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IBM's 'Watson' to Take On 'Jeopardy'

IBM said Monday that it plans to produce "Watson," a computing system designed to parse questions intelligently and respond in the manner in which it was intended. The goal? To knock off human contestants in "Jeopardy," in much the same way IBM's "Deep Blue" computer beat Garry Kasparov in chess. Watson will be forced to interpret the question, process puns and other word games, search through its database and determine the correct answer, all within less than a second -- the reaction time of "Jeopardy" players. The machine will not be connected to the Internet, but will have to parse its own database of content.

[Estimated timeframe:Q2 2009-onward]

While IBM has apparently convinced Sony Pictures to stage a match against a Watson system, details of the taping (or if it will be taped) have yet to be disclosed. A Sony spokesman could not be reached for comment.

"The essence of making decisions is recognizing patterns in vast amounts of data, sorting through choices and options, and responding quickly and accurately," said Samuel J. Palmisano, IBM's chairman, president and chief executive officer, in a statement. "Watson is a compelling example of how the planet - companies, industries, cities - is becoming smarter. With advanced computing power and deep analytics, we can infuse business and societal systems with intelligence. This project is the latest example of IBM´s longstanding commitment to fundamental research and to overcoming grand challenges' in science and technology."

Like Deep Blue, IBM plans to take a massively parallel approach toward the problem, considering solutions, prioritizing some and discarding others. It´s a sort of holistic solution to a problem: part hardware, part software, brute force plus intuition.

It's also an interesting test of what search is evolving towards: not just matching keywords, but trying to intuit what the questioner is also asking. Getting to the heart of the question is also a part of what´s known as "business intelligence," or trying to find the interesting needles in a haystack of seemingly random data.

One can imagine similarities between these two phrases: "This highly prized form of corundum gets its red color from minute amounts of chromium." "This product commanded the highest margin during the month of June from our "Lifestyle product line." In this case, the answer could be the same for both: "rubies".

But could "Watson " also parse this clue: "Apes might enjoy eating these legumes." On its own, no. But under the heading of "anagrams," possibly. (The answer? "Peas".)

The New York Times reported that the Watson prototype for some reason interpreted a "sheet" as a fruit. Small glitch or fatal flaw? We´ll find out when the show airs.

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: PCmag.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=3946

Rise of the Advertising Robots

Big brands would love to advertise on small, niche-focused Web sites -- think Mountain Dew on blogs about windsurfing, or Gerber baby food on sites about vegetarian parenting -- but don't have the manpower to screen every site for quality content, let alone negotiate thousands of deals with different buyers.Yet publishers have it even worse, says Dan Cadogan, Yahoo's former head of global advertising. Editors who run small Web sites are so consumed producing content that titillates readers that they turn over their ad inventory to one of hundreds of resellers in exchange for pennies per view.

[Estimated timeframe:2009 onward]

Through his Pasadena, Calif., start-up OpenX, Cadogan is working on an application to alleviate the anxiety of both beleaguered ad buyers and frustrated Web publishers. OpenX recently unveiled Market, an application that allows advertisers to automatically bid on access to narrow niches of readers across an array of small Web sites.

OpenX is one of many outfits seeking to automate the selling of hyper-targeted digital ads on the Web. A slew of firms--ranging from tiny start-ups to Web giants like Google --have rolled out applications purporting to analyze online ad opportunities and help publishers and advertisers figure out how to allocate their respective ad inventories and budgets.

Many of these new applications promise to deploy demographic, geographic and personal interest data to identify attractive readers for advertisers wherever they land on the Web. Such micro-targeting may seem like a potential invasion of privacy, but user data analysis is an established practice. Most data collectors skirt privacy complaints by allowing Web users to block their tracking software.

The boom in new advertising optimization tools could reshape the $7.6 billion market for Internet display advertising. Leery of attaching the brand to sketchy Web content, big advertisers have historically preferred to deal with large Web publishers, such as the digital arms of newspapers and consumer magazines.

But ad tech executives and media planners say the new ad sales tools promise a cheap and efficient way for brands to screen and buy ads on smaller Web sites and blogs.

"These systems help advertisers cut through the clutter online, which will clearly help the 'long tail' publishers,'' says Kelly Twohig, a senior vice president at media planning agency Starcom in Chicago, whose clients include Allstate and Capital One.

The potential for a reallocation of ad budgets from big publishers to smaller rivals comes at a stressful time for media giants. The New York Times Co announced this week that Web ad sales fell 6% and overall ad revenues dropped 28% year-over-year during the first quarter of 2009.

Earlier this month, Gannett, publisher of 85 daily newspapers including USA Today, reported that quarterly revenue decline 18% compared to last year.

Publishers participate in the OpenX Market by entering their advertising inventory--the spaces on their Web pages where ads can appear--into an online database and set a floor price for each slot. If an advertiser bids above that minimum, their ad appears on the Web site.

