But the more interesting question is always: why? Why are people doing what they do?

So when I can, I ask people. Not people in the industry. No, I mean normal people. People who couldn’t care less about CTRs, series C valuations or mobile app installs.

At a family gathering on Sunday I took 5 minutes to speak to L. L is 22, a recent graduate, works in retail and lives in Kent.

What she said

L used to have Facebook on her phone (an iPhone 5) but deleted the app. She said there was ‘too much going on’ – the newsfeed has too much information. She doesn’t want to spend the time going through it.

Her friends use Twitter a lot, but personally she doesn’t.

L loves Instagram for instant sharing of photos with a message. She uses the app for that. She didn’t know anything about their changing T&Cs, or that Twitter doesn’t play so well with it any more.

For instant messaging, L uses Whatsapp.

My interpretation

People like L want to share instantly. It’s about being in the moment. That’s why Whatsapp, Instagram and Twitter are popular apps. They’re good for private sharing (e.g. DMs, one-to-one messaging) and group sharing.

As businesses, Whatsapp is mobile only; Instagram is mobile first and Twitter is orientating itself around mobile.

Facebook has struggled with mobile, and the news feed is more of a news digest. It’s not what L or her friends want (though personally I love it).

I’ve long been a fan of Whatsapp. In my opinion, it effectively killed Blackberry’s and BBM’s popularity with the younger demographic. It is a huge component of ‘dark social‘.

Of course, we didn’t even talk about desktop usage. That says something important too.

It’s one of the most interesting developments of the year, but what are the pros and cons of the Facebook Ad Network (FAN*), who will it challenge and what are the questions that need answering? (*My obvious acronym, not theirs.)

So here are my first thoughts and speculation on how it may shape up. Please note I don’t have any inside information; this is based on what’s publicly available and what might be. And I’m basing this on gut instinct, there maybe data out there which says I’m wrong (there usually is).

Pros

Great demographic, interest, ‘psychographic’ data. This is obvious, Facebook has an incredible amount of information about their users, based on what their uses have inputted themselves, and what they do on Facebook and elsewhere on the Open Graph.
Established API-driven marketplace with many 3rd party tool integrations. You need an eco-system to make this kind of network grow. Facebook have this already and allowed many developers to create ad management systems through the PMD programme.
Reduce newsfeed clutter? There’s already a feeling that the newsfeed has become cluttered experience, awash with promoted posts and sponsored stories. This is especially true on mobile and tablet devices. Perhaps Facebook have realised they can only push this so far, and need to find more ad space?

Cons

Proprietary ad format. Facebook ads are their own proprietary format, and pretty much every publisher and advertiser hates that. Google AdSense has expanded to cover most standard ad formats and dimensions, text ads are usually the backfill these days.
Privacy concerns. Well duh.
Pricing. “The Facebook Exchange works so well because the inventory is cheap” is pretty much what one DSP said to me. There’s so much inventory on Facebook that ad costs are low (though creeping higher). Great for advertisers, not so great for publishers – and that’s who Facebook would be selling FAN to first, not advertisers.
Advertiser depth. Pricing is partly a function of the number of advertisers in the system. When Google switched Adsense on, they had the ecosystem and a huge pool of advertisers. Facebook only have the first part of this.

Losers

Data providers / cookie resellers. Buy ads on the FAN, and you get the audience data as part of the price. No need to buy it in on top.
Publishers? Publishers losing control of their audience is a step back. How can they bake in their own 1st party data to keep value of their proprietary audience segments.

Questions

Global frequency capping? God knows some frequency capping is needed in newsfeed. I get bombarded by the same ads every day, for weeks and months.
Great mobile opportunity? Most Facebook users are accessing it on their phone, and the mobile ad opportunity is still wide open. Not sure how this is achievable technically though. For example, I understand cookies set in an iOS app are not available to the mobile Safari browser.

I’d love to hear your thoughts in the comments. I’m sure Google are looking at this carefully, but I don’t think they’re losing any sleep yet.

The panel was what you might expect from a setpiece type debate such as this. The reactionary journalist (Amanda Platell) versus the civil liberties campaigner (Kirsty Hughes). The corporation that is terribly concerned (Google’s Sarah Hunter). The ISP present (Talktalk’s Andrew Hearney) was the only one who wanted to offer practical help to parents, plugging his Homesafe product.

Predictably, the panel members preferred to talk across each other with dogma rather than address any points of substance. It wasn’t a very constructive or informative conversation. My thoughts on the main points raised:

Home network filtering seems like a sensible idea for parents who want to control what goes up and down their broadband connections. It isn’t perfect, as it’s list based and will result in some false positives and other sites slipping through the net. I don’t see why those lists can’t be transparent to the end user (the parent), even if they might be the intellectual property of Symantec or some other provider. Sites can also be whitelisted or blacklisted by the end user. But just because it isn’t a perfect system, it could make parental control substantially easier.

