A New Start

Economist: Infectious personalities

Epidemiology

Infectious personalities

Social networks catch an early glimpse of disease outbreaks

May 13th 2010 | From The Economist print edition

Who will sneeze first?

CHANCES are your friends are more popular than you are. It is a basic feature of social networks that has been known about for some time. Consider both an avid cocktail party hostess with hundreds of acquaintances and a grumpy misanthrope, who may have one or two friends. Statistically speaking, the average person is much more likely to know the hostess simply because she has so many more friends. This, in essence, is what is called the “friendship paradox”: the friends of any random individual are likely to be more central to the social web than the individual himself.

Now researchers think this seemingly depressing fact can be made to work as an early warning system to detect outbreaks of contagious diseases. By studying the friends of a randomly selected group of individuals, epidemiologists can isolate those people who are more connected to one another and are therefore more likely to catch diseases like the flu early. This could allow health authorities to spot outbreaks weeks in advance of current surveillance methods.

In a report just posted on arXiv, an online repository of research papers, and which has been submitted to the Proceedings of the National Academy of Sciences, Nicholas Christakis from Harvard University and James Fowler from the University of California, San Diego put the friendship paradox to good use. In a trial carried out last autumn, they monitored the spread of both seasonal flu and H1N1, popularly known as swine flu, through students and their friends at Harvard University.

Dr Christakis and Dr Fowler selected a random group of 319 undergraduates and asked each to nominate up to three friends. Using these names, they collected another group of 425 friends. As the friend paradox predicts, the second group were both more popular (named more times by the random group) and more central to the connections among Harvard students. Flu infections were monitored from September 1st 2009 to the end of December by identifying those diagnosed by the university’s health services and by e-mail responses to a twice-weekly health survey. Overall, 8% of the students were formally diagnosed with the flu and 32% were self-diagnosed. But the infection rate peaked two weeks earlier among the group of more-connected friends. Their social links were indeed causing them to get infected sooner.

Early warning

As this result came with the benefit of hindsight, the researchers tried to come up with a real-time measure that could potentially provide an early warning sign of an outbreak as it began to spread. To do this they went back to the beginning and compared diagnoses between the two groups on a daily basis for each of the 122 days of the study. A significant difference between the two groups was first detectable a full 46 days before visits to health services peaked for the random group. For those with self-reported symptoms, there was a noticeable difference 83 days before the peak in self-reported symptoms.

These early results are impressive. Currently, the methods used to assess an infection by America’s Centres for Disease Control and Prevention lag an outbreak by a week or two. Google’s Flu Trends, which monitors millions of queries submitted to the giant search engine for the occurrence of flu-related keywords, is at best contemporaneous with an outbreak. Dr Christakis and Dr Fowler suggest that a hybrid method might be developed in which the search queries of a group of highly connected (ie, popular) individuals could be scanned for signs of the flu.

Although the technique has so far only been demonstrated for the flu and in the social milieu of a university, the researchers nevertheless think that it could help predict other infectious diseases and do so on a larger scale, such as in cities and across regions. Nor should it be difficult to implement. Public-health officials already conduct random sampling, so getting the participants to name a few friends too should not be onerous. When it comes to infectious diseases, your friends really do say a lot about you

Fortune: Box office boffo for brainiacs: The Netflix Prize

http://brainstormtech.blogs.fortune.cnn.com/2009/09/21/box-office-boffo-for-brainiacs-the-netflix-prize/

Box office boffo for brainiacs: The Netflix Prize

Posted by Michael V. Copeland, Senior Writer

September 21, 2009 10:15 AM

How To Recommend Movies (and Win $1 million)

Netflix CEO Reed Hastings.

It was like the machine learning world’s version of “American Idol” Monday in New York:  A seven-man multinational group dubbed BellKor’s Pragmatic Chaos was awarded $1 million by Netflix (NFLX) CEO Reed Hastings as the winners of the Netflix Prize.

Cooked up three years ago by Hastings, the Netflix Prize challenged all comers to improve the recommendation technology used by the online movie rental company by 10%.

As they clutched the Ed McMahon-style check, and slung enormous gold medallions stamped with “Netflix Prize 2009” around their necks, it was the first time the winning team – a collection of computer scientists, electrical engineers and statisticians  – had actually ever physically been in the same place at the same time.

The basic gist of the problem to be solved was this: If you love this handful of movies, here are others you ought to adore. Simple enough when you are talking to the video clerk behind the counter (though hit or miss even then), but to break movie preference down into essentially mathematical components and do it even 10% better than Netflix was able to do proved an incredibly tough goal to achieve.

Global Brainpower

Bob Bell, Martin Chabbert, Michael Jahrer, Yehuda Koren, Martin Piotte, Andreas Töscher and Chris Volinsky, had combined teams and brain power to fend off 40,000 other teams from 186 countries to take the grand prize to back to home bases in Austria, Canada, Israel and the United States.

Hastings had an inkling of how hard it was going to be. During one Christmas vacation skiing in Park City, Utah a few years back, Hasting figured he could make some headway after his days on the slopes. “I’d stay up at night writing computer models, and I thought I had it all figured out,” Hastings says with a grin. “I didn’t get anywhere. One of the biggest surprises for me in all this, has been the enormous progress this area of mathematics has made.”

BellKor’s Pragmatic Chaos managed to do what Hastings and the crack engineers at Netflix couldn’t, by blending a variety of mathematical models, a tact that ultimately all the serious contenders used.

If you liked French Connection will you love Singin' in the Rain?

A snapshot of how Netflix maps the world of movies.

Some of the BellKor team’s algorithms examined movies as bunches of elements. These elements might include genre, a specific actor, and then drill down into more detail  – blood but no car chases, or car chases but no gunfights.

Movies that had combinations of similar elements would get lumped together into groups. The theory is that if you like one in a particular group you are more inclined to like the others.

But that kind of approach, similar to what Amazon (AMZN) and other online retailers use, couldn’t squeeze out enough improvement to take home the victory.

To do that, the BellKor team deployed a variety of other models that were far from obvious. One looked at what movies the anonymous Netflix customers in the data provided rated, rather than how they rated the movies (the movies they chose not to rate also provided so-called negative information).

Other models looked at when the ratings were done. It turns out, the longer it’s been since a movie was viewed the more generous the ratings are. BellKor’s model, therefore, discounted ancient movie reviews, when suggesting a movie you might want to watch tonight.

Still unanswered: The Miss Congeniality question.

How to blend hundreds of algorithms together into a useable model turned out to be the final problem BellKor’s Pragmatic Chaos had to lick, one that ultimately required combining four leading teams into one (thus the mouthful of a name representing the members of each team).

“You need to think outside the box, and the only way to do that is find someone else’s box,” says Chris Volinsky, BellKor’s team manager and the head of statistical research for AT&T Research. “When we combined with other engineers, we found they approached the problem from a different perspective and we were able to use that to our advantage.”

(One thing Volinsky and his team couldn't figure out is why Sandra Bullock-vehicle "Miss Congeniality" – savaged by critics – was the most frequently rated movie among Netflix users. "I still have no explanation for that," Volinsky says laughing. Click here for more lists of favorite movies, hated movies.)

Indeed, one of the chief lessons of the lengthy contest was the necessity of collaboration. And whether it was behind (virtual) closed doors, or by publicly sharing information on contest forums, the teams and people involved pushed everyone further by sharing information and methods.

