Category: Silicon Valley
Below at the bottom of this article is a graphical map of San Jose’s Halloween Eve earthquake. The epicenter of the quake is the red star in the center.
It happened a little after 8 p.m. while I was in class in law school (right arrow). The classroom was in a basement of a mid-rise building in downtown San Jose. As first there was a low rumbling… for about 5 seconds. It felt like a freight train going by.
Then BAM.. it was like someone took the floor and started shaking it up and down real hard and very fast. If you’ve ever driven your car into a ditch before – that’s how it felt. That lasted for about 5 or 6 more seconds.
Then it started to subside in a rolling fashion. That felt like the room was on a boat in heavy seas. It kinda made you queasy. During this part, I got up and headed for the door. That rolling lasted for a few more seconds and finally tapered off.
As you read this, a “few seconds” may not seem like much, but when adrenaline kicks in 10-15 seconds can feel like a LOOOOOOOOOOOONG time.
Where my home is in Mountain View (Left Arrow), the shaking was much less severe. My husband and our pets rode out the rumbles like seasoned veterans.
Me, being an Indiana boy, I think I handled the situation – which was the strongest earthquake I lived through – fine. But it did make enough of an impression on me that I decided to write about it here. (And make a map to boot.)
After a 10-minute break, my class resumed and Judge Ware, continued his lecture as if nothing happened. But with the student turmoil, he ended class early since many of the students were freaking out about being in a trapped basement if a bigger quake hit.
SAN JOSE, Calif. – The right to display firearms at gun shows on county fairgrounds is protected by the First Amendment of the U.S. Constitution, according to a San Francisco federal judge in an order issued this week.
The Sept. 27 ruling was part of the Nordyke v. King, (Case. No.: CV-99-04389) suit brought by gun hobbyists and gun show advocates Russell and Sally Nordyke. The Nordykes and a collection of other plaintiffs including the Madison Society, are suing Alameda County and the Board of Supervisors claiming their 1999 ordinance prohibiting guns on county property effectively bans gun shows and other legal displays of firearms in violation of constitutionally protected freedom of speech rights.
“The county could not have banned gun shows outright, they shouldn’t be allowed to ban them under the pretext of ‘public safet’.” Don Kilmer, the San Jose-based attorney representing the Nordykes said. “Gun Shows are cultural events and are protected by the First Amendment and the California Constitution’s Freedom of Expression Clause.”
In denying Alameda County’s motion to dismiss the case, U.S. District Court Judge Martin J. Jenkins agreed with the Nordykes that having guns at gun shows can be constitutionally protected “expressive conduct” – a form of free speech.
Judge Jenkins also said that the Nordykes have a viable claim that Alameda’s ordinance does, in fact, infringe on expressive conduct. The judge listed seven forms of protected speech that Alameda County’s ordinance may me infringing upon with its ban:
1. Advocacy that the Constitution’s Second Amendment should be interpreted to protect the right for an individual to bear arms.
2. Conveying a message that possession of guns is patriotic.
3. Celebrating and expressing solidarity or membership in the gun culture.
4. Expressing friendliness to gun owners.
5. Expressing support for the National Rifle Association’s or similar groups’ interpretations of the Second Amendment.
6. Displaying guns for educational, patriotic, political or commercial purposes.
7. Demonstration of support for private ownership of firearms.
Additionally, the judge found that the ordinance not only bans gun shows, it may ban ROTC or military veteran ceremonies which require firearms. For example, an American Legion 21-gun salute for a war hero at a funeral ceremony also is banned if the services are on Alameda County property.
“The County has admitted all along that its target was gun shows and the activities that take place at them.” Kilmer said from his San Jose law office. “Now its policy must stand up to fundamental, well-established rights that every American has under the First Amendment.”
American politicians from both parties routinely carry guns for political reasons. In the most recent presidential primaries, Sen. John Kerry invited the press to go pheasant hunting with him in October 2003 in the early caucus state of Iowa, knowing that published photos of him toting a rifle would attract the vote of gun owners.
“John Kerry’s photo-op aimed at hunters during the last election was the archetypical example of conveying a symbolic message by holding something in your hands, and letting your conduct speak for you.” Kilmer said.
With Judge Jenkins’ denial of Alameda County’s motion to dismiss, the case is proceeding to the trial level where Alameda County will have to defend its ordinance. Alameda County is represented by the Los-Angeles based law firm of Richards, Watson & Gershon.
After the New York Stock Exchange (NYSE) completes its acquisition of Chicago-based electronic trading company, Archipelago Holdings within the next 12 months, the impact will also be felt in San Francisco, California as the future of the 123-year-old Pacific Exchange (PCX) becomes murky.
This stems from a deal struck in January of this year, before the NYSE merger, when Archipelago struck a deal worth $83 million to take over operations of the San Francisco stock exchange and its 260 employees. All PCX operations are scheduled to be under Archipelago control by the end of September. Archipelago had planned to maintain the San Francisco operations.
