Why only Twitter and maybe facebook can challenge Google!

Since quite some time I am wondering if the global giant in Internet Lead Generation Google is going to remain the only game in town for the foreseeable future.

In general I doubt it, as any industry in the long term has seen a three way split of the overall pie. Why is such a sharing of the overall marketplace so important for the evolution of the technology market space? Most of recent innovation on the web has been build around the advertisement driven industry enabled by Google. Ingredients of this drive between 2003 and 2008 have been quick setup and monetization, once an audience of size has been established.

Only now it is emerging that new online giants like facebook with very high daily re-login rates have a chance to change the status quo. Also facebook is still in need to find an appropriate business model, which cannot be the adaption of Google Search being build into Social Networks, as mySpace has shown in 2007.

Yes, I do agree the Social Networks have seen tremendous growth, but demanding sky-high double-digit multi billon dollar valuation will need more than just subscriber growth. It will need a monetization engine independent of Google and something much better than banners in smaller formats beside the website. This is where I like to start looking at what I call the Lead Generation Marketplace on the WWW.

While traditional media has been dominated by traditional advertising formats for as long as I can see, in the first 10 years of the Web we have seen a direct translation of such traditional advertisement formats into online via banners. The dominant player had been Yahoo with its massive audiences which are now reclining and only remain loyal on the mailing platform.

Lead generation as pioneered by Goto.com later called Overture and eventually taken to global dominance by Google is ultimately a new industry in a new technological enabled Internet based world. It is an industry, which is destroying the traditional advertising industry and therefore the established players unless they are able to change. The recession will most likely show that most publishers will never regain the same power base and advertiser base and most titles struck today from the lists, which have emerged in a last blip post the dot com bubble will never re-emerge. The reason is that we have entered a stage where lead generation will be king and traditional publishers understand very little, what this is, how to participate in it and how to turn the businesses around into a direction of survival in a lead generation driven world.

In the past 8 years while google with his simple advertisement format AdWords (three liners, 45 characters, followed by 160 characters), has grown from just $100m in revenue to having accumulated a cash pile of $14.4bn on its balance sheet within a very short period. It remains the only dominant if not monopolistic player in lead generation.

In this analysis I in particular do not differentiate between the per thousand advertising formats (CPM), the per click model (CPC, cost per click) mostly favored by google which makes a near 99 percent part of the Google income stream or the click per action (CPA), which we traditionally call lead generation. All three models, CPM, CPC and CPA are lead generation if monetized on a performance base. Clearly google has favored to stay away from a total performance based model as generated leads can convert with different efficiency independent of Google’s or others influence. Google is driven mainly by CTR, click Through Rate for this reason to maximize revenue and profit for its on sake.

However it is clear that different leads have different values. A lead generated from a Search is different to a lead generated by a performance and behavioral banner or any new ad formats called AdImages™, which one of our portfolio companies Pixsta is proposing. AdImages are very attribute-rich product pictures placed contextually into the right location at the right time, so the user can interact with them. However the underlying lead is all the same, only a global dominating standard can generate substantial cash for shareholders. Most startups do not understand that ultimately only an establishment of a lead generating standard can generate substantial income. Readers will now argue that MoneySuperMarket or Affiliate Networks and many other companies have shown otherwise. But I argue they have not, as they all have remained minor players on the sideline of a giant.

However what is clear is that different leads have different engagement matrices and values. The industry has shown very little differentiation between the leads generated to them. We have seen some differentiation but not to the level we could break down utilizing existing technologies.

Every owner of a product or service based website has seen such a matrix if he observes the visitors not just by CTR or conversion rates but ultimately how engaged users are with the website and in particular the product displayed. Higher engagement must lead to a higher potential visit to purchase ratio.

Now massive lead generation potential resides not only within today’s comparison shopping engines of the like of shopzilla, ciao or ebay’s owned shopping.com or the newcomers like Pixsta, like.com, theFind, become.com, twenga or myDeco, but equally in the social networks and short message platforms like twitter. Most likely two of them, facebook and twitter, have the greatest potential of all as they start to engage very targeted and large audiences.

If I would vote I would believe twitter, which is still relatively small and only known in the tech world, has the greatest potential to emerge as a new Giant in Lead Generation.

Why? Any timely interaction, location based, text readable and so simple in the form of 140 characters is ultimately powerful and what we have been waiting for such a long time. We have engaged in billions of these communications since SMS emerged about 15 years ago. But what is the same but ultimately different is an interconnected and networked IP driven 140 character string via twitter. The similarity of twitter strings and Google AdWords and SMS are obvious, but only emerge when put into this context of lead generation.

However it remains today’s dominant platform, the mobile phone followed by the laptop / PC as the perfect most powerful consumer device for such casual communications. Behind is the unlimited potential to generate a massive global lead generation engine. This has a potential to emerge as yet the most powerful lead generation engine we have seen, many times more powerful than google.

