MONDAY, MAY 7, 2012
TECHNOLOGY
Quality over speed in new Internet domains ICANN sorry for abruptly shutting down
CULVER CITY: Reality TV producer Mark Burnett (center) is behind a new online advertising concept that goes beyond banners and search terms called Vimby. — MCT
Marketer helps advertisers express themselves via video LOS ANGELES: British television producer Mark Burnett turned program financing on its head a decade ago when he brought brands like Doritos and Mountain Dew as sponsors into the expensive, prime-time reality series “Survivor,” helping to defray costs. “Survivor” is considered a watershed in paid product placements, opening the floodgates to a projected $2.75 billion in spending this year on such shows as “The Tonight Show With Jay Leno,” WWE’s “Monday Night Raw,” “American Idol” and “Celebrity Apprentice.” Before “Survivor,” brands got promotional placements in exchange for use of a prop, such as a car, or as a bonus for buying commercial time. Burnett is now trying to bring that formula to the Web through his investment in the Vimby digital production studio. The Van Nuys, Calif., venture launched in 2005 with a network of filmmakers around the country who create original, short-form videos for Vimby’s website that now also may find a home on other sites including YouTube and Myspace. As part of Burnett’s investment in 2010, Vimby began rubbing elbows with such major advertisers as Aflac, General Mills, Macy’s, McDonald’s, Pepsi and Puma - helping these brands create their own content for distribution on YouTube or on a company’s Facebook page. “Mark Burnett said, ‘Guys, we need to build an arsenal, a bigger toolbox, working with General Mills, with Pepsi, doing stuff in a way that’s consistent, authentic and involves great story-telling,’ “ Vimby founder and Chief Executive Dean Waters said of the digital studio’s expanded focus. Under Burnett’s influence, Vimby’s filmmakers have widened the lens, creating stories not only for the Web but also for TV, as was the case with an MTV special that followed five young women to New York, where they competed to become a Seventeen Magazine cover model. On other occasions, brands pay Vimby to create content that the advertiser can use to build an online community or cultivate greater affinity with its consumers. Macy’s Million Dollar Makeover promotion drew 20,000 applicants from around the country, eight of whom were selected as finalists to participate in a realityTV-styled competition that attracted 1 million new fans to the retailer’s Facebook page. Burnett isn’t the first television producer whom brands have sought out to create high-quality, low-cost entertainment for the Web and beyond. Several other veterans from the traditional media world, including former top network executives such as ABC’s Lloyd Braun, NBC’s Ben Silverman and the WB’s Jordan Levin and independent producers like Jak Severson, also are looking to capture audiences as they move to these digital platforms. Big brands are tagging along, in hopes that such proven players can find their footing online. A significant portion of the US population goes online to check out YouTube videos, update their Facebook status or watch music videos and TV shows through services including Vevo and Hulu. Some 182 million Internet users spent an average of five hours a week on the Web in September and watched nearly 40 billion videos, according to ComScore Inc. Advertisers predictably are following the viewers online, with spending projected to reach $31.3 billion this year in the US - an increase of 20 percent over 2010, researcher EMarketer predicts. As new gadgets and services deliver entertainment to young, digitally savvy viewers, advertisers are scrambling to respond. Initially, brands took a direct marketing approach, focusing on buying search terms to spur sales of particular products. Although search advertising remains the single largest segment of spending on the Web, its growth has slowed as brands look for new ways to
connect with consumers. “Brands are starting to think more about, ‘How do we become the destination?’ “ said Jason Deal, digital director at the Initiative ad agency. “How do we create advertising that draws consumers to us, instead of solely interrupting people” through banners and search ads? The breadth of online experimentation is wide, from traditional sponsorships and product placements to “branded content” - in which advertisers use entertainment to communicate with audiences in an original way. Hyundai, for example, attracted attention to its sporty Veloster subcompact car by sponsoring a mash-up, in which five prominent DJs reinterpreted the traditional musical genres of classical, country, R&B, jazz and rock. The resulting documentary is promoted on Hyundai’s YouTube channel as well as a series of live events. “The marketing leadership at Hyundai had the mind-set that we have to become the content that consumers are looking for, not just a disruption,” Deal said. Severson, CEO of Thoughtful Media Group Inc., a digital studio, is seeking to emulate a formula that has succeeded for YouTube celebrities such as stand-up comedian Shay Carl, who has attracted more than 1 million regular followers (self-described ShayTards) and logged more than 14 million views since he began posting videos. “Their level of effectiveness in driving continual, sustained, religiously devoted audiences - there is nothing in the world like it,” Severson said. Severson is using actors and professional writers to construct his own YouTube personalities, in hopes of building a sizable enough audience to interest advertisers. One character, Monty, a middle-aged man who lives in his grandmother’s basement, delivers product reviews that comically veer into unrelated topics - such as his infatuation with actress