Neck and neck in the homestretch

It was also a requirement of the contest that the winners of so-called progress awards during the course of the competition (all won by BellKor’s members), had to publish their methods for all to see.

At the close of the three-year contest, after BellKor had already passed the 10% mark, the rest of the contestants were given a final 30 days to beat the BellKor score. In that all-or-nothing push, essentially all of the other top-notch teams ganged up to topple the leader.

They practically pulled it off.

After three years of effort, the second place team, called simply The Ensemble, a combination of dozens of teams ended up with the same final score as BellKor’s Pragmatic Chaos on the final day of competition. But BellKor had submitted its final top-scoring model 24 minutes earlier – thus according to the contest rules taking the victory.

Since Volinsky and fellow BellKor team member Bob Bell worked full-time at AT&T research during the contest, and spent company time on the problem, AT&T gets a chunk of the winnings, Volinsky says. The remainder gets split between the three other teams. For its part, Netflix got much more than its money’s-worth, says Hastings, who estimates by using the prize-winning approach Netflix ought to be twice as good in its recommendations (not just 10% better – it’s a logarithmic thing, naturally). Since the winning team owns its solution, Netflix is licensing it, but there is nothing to prevent the likes of Amazon, Apple (AAPL) or anyone else from doing the same or licensing The Ensemble’s models.

Hastings is clearly pleased with the way the contest went, though it may have dragged on a bit long. That is why, on the same day the winner of the first Netflix Prize was announced, Hasting’s outlined a second $1 million prize.

The next contest also focuses on movie recommendations, clearly at the core of the Netflix business, but rather than picking movies for people whose movie ratings are known, it’s tackles the tougher problem of recommending movies for Netflix customers who don’t rate movies at all.

Rather than millions of ratings, the dataset will include more implicit information about preference, such as which movies have been watched, which haven’t, and demographic information. Rather than an open-ended contest to hit some numeric goal, it will be a limited 18-month sprint to the best solution.

Ladies and gentlemen, start your linear algebra.

FT: Wolfram Alpha asks some searching questions of the web

Wolfram Alpha asks some searching questions of the web

By John Gapper

Published: May 22 2009 19:36 | Last updated: May 22 2009 19:36

For years, there has been little competition in the business of enabling people to find out things on the web: Google led and a bunch of its would-be rivals lagged behind. Suddenly, however, internet search is becoming lively again.

Next week, Microsoft will launch its latest effort to catch up with Google – a refreshed search engine codenamed Kumo. Meanwhile Yahoo has just shown off its own efforts to help people extract data from the internet’s millions of web pages, rather than wade through it link by link.

All this might be yawn-inducing – Microsoft and Yahoo have tried and failed to catch up with Google before – but for two things.

One is that Google, despite its 64 per cent share of search, according to the comScore research group, knows there is a gulf between what it provides and what many people want and is experimenting with making its search engine perform better.

The second is that Google faces a new challenge from an Illinois-based software group founded by Stephen Wolfram, a British scientist. This week, Wolfram Research launched Wolfram Alpha, a web application that resembles a search engine but aspires to be a digital oracle.

Wolfram Alpha will never rival Google as an entry point to the web because it serves up information from a private database, rather than the internet as a whole. But it is an intellectual slap in the face to Google because it approaches the quest for knowledge in another way.

Wolfram Alpha’s launch this week garnered a lot of hype and many people were disappointed. After receiving blank responses to queries that its software could not recognise – “Wolfram Alpha isn’t sure what to do with your input” – some gave up.

Even when it knows what to do with a query, the software is very curt on some subjects that would return thousands of web pages, videos and images on Google, and a detailed entry on Wikipedia.

Type “Barack Obama”, for example, and you are told his full name, his birth date and place, and that he is a head of state (although not of which country). The timeline of his life has no entries apart from his birth.

But it is a different story when it comes to scientific and mathematical data, or the sort of information held routinely on public databases such as the Central Intelligence Agency’s World Factbook or by the International Monetary Fund. Then Wolfram Alpha comes to life.

Enter “Halley’s Comet” and you get scientific details and a map of where it is at any moment. Enter “GDP per capita UK/GDP per capita US” and it builds a graph showing that Britons were half as rich as Americans in 1970 but approached parity by 2005.

The data are not drawn from the web but from a database that is “curated” by Wolfram Research, a company that makes most of its money by selling licences for Mathematica, a software package used in colleges. That makes it much more limited than the internet, but clean, precise and easily malleable. While search engines are a starting point in a quest to find things out, Wolfram Alpha provides complete answers.

Unlike Wikipedia, it is also tightly controlled. Its data are drawn only from sources that are edited and checked so that, at least in theory, all the information is trustworthy.

“Search engines are like traffic directions to everything, systematic and random, that is on the web. We are collecting knowledge accumulated by civilisations and making that data computable,” says Mr Wolfram.

Search engines are now trying to do something similar with the internet as a whole, but it is very difficult. “One of the hardest problems in computer science is data extraction. Can we look at the unstructured web and extract values and facts in a meaningful way?” asked Marissa Mayer, a Google executive, at a presentation last week.

Ms Mayer showed off Google Squared, an experimental new feature that would allow Google’s users quickly to assemble data about, for example, various breeds of small dogs in a form like a spreadsheet.

It would be a lot easier to achieve if data were written into web pages in a structured way. Tim Berners-Lee, one of the creators of the internet in its graphical form, has been working on a project called the “semantic web”, which encourages this approach, but progress has been slow.

That is what makes Wolfram Alpha so radical – it is a challenge not just to Google but to the internet as a whole. Instead of grappling with all the data that are theoretically discoverable on the web, Mr Wolfram has got around the difficulties by building his own black box.

Similar struggles for dominance between private databases and open information systems are common. In financial services, stock exchanges contend with “dark pools” of liquidity – private networks of banks and institutional investors that allow them to trade with each other.

So far in the history of the internet, the public has soundly defeated the private. Private networks such as the original AOL and Compuserve gave way to the internet as a whole, made comprehensible by Google.

Now that faces a challenge. If all the data on the internet are simply too messy to be analysed and structured, Google will be unable to produce a service rivalling Wolfram Alpha in clarity and reliability.

This would not spell the end for Google and other search engines. But it would mean that search itself – on which we rely to map the internet – had bumped up against its natural limits. Let the battle begin.

john.gapper@ft.com

Copyright The Financial Times Limited 2009

FT: New techniques find meaning in words

New techniques find meaning in words

By Alan Cane

Published: October 8 2008 03:00 | Last updated: October 8 2008 03:00

Markets may rise and fall but the quantity of information collected and stored by businesses only seems to rise.

The need to be able to search quickly and efficiently through all this material for legal, regulatory or plain business reasons has given rise to a subset of search technology - enterprise search.

It may seem little different, in essence, to conventional web searching, but trawling through an organisation's data mountain is a much tougher nut to crack.

Colin Hadden, UK country manager for Sinequa, a French company whose search engine uses a combination of techniques including semantics, outlines the difficulties.

"First, the data are not designed to be found, are of irregular quality and they aren't linked.

"Second, enterprise users search for people as well as content - they want to find the author of a document as well as the document itself. Third, security is essential - it may be a legal requirement and certain individuals may only be allowed to look at certain documents.

"And fourth, the data are stored in a variety of places and formats - documents, e-mails, the internet, databases, spreadsheets and, more recently, audio and video material."

All of which may explain why companies' experience of implementing search systems has not always been satisfactory. Royce Bell, who leads Accenture's Information Management Services, says businesses are beginning to realise that they are not the internet and the tools and techniques needed to search within an organisation are different from Googling at home.