You are censoring your children if you use a product like Homesafe, of that there is no doubt. But censoring children in a private home is perfectly fine; they don’t have the same rights as adults. So long as a child’s welfare is the moral and legal responsibility of an adult, that’s how it goes.

Pornographers’ freedom of speech is not harmed by blocking their content at the household level, if that is a conscious choice by the household. Just as when I enter a newsagent and choose not to buy the Daily Mail, I’m not threatening Amanda Platell’s freedoms either. Only when censorship on legal content becomes opt-out or forbidden by companies or governments are rights infringed. The crowd at the Bigtent overwhelming agreed, rightly, that primary legislation was not the answer to this issue.

It’s true household level filtering is open to abuse, such as a controlling husband blocking his wife from communicating on social networks. But all tools can be used as weapons by aggressors on their victims, it doesn’t follow that those tools are causing the aggression.

What the panel didn’t really address, but mercifully the intelligent audience did, was that of education. Both of parents and children. Technology can only go some way to protect our children and the rest of us from the ills of the world.

Despite all the developments in car design and town planning, the safest way to cross the road is still to follow the Green Cross Code.

Google say this isn’t a problem and not a concern for their business. Not only do I agree with them, but I think Google are the cause of the decrease in CPCs. Here’s a simple thought experiment to show why.

Let’s imagine a scenario where an advertiser gets 100 clicks a day from a search query. Let’s say 20 come from a paid ad and 80 come from an organic listing. Also, let’s assume that clicks from both convert at an equal rate (5%).

So our SEM report for day 1 looks like this:

So the advertiser is happy, hitting his/her CPA target.

However, Google, in the quest for higher revenues, decides to increase the paid ad space on the page. Overnight, sitelinks, product ads etc appear, pushing the organic listings further below the fold. As a result, more traffic goes through the paid ads. The SEM report for day 2, to the advertiser’s horror, looks like this:

At this point, the advertiser does what anyone would do to get back to their target. They reduce their bids.

Satisfyingly, this prompt action means day 3′s report reveals this:

As Google increases the supply of paid ads and the demand stays the same, then the price will fall. That’s simple economics.

Google isn’t resting on its laurels. Many macro factors (e.g. spread of the internet in developing markets) and controllable factors (e.g. better targeting, more network partners) mean they can increase the revenue from paid ads despite the fall in CPCs.

The real stat, which Google doesn’t reveal, is the growth of monetisable impressions. That is, search queries that have ads against them. If that increases, all is good.

Update

Google have been releasing paid clicks and CPC variance data since Q2 2009. I’ve taken that to produce an indexed view of change over time.

As you can see since Q2 2008, although CPCs have declined about 19%, the number of paid clicks has increased by 130%. That’s not a bad trade-off.

I don’t think that was true then, and I’m sure it isn’t true now. Latest forecasts published by ZenithOptimedia demonstrate the enormous year-on-year growth of internet advertising in the UK over the last decade.

Came in a nice cardboard box with a card that was in a handwritten envelope. Note the wax seal on the ribbon.

The book was inside a red translucent protector, showing a human brain on the cover

Remove the cover, and in fact there’s a lightbulb inside the brain too

A closer look at the lightbulb reveals it’s made up of my name. Add 25% to the unit cost.

At the back there’s a three-dimensional, pop-up infographic about TFL’s cycle hire scheme. Add another 25% to the unit cost.

On the back, handwritten, is 885/1500, so I feel honoured I made it into such a short print run!

On Econsultancy I wrote about cross-channel attribution and optimisation. There were a few interesting comments too.

At the Media360 blog, I posted an article on the impact of TV on search performance, borrowing heavily from Dr Sid Shah.

Finally, I put a quick write up of my experience at this year’s SES London on the Efficient Frontier blog.

2010 showed a 13% growth on 2009, as Google recorded c.£2.15bn of revenue in the UK. It’s a staggering amount – ITV will probably make £1.4bn in revenues from TV advertising in 2010 (based on their H1 results).

Here are the charts that give the quarter-on-quarter view since 2007.

Quarterly revenue in GBP and USD

Year-on-year change

Quarter-on-quarter change

In an attempt to be less busy, or rather, to concentrate my time more wisely, I’ve been changing the way I use Outlook for email. I thought I’d share it here if you’d like to do the same in 2011.

Email is the burden of the modern office worker. We often feel controlled and dictated to by what drops into our inboxes. I hate that, so here’s what I’ve done in Outlook to improve my management and processing of email. But there’s so much to cover I’ve had to split this across more than one post. So here’s the first part.

