This is a continuation to a Post that I had written Earlier.

“Yahoo could emerge with an edge, if they leapfrog into other verticals following the same web-based advertisement network.”

For a company which has entrenched itself in the media space, managing advertisements networks i probably the holy grail. I wouldnt recommend that Yahoo give up that leverage. Instead of going head on with Google and losing out on that battle, all they need to do is leverage that asset in a different vertical.

I wrote about perhaps using advertising networks, especially multimedia (audio/video) ads in Radio and television networks. One could argue that the ad server requirements, the infrastructure requirement and cost of operations would significantly vary because of the medium. I’d agree to some extent. But there is also a way to deploy the already existing asset, as-is, into different verticals. Read on.

I am not sure how many of you are aware of the CSCs coming up. The Community Service Centres, or Common Service Centres, are essentially Internet kiosks, each fitted with a fairly decent hardware and broadband connectivity, and the idea is to utilize those as hubs to deliver services into Rural India. It could be anything from eGovernance, health, Banking, Telecommunications, etc etc. There are a lot of private bidders who have won the tenders for regions (so the service delivery will be upto par on standards), and organizations in the likes of 3i Infotech, Reliance, Comat etc have come into this.

So Whats the opportunity for Yahoo or Google in all this? Well, there is a computer and its connected to the internet. Find a way to build a lightweight application that acts as a screensaver, which would display advertisements – pulling it from the internet – when the computer is idling. The advertisement can be focused to the rural space, and there is everyone from the likes of HLL, to your Cellphone companies, dying to get the attention of that market share.

The reason why the operators would be open to this idea is simply because everyone is trying to figure out how to break even in this business. As you could imagine, Rural India and technology are like lotus leaves and water drops. They just dont have a history of blending so far. And there is going to be that initial adoption curve issue for these services to pick up. And as a means of ensuring that the Kiosk Operator has some viable means of keeping at it, advertisements, and complementary services begin to play a role.

I believe there is a company which recently started in this space, and got funded by Sequoia. But yep, its definitely a market to explore.

So I know that there are a gazillion guys out there in the whole wide world, who have given “open” advise to Yahoo as to what they should do. I am neither an expert, nor am vested into the company to have such generosity towards them

A friend of mine and I, over some conversations were discussing about some of the bigger brands that we see around us and something along the topics of Return on Equity. Not sure if you are aware of, but Microsoft has a 52% return on equity. Yahoo has roughly about 7% and falling drastically and Google has one which stands at around 26% – and growing steadily. Whatever you may say, Microsoft has played this game with a whole new set of balls and one most people simply won’t understand. And if you ask me, they are a much better company in terms of strategy and products compared to Google, anyday.

Yahoo could emerge with an edge, if they leapfrog into other verticals following the same web-based advertisement network.

But that’s not the focus of this post.

The conversation was that, if a company has Advertisement as its core strength and has built a competence in it, then its going to be very hard for the company to drop that and adapt the advertising network of its partner/rival. Well, for the case of survival they might, but since they do have the core competence, the resources and the minds that can think in that direction, what could they possibly do, was the question.

Fact: Yahoo makes most of its money via advertisement, and that too on banner ads.

This becomes an issue when you have so much internet portals and properties, but just simply have to fill them with advertisements in order to make them viable. And in this day and age of APIs, nobody might even come visit the site to get hit by the advertisement. You are forced to rethink in terms of strategically placing the advertisement within the content, but thats a very very hard thing.

My Take: I think this is probably the same route as making fiber out of rocks. There might be some way to do it, but whatever it is, its one rare, long process.

I’d say, flip the coin, and lets look out to the horizon. Go after other streams, television and Radio… to be precise.

So go down memory lane and you will remember how there was a time when all the internet properties used to have a sales team to go chase after advertisers and get them onboard and once the term was over the havoc began all over again. Most of them knew that they could make more money if they managed the deal directly with the advertisers, but the cost that went into chasing orders, and managing the clients was too much an ordeal that when the concept of advertisement networks came about, people were more than glad to give up a marginal cost to have these services “managed”.

It happened for the web medium, and it can happen for the television and Radio network as well. Because they face the very same problems.

If you don’t believe me, check out this company. There is a company named Spotrunner. What they do is that they build an inventory of ads that the local television operators, while doing the programming, can draw advertisements out of. I think thats a very neat bloody idea. I know of people who are running campaigns and they get the sweetest deals out of this television networks during “off seasons”. And when its off seasons, oh boy, the inventories are really bad that they’ll run just about anything to keep those media streams flowing. During rainy seasons, nobody wants to sell or buy cars, consumer goods etc, and that usually is what constitutes a large chunk of the advertisement revenue. So, they usually fill it up with fillers and Awareness Advertisements.

But imagine if… a centralized network would manage all the advertisements with vendors, create an inventory, and as broadcast partners sign up, all they would have to do is enter in the keywords for the show, and they’d see options of which ads they can play. They can pick, and queue it and go about their work. When the ad gets played, whatever amount was agreed upon with the vendor gets deducted from the advertising account – this could technically even be a prepaid account. Now this totally leverages the broadcaster, since he has options of playing an ad of a sponsor that they have, and use the flexibility of the ad inventory to fill whatever is required, and hence maximizing his revenue potential. If laziness is one to bet on, eventually they’ll scrap their sales force, and resort to doing programming with most of these advertisements running in.