But going back to the more traditional lead generation, it is obvious that the web is yet in its early developments for product based lead generation. If you analyze the space numerous companies are fighting in comparison shopping for a meaningful position. Nobody so far has been able to achieve a substantial market share and brand loyalty like Google . All of them are purely driven by short term and are totally dependent on google’s search engine optimized traffic. The model is get in quick, build it quick and sell it as long as it lasts. Hopefully before Google regulates your traffic to the level where they believe it belongs. Mostly in the negligible 2 – 5% market share so no one is able to build an equivalent ad standard like AdWords into a challenger.

So far facebook or twitter have not been able to innovate in this field either and I doubt they can. The organizations of such companies are not able to innovate beyond the core DNA of the founders gene which are around functional drive for the existing social communication enabling platform.

Therefore companies with innovative ideas like our portfolio company PIXSTA, which is establishing the AdImage™ standard will play an important role as an engine of monetization in a world in which lead generation will emerge in a three way split between giants like Google, Facebook and hopefully the soon largest player called Twitter.

Update: Today both, JP Morgan’s Imran Khan and Barclays Capital’s Doug Anmuth have put the rising importance of performance based advertising on their respective lists for tech predictions for 2009, as noted by TechCrunch.

We wish all of our business associates and website visitors a Merry Christmas - and a prosperous 2009. See you then.

Described by Apple itself as the ‘funnest’ iPod ever, the iPod touch may now be the ‘useful-est’ too thanks to FREE software - Truphone for iPod touch - that effectively turns one into a mobile phone.

Not only is the software free, but calls made using Truphone’s application for the iPod Touch are also FREE - just in time to save precious cash when making those Christmas calls to friends and family.

Once installed, and with the addition of microphone adaptor (Truphone microphone adaptor available soon)*, an iPod touch owner can make free calls - no matter where any are in the world - to other iPod touch owners, to customers of Truphone’s Internet telephony service, and to users of the Google Talk™ instant messaging service.

Truphone for iPod touch will become a one-stop-shop social hub with the following features coming soon:

• Making and receiving calls to and from landlines (PSTN) at low cost (simply set yourself up with a Truphone account)
• Instant messaging to Skype and MSN (free)
• Calling to Skype users (free)
• Calling to MSN users (free)
• Check and set facilities for Twitter (free)
• Check and set facilities for Facebook (free)

Truphone for iPod touch is easily downloaded from Apple’s App Store in exactly the same way as any other iPod touch application.

The software uses the iPod touch’s Wi-Fi connection to carry calls over the internet to its destination. There is no monthly line rental, no subscription or other hidden charges.

Mike from techcrunch seems to like it. Check out Alexander’s comment as well.

Straub Venture’s Stefan Menden will speak among other web 2.0 experts in a panel discussion at the Essential MediaTech 2008 conference on 11th November in London.

Indeed truphone on blackberry is a very exciting product launch and we are excited about this milestone.

One reason is that most people these days see the blackberry as a status symbol of employment in a senior position. The device is almost omnipresent in global cities like New York, London, Tokyo, Paris, Berlin, Bejing and Shanghai. Still it comes with VERY LARGE BILLS (VLB’s) attached. The VLB are a result of our use of the inbuild address book for calls which very well could be done on Skype, or via your landline. But studies show that even in the presence of a landline phone or a computer with Skype installed we tend to use our mobile for convenience. We are addicted to our smartphones - the modern replacement of cigarettes. These days you see more people playing with mobile phones (in particular blackberries and iphones) on the subway, railways into these global cities than inhaling blue smoke. (thanks god).

Why is the truphone blackberry launch so exciting, many analysts will ask , when it does not yet use the full IP communication capability of the Blackberry WiFi chipset to allow end to end mobile IP communication? Yes, you heard it correctly it currently relies on the ((truphone)) Anywhere product specs (also enabled on the Nokia series by truphone (but not yet on the iPhone), meaning it uses for the first leg GSM to connect to the truphone calling servers ((truphone cloud)).

Also many people have enabled pure IP calling with truphone, pure mobile IP to IP calling with your mates, friends and family members makes a lot of sense once they are all on ((truphone)), but in many cases WiFi will not be openly accessible. So even then it is hugely beneficial if one party is on IP and you call him on his truphone number, meaning the leg into the truphone server comes out of your bundles but the termination is provided free of charge by the truphone calling cloud.

A personal anecdote: On a recent trip to Silicon Valley I was stuck at San Francisco Airport. Already on the American Airline flight to Chicago I was unable to access the lounge or Airport WiFi as the cabin shielded the signal. Nevertheless I was able to use my AT&T bundled minutes to call my family via truphone Anywhere back in London, United Kingdom by just using the At&T bundled minutes. The calling leg from the US truphone servers to my home in London was all provided free of charge by truphone. Therefore a telephone call which would have just lasted 4 minutes before my minutes would have been spend lasted 45 minutes.

The essence of the story is that Blackberries like iPhone contracts with huge bundled minutes which are just as good as WiFi. (e.g. in the UK carriers like 3, T-Moile and O2 are fighting over who offers more minutes for 15 Pounds). In my experience 1200 minutes are almost impossible to use up, except if you have truphone Anywhere enabled on your Nokia or blackberry.

Mobile VoIP to IP on truphone is still the most crystal clear connection if the setup is correctly done, but GSM is almost as good as truphone on WiFi, as Om Malik reports in his article at the New York time and his own Blog.