The complexity is multiplied by the fact that many large businesses are distributed, so information has to search across many platforms.

"Quite a few organisations are grappling with that now," he says, pointing out that some companies are simply giving up on unstructured search, especially where audio and video are concerned. Instead, they insist the material is tagged or identified so it can easily be recovered at a later date.

But even if enterprise search is technically harder than consumer search, the user should not be aware of the complexity of the software under the bonnet (or hood - to point out the kind of semantic difficulties search systems face).

Matt Glotzbach, head of products for the enterprise arm of Google, the company whose name is virtually synonymous with consumer search, argues that the objectives of enterprise search and consumer search are similar.

"One fallacy is that enterprise users want to search in some fundamentally different way from consumer users," Mr Glotzbach says. "They don't. We, as Google, have trained the world at large how search is supposed to work: there is a single interface, not 10 interfaces for 10 kinds of content; you enter a couple of words and in less than a second you get the right result."

The knowledge and experience Google has built up over the years developing these rules has been fed into its enterprise offering, the Google Search Appliance, introduced six years ago and now with 20,000 deployments.

A self-contained combination of hardware and software, the appliance is installed "behind the firewall" - that is, connected directly to the company's IT infrastructure.

It is now in its fifth iteration. In August this year, Google released a new version with revamped internal architecture to improve speed and provide the capability to handle up to 10m documents on a single server.

Mr Glotzbach says the revamp was designed to satisfy what he sees as the two big trends in enterprise search. First, the spectacular growth in the volume of information which companies are now storing and the fact that business users expect Google-like quality of search behind the firewall.

He says the system is marketed as an appliance for simplicity and ease of operation.

He explains: "One of the problems we see in most companies with large search engines is the complexity of setting them up and managing them. Often this puts so much work on the systems administrators and IT staff that the project fails."

In this, he is in step with Mr Hadden who says that the Sinequa system was designed to cut the cost and complexity that prevents companies from making the most of search.

Google's early success was based on matching keywords and a now legendary algorithm or mathematical procedure for listing web pages in the most useful order.

Today, Mr Glotzbach says, its technology goes well beyond simple word matches using hundreds of algorithms and signals to produce results. He points out that semantic or knowledge-based search, which essentially identifies non-obvious relationships between different pieces of content, has been part of Google's armoury for years.

"Understanding" is an important concept in modern search technology.

Mike Lynch, chief executive of Autonomy, a world leader in unstructured search, says the field is being transformed as technologies are developed that give computers the appearance of being able to understand meaning.

"At the moment, most search engines don't understand what they are looking for. They just match words.

"Type in 'dog' and the engines don't understand dog, they just recognise the characters d, o and g. These newer technologies understand meaning: a dog is an animal, it is man's best friend, a labrador is an example of one."

Dr Lynch argues that the meaning of search itself is changing: "Advanced search means the ability to process things."

The original aim of search was to retrieve material for human beings to think about but, increasingly, content is retrieved for computers to process. "For the first 40 years of the IT industry, computers were not very clever, so you took the real world and laid it out in a simple form," says Mr Lynch.

"Now as we move into advanced search, computers can handle the real world as it is: a computer can read an e-mail and decide what to do by itself," he says. One new technology is capable of "understanding" the emotional content of, say, an e-mail by analysing the text.

There are essentially two ways to create this kind of "meaning-based computing". First, through an understanding of linguistics, including semantics; second, an approach which treats language mathematically, calculating probabilities to infer context.

Experts argue over the merits of these approaches but as Mr Lynch says: "Both these methods are way ahead for the things people normally think of as search based on keyword matching."

Charles Armstrong, chief executive of Trampoline Systems, a UK-based company, agrees that searching for individuals is becoming as important as searching for documents.

"A business's main asset is its people, their knowledge and experience. In the 1990s, there was a boom in technologies that tried to make sense of millions of documents but they only gave half the picture.

"The rise of Web 2.0 in the consumer world alerted business to the role that social contacts and networks play. When you are dealing with a project that requires a particular knowledge, you look for the person with the knowledge, not a document."

Mr Armstrong says Trampoline's search engine is the first to analyse not just the content of documents but the professional networks of those connected to the documents.

He foresees that a big part of search in the future will be "doing less of it", as apparently sentient systems anticipate the users' needs and provide relevant materials automatically.

Copyright The Financial Times Limited 2008

FT: The man who put a local face on Google

The man who put a local face on Google

By Andrew Edgecliffe-Johnson

Published: May 18 2008 17:28 | Last updated: May 18 2008 17:28

The job of running Google’s largest overseas outpost may be the most sought-after position in European technology but, when Nikesh Arora was approached about the role, he was not impressed.

In 2004, Google’s European, Middle Eastern and African operations amounted to fewer than 400 people, 80 of them crammed into a small office in London’s Soho. Mr Arora sat in the conference room and told Omid Kordestani, Google’s worldwide sales boss: “It looks like a great company but, honestly, these offices do not reflect what I’d expect of it.”

Most discussions about Google come round sooner or later to the premises. Like the Googleplex in Mountain View, California, Google’s London workplace these days is all fresh fruit and Italian coffee machines. Soft furnishings in primary colours, bunting and the occasional inflatable tiger make it look more like a kindergarten pre-school than home to a group of high-powered engineers.

Handpicked crowd of powerful friends asked to tap into Zeitgeist

Nikesh Arora will today trade his stylish offices for a country house hotel in Watford as he plays host to one of the more unusual corporate networking events. Google’s Zeitgeist conferences, originally devised in the US, have evolved into something akin to a one-company Davos, which book up months in advance.

Over the next two days, a handpicked crowd of 350 advertisers, broadcasters and politicians from around Europe, the Middle East and Africa, will listen to 40 speakers ranging from Mohamed Ibrahim, the African mobile phone entrepreneur, to Queen Rania of Jordan.

The themes this year range from climate change to copyright battles. Tomorrow, the most popular users of YouTube, StarDoll and Metacafe will be on stage with the chief executives of the three websites to discuss how they might be improved.

The accomplished networker says he personally called 30 of the speakers to persuade them to come. They are not there to talk about Google, he insists. But, in a year in which Google has needed political support for its Doubleclick acquisition in Europe and has been rehearsing its arguments against a Microsoft-Yahoo combination, such powerful opinion formers are increasingly useful friends.

Sprawling in a red leather chair in one of the building’s more restrained offices overlooking Victoria station, Mr Arora describes his achievements largely in property and personnel terms. The nine EMEA offices he inherited are now 33, he says; he spends a third of his time recruiting – staff numbers have swelled to 3,400 – and thinking “how do we make our people happy”?

For Google, he says, this is no cliché. “The only way we can scale a business which has probably grown faster than any other business in the world is to make sure we have the right people and to trust them.”

Another third of his time is spent with partners and advertisers, discussing products with “local flavour” to work beyond California. Logic dictates which products are developed locally, he says, noting that Europe’s mobile telephony strengths have given it a lead over the US in mobile search and that the Dutch like their online maps to include bicycle routes.

Mr Arora spends the rest of his time pursuing longer-term ideas. Top of the list at the moment is the phenomenon of “video when you want it”, he says. As people have more freedom to watch programming at different times, he notes, assumptions about their demographic profile are also having to change. This opens the possibility of customising video advertising not just on websites such as Google’s YouTube platform but also over television set-top boxes.