Along with buying on specific Web sites, Cadogan says that ad buyers will be able to use third-party data on Web users' personal interest, browsing history and demographics to find desirable segments of readers across all publishers participating in the market. Web sites currently use OpenX's software to deliver an estimated 300 billion impressions each month.

In addition to the challenge of convincing marketers to spend their ad budgets in a drastically different way, outfits like OpenX have to figure out how to emerge as leaders in an already competitive field.

"We've seen half a billion dollars of venture capital poured into building optimization and planning companies,'' says Matthew Hulett, chief executive of ad network and analytics firm Mpire.

This week, Hulett's firm unveiled an application to help advertisers track on which Web sites networks place ads, where on the actual screen the ad appears and if Web surfers pause their cursor over the ad. The tool is intended to help marketers better figure out how much of their ad spending is essentially worthless.

Google and Yahoo! Both operate advertising exchanges that allow publishers to analyze how much revenue different ad sales techniques attract and help advertisers secure the best ad placement for the cheapest prices.

Rubicon Project, a two-year-old Los Angeles start-up that processes 40 billion impressions each month, helps Web sites compare ad prices delivered by different third-party ad brokers. This week, the company unveiled OnDemand, a service that lets advertisers automatically buy ads delivered to specific geographic, demographic and personal interest groups across a network of publishers.

PubMatic, a Silicon Valley start-up known in the ad world for publishing market reports on trends in ad prices, offers a similar optimization product aimed at big media companies' digital arms.

It's too early to say whether advertisers embrace the automated ad buying tools en masse. As people spend more of their lives online, marketers are desperate to reach them cheaply and efficiently. But, as Starcom media planner Twohig says, a human salesperson and trusted media product go a long way in attracting ad dollars.

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: Forbes.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=3940

Service Fees, Not Ads, Key to Japan's Online Success Amid Slump

Amid the gloomy economy, Web site operators that provide fee-based services are generally faring much better than those rely on advertising revenue.Gree Inc. (3632), which operates a social networking site, said on April 10 it expects a pretax profit of 3.87 billion yen for the year ending June on a parent-only basis, up 560% from a year earlier. This is its second earnings projection upgrade since it went public in December last year, highlighting the company's strong growth at a time when many other firms are reeling from the economic downturn.

[Estimated timeframe:2009-onward]

Unlike Mixi Inc, another key player in Japan's social networking service (SNS) industry, Gree does not depend on ad revenue, with 70% of its sales coming from games and other online content.

Gree offers its games and other basic content for free, but it charges users for items that can enhance their online experiences, such as a rod for a fishing game. Most of these items go for fairly low prices, at several hundred yen.

Gree´s membership surpassed the 10 million mark on April 5. President Yoshikazu Tanaka attributes the firm´s success to the easy and affordable access to its services.

DeNA Co. (2432), which provides auction and other online services using an earnings structure similar Gree´s, is also enjoying a sharp increase in profit. Once listed on the Tokyo Stock Exchange´s Mothers market for start-ups, the company has moved to the first section of the TSE.

Gourmet Navigator Inc. (2440), which operates a restaurant information Web site, is also thriving on its fee-based business model. More than 80% of its sales are from fees paid by restaurants. While this in some ways is akin to ad revenue, most ad contracts tend to be short-term deals, whereas Gourmet Navigator forges long-term contracts with restaurants that post their information on the site. Revenue from advertisers is highly sensitive to economic trends, but Gourmet Navigator´s income from restaurants is not.

Online businesses have the potential to create large customer bases at little cost, with most of the money going toward purchasing content and operating servers. Gree, for example, achieved a gross profit margin of 92% for the six months through December 2008. Operating profit at such firms can swing sharply upward when sales surpass projections, if sales and general administrative costs are kept in check.

But at Web businesses reliant on ad revenue, smaller ad volume, as well as costs related to introducing new services to offset the revenue decline, have weighed down profits.

Portal site operator Excite Japan Co. (3754), for example, appears to have suffered a drop in gross profit margin to 30-40% for fiscal 2008, from over 50% two years earlier. Ad revenue accounted for about 30% of total sales, down from roughly 50% for fiscal 2006.

According to data compiled by ad agency Dentsu Inc. (4324), ad spending in Japan fell 5% in 2008. Expenditures for online ads -- a growing field -- rose 16%, but because advertisers came to take a closer look at the effectiveness of their spending, only a handful of popular Web sites -- such as Yahoo! -- are drawing most of the demand.

Hiroshi Naya of Ichiyoshi Research Institute Inc. Said it is difficult for an Internet company to continue growing unless it is the leader in its area of business. This means it is important for companies to seek ways to set themselves apart from rivals.

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: Nikkei Japan
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=3949

Phorm Confident About Take-up Despite Amazon Opt-Out

Behavioural ad targeting company Phorm insists it is confident "most companies" will participate in its controversial system, despite Amazon's decision to opt out of its targeted ad technology.

[Estimated timeframe:2009-2012]

Behavioural ad targeting company Phorm insists it is confident "most companies" will participate in its controversial system, despite Amazon's decision to opt out of its targeted ad technology.