As details were released Thursday of the April NYSE-Archipelago merger to the Securities and Exchange Commission, all Archipelago functions are to be folded into NYSE operations, including the PCX stock and options trading business. The report did not state whether or not the San Francisco employees would be kept after the merger is complete.
Started in 1882 at the San Francisco Stock Market, the Pacific Exchange, along with other regional stock exchanges, has suffered as customers shifted to electronic trading, which bypassed the need for stock exchange services in many instances.
According to a recent report by the United States Census Bureau, the pecking order of the most populous U.S. cities has changed. The report, issued June 30, shows in 2004 San Jose, with an estimated population of 904,522 is the nation’s 10th-largest city, overtaking Detroit with its smaller population of 900,198.
The U.S. Census traditionally releases population figures for the year previous to the date the figures are made public.
‘Capital of Silicon Valley’ still an unknown among Americans
According to a report in the San Jose Mercury News, Mayor Ron Gonzales is saying the new ranking may help people across the U.S. be more interested in San Jose and think of it as a world-class city. “It puts us in a very distinguished class,” he told the paper.
But for many, northern California’s largest city, the self-proclaimed “Capital of Silicon Valley” remains an enigma. In a country not noted for its geographical knowledge prowess, many Americans have no idea where San Jose actually is. Culturally, the city may be best known as the title location of a Dionne Warwick hit song with the ironic title, Do You Know the Way to San Jose?
Many locals claim the city suffers from a self esteem problem stretching back to 1852 when San Jose lost the honor of being the California state capital to Sacramento. Additionally, for most of its existence, San Jose has been overshadowed by its smaller and more glamorous neighbor to the north, San Francisco.
“San Francisco has been in the limelight since 1849, and it was the capital of everything west of the Mississippi – it was a huge presence in the psyche of the world, and we can never replace that,” David Vossbrink, San Jose city spokesman told the San Francisco Chronicle.
It doesn’t stop with San Francisco, San Jose is routinely outshined by other Bay Area cities such as Oakland, California, which is one-third its size. Additionally, the city’s own Silicon Valley suburbs, including Palo Alto and Cupertino, regularly steal the national spotlight from San Jose.
As far as the workkforce is concerned, San Jose continues to reel from the dot-com meltdown of the early 2000’s. With an unemployment rate of 5.5 percent, it has a higher jobless rate than the national average of 5.1 percent. For a couple of years after the 2000 tech crash, San Jose lost population as thousands of unemployed fled to look for work elsewhere.
But the city is on the mend and does have some legitimate bragging rights aside from sheer size. Despite the unemployment, San Jose is America’s wealthiest big city with an average household annual income of $70,000. It consistently ranks as “The Safest Big City in America,” according to FBI crime statistics as having the lowest violent crime rate for any U.S. city with a population over 500,000. The local public university, San Jose State is the largest within the California State University system.
Economically, an increasing number of large companies also are opting to call San Jose home, including Cisco Systems, Knight Ridder, eBay and Adobe Systems.
Slowdown in ‘Motown’ a long time coming
For many media outlets covering San Jose’s ascendence into the ranks of the United States’ Top 10 cities, the real story has been the decline of Detroit and its symbol as a Midwestern industrial giant.
For decades, Detroit, the self-styled “Motor City,” rested its fortunes with the American automobile industry. Each of the Big Three automobile manufacturers, General Motors, Ford, and Chrysler, maintained headquarters there.
But with the shift of the U.S. economy away from heavy industry to services and technology, cities like Detroit suffered, while cities like San Jose prospered.
Detroit’s decline in population is not a new phenomenon. In the 1950s, the city had a population of about 1.8 million, ranking as the fourth-largest U.S. city. But its fortunes started changing in the 1970s with the OPEC oil embargo and the rise of Japan as an automobile-producing powerhouse. As the city’s fortunes waned, many residents fled Detroit for the suburbs or opted to leave Michigan altogether.
“It’s part of a pattern for the heavily industrialized cities, but I think Detroit is a specific case. There’s been an ongoing dynamic here of people, middle-class people in Detroit, fleeing the city looking for better schools, better lifestyles, better services. So it has been a particularly hard fall,” Dana Johnson, chief economist at Comerica Bank in Detroit said in an interview with the New York Times.
Detroit has also been taking its knocks in recent statistics. Unlike San Jose’s reputation for being a safe place to live, Detroit tops the list of most violent U.S. big cities. In the past year, Time magazine named Detroit Mayor Kwame M. Kilpatrick among the worst mayors in the U.S.
Along with the exodus of people and 7.8 percent unemployment rate, Detroit harbors a sight unseen in San Jose, blocks of vacant housing. For years these vacant buildings have been the targets of arsonists on the so-called Devil’s Night, where blocks of homes have been set ablaze in Detroit.
Additionally, unlike San Jose, which is in the process of moving 1,800 employees into a new $388 million city hall and faces shortage of police officers, shrinking Detroit faces a $300 million budget deficit and the prospect of laying off 700 police and fire-fighting personnel in the next few months.