Christina Ricci. So far Monty’s YouTube show, “What’s What,” doesn’t rank among YouTube’s most popular: It has about 7,900 subscribers. “It doesn’t happen on Day 1,” Severson said. One of the most enduring forms of advertising - paid product placements already has taken root on digital platforms. The practice dates back to Charles Dickens, whose novel “The Pickwick Papers” draws its title from the carriage line from the author’s time, according to Patrick Quinn, president of PQ Media, a research firm. Now a film and television staple, paid product placements are expected to reach $55 million online this year, Quinn said. Lady Gaga’s 2010 “Telephone” music video illustrates how eager brands are to integrate their products into a piece of popular online content - the assortment included the Plenty of Fish dating service, Virgin Mobile phones, Polaroid cameras, Wonder Bread and Miracle Whip. “The video generated nearly 4 million views on YouTube in the first 24 hours and more than 20 million by the end of the first week of release on YouTube and Vevo,” said Patrick Quinn, president of PQ Media. Lady Gaga “did the same in the ‘Bad Romance’ video. ... She basically has become the product placement star. Brands and agencies love her right now.” Burnett made his own leap into Vimby short for Video in My Backyard - after one of his former executive TV producers introduced him to the company and its network of 70 filmmakers (it now boasts 150). Vimby’s chief creative officer, David Goffin, talked about the value of low-cost, high-quality production of video to be viewed on multiple screens. “Mark saw on instinct that there was something here,” Goffin said. “I play Rosetta Stone, translating between the world Dean had and that Mark knew.”—MCT
NEW YORK: The organization in charge of expanding the number of Internet address suffixes - the “.com” part of domain names - is apologizing for delays but says it’s favouring “quality, not speed.” Three weeks ago, the Internet Corporation for Assigned Names and Numbers abruptly shut down a system for letting companies and organizations propose new suffixes, after it discovered a software glitch that exposed some private data. At the time, ICANN planned to reopen the system within four business days. The system remains suspended indefinitely. “We’ve very focused on the quality of what we do,” ICANN CEO Rod Beckstrom said. “We take this very seriously. That’s why we’re moving very methodologically and professionally.” In an interview with The Associated Press last week, Beckstrom added, “We apologize for the delay, but we’re committed to getting this right.” ICANN has said it needed time to figure out why the software failed and how to fix it. That was completed last week, Beckstrom said, but ICANN still must undergo extensive testing on the fixes and inform companies and organizations whose data had been exposed. He declined to offer a timetable; ICANN said Friday that it planned to provide an update after tomorrow. Up to 1,000 domain name suffixes could be added each year in the most sweeping change to the domain name system since its creation in the 1980s. The idea is to let Las Vegas hotels, casinos and other attractions congregate around “.Vegas,” or a company such as Canon Inc. draw customers to “cameras.Canon” or “printers.Canon.” The new system will also make
Chinese, Japanese and Swahili versions of “.com” possible. After several years of deliberations, ICANN began accepting applications in midJanuary. The application window was to have closed on April 12 - the same day ICANN had to shut down the system, just hours before the deadline. The glitch did not affect general availability of the Internet’s domain name system the databases that let Internet-connected computers know where to send email and locate websites. It also did not affect the ability to register new names under existing suffixes. Rather, the glitch was with the software ICANN had set up to take applications for new suffixes. The proposals were supposed to be confidential until the application period closed. The software glitch allowed some applicants to view data about others, including potential competitors. The data were limited to file names and usernames, not the contents of the files. But those names in some cases offered clues about which companies were proposing what suffixes, Beckstrom said. Knowing that could allow an applicant to change a proposal and gain an advantage. ICANN believes that 105 applicants might have had data viewed by others, while 50 applicants might have seen information on others inadvertently, ICANN believes. That’s out of 1,268 registered applicants, each of which can submit as many as 50 suffix proposals. Beckstrom said that once the system reopens, ICANN will monitor applicants to determine whether they make adjustments based on what they might have seen. Applicants will also have at least a week to make sure their data didn’t
get lost or corrupted. The delay shouldn’t have a major effect on the availability of new suffixes, as the new names won’t appear in general use until at least next spring - in many cases, much later. Late Friday, ICANN said it had received 2,091 suffix proposals - fully completed or in progress - and another 214 for which it was still awaiting or processing application fees. That means applications will be divided into at least four batches of about 500 each, potentially stretching the review process over a few years. The bigger damage could be in the longterm confidence in ICANN. Even before the glitch was discovered, opponents of the domain-name expansion questioned ICANN’s ability to roll out new suffixes smoothly. Beckstrom said all organizations encounter technical problems, and he said ICANN hopes to retain people’s confidence by resolving the problems and communicating well. ICANN did not say what suffixes were proposed. It plans to release a list a few weeks after the application window closes, after which it will accept challenges for trademark and other issues. ICANN said Friday that it had received $350 million in applications fees so far. Each application costs $185,000, and winners will have to pay $25,000 a year. The money will pay for ICANN’s costs setting up the system, reviewing applications and making sure parties do what they have promised once the suffix is operational. Some of the money will be set aside for potential lawsuits from unsuccessful applicants and others. Companies can make money by selling names under approved suffixes. — AP