Already, Mr Arora says, his 11-year-old daughter “doesn’t understand you have to wait in front of a television screen for something to happen at 8pm”.

Her approach of setting the family digital video recorder having researched programmes on YouTube is a far cry from Mr Arora’s own childhood. Growing up in India, he and his family would gather at the house of an aunt who had a TV set. They would arrive before broadcasts started to get a good seat, then, “from 6pm to 6.30pm, I got educated about how to be a better farmer” before the Bollywood music programme he was there to see came on. “That was it. That was entertainment.”

Mr Arora, who has just turned 40, left India 19 years ago, but he credits his upbringing with setting him on the path to Google. One of 100,000 students who sat the same examination in 1985 for 2,000 places in the six best engineering schools in the country, he still remembers his rank – 1,292. When he beat 200,000 people to get one of 250 scholarships the following year, “that’s when I figured out I might be a little smarter than I’d thought”.

Asked why so many of his generation of Indian engineers went on to make their careers in the US rather than at home, he points out that, when he left the Institute of Technology in Varanasi for his first job at Wipro in India, he was paid just £500 a year.

A year later, the 21-year-old Mr Arora moved to the US with two suitcases and $100. “The thing I feel most proud of is that I went to business school for two years in a culture I didn’t understand but I graduated first. That to me was a significant achievement because that tells me I can adapt to different environments,” he says.

An MBA at Northwestern University took him to jobs as an analyst at Fidelity and Putnam, covering the booming telecoms industry. By the end of the decade he was at T-Mobile, where he launched T-motion, a mobile media business, before becoming chief marketing officer.

Despite his ringside seat at the TMT boom, Mr Arora claims the only thing he knew about Google by 2004 was that it had used an unusual Dutch auction process for its initial public offering.

When interviewed by Google founders Larry Page and Sergei Brin at the British Museum, however, he clinched the job after a discussion about machine-based translation services spurred by five minutes in the gift shop reading about the Rosetta Stone.

Eric Schmidt, Google chief executive, told him later that his primary role would be to build a sales force. Mr Arora had no direct sales experience – “but that’s what Google’s about. We don’t believe everything we are going to do has been done, so it’s hard for us to hire somebody who’s done everything we want to do”, he says.

Mr Arora dismisses European handwringing about whether the continent has the talent to compete with Silicon Valley, adding that every one of his staff would give their US colleagues a run for their money. “Clearly you don’t have a Google [in Europe] but show me how many Googles exist in the world,” he says.

Europe may have been fertile recruiting ground but it has also been the place where Google has run into the most resistance over copyright and privacy issues. Mr Arora plays down its battles in Brussels as “discussions”, saying that Europe’s multiple states will rarely have as consistent a view on such issues as the US.

The debates are very different in other regions under his wing. The Arab world, eastern Europe and Africa will account for two-thirds of the world’s new internet users over the next decade, Mr Arora estimates, but they have little digital infrastructure at present.

Google’s efforts to build a culture of internet use in such markets has included its giving tailored, local-language versions of its Google Apps applications to education ministries in Egypt and Saudi Arabia. “You have access to the internet, you get access to information and it’s positive for economies, it’s positive for citizens,” he says.

Self-interest also plays a role, however. “We do it right and, in five, six or seven years, we’ll be working towards the same advertising benefits that we have in the developed world,” he says.

While analysts and bloggers hang on every word uttered by Google’s founders and chief executive, it is harder for outsiders to point to Google initiatives that have Mr Arora’s name on them. Asked about his achievements, though, he is clear: just above half of Google’s revenues now come from outside the US, he says, compared with one-third when he joined. Google does not break out regional sales but Europe is the largest of its international hubs.

“When I came here four years ago, the biggest concern partners had was they felt they had to go to California to do anything,” he says. Today, as telecoms companies, advertisers or governments beat a path to the multicoloured offices in Victoria and beyond, “we have put a local face on Google”.

Copyright The Financial Times Limited 2008

FT: Google triumphant: Search wars look settled

Google triumphant: Search wars look settled

By Richard Waters in San Francisco

Published: May 12 2008 19:54 | Last updated: May 12 2008 19:54

Eric Schmidt was doing his level best late last week not to gloat. With Microsoft dropping its attempted takeover of Yahoo, the Google chief executive had just seen his arch-rival abandon its most direct attack yet on Google’s growing dominance of online search and advertising.

“I’m happy to be crowned winner,” Mr Schmidt said, before quickly adding: “But as we’ve learned in the election cycle, it goes back and forth.”

The political analogy may have been ill-judged. Like Hillary Clinton after last week’s primary results, Microsoft has never looked more on the defensive. For a company that has always scorned the idea of big mergers in the past, the pursuit of Yahoo was the clearest admission yet that the software company was running out of options as it tried to counter the rise of Google.

“The failure of the Microsoft/Yahoo merger eliminates the biggest short-term threat” to Google’s unrivalled position on the web, says David Yoffie, a professor at Harvard Business School. For now, its momentum “seems unstoppable”. Michael Cusumano, a management professor at Massachusetts Institute of Technology, describes Google’s now-unchallenged dominance even more bluntly: “They’re sitting on a goldmine.”

The scale of Google’s victory over Microsoft in online advertising, sealed by the failure of the Yahoo takeover approach, is hard to exaggerate. By next year, half of the world’s online advertising – set to reach $55bn (£28bn, €36bn) in total – is expected to flow through Google’s systems. Of that, slightly more than two-thirds will come from advertisements that run on Google’s own websites. The rest represents advertising that the internet company, acting as a broker, places on other companies’ sites in return for a small cut of the action.

It is a stunning victory that raises two overriding questions. Will Google be able to use the respite provided by the disarray at Microsoft and Yahoo to carry its dominance of search over into other areas of online – and broader digital – advertising? And should it now be a cause for alarm that one company is in a position to control so much of the lifeblood of the internet?

To some extent, the Microsoft/Yahoo debacle merely confirms something that had already become apparent: the internet search wars ended almost as soon as they began, and Google won. It accounted for around 70 per cent of the estimated $16bn of advertising placed on search engines last year, a share that continues to rise.

Microsoft and Yahoo were late to see the danger, beginning their own search initiatives four to five years ago. A merger would at least have created a second player with the scale to try to compete, says Sir Martin Sorrell, chief executive of WPP, the advertising group. Separately, the two now face continued erosion, he adds. Sir Martin also takes issue with a potential partnership with Yahoo, currently under discussion, that would give Google an even bigger share of the search advertising market.

The eventual limits of the fast-growing search market, which accounts for almost half of all online advertising, are still impossible to discern, but it is already a business that stands comparison with the technology industry’s most fabled success stories. On the current trajectory, Google’s revenue – almost all of it coming from search – will probably surpass the income that Microsoft generates from the Windows operating system some time next year.

There is no guarantee that the search company will alight on another idea as powerful as its advertising system, says Mark Anderson, a veteran technology commentator. Yet that may not matter for some time, he and most other industry insiders say. “I think it’s enough for the next 10 years,” says Mr Anderson. “When God gives you a golden goose, you have to hold it tight.”

Google has spent much of the money from this gilded fowl, and the time afforded it by the failure of its competitors to mount a tougher challenge, preparing for what comes next. Through the acquisitions of DoubleClick and YouTube, it has placed big bets on display advertising and online video. These deals have been the most visible part of its attempt to stake out a position in some of the most promising new areas of digital advertising, says Rishad Tobaccowala, a new media expert at Publicis, the advertising and marketing group.

