behind the flat click through rates, it would suggest that Google is more vulnerable to a recession than some have predicted.

With Google’s shares already off almost $300 per share from their November highs, investors are surely hoping there is another explanation for the ComScore numbers - one that leaves them a little more room for optimism.


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