Startups give consumers more control over health SAN JOSE: When new mom Leah Dillon needed advice for her son’s first fever, she wondered where to turn. Recently arrived in Palo Alto, Calif., she couldn’t ask neighbours for guidance and wasn’t sure if she should page her son’s pediatrician in the dead of night. So Dillon went to a website called HealthTap, unveiled this spring by a startup in her neighborhood. An interactive Q&A database walked her through a set of recommendations_from doctors, not just anybody with an opinion and a keyboard. “The Internet is so vast, you don’t know where you’re getting your information from,” she said. “It gives me more confidence if it’s backed by pediatricians.” The arrival of a new child also set Robert Auguste looking for technological help, but with spending, not symptoms. “All of the hospital bills started coming in, and I said, ‘I have no idea how I’m going to get through all of this,’ “ said the consultant in Greenwich, Conn. “They’re all from different companies, and it’s confusing.” Then Auguste read about another Palo Alto, Calif., startup, called Simplee, which promised help organizing medical bills; he immediately signed on for the beta. “I went to this one dashboard and I could see, ‘These bills are all related to the hospital; these are from the doctor.’ It adds a whole level of simplicity.” HealthTap and Simplee are part of a growing wave of Web 2.0 startups that are using mobile and social technology to give consumers more control over their health. From turning smartphones into diagnostic tools to helping users shop for health plans and providers, these young companies hope to bring Silicon Valley knowhow to bear on age-old problems. “There’s a ton of interest in this area, and for good reason: There hasn’t been a lot of progress in applying information technology to health care,” said Derik Pridmore of Founders Fund, the San Francisco venture capital firm launched by the co-founders of PayPal and Facebook. Among his firm’s investments are ZocDoc, which lets patients instantly book medical appointments online, and Practice Fusion, which gives doctors and
patients more control over medical records. Practice Fusion CEO Ryan Howard realized the need for such a system while working for Brown & Toland, a network of more than 800 San Francisco Bay Area physicians. “I started seeing a massive problem - the claims systems were so disparate,” he said. “And I started thinking about patient records, which are even more complex.” Howard, who previously had built supply-chain technology to help companies like Wal-Mart find small suppliers, began noodling on a way to connect doctors to pharmacies, labs, and insurance companies
Management and Felicis Ventures. Despite the failure of Google Health, which aimed to let consumers input and update their health records online, Howard has high hopes for a feature that lets doctors in his network give their patients access to their charts, medications and immunization histories. “Right now we’re sort of Salesforce for doctors,” Howard said. “We’ll be at 100 million patients next year, which will let us become Facebook for patients.” He talks of letting users put together online wellness plans with social gaming-type rewards and use “clinical crowdsourcing” to share information about their
PALO ALTO: Leah Dillon uses a computer program called HealthTap that gives health advice and keeps her from unnecessary trips to the pediatrician. —MCT and ensure a secure flow of patient health information. Practice Fusion, rolled out in late 2007, provides the system for free to nearly 100,000 doctors and nurses, making money by placing ads on the platform. “It literally prevents the doctor from prescribing a medication that the patient will have an adverse reaction to,” Pridmore said. And while the road to broader adoption of electronic health records has been potholed - Google last month said it would close down its 3-year-old Google Health initiative - investors have been bullish on Practice Fusion, with Pridmore’s firm leading a $23 million April venture funding round that also included Artis Capital
own conditions with other patients. Helping patients by helping doctors was also the idea behind HealthTap. CEO Ron Gutman, who led an interdisciplinary research team on personal health while a graduate student at Stanford University and later founded Wellsphere, an online community of health writers, launched his latest venture in April. Within two months, it had added more than 1,200 board-certified doctors in all 50 states. “We want to bring the doctor back into the center of the discussion,” he said, “because if not, it’s the blind leading the blind.” (Gutman’s wife, incidentally, is a retinal surgeon.) What powers HealthTap is not just the database culled from peer-