This is most evident in the video and mobile worlds. Through YouTube and its test of a digital advertising system with EchoStar, the satellite television company, Google has put itself in a position to catch the wave of traditional television advertising as it moves to the web.

In mobile, meanwhile, Google has spent a frenetic year preparing the ground for what it claims will be a bigger business than even its current PC-based one. That has included fighting to open up part of the mobile spectrum in the US so that users get guaranteed access to its services, investing $500m in a high-speed WiMax network, grabbing a prime spot for its services on Apple’s iPhone and launching its own mobile technology platform, known as Android. “They have understood better, they have positioned themselves better, for where the world is going than anyone else,” says Mr Tobaccowala.

This does not mean that success is guaranteed. “The best technology doesn’t always win,” says Prof Yoffie. “History is littered with better technologies that have been left by the wayside.”

The biggest danger may well be that fear of Google’s growing power will prompt a backlash from the very companies it will need on its side as it tries to expand out of search. “The mobile carriers are very concerned about letting Google dominate advertising on mobiles the way it has on the PC,” says Prof Yoffie. That echoes the earlier struggles of another tech industry giant: Microsoft found it hard to break into the mobile industry for similar reasons, while the traditional media industry kept the software company at arm’s length for years after the arrival of the internet out of fear that it would become a gatekeeper with the power to intercede between media companies and their customers.

The parallels with Microsoft are compelling and help to explain why Google is becoming widely feared, says one person who has worked closely with Google for a number of years. Microsoft used its dominance of computer operating systems to build a second market in software applications, eventually dominating that market too.

“These days, the applications are newspapers and television and video games and communication devices,” this person says. According to this view, as these information services are digitised and move to the internet, Google’s advertising system will become the financial platform on which many of these businesses depend – in much the way that Microsoft’s operating system became the backbone for the technology ecosystem of the PC.

Despite the discomfort this causes, however, Google’s status as the internet’s most effective money-maker makes it hard to ignore. That helps to explain Yahoo’s plan to cast itself as a more trustworthy ally of other internet companies – and why many will be hoping it recovers to become a stronger competitor to Google.

So if Google is about to enter a golden age that rivals the heyday of Microsoft on the PC or IBM on the mainframe computer, should this be a cause for concern? Both of those technology companies were criticised in their industry for growing so powerful that they eventually squashed innovation, drawing the attention of antitrust regulators. Does a similar fate await the young idealists who have vowed “Don’t do evil” with their search engine?

The case against a dominant Google is summed up by Sir Martinof WPP. Without the prospect of a strong rival that would have been created by a combination of Microsoft and Yahoo, advertisers could be left with little choice, he warns.

For their part, Google executives make a number of claims for why their particular corner of the advertising business is not susceptible to monopolisation – and why bringing even more advertising into their system should actually help customers.

“What we’ve seen in the past when we’ve done substantial expansions of our network, advertisers have really benefited, they’ve been really happy to be able to get increased reach for their targeted ads,” says Sergey Brin, one of Google’s founders. “For them it just means more sales with clear and accountable profit margins,”

Larry Page, his co-founder, adds that since Google merely runs an auction in which advertisers bid against each other, rather than actually setting the prices for advertising placed on its sites, it cannot affect pricing. “In general having more inventory available to advertisers is very positive for them – they have one powerful interface where they can bid on one type of advertising and have that against as wide a range of inventory as possible,” he says.

Yet this heavy focus on the financial efficiency of Google’s brand of online advertising ignores the fact that many customers want more choice in the types of advertising they use and more ability to negotiate unique ways to present their message, says Prof Yoffie. “Google doesn’t have the reputation for being the easiest company to deal with, and with less competition it will be even less easy,” he adds.

That will not matter as long as advertisers are able to switch their business to other online advertising networks, counters Mr Schmidt. “Advertisers always have multiple choices so it always makes sense for them to use more than one,” he says. “It is incorrect to assert that there’s lock-in or an opportunity for dominance in the advertising space.”

Switching between advertising suppliers in a market as concentrated as internet search may not be as simple as this suggests, though. Big advertisers that want to buy a large volume of “clicks” a week may find that other search engines cannot guarantee them the volume they need, says Sandeep Aggarwal, an analyst at Collins Stewart in San Francisco.

Also, the cost of building the technology to connect with Google and learning how to get the best out of its search system means that many of its customers have made a big investment, says Prof Yoffie. “There are real switching costs,” he adds.

Even some of Google’s admirers agree that the limited choice in search – and, potentially, other areas of digital advertising – does not sit well with customers. “Generally, advertisers like to have four or five suppliers in a market,” says Mr Tobaccowala.

The argument for overlooking this, he adds, is that most big advertisers direct only a very small percentage of their budgets to search – and besides, the upheaval under way on the internet is so great that any lopsidedness in a particular part of the industry may well prove insignificant in the long run. “With all that change, I’m less concerned about one company climbing on the others,” Mr Tobaccowala says.

That is certainly how Google’s leaders see it. The search company and its rivals are racing to invent the future of advertising, says Mr Page, and this rapid innovation is by far the dominant force in shaping the competitive landscape.

If Google tries to rub salt into Microsoft’s wounds by pressing ahead with an alliance of its own with Yahoo, it will get a chance to find out whether regulators agree with this sanguine view.

Copyright The Financial Times Limited 2008

FT: Hitch a ride on a search engine

Hitch a ride on a search engine

By Richard Waters

Published: April 4 2007 17:27 | Last updated: April 4 2007 17:27

Off Santa Monica’s touristy Third Street Promenade, up a narrow flight of stairs, there is an unmistakable hustle in the air.

The ceiling of Richard Rosenblatt’s office has not yet been finished, and a clutch of investment bankers is waiting in the hallway for a meeting (probably a common occurrence, given that he raised $220m last year to build his latest internet start-up.)

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This district of Los Angeles has become a centre for the new digital media industry, a place where technology from Silicon Valley, 350 miles to the north, mingles with the creative impulses of nearby Hollywood. It is no coincidence that Yahoo! moved its media arm here, or that Electronic Arts has built a games studio nearby.

The fast-talking Mr Rosenblatt, 37, is already a veteran of this world. The last company he headed, Intermix, was sold to Rupert Murdoch’s News Corp in 2005 for $650m, thanks to the success of one of its online subsidiaries that at the time was only just gaining wider attention: the social networking site MySpace.

He claims to have no regrets now about giving up an internet property that has since become a household word. Yet Mr Rosenblatt is itching to go one better than he did before.

For a would-be entrepreneur, there is a paradox to the digital revolution under way in the media business. On the one hand, the barriers to entry have collapsed. It has never been this easy for anyone with a good idea to find an instant audience. Given the sizeable fixed costs involved in setting up a large-scale operation, however, this is an industry where big money is starting to count.

Mr Rosenblatt’s company, Demand Media, exhibits both sides of this conundrum. Starting with a clean sheet of paper, he and his business partner Shawn Colo, a veteran of private equity, have set out to build a new media company that is tailor-made for the era of Google and MySpace.

Any media business, says Mr Rosenblatt, needs three things: content, an audience, and a way to cash in on that audience. The trick is to find a free – or at least extremely low-cost – way to do each of these things.

Take the way Demand sets out to attract an audience. Some of its cash has been spent on acquiring digital assets that have a good chance of attracting the casual web surfer. That includes buying generic domain names – such as Gardening.com – that internet users are likely to type directly into the address bar of their Web browser.

