Most Investors and Entrepreneurs Don't Understand Online Advertising

Before you take an investment to start your Web 2.0 company that relies on advertising for revenue make sure you hire and partner with the right investors. Here is some vernacular you or someone on your team should clearly understand: CPM, CPE, CPA, CPL, CPC, Intext, Run of Network, Fixed Rate, Affiliates, Contextual, Remnant, Display, Behavioral, Retargeting and Demographic. There are over 300+ advertising networks with very little differentiation in a very complicated online advertising world. It is critical that Web 2.0 entrepreneurs and investors (including most VC's) rely on qualified advertising executives with relevant domain expertise. Southern California has an enormous ecosystem of former executives from Overture, Yahoo, Google, PriceGrabber, LowerMyBills,, Shopzilla, ValueClick,, Vendare, Vantage Media,, and Nextag. We can help you validate business plans and find these individuals who can help add credibility and value to your team.

Silicon Valley vs. Southern California

IPO vs. Acquisition, Band of Angels vs. Tech Coast Angels, Facebook vs. MySpace, Stanford vs. CalTech, Polished vs. Scrappy, 3rd time CEO vs. 1st time CEO, 10M Pre vs. 3M Pre-Money Valuation are some of the many common characteristics of Bay Area Companies vs. Southern California Companies. However, Southern California is catching up to its big brother and now accounts for two-thirds of the state's GDP, making it the 15th largest economy in the world? In 2007, the region saw the second highest level of capital investment in the U.S. (beat only by Silicon Valley) with 1.10 billion invested over 66 deals, the first time investments have topped $1 billion in a single quarter since 2000, reports VentureOne.

Contextual vs. Direct Advertising Monetization

Is contextual advertising starting to lose some steam? I have always assumed that most quality content publishers know exactly who their potential advertisers are and should sell ads directly to them for lots of reasons. If AdSense pays publishers on average $.25 cents per click, could you sell it directly to the advertiser for $.75-$1 profitably and provide more value? I would like to find a company that provides the best click management software to the small publisher and helps us get back to the basics of business and building relationships. I am looking for a software as a service company and not an ad network or ad server. Don't ask me how does it scales or makes money either as I want to solve the problem first. I think in the next couple of years we are going to see a lot of successful companies built that attack entrenched businesses that use the KISS philosophy. Keep it simple software or stupid.

Open Ads + Direct Advertising + Transparency = $

A real opportunity is finally emerging for a disruptive ad solution and not an ad network that focuses on enabling publishers to sell ads direct to advertisers. Google Ad Words has conditioned lazy ad agencies, publishers & advertisers to rely on content network syndication that has zero transparency. I believe good content attracts good advertisers and a simple solution is needed to manage these direct adverting relationships. Below is a overview of the current online advertising world if you are unfamiliar with this complex and often confusing industry.

From: openads, 3 days ago

Quantcast Revolutionizing The Advertising Industry

Have you ever asked yourself why Nielsen, Comscore, Alexa and Compete only give approximate viewer numbers for a specific TV shows or web site visitors? The answer is pretty simple . . . because its not in the publishers best interest to give the actual numbers because it would cannibalize the advertising that was sold against the inventory. With the technology that is available in 2008 I consider the current advertising tracking methods a scam to the entire industry. Enter Quantcast who is creating a new currency for advertisers to purchase ad inventory against more qualified demographics and actual traffic numbers. Click here for an example of how Quantcast provides free information to potential advertisers on my network of web sites. Stay tuned as I am following this one closely!

Could Google Become The Next Wireless Giant?

Range of and capacitiy have been major limitations for existing cell tower solutions. I am not an engineer but it would seem that if a cell down can only reach customers over a few square miles than the technology is probably old. I have heard Wifi and Wimax tests have proven to work up to 100 miles. I also know how to make a phone call using VOIP. So if you add 1+1 together you get a Wifi / VOIP mobile phone. Is it going to take an innovator like Google to enter the wireless carrier business before existing carriers will wakeup and invest in the future? Google does know how to provide a good service to its customers and monetize that experience through advertising profitably. Why can't the same be done with free mobile phones?

Could Amazon Become The Next Software Giant?

Who would have thought 10 years ago when online retailers Webvan, Etoys and Amazon were founded that one of these companies could eventually rival Microsoft, Oracle and Sun? During this 10 year period enterprise software licenses have been reduced by 1/10 from around $250,000 to $25,000 while bandwidth capacity has increased 100X from dial up speeds of 56k to greater than 5GB. Amazon has quietly become the world leader at selling high volume products at thin margins with zero customer service. Why not take that same level of quality service learned from selling millions of books at thin margins and start selling hosting application services at similar margins? The financial industry has given a sophisticated name to this new industry and we call it "Cloud Computing". Stay tuned!

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