reviewed medical articles and curated by physicians, but a search algorithm that asks patients questions as they describe symptoms_much the way a doctor would during a visit. Gutman says the software provides better search results and gives patients a personalized “prep sheet” they can take to doctor’s visits, making them shorter and less costly. Users like Dillon appear to be sold. “As a new mom, you’re constantly worried about every little thing, but you can’t see your doctor every day,” she said. “This is going to be my onestop shop for health care. It saved me a trip in the middle of the night, it saved me money, and it works.” As for Simplee, which only came out of beta June 30, it too has its roots in a parent’s search for answers. CEO Tomer Shoval, who at the time was a managing director of eBay’s Shopping.com, had a “horrifying,” flu-filled Mexican vacation in 2009, an experience made worse once the family arrived home and was inundated with invoices from medical providers and obtuse benefit statements from their insurance company. “Each of them comes in a different format; you’re not really sure if you’ve paid them or not,” he said. “It kind of hit me that this is really broken.” So Shoval left eBay last summer and in May began the beta, which he said included several thousand people covered by eight of the biggest insurance companies. Once users register, Simplee pulls together information from their insurers on recent medical visits, out-of-pocket expenses and so forth. The software will also email a user to say a doctor’s bill is on the way or remind them to take advantage of health plan benefits like free immunizations. “The average family spends more than $3,000 a year on out-ofpocket expenses, and it’s increasing every year,” said Shoval. “We can’t afford to ignore this anymore.” The service is free to consumers. And Shoval, whose 15-person company has landed $1.5 million in venture backing from Greylock Israel and others, plans to add a recommendation engine that would look at a person’s insurance history and suggest new health plans based on their historical consumption of care. —MCT
I more than ‘like’ you Company diversifies Facebook buttons MINNEAPOLIS: Sure, you can “like” a store on Facebook, but you can’t easily tell all your friends you “want” that new pair of jeans, “love” that handbag or “own” that sleek electric guitar. Minneapolisbased 8thBridge Inc. is seeking to shake up the world of Facebook by adding these new buttons of endearment linked to the social media site. It hopes the options will encourage Facebook users to broadcast their shopping desires on their pages - and make the social media site all the more attractive to advertisers. The firm had centred its business on encouraging users to buy items directly on Facebook, but retail sales never took off because most consumers still prefer to shop on a retailer’s website. So now, 8thBridge is doubling down on Facebook, surmising that if users broadcast their shopping opinions to their friends, advertisers will be interested. “It’s word-of-mouth marketing. That’s where the value is,” said Wade Gerten, CEO of 8thBridge. A consumer can click on the words “want,” “love” and “have” next to a dress on American
Apparel’s website, prompting a post on their Facebook page. Friends will be able to view the selected item on Facebook and can even go to the company’s retail website to purchase the product. Analysts said they believe 8thBridge’s new Facebook marketing tool, called Graphite, will help boost sales for retailers. Now, Facebook users will be able to differentiate if their friends want an item or if they already have it. In addition, the retailer will be able to know what consumers are interested in buying and could offer them a discount for wanting that dress. “It’s almost like your gift registry, but it isn’t around your birthday,” said Mike Gatti, senior vice president of member relations for the National Retail Federation. “It’s all the time.” Already, more than a dozen retailers from Guitar Center to Oscar de la Renta have signed up for the new marketing tool, generating more in sales for 8thBridge than what it made during all of last year. Companies pay on average $5,000 a month to use the tool and a one-time subscription fee, which costs less than $10,000, Gerten said. As a
result of the signing up, each brand gets to pick its own expressions to post on Facebook. More companies are ramping up their marketing budget on Facebook because of the intimate way they can connect to the consumer and their friends. This year, companies worldwide will spend $7.7 billion on social network advertising, according to data analytics firm eMarketer Inc. “I think every retailer is exploring this space now. They have to,” said Tim Brunelle, president of the Minnesota Interactive Marketing Association. “There’s a greater cost to not experimenting. So why not give it a shot?” Stacey Shulman, chief information officer of American Apparel, said 8thBridge’s tool fits in well with the retailer’s social media strategy. “It allows us to get detailed insights about the popularity of our products beyond the ‘like’ button,” Shulman said in a statement. Indeed, 8thBridge says 57 percent of consumers who click the “like” button on Facebook already have the product, according to its own survey. That may have alienated some shoppers who wished to
Wade Gerten, is CEO of Minneapolis-based 8thBridge, whose new Facebook marketing tool, called Graphite, will help boost sales for retailers, analysts say. — MCT express their relationship to the brand in a different way, the firm said. 8thBridge is known for launching the first store on Facebook in 2009 for 1-800-Flowers.com. The company was founded in 2008 and is a winner of the Minnesota entrepreneurial competition Minnesota Cup. Gerten declined to state the exact
number of employees, but said it is in the 30-person range. Last week, Gerten toasted his team, investors and friends for 8thBridge’s new product launch at a gathering at the Crooked Pint Ale House in Minneapolis. “The hard part is over, and now it’s party time,” Gerten said as he greeted his guests. — MCT