A second approach relies on “natural” search – the free listings that Google and other search engines return in response to a query. Demand has bought up sites that stand a good chance of figuring high in the results. They include eHow, a collection of tips written by professionals that is targeted at search engine users.

To make money from this audience, Demand relies entirely on plugging into Google’s AdSense system. This places contextually relevant advertisements on other companies’ websites in return for a cut of any money earned, relieving companies such as Demand of the need to employ their own salesforce.

Content, the third element, is a work in progress. On some of Demand’s sites, the adverts from Google are the only content. Flashgames.com, for instance, is a website that exists purely to draw users to Google ads. Users who go to the site find a collection of links to other games sites: a click on any of these earns the company a fee.

“That little domain makes $200,000 a year profit and does nothing,” says Mr Rosenblatt. “It just sits there.”

That is the starting point. Adding other types of content to keep users on the site longer, or recommend it to their friends, could eventually increase the audience and advertising yield. From his experience with MySpace, as well as earlier internet ventures, Mr Rosenblatt is clear about the cheapest way to do this: give people the tools to create the content themselves.

It all sounds like a highly opportunistic and low-risk recipe for turning a profit. Yet perfecting this system takes big money. Partly that is because it relies on the sort of leverage that comes only from being able to aggregate a large amount of internet traffic.

“The bigger you are, the more attention you get from the search engines. They want to do big deals,” says Mr Rosenblatt. The little guy simply can’t bargain for the same sort of revenue share when it comes to negotiating an advertising deal. Also, size helps to justify the large fixed investments in infrastructure, expertise and technology needed to run an internet company like this.

“We think, right now, scale is important,” says Mr Rosenblatt. That is one of the lessons from MySpace: without the backing of a big parent like News Corp, he says, MySpace could never have afforded the investment needed to grow so quickly.

Scale also brings something else: a deeper knowledge of user behaviour, and the value of internet content, that can be used to perfect an online business model. With what Mr Rosenblatt claims are 9m domain names and 15m-20m unique monthly visitors, his company is in a position to analyse usage patterns and financial returns across many different websites.

“You can predict the ROI [return on investment] on a piece of content,” he says, and make smarter decisions about when to invest in extra content to attract an audience.

The model, however, is not without risk. Relying on natural search to generate an audience leaves a company dependent on the methods that popular search engines use to rank their results. These can change abruptly as search engines act to prevent websites “gaming” their systems, creating unpredictable changes in the search rankings.

Also, without their own sales forces, Demand’s reliance on the advertising networks of Google and others gives it less control over their revenue-generating capability. And because it amasses a large audience by drawing together many specialised ones – what is known on the internet as the “long tail” – it probably has no other option.

“For most of the ‘long tail’, you need to give up your advertising to a Google or a Yahoo,” says Mr Rosenblatt.

When personal gets vertical

It all sounds so 1999. In the first dotcom boom, there was much talk of “vortals” – short for “vertical portals”, or specialised gateways to the internet that would draw an audience of people who shared a common passion. The language of the Web 2.0 boom may be different, but it appears that some ideas don’t change.

“I think social networks and communities will become more personal and more vertical,” says Richard Rosenblatt, chief executive of Demand Media.

In other words, sites such as MySpace have benefited from the new passion for social networking, but this audience will fragment as internet users congregate around online services that reflect their particular interests, whether that is gardening or kayaking.

Mr Rosenblatt has licensed back some of the social networking technology that, as chairman of Intermix, he sold to News Corp, and is now working to graft that on to the specialised websites that Demand has assembled. If all goes to plan, for instance, users of eHow will later this month be able to post their own advice on the site and find related tips written by friends or others who share their interests.

The next step, says Mr Rosenblatt, will be personal portals that are even more closely tuned to each user’s interests. To that end, Demand has licensed the “.tv” domain and is building a service to let internet users run their own personal video portals.

“People will want their own vertical, and their own personal space,” says Mr Rosenblatt.

Copyright The Financial Times Limited 2007

FT: Entrepreneurs change the rules to cash in on clips

Some types of media and entertainment content are likely to be better suited to this world than others. In general, according to entrepreneurs such as Mr Reese, it suits short-form, highly targeted pieces of information that can easily be indexed by search engines or matched to specialised websites (readers of a site such as Free-beauty-tips.com, for instance, may have more of an interest in pimple solutions than most).

The second part of this new online media model relies on distribution to as wide an audience as possible. This means tapping into mainstream "destination" sites that attract large audiences of their own (for ExpertVillage, that includes submitting its content to Google Video's servers); making it easy for people to discover the material through search engines; and tapping into the various new online syndication services that have been set up to make it easy to reach a wide range of potential online outlets.

Not all the mechanisms required for this distributed media world to operate efficiently have yet fallen into place, however. Controlling content as it passes around the web and collecting money each time it is "consumed", often in very small increments, requires a level of technology infrastructure and standardisation that has yet to be achieved.

==

Entrepreneurs change the rules to cash in on clips

By Richard Waters and Aline van Duyn

Published: February 16 2007 02:00 | Last updated: February 16 2007 02:00

Byron Reese is typical of the new wave of internet entrepreneurs out to turn the economics of the media industry on its head. While traditional publishers and broadcasters struggle to adapt to a disruptive new medium, often by trying to limit access to their content and retain their premium pricing, newcomers such as him start with a different idea.

The approach is based on ultra-low cost, purpose-built content and the ability to tap into a rapidly expanding and highly diverse ecosystem of independent online distributors to build a wider audience. Many of these new distributors, however, are at an early stage of development and some important technological underpinnings have yet to be put in place.

ExpertVillage.com, the US website that Mr Reese heads, does not produce the sort of videos that you are likely to want to watch every day. Its short instructional videos, each two to three minutes long, include items such as "How to get rid of pimples" and (recommended for would-be automotive mechanics only) "Replacing the serpentine belt with jacking screw".

In a world exploding with amateur video and other "user-generated content", such sites represent a small but fast-growing area of professionally produced but cheap material. ExpertVillage, which has rivals including VideoJug in the UK, pays filmmakers just $20 (£10, €15) for each video they submit (which must feature advice from an "expert"). Each video costs a further $10 to publish online.

By finding an average of 15 viewers a month to watch each segment, and by generating 10 cents in advertising revenue for each viewing, ExpertVillage hopes to recoup its investment in each video within two years, says Mr Reese. To do that, it looks not just to traffic on its own site but to a range of other distributors to reach out and find a global audience: among others, the company is negotiating with a website in India to promote its how-to videos there.

Ideas such as this turn the economics of media on its head. The old way of doing business was built around the idea that distribution was scarce. With few outlets available (whether that meant television channels or newspapers), the trick for each producer/distributor was to attract as big a share of the audience as possible, usually with expensively produced content. The large audiences that TV stations or newspapers have traditionally been able to attract have justified high charges to advertisers, which bought audiences in bulk.

The new approach to media that is purpose-built for the internet is the opposite. First, cut costs to the bone, then spread distribution across as many sites and online services as possible, pushing the content out far beyond the original publisher's domain.

Some types of media and entertainment content are likely to be better suited to this world than others. In general, according to entrepreneurs such as Mr Reese, it suits short-form, highly targeted pieces of information that can easily be indexed by search engines or matched to specialised websites (readers of a site such as Free-beauty-tips.com, for instance, may have more of an interest in pimple solutions than most).

