Web X.0

Israel's exports, part 5

Regular readers of this blog are familiar with the theory: There are countries that export oil, countries that export electronic goods, there are those that export agricultural produce, etc. Israel builds and then exports high-tech companies.

The pace of roughly one exported company per week has slowed down a bit over the summer/war months, but the export business is still solid:

• Mobilitec exported to Lucent for ~$75M
• M-Systems exported to SanDisk for $1.35B (pending all sorts of legal crap)
• Gteko exported to Microsoft for $120M

Previous editions here, here, here and here.

* Not a company export per-se, but a notable mention goes to QBI which licensed a biotech drug to Pfizer for a reported "hundreds of millions of $$'s"

FreshDirect Recipes - this could be big

A couple of years ago I had an idea relating to the way we purchase groceries. I thought maybe someday I'll get around to doing it, if no one does before me.

But this week I noticed that FreshDirect have launched a service that's the beginning of what I had in mind. Now that this cat is out of the bag I thought I'd share my full idea with the world here. If this plays out, I think FreshDirect could be onto something big big big[1].

The idea in a nutshell is this:
Most groceries we buy are intended for cooking. Cooking is driven by recipes. The question is - Why is grocery shopping so detached from recipes then?

My idea was: Use recipes as the shopping lists of the future. Let the shoppers decide on a menu, and ship the exact ingredients needed to fulfill that menu. There's so much inefficiency in the process today where the shopper/cooker has to translate the menu to recipes and then to shopping lists, and then to actual buying decisions. Surely a more streamlined and automated process for grocery shopping would be a winner in this space.

If you're scratching your head un-impressed, keep reading... this is where this gets  really interesting:

I think that recipe-driven shopping might be one of the biggest potential cross-promotional opportunities in history.  

Think about this scenario:

• FreshDirect (or whoever may emerge) offers national recipe-driven shopping to shoppers.
• They open an interface for anyone to register recipes with them. Enter your recipe and you get a unique 'Recipe ID'.
• Any time someone buys via your recipe, you get a small cut of the profits.
• FreshDirect also provides you with a unique 'Recipe ID Badge' that you can print next to each recipe. I made one up below (don't try the URL...;-):

Now play this through. Did the light bulb go off??

Recipes has to be one of the most frequently published items in print today. The cookbook shelf at B&N is one of the biggest, and there are hundreds of magazines dedicated to cooking (whether entirely or partially). Not to mention TV shows, websites, etc. However, with the print advertising market declining, this is a slow/no-growth market. 

But what cooking publishers have failed to see is that they own a treasure trove of completely untapped ad media right under their noses - the recipes themselves. It's one of those rare occasions where readers actively consume content with a clear intent of making a related purchase. It's the level of user intent you get when people "read" the yellow pages or use Google. In other words - a perfect advertising media.

Once this is realized (and FreshDirect seem well on their way to do so), a perfect cross-promotion platform is created. Every recipe published in books, magazines, TV, the web, heck - even in restaurants[2], becomes a small revenue generator for its publisher. In return, the whole cooking publishing industry becomes one huge sales funnel into FreshDirect. And unlike some other cross-promotion marketing schemes, this is one where the user is actually benefiting because it perfectly aligns with his initial intent - to purchase the ingredients for the recipes he's looking to cook.

Think about it - A magazine that cover-to-cover is 100% "ad" space, without alienating readers a single bit (on the contrary).

If I were an investor, I would not touch traditional publishing companies with a stick these days. But in the cooking niche there might be a very very bright future. And if publishers understand this, the future of FreshDirect (or whoever emerges as this platform[3]) will be even brighter.

[1] BTW - it's pretty amusing to me that every stupid 'social calendaring tagging video web 2.0 mashup' developed by two college dropouts gets ridiculous amount of publicity in the blogosphere driven by TechCrunch & Co., while real businesses like this get totally ignored... ;-)

[2] How cool would this be? - Restaurants have little incentive to publish their recipes. That's their livelihood, so why give the secrets away? But this dynamic completely changes if a restaurant could make 25-50c each time someone prepares one of their recipes at home. It's a 0 cost transaction and it gives the restaurant potential scale they couldn't have dreamed about achieving in their physical location.

[3] While FreshDirect is the first player to make an entry into this space, it is not necessarily the winner. The key to winning this space is offering grocery shipments nation-wide, and FreshDirect seems far from having the infrastructure to do so at this point.
The importance of the 'national' piece is extremely significant - Publishers of national magazines (ditto TV shows, books, etc) will not start referencing a recipe shopping destination that cannot ship to 95% of the readers, because doing that would alienate most of the readers. So this game is far from over, and I'm sure an arms race will soon start.

RSS relevancy project - updates

Excellent post by Jim Meyer on the attention crisis, as it relates to RSS readers. From this post:

There's no doubt that RSS has had a significant impact on how people access and discover information on the web. But to most people the experience has been bittersweet... for a while it seemed a small yet noticeable step in the right direction for fighting the information overload most of us face every day.

As time passed, more and more websites proclaimed "we have a feed, add it!", and so we did, thinking that this feed might be the one we couldn't live without... RSS suddenly made it all too clear that we will never be able to read and comprehend all the content out there.