Use Search Folders to get to important mail
Take a look at my Favourite Folders; 7/9 are Search Folders. I use Search Folders to segregate the email in my inbox, without actually moving files to different folders.

You can create a search folder from the menu: File > New > Search Folder… or use the shortcut CTRL+Shift+P. Here’s a quick run down of the folders I created and how you can do the same (in order of simplicity):

Unread mail: This is a default option at the top of the Search Folder dialogue box. Easy.

I only want the Search Folder (and the others below) to look directly at my inbox, and not any sub-folders I may have created. Do this by right-clicking on the Search Folder and selecting ‘Customize this Search Folder…’. Hit Browse from the subsequent dialogue box, then uncheck the ‘Search subfolders’ tick box.

To: me only, no cc: These are the emails that have to me only. No one else is on the To or Cc line, therefore if I don’t respond, no one will. To create, select ‘Create a custom Search Folder’, the last choice on the New Search Folder dialogue box. Name it, then click ‘Criteria…’. On the Messages tab, check the ‘Where I am:’ box and select ‘the only person on the To line’ from the dropdown.

Then on the Advanced tab, select the Cc field (under Address fields) and set the Condition to be ‘is empty’.

Add the criteria to the list and click OK on all the open dialogue boxes.

To: me only: Remember folks, it’s not who you send email to, it’s who you cc that counts! With these kind of emails you’re being asked to do something in public, so don’t ignore them. Creation is simply, follow the instructions for the Search Folder above, just don’t create the Condition on the Advanced tab.

To: me: These emails are sent to me, but not just to me, others are on the To line. Fortunately, the ‘Where I am:’ dropdown mentioned earlier anticipates this. Select ‘on the To line with other people’ and you’re done. The only downside is there’s overlap with the ‘To: me only’ folder, as Outlook will still include emails where I’m the only person on the To line. I’m not sure if there’s a way around this ‘feature’.

Cc: me: Finally, the least important emails – the ones where I’m cc’d. Again, this is easy to create. Just select ‘on the CC line with other people’ from the ‘Where I am:’ dropdown.

Calendar updates: This is where it starts to get tricky. Often the emails I want to process first are calendar updates (invites, cancellations etc) so my diary is up-to-date. Defining those is less than obvious, but there is a way. Create a new custom Search Folder and bring up the Criteria dialogue box. Then from the Advanced tab select the ‘Duration’ field (under ‘All Appointment fields’) and set the condition that it exists.

Only calendar items can have this particular field, so that’s how you identify them.

External mail: My job puts me in daily contact with customers and suppliers, so I often want to quickly see email that has come to me from outside my company. Unfortunately though, from what I can see, there is no way of creating a Search Folder that highlights external mail. So this requires a two-step process. First a rule to identify external mail and categorise it, then a Search Folder that can filter emails from that category.

Rules can be created by selecting ‘Tools > Rules and Alerts…’ from the toolbar. Create a new rule then follow these steps. First, start from a blank rule that checks messages when they arrive.

Next check ‘where my name is in the To or Cc box’ and ‘with specific words in the sender’s address’. Make the specific words to be just the ‘@’ sign.

Next check ‘assign it to the category category’. Choose or create a category for this purpose. Also check ‘stop processing more rules’.

Next check ‘except with specific words in the sender’s address’ and set the specific words to be the domain that your company uses for email. In my case, that’s efrontier.com.

Finish the rule up and you’re ready to go. Now if an email comes from an external domain, if will be categorised as such. If you use other rules, be mindful of the order in which those rules run.

Finally, we just have to create a Search Folder that filters for this category. ‘Categorized mail’ is a default option from the New Search Folder dialogue box, so this is easy to do.

And we’re done. Now it should be easy to filter all those emails so you can process the important ones quickly.

But why use Search Folders and not rules that move the emails into different folders?

First, I want the inbox to keep all the unprocessed emails together. Emails moved to folders by rules often get forgotten about. Second, I want to keep emails from the same thread together, where I may be move between the To or Cc field depending on how people reply. Third, I want to apply a little more intelligence to the way I file or discard emails and that’s the subject of part 2.

Further reading
Thanks to the following who came up with some of the solutions above:

Reading about the changes on the web, I’m really surprised how many articles have got this one wrong. Mostly it seems to stem from an inability to distinguish that different policies have applied, and will apply, between UK and Ireland, and the rest of Europe. (Google has a helpful list of which countries it considers to be in Europe. To add to the confusion, some places on the list are in South America or the Antartic.)

Anyway, here’s a couple of charts that hopefully explain what’s changing.

Policy before September 14th 2010

Policy after September 14th 2010

The change happening to Europe (excluding UK and Ireland) happened in the UK in May 2008. Chaos was predicted, but failed to materialise. I wrote about it before the change and made some observations after it was implemented. I think the comments I made then still stand.