Some big media groups are attempting a similar approach to content creation themselves. The Warner Brothers Television Group, the biggest maker of television shows with hits such as Friends and The West Wing, last year created Studio 2.0 to produce short-form programming for the internet. Instead of tapping only the group's impressive but expensive roster of television writers, the division is signing up newcomers. Many of the people working on the emerging digital ventures are not a part of any union and they often work on short-term contracts.

Other production costs can also be cut. Content made for web viewing can be of a lower resolution and fewer frames per second than that made for television; quality can be reduced further for video viewed on a very small screen such as a mobile phone. In addition, the absence of marketing, packaging and physical distribution costs leads to budgets in the thousands rather than the millions of dollars.

The second part of this new online media model relies on distribution to as wide an audience as possible. This means tapping into mainstream "destination" sites that attract large audiences of their own (for ExpertVillage, that includes submitting its content to Google Video's servers); making it easy for people to discover the material through search engines; and tapping into the various new online syndication services that have been set up to make it easy to reach a wide range of potential online outlets.

Online publishers will eventually find that their content is "watched, listened to and read more off their sites than on them," says Dick Costolo, chief executive of FeedBurner, one of the new syndication companies. Among the material it distributes, FeedBurner puts out nearly 100,000 independent podcasts as "feeds": consumers can subscribe to any of these directly and other websites can pick up the material, provided they pay a share of any advertising revenue they generate.

Not all the mechanisms required for this distributed media world to operate efficiently have yet fallen into place, however. Controlling content as it passes around the web and collecting money each time it is "consumed", often in very small increments, requires a level of technology infrastructure and standardisation that has yet to be achieved.

For instance, while there is a convention about what defines a web page "impression" and therefore when an advertiser must pay an online publisher, there is no similar agreement when it comes to video and audio, says Mr Costolo: what happens when the material is only partially listened to or watched?

Systems to identify and track the use of copyrighted material as it moves around the web, enabling the owners either to limit or charge for its use, are also in rudimentary form. Digital "fingerprinting" systems, which identify content based on their unique audio or video patterns, have been put in place on a number of websites to combat piracy: MySpace, for instance, announced a video identification system this week.

However, tracking video automatically in this way remains difficult to do reliably. Also, fingerprinting systems have yet to be set free to crawl the web at large to track down copyrighted material.

Richard Waters

and Aline van Duyn

Copyright The Financial Times Limited 2007

IFTF: The reality of biotech

http://future.iftf.org/2007/02/the_reality_of_.html

February 13, 2007

The reality of biotech

New York Times reviews Gary Pisano's new book, Science Business: The Promise, the Reality, and the Future of Biotech. The big claim of Science Business is that contrary to popular perceptions (or perceptions within the biotech world), biotech is actually

no more efficient at drug development than traditional big pharmaceutical companies. That conclusion runs contrary to popular belief that scrappy, driven biotechnology entrepreneurs can run rings around the bureaucratic drones of Big Pharma.

Biotechnology has been “one of the biggest money-losing industries in the history of mankind,” Arthur D. Levinson, chief executive of Genentech, told analysts in New York last year. He estimated that the biotech industry as a whole has lost nearly $100 billion since Genentech, the industry pioneer and one of its most successful companies, opened its doors in 1976. Only 54 of 342 publicly traded American biotech companies were profitable in 2006, according to Ernst & Young.

Most biotech enterprises face a host of daunting challenges. While they can work much more nimbly than their brethren in Big Pharma, they also lack some of the hard-won experience that large corporations bring to the drug pipeline. Moreover, biotech companies often aim at harder-to-conquer diseases and use more experimental technologies, further complicating their quests.

Technorati Tags: biotech, books, innovation, pharma

 

   

Posted by Alex Soojung-Kim Pang at 10:19 AM in Biotech, Innovation | Permalink

New York Times reviews Gary Pisano's new book, Science Business: The Promise, the Reality, and the Future of Biotech. The big claim of Science Business is that contrary to popular perceptions (or perceptions within the biotech world), biotech is actually

no more efficient at drug development than traditional big pharmaceutical companies. That conclusion runs contrary to popular belief that scrappy, driven biotechnology entrepreneurs can run rings around the bureaucratic drones of Big Pharma.

Biotechnology has been “one of the biggest money-losing industries in the history of mankind,” Arthur D. Levinson, chief executive of Genentech, told analysts in New York last year. He estimated that the biotech industry as a whole has lost nearly $100 billion since Genentech, the industry pioneer and one of its most successful companies, opened its doors in 1976. Only 54 of 342 publicly traded American biotech companies were profitable in 2006, according to Ernst & Young.

Most biotech enterprises face a host of daunting challenges. While they can work much more nimbly than their brethren in Big Pharma, they also lack some of the hard-won experience that large corporations bring to the drug pipeline. Moreover, biotech companies often aim at harder-to-conquer diseases and use more experimental technologies, further complicating their quests.

Technorati Tags: biotech, books, innovation, pharma

 

The reality of biotech

New York Times reviews Gary Pisano's new book, Science Business: The Promise, the Reality, and the Future of Biotech. The big claim of Science Business is that contrary to popular perceptions (or perceptions within the biotech world), biotech is actually

no more efficient at drug development than traditional big pharmaceutical companies. That conclusion runs contrary to popular belief that scrappy, driven biotechnology entrepreneurs can run rings around the bureaucratic drones of Big Pharma.

Biotechnology has been “one of the biggest money-losing industries in the history of mankind,” Arthur D. Levinson, chief executive of Genentech, told analysts in New York last year. He estimated that the biotech industry as a whole has lost nearly $100 billion since Genentech, the industry pioneer and one of its most successful companies, opened its doors in 1976. Only 54 of 342 publicly traded American biotech companies were profitable in 2006, according to Ernst & Young.

Most biotech enterprises face a host of daunting challenges. While they can work much more nimbly than their brethren in Big Pharma, they also lack some of the hard-won experience that large corporations bring to the drug pipeline. Moreover, biotech companies often aim at harder-to-conquer diseases and use more experimental technologies, further complicating their quests.

Technorati Tags: biotech, books, innovation, pharma

 

FT: Treasures in the company attic

Measuring the links between online and offline advertising is difficult, but increasingly search usage is being used as a proxy to gauge the effectiveness of traditional advertising.

“Search provides a perfect bridge between offline and online,” says Peter Hershberg, managing partner at Reprise Media. “We know people do not randomly end up in a search box, and by measuring search after a commercial we can measure how much brands are resonating with consumers.”

Seven ways to bring the corporate website to life

■Print publications. Companies spend millions of dollars producing in-house publications, reports and catalogues or magazines for their clients. Once checked for topicality, accuracy and copyright, articles and pictures can be re-used on websites, perhaps grouped together in themes or with other relevant content.

■Conferences. The specialised conferences that companies organise for internal purposes or for clients often produce expert material that can be used as a theme within a website. When speaking at conferences, check whether you will be able to reproduce video or audio of your company’s contributions on its website.

■Sponsorship. Any corporate sponsorship of arts, sports, music and other events should be used to the full. Ensure the right to re-use content is part of the deal. Photographs can be used on the web, for example through the creation of slide shows, and music and video can help liven up a website.

■Corporate art. Investments in arts and antiques can be good for more than just decorating conference rooms. Photographs, combined with history, can create an interesting slide show or be used to illustrate other parts of the website.

■Archives. Sometimes corporate archives can be a source of interesting content – all owned by the company. Examples include a timeline of patents or a selection of photos of important moments in the company’s history.