Amazon has requested to opt out of Phorm's online behavioural targeting technology, so that its customers' online activity will not be tracked online.

On Tuesday (14 April) the European Commission said it was taking legal action against the UK government for failing to act against Phorm's system, after receiving a raft of complaints about the company.

A spokesman for Amazon said: "We have contacted Webwise requesting we opt out [of Phorm] for all of our domains."

Phorm's targeted advertising system allows ISPs to track customers' activity online to target them with relevant ads. However, it has prompted controversy with rights campaigners surrounding issues of privacy.

Amazon's decision to opt out of Phorm's system will come as a huge blow for the company, with the online retailer being the second-most visited destination after eBay.co.uk among shopping and classified websites in the UK, according to Hitwise.

A spokesman for Phorm said: "We have allowed a procedure for opting out. However, we are very comfortable that most companies will be happy to participate in the open internet exchange in due course following deployment."

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: brandrepublic.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=3923

Making 'Old' Media New Again

It's make-or-break time for many newspapers. Denver and Seattle recently lost dailies, the Chicago Tribune and Sun-Times are both in bankruptcy, and owners of the Boston Globe and San Francisco Chronicle threaten closure. One reader mourned the loss of her local newspaper in Connecticut by lamenting that she had gone from living in a city to living off just another exit on Interstate 95. As comedian Stephen Colbert put it last week, "The impending death of the newspaper industry: Where will they print the obituary?"

[Estimated timeframe:2009-2012]

Creative destruction is blowing hard through the news industry, as digital technology gives readers access to endless sources of news but undermines the ability of publishers to support news departments. City newspapers are no longer the dominant way people get news or the main way advertisers reach consumers. The recession is accelerating these trends, with advertising so soft even Web-only news operations, which don't have the legacy costs of print, are now struggling to support journalism.

As the remaining city newspapers rethink themselves, editors and publishers might consult a road map for how newspapers can live alongside new media that was drawn up more than 50 years ago by Bernard Kilgore, outlined in a new biography by former Journal executive Richard Tofel, "Restless Genius: Barney Kilgore, The Wall Street Journal and the Invention of Modern Journalism."

Kilgore had remarkable judgment early about the journalistic issue of our day: how readers use old media, new media and both. When Kilgore became managing editor of the Journal in 1941, he inherited a business model that technology had undermined. Founded in 1889 to provide market news and stock prices to individual investors, the Journal lost half its circulation as this basic information became widely available.

Kilgore observed that then new media such as radio meant market news was available in real time. Some cities had a dozen newspapers that had gained the Journal's once-valuable ability to report share prices.

The Journal had to change. Technology increasingly meant readers would know the basic facts of news as it happened. He announced, "It doesn't have to have happened yesterday to be news," and said that people were more interested in what would happen tomorrow. He crafted the front page "What's News -- " column to summarize what had happened, but focused on explaining what the news meant.

On the morning after Pearl Harbor, other newspapers recounted the facts already known to all the day before through radio. The Journal's page-one story instead began, "War with Japan means industrial revolution in the United States." It outlined the implications for the economy, industry and commodity and financial markets.

Kilgore led the Journal's circulation to one million by the 1960s from 33,000 in the 1940s by adapting the newspaper to a role reflecting how people used different media for news. His rallying cry was, "The easiest thing in the world for a reader to do is to stop reading."

Business and financial news is different from the general news focus of city newspapers, but in 1958 the owners of the New York Herald Tribune approached Kilgore for help. Mr. Tofel uncovered a five-page memo Kilgore wrote them on how to keep city newspapers essential to readers. The Herald Tribune, he wrote, is "too much a newspaper that might be published in Philadelphia, Washington or Chicago just as readily as in metropolitan New York." Kilgore urged the "compact model newspaper." Readers valued their time, so the newspaper should have just one section, with larger editions on Sunday when people had more time to read.

His advice was clearly ahead of its time. The owners didn't heed it, and the Herald Tribune went out of business in 1967. But his observations on what readers want from city newspapers may be even more true in today's online world. Readers increasingly know yesterday what happened yesterday through Web sites, television and news alerts.

"Kilgore's first critical finding," Mr. Tofel wrote, was "that readers seek insight into tomorrow even more than an account of yesterday." This "may only now be getting through to many editors and publishers." Indeed, at a time when print readership is declining, The Economist, with its weekly focus on interpretation, is gaining circulation. The Journal continues to focus on what readers need, growing the number of individuals paying for the newspaper and the Web site.

If readers would prefer more-compact city newspapers, a less-is-more approach could help cut newsprint, printing, distribution and other costs that don't add to the journalism. Newspaper editors could craft a new, forward-looking role for print, alongside the what's-happening-right-now focus of digital news.

There's a lot of experimentation by editors around the country to find out what people want from their print and online news. For city newspapers on the brink, the Barney Kilgore approach might deliver some badly needed good news.

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: WSJ.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=3910

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