If you're a regular reader of blogs/RSS feeds and feel this pain yourself - this post is for you: Today we're expanding the RSS relevancy experiment I mentioned here, and will be adding the first 25 readers to sign up. The only requirement is to be a Firefox user.

What's in it for you? - Honestly, nothing at all right now. But the effort is tiny and within a few weeks I believe the results will be very interesting. Plus - we'll be forever grateful for helping us out!

Interested in more info? Sign up here.

Jim Lavoie speaking at BIF

A few months ago I recommended a video cast of Jim Lavoie (Rite-Solutions CEO) speaking about applying wisdom of crowds concepts within a corporation. That video is available here.

Looks like Jim was invited back to speak at this year's BIF (Business Innovation Factory) conference in October. It's taking place in Rhode Island and if you're in the neighborhood, my guess is that this is well worth attending.

Registration for the conference - here.

CNN Money: "Quigo: The next Google?"

Hmmm - I'll subscribe to the title of this article by Paul R. La Monica on CNN Money this morning!... ;-)

From the article:

...To that end, Quigo is not trying to be an online media company competing with "old" media firms for traffic and ad dollars. Quigo isn't billing itself as a site where people can go to check e-mail, read news, look at job listings or watch videos.

"Quigo is benefiting from a perception of independence. There is general angst about the power that Google and Yahoo have and Quigo is able to sell against that. They have quietly replaced Google and Yahoo in a lot of newspapers for that reason," Sterling said.

Perfectly said. As I said here over and over - large Media Co's should be extremely cautious about outsourcing+blackboxing their most vital asset (=advertisers) to their biggest competitors (=Google, Yahoo and MSN).

Full article available here.

ESPN shows there's life after Google/Yahoo/MS

Yesterday Quigo (disclosure - my company) announced an exclusive deal to power all contextual ads on ESPN - the largest sports site in the world. This comes at the footsteps of the Google-MySpace deal, and the MSN-Facebook deal, and proves that there's life after Google (and Microsoft, Yahoo, etc).

When we first launched AdSonar, our contextual ad network, Google was already a gorilla in this space. At first we did the most natural thing for a startup to do in a space dominated by a gorilla - run after the crumbs (=small publishers) left by the gorilla eating all the good cookies. After all, what serious media company would partner with a little-known startup over the internet's sweetheart?

And then it dawned on us that we should completely flip the whole thing. The cookies are where you want to be.

Instead of being the one-size-fits-all that Google AdSense is, we worked for the next 1.5+ years on getting AdSonar to do for large media companies all the things that AdSense doesn't. AdSense operates under the Google brand? We give the publishers full control over the look&feel of the platform.  AdSense is a black box of advertisers the publisher can never get to? We give publishers full control and transparency over the advertiser relationships. Etc, etc.

Shooting for the cookies when you have a gorilla hoarding them, and paying $900M or more for some of them, is not a simple task (OK - that's the understatement of the century...). But our ESPN deal[1] shows that the fact that the gorillas are sitting in your market and paying billions of dollars to buy deals doesn't necessarily mean that the  whole market is done.

My personal conclusions:

1. The gorillas are trying to eat your lunch? - Don't panic.
2. Think hard about your market and find those areas that are not being optimally serviced by the gorillas. I guarantee there are.   
3. Carve your niche and obsess about servicing to its needs.
4. Kick everyone's asses in the niche that is now "yours".

Google AdSense and YPN are excellent options if you have a small/medium site that doesn't attract advertisers directly. But if you have a great brand like ESPN, and you have direct relationships with advertisers, there's really no point in handing all those assets over to the Google/Yahoo/MSN's of the world. AdSonar is a much better option for that niche of publishers, and it's nice to see that ESPN gets it.

More coverage on ClickZ, AdAge, Barron's Marketing Pilgrim, SearchViews and of course the Quigo Blog.

[1] ...as well as the Fodor's, Lonely Planet, Cox, IDG, and the many other great publishers who have chosen Quigo's AdSonar platform over the other options.

Google & MySpace - Whos' really driving the traffic...

Good post on TechCrunch today about how the big guys (Google, MSN, MySpace) are driving traffic to online retailers:

New Hitwise findings indicate that MySpace sent more US traffic to online retail sites last week than MSN search, the third largest search engine on the web. That’s big news, as it’s tangible evidence that youth oriented online social networking is a market driver of serious proportions.

The Hitwise report puts Yahoo! as the source of 4.69 percent of traffic to online retail sites, MySpace as 2.53 percent and MSN search at 2.33 percent for the week ending August 26th. Google leads the pack at 14.93 percent.

One sentence caught my attention, and needs some clarification:

Google’s advertising, which is generally believed to be more effective than that of competitors, hasn’t kicked in at MySpace yet. If Google can make MySpace search more bearable when it takes over in the fourth quarter of this year, then you can expect MySpace to drive more traffic to retail sites than ever.

Instead, I think it should read: "If Google can make MySpace search more bearable... then you can expect MySpace Google to drive more traffic to retail sites than ever."

MySpace is essentially outsourcing its kitchen over to Google and becoming another node in its network. When that happens, MySpace will actually deliver *less* traffic to retailers, while feeding the Google beast and giving it an even bigger share of web traffic. Retailers looking at their log files will see the traffic coming from "Google AdSense", not from MySpace.

In this relationship, Google is the only one that walks away with the long term assets of advertiser base and deep expertise in monetizing traffic.