■Old advertisements. Just as people like watching television programmes based on old advertising campaigns, or specials about the 1970s, 1980s or 1990s, old publicity material can provide interest by tracing the path of a company’s branding or product development.

■Employees. Chances are that among your employees there are plenty of amateur video enthusiasts, musicians and photographers. Ask them for ideas on content and presentation. If you want to test their ideas before going public, try it out first on the corporate intranet.

==

Treasures in the company attic

By Aline van Duyn

Published: January 29 2007 17:36 | Last updated: January 29 2007 17:36

Not long ago, one of the biggest software companies in the US decided it wanted to take the plunge into the digital world and spend a much larger part of its budget on online advertising.

The process quickly ran into a problem. Once people clicked on the search results or the online banner ads, they were directed to a website. The snag was that there was no money to create new content for this site; most of the software company’s budget had been spent on a snazzy, 30-second television advertisement which would not hold the interest of web users for long.

In desperation, the advertising executive in charge of the account walked around the company’s US headquarters in a hunt for content. He found a room full of tapes of footage of every speech ever given at a conference by senior executives; he also found a store of magazines that were being published for company employees and its clients.

“These parts of the company never had to talk to each other before,” says the advertising executive, who did not want to identify his client. “Finding this was just what we needed, though. After getting rid of content that was out of date and after finding out what we did and didn’t have the rights to use, there was enough there to create a very interesting website. Companies sometimes have more content than they realise.”

This story is being repeated across the globe as companies increasingly put the web at the centre of their advertising strategy yet struggle to find content to put on their sites.

It is already clear that media consumption is changing. The widespread use of high-speed internet connections allows people to watch video on the web and exchange video, pictures and text with others online. PwC, the consultancy, estimates that 187m households around the world have broadband internet access, up from 30m in 2001. Within three years, the figure is expected to reach 433m worldwide.

Advertising and marketing campaigns therefore have to adapt. “What was once a one-way, static dialogue with the consumer is now a network of dynamic conversations,” a recent report on advertising by PwC concluded. “Campaigns built entirely around broad messages, faceless audiences and mass distribution are becoming a thing of the past.”

In addition, the lines between traditional advertising and online advertising are blurring. Traditional ads, which lack the interactivity of the internet, are increasingly being used to encourage people to visit websites, where they can get more information or be urged to buy something.

A good example is an online initiative by advertisers such as Doritos, Alka Seltzer and Chevy cars ahead of next weekend’s SuperBowl, the American football final, which have one of the world’s biggest live audiences with an estimated 90m viewers.

These companies are attempting to generate excitement with websites seeking entries for amateur ads that will then be aired on TV (plopplopfizzfizz.com and chevycollegead.com). The advertisers are hoping that people will return to the web to look for the ads after seeing them broadcast.

Measuring the links between online and offline advertising is difficult, but increasingly search usage is being used as a proxy to gauge the effectiveness of traditional advertising.

“Search provides a perfect bridge between offline and online,” says Peter Hershberg, managing partner at Reprise Media. “We know people do not randomly end up in a search box, and by measuring search after a commercial we can measure how much brands are resonating with consumers.”

So how should a compelling company site be built? The most effective include different kinds of content, including video, audio and interactive features.

Cisco, the US maker of network switches and routers, says it has recently “significantly increased” its spending on the web, and it has begun posting more video and audio content on technology subjects.

“We are embracing the web as our basic platform for all our communications,” says Kelly Hemmingway, senior broadcast producer at Cisco. “Two years ago, webcasts were a combination of PowerPoint presentations and audio. We have changed the model . . . and introduced a [video] news-style format last September.”

As well as news-based video reports, Cisco is putting up regular podcasts. These audio recordings, which can be downloaded on to iPods or other portable music devices, are available on Apple’s iTunes website for free, meaning that Cisco can reach an audience previously beyond its reach.

“We have set up our own broadcast network for customers, which aims to demystify technology . . . It is extending our reach with a new engaging type of content,” says Maureen Hands, new media broadcast producer at Cisco.

The video services also showcase one of Cisco’s products, which it calls “a YouTube for enterprise”. Last year, its audience for news@cisco exceeded 1m, and the company reports a good response to the podcasts, which started in September.

One of the features of the Cisco initiative is to get staff involved, and executives have been surprised how many of the company’s programmers enjoy doubling up as reporters and editors.

At Intercontinental Hotels, the staff are already part of its advertising. But now, concierges in 134 countries are going to be the stars of the company’s web-based videos. Currently in production and due to roll out in a few months, the hotel group hired an outside company to make videos, which will cost $5,000 to $7,000 each.

“We have noticed a big focus [among our customers] on digital media because of the emergence of broadband,” says Jenifer Zeigler, senior vice-president of global brand management at Intercontinental Hotels, which spent $10m on training concierges for their new role.

“We had to strengthen our website because people have much higher expectations, and making these videos is a really cost-efficient way of doing that.”

Other sources of content are Intercontinental Hotels’ sponsorship of the Aston Martin racing team, which generates photos and video material, as well as its sponsorship of National Geographic photoshoots, which allows the hotel group to use the photographs on its website.

Even for companies that cannot take on such ambitious plans, there might be more available than they realise. For example, many banks and larger companies decorate their headquarters with impressive corporate art collections. These can be used to create a prominent visual feature online.

“Especially when companies join efforts with someone who has experience in presenting content, like a media company, they can do a lot with the information or knowledge they already have,” says Eric Bader, director of digital at MediaVest Worldwide, a media services agency.

Some inevitably get it wrong. Earthlink, the internet service provider, last year decided to re-use material from its radio advertising campaigns as content for podcasts. The initiative created such a storm of protest that the company decided to make fun of itself and start a competition for the worst possible podcast.

But there are ways to avoid looking out of touch. Cisco, for example, uses professional journalists to ensure its programmes do not contain too much jargon which often seeps into company-specific conversations, and to make subjects intelligible to new audiences.

“It is very costly [to create content] . . . but professional talent helps to raise the bar,” says Ms Hands.

Seven ways to bring the corporate website to life

■Print publications. Companies spend millions of dollars producing in-house publications, reports and catalogues or magazines for their clients. Once checked for topicality, accuracy and copyright, articles and pictures can be re-used on websites, perhaps grouped together in themes or with other relevant content.

■Conferences. The specialised conferences that companies organise for internal purposes or for clients often produce expert material that can be used as a theme within a website. When speaking at conferences, check whether you will be able to reproduce video or audio of your company’s contributions on its website.

■Sponsorship. Any corporate sponsorship of arts, sports, music and other events should be used to the full. Ensure the right to re-use content is part of the deal. Photographs can be used on the web, for example through the creation of slide shows, and music and video can help liven up a website.

■Corporate art. Investments in arts and antiques can be good for more than just decorating conference rooms. Photographs, combined with history, can create an interesting slide show or be used to illustrate other parts of the website.

■Archives. Sometimes corporate archives can be a source of interesting content – all owned by the company. Examples include a timeline of patents or a selection of photos of important moments in the company’s history.

■Old advertisements. Just as people like watching television programmes based on old advertising campaigns, or specials about the 1970s, 1980s or 1990s, old publicity material can provide interest by tracing the path of a company’s branding or product development.

■Employees. Chances are that among your employees there are plenty of amateur video enthusiasts, musicians and photographers. Ask them for ideas on content and presentation. If you want to test their ideas before going public, try it out first on the corporate intranet.

Copyright The Financial Times Limited 2007