Monday, March 31, 2008
  • Ross Fadner, March 31, 2008, 11:15 AM
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  • Who needs Internet TV? The New York Times is reporting that Microsoft just hired a Hollywood producer to create programming that will initially only run on the Xbox 360 console. Its first major deal --"the first of many," according to Scott Nocas, the global marketing manager for Xbox Live--is with the Safran Company, a Hollywood talent manager representing the producers of such films as "Monster's Ball" and "My Big Fat Greek Wedding."

    Safran co. founder Peter Safran told the Times that the first round of programs would be scripted, and would run under 10 minutes. His group plans to focus on comedy and horror--genres that appeal to Xbox Live's core 18-34 male demographic. The first slate of shows should be available by the fall.

    Exactly why does Microsoft--a company that has tried and failed to reach audiences on the Web--think the walled-garden approach to content distribution will fare any better? You have to ask yourself, will consumers even be using the Xbox 360 in three years? Many analysts have predicted that this will be the last cycle for video game consoles before gaming moves permanently to the Web.

    With just 10 million total users, the Safran Co. and others aren't looking at Hollywood-size audiences. Gamers have to pay either through activities on the system or through credits purchased by cash to watch TV shows and films on Xbox Live. This means the original content isn't free to watch, and will be competing with downloadable games as well as big-budget films and TV shows for users' credits. Read the whole story...
  • There's one question on everybody's mind before Google releases first-quarter earnings in a few weeks: can fewer clicks on paid links lead to more revenue for the search giant? This depends on many factors--but if the answer is yes, it would corroborate the claim made by Google supporters that fewer clicks reflect the company's efforts to improve the quality of its advertising system by minimizing the number of clicks that don't lead to conversions for advertisers. The result: advertisers would pay more money for higher-quality clicks--a measurement that comScore couldn't take into account in its January and February reports, which showed a marked decline in click-through growth for the search giant.

    The most recent comScore report, released last week, showed that clicks on ads in February were up just 3 percent over February 2007; the measurement said growth was flat the month before. Google's stock is now trading at around $445, an astonishing $300 less than it was six months ago.

    It depends on your bias--whether you believe the Web giant is showing signs of weakness or is simply in the midst of improving its pay-for-performance advertising system. BusinessWeek talks to both camps, but financial analysts say that regardless of system tweaks, it will be hard for Google to hit first-quarter estimates. Clayton Moran, an analyst with Stanford Group, cut $115 off his Google price target the day after the comScore report, citing an overall weakness in the tech sector. "Checks and data indicate softness," he wrote in a note to investors. Read the whole story...
  • Unfortunately, 2008 won't be the year that mobile marketing finally takes off, says Ad Age's Alice C. Cuneo. For starters, there simply aren't enough mobile Web users in the U.S.: of the 219 million nationwide subscribers, a paltry 30 million have data plans. Why? Two reasons: one, the mobile Web isn't a great experience, and two, it costs too much. Advertising can help the latter problem--but which comes first--a leap of faith on the part of marketers to reduce the cost of mobile content, or a leap of faith on the part of carriers to provide free or low-cost data plans? Probably the latter.

    Next comes the problem of ad measurement. As Cuneo says, there's "a paucity" of trusted third-party auditors in the mobilesphere; many think this should be the carriers' territory, but don't they have a vested interest in selling ads across their networks, too? Meanwhile, marketers have to juggle different operating systems, devices and carrier standards. "A single campaign needs to meet myriad approvals," Cuneo says--a problem that calls for a third-party mobile ad delivery specialist like DoubleClick. Some of these problems will be ameliorated as the carriers open their networks. Read the whole story...
  • The Micro-hoo camp has been eerily quiet over the last few days, leading BoomTown's Kara Swisher to believe that a deal is getting closer. Ever since Yahoo released its "sunny-side-up growth plans," Microsoft has gone virtually silent. Most figure that the software giant will up its initial bid of $31 per share to something approaching $35. The official word from Redmond: "We are being patient and open to listening."

    With a deal approaching, Swisher imagines a post Micro-hoo world in which Yahoo remains more independent than some might fear. She says the Web giant would clearly take the lead in areas such as media, communications, community and connectivity--as Yahoo offers a superior slate of communication tools and has the successful media experience (Yahoo News, Finance, Autos) that Microsoft lacks. Swisher says the combined company has the opportunity to excel in social media, but success will hinge on leveraging underutilized Yahoo properties like Zimbra, Flickr and del.icio.us.

    One area where Microsoft trumps Yahoo is technology. This is a good thing for Yahoo, Swisher explains--because Microsoft is the only company that can truly compete with Google in this area, whereas Yahoo has been losing ground for several years. She adds that advertising should also fall under Microsoft leadership. Yahoo has the media relationships, but Microsoft has better automated technology, making it a potentially powerful combination. In the end, Swisher says, Yahoo President Sue Decker should head the merged entity. Read the whole story...
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