This is also brilliant, cause imagine if there is a talk show happening and knowing how most programmers can flip through the show quickly, they can even generate keywords – manually, or there could be a simple app that extracts out the audio and picks up keywords, and can “suggest” advertisements that would make the most sense. THAT would be relevant advertising indeed.

I think television stations get away with it, by a little bit. But Radio stations really struggle. If you do the same for them, with just audio, they’d keeel (spelling intentional) over themselves for it. I have closely observed how some of these radio stations work, including the popular and well known ones and having friends in that circle, one only hears one thing over and over again – finding sponsors and advertisers is a tough job.

So you’d start with something like this, and move on to the second phase, and then there is even a third. That, we’ll talk about tomorrow.

But Yahoo, I really hope you’ll see this, and more so, I’d like you to come back to your former glory. I think my first email account ever was a yahoo one, and perhaps that bit of loyalty still runs.

Social Networks are the way to the future. Ah, I can see people getting ready with pitchforks to nail me to the wall, but lets hear this out.

There is this basic ideology. The paradox of the masses. Whenever at any given network the number of members become too huge, the system starts to break down. It happened with all other social networks, it happened with the internet before that, it happened with ICQ, it happened with Orkut, and it will happen with Facebook. Lets take the case of Orkut, and with a much more real life example to follow it. Orkut was great till it was reference based, and then case the day when it was opened up to everyone and then the masses came in and so did the “frandship” requests. Long story short, I deleted my account in Orkut and am hiding in Facebook till that eventual doom also arrives at the door step of Facebook.

I think this is the logical thing that is going to happen to facebook. Imagine that you are part of an elite club such as the Lion’s club (if it is elite enough) or lets take the Madras Club (known for its elitism) and you were part of the elite 50 and you knew everyone who was part of the club. Most of the members in that club enjoy that lifestyle and keep it closed for the very nature that they dont want to democratize it. Lets say that they do, what is going to happen is that there will be 300+ people flowing in, soon you realize that you dont very much “belong”.

In the first order of things of all creatures, the necessity to belong is a crucial one. When that starts to erode, everything starts to fall apart. In my visual imagination, its like a tower that rises and rises, till it eventually starts to crumble under its own weight and falls apart, that smaller networks start to arise out of the ashes of the parent.

All this is to state one thing. The future of social networks is one where there will be niche verticals that will get created for various things. Imagine meetups with a social networking aspect and that is what will happen. Now this is happening in some level with Ning . But the issue with Ning is two fold. One it cant get out of the domain name of Ning.com (which can be easily fixed), and the other is the fact that I need to recreate the membership everytime. What if I create a new “community” pretty much like what we do inside orkut or Facebook, but outside of the walled garden?

So the future is pretty much a case where there will be skeleton frameworks available so that one can give it the look, and theme it to what they want, all the way from Mac Cultists, to Cricket Fans to whatever one fancies, and the social linkages will be drawn out of Opensocial. Using the linkages one can easily pass on how one’s friend is part of a new network and can draw out a larger easily accessible audience for each of these interest groups.

Now comes the fancy bit. Each of the these verticals will need to be monetized to be sustainable. And just as facebook has Beacon, there is a need for a Unplugged beacon which can power these networks and make these initiatives sustainable. Given that they will be such a niche target area, getting an audience of say 40,000 – 60,000 for each genre would be fairly simple and would make for a very focused approach for these marketers and advertisers. There will be new ways and means of delivering the content, message and engaging those audiences.

There is most certainly an opportunity to tap here, especially as we start to see eCommerce on the rise in emerging markets with such staggering numbers.

Do you know how much India spends on Advertisement budgeting at the moment? a Whopping 400 crores. Did you know that the Times Group makes a heck of a lot of money in their outdoor advertisement business? I am quoted numbers as high as 60% of all outdoor billboards in Mumbai belonging to the Times Group. And I am also hearing that there is plenty of prime locations near the new Bangalore airport that is bought by the Times Group to expand and make sure that this revenue stream doesn’t dry up anytime soon.

So if I may come to the point, advertisements and the ad market is quite huge. The good news, its nascent and has just started and will only grow to be bigger from here.

That said, we do have a small problem. I have friends who work with online portals and in running content who basically have this complaint: “We scrap content at times, simply because we don’t have a good supporting image to go with it”. Images are plenty and dime a dozen across the web. What they are talking about is an image that fits the context – the context here being, the audience, and the characters of the story being Indian.

Let me zero in on the issue: Have you seen all the billboards that are up there around the city? In every bill board, in every Spread of newspaper, in every online banner, in every pamphlet and brochure, in every marketing material that is used by corporates, in every image that the media uses – be it print, broadcast or for advertising, wherever there is a boy or gal to be presented there, be it contemporary, skimpily clad or in the next new saree model there is, all of them are commissioned photos. Which means, each of those pictures probably cost more than a pretty penny for the advertisers who are running it. Could we do it for cheap? We could, if there was a way to get stock images with Indian folks on them – something that is quite as rare as the tiger population.

There is a business opportunity for a team of artists, creative and enthusiastic photographers to put together a studio and create this portfolio and effectively tap the market, very similar to what Istockphoto did. Any takers?