The Federal Bureau of Investigation is investigating allegations of wrongdoing in the building of a new $1.5 billion “skyway” portion of the San Francisco-Oakland Bay Bridge, according to a report published in the Oakland Tribune. The bridge spans the San Francisco Bay between Oakland and Yerba Buena Island. There are so far no criminal charges filed.
The paper reported that welders for KFM, the company under contract to build the bridge, told authorities they were pressured – and even paid monthly bonuses of between $200 and $600 – for performing substandard welds on the support piers for the bridge if it meant the project proceeded faster. But Caltrans, the state agency in charge of building the bridge said their inspectors checked the welds and determined the work, although rushed, met safety standards.
“We’ve got good welds, good procedures and everything is in place to have a quality product. If a defect got in, we can’t find it,” Pete Siegenthaler, Caltrans project manager told the Tribune in an interview. A KFM spokesman told the Tribune that the welds are in “compliance with stringent Caltrans specifications.”
According to a report by Oakland television station, KTVU, the Office of the Inspector General of the U.S. Department of Labor and the U.S. Department of Transportation are joining the FBI in the investigation of the matter. The federal government is getting involved in the investigation because more than $1 million in U.S. taxpayer money was spent during its construction.
If questionable welds are found in the support piers, according to reports, much of the new construction may have to be torn down to be rebuilt.
The current 68-year-old span was damaged in the 1989 Loma Prieta earthquake. At $6.2 billion total, the new bridge qualifies as the largest public works project in California’s history.
By David Speakman in Silicon Valley
Bill Miller is CEO of Valchemy, a San Mateo, California company founded in 2001 to provide application software to the M&A industry. Previously, he was an executive with Intel Capital, working with the company’s active equity investment and M&A programs.
05:00 Hit the alarm to turn it off, stumble downstairs to let dog out, then check email for 20 minutes. Send notes to members of the East Coast team after reviewing some of the proposals and presentations they plan on delivering on the today. Well over half of our customers and prospects are on the East Coast and we have a full team there.
05:30 Stretch and go out for short, dark, cool three-mile run. During the longer days of the year when there is more early light I sneak in a 15-20 mile bike ride in the mornings in the hills near where I live. It’s become an oft used cliché, but even a short run clears cobwebs and puts the right edge on the day for me. Additionally, one of the few contributions I make to the daily comings and goings of the busy Miller household is that I can take some of the energy out of our two year-old black lab early in the day.
06:00 Back home to check email, shower and change for work.
06:30 Wake up three children to get them started on their daily school routine.
06:45 Grab a bottle of water and head out to a breakfast meeting with a former Intel colleague who works as a venture capitalist.
07:00 The breakfast meeting starts. We reminisce about Intel and catch up on current business. I suggest some potential sales and marketing executive candidates for one of his recent investments, he agrees to introduce me to one of his portfolio companies which has an interesting technology that my technical guys want to learn about.
08:00 At the San Mateo offices I listen to a voicemail from the CFO who is working on a contract with a supplier. Since I’m on the phone, I call one of my board members to update him on a couple of executive candidates.
08:30 Finish checking messages and prioritize the day. This is what I call my personal ‘danger’ zone where if I am not disciplined about carving out at least 30 minutes in my morning to think about what is really important I end up not leading as effectively as I should. Leaders need to breathe deeply and make sure that they leave time to plan, think, and develop the perspective that they need to provide to their organization. If you make yourself an integral part of everything, you’ll never scale your organization and therefore never scale your business.
09:30 One-on-one meeting with the CFO to discuss our preliminary business plan for next year and plan out our executive offsite the following week where we will nail the key assumptions in the plan before we communicate the goals and commitments to the board at the end of the month. We identify the really key variables so we can focus my team time on those few key leverage points that will have the most impact on our growth next year.
11:00 Have hour-long telephone call with some executives from a potential services partner. This service provider may incorporate our products into their service offering.
12:30 Eat a quick lunch at my desk. Make a few more calls to some of those potential candidates to keep them ‘warm’ as we evaluate their fit and they meet with members of the team here.
13:00 Phone call with Sales VP, CFO, and attorney to go over the open items we still have on the contract we were negotiating last night.
14:00 Quick meeting with Marketing VP to review press releases on our two most recent customers.
14:30 I feel the need to get up and leave the office. I’ve spent too long inside, so I go for a quick walk outside to see the daylight and re-focus. I always joke that we are paying a lot for this Bay Area weather, so we ought to use it.
15:00 I get a call from our VP of Sales that the potential customer we’ve been in contract negotiations with wants to extend the technical evaluation for 4-6 weeks. This isn’t negotiable.
15:15 Get together with the VP of Sales and CTO to discuss what the prospect wants to spend additional time on, get myself comfortable that this is truly a technical, not a business, issue.
15:45 Quick exec team meeting to discuss the change in timing of this deal and make sure we have all the right people working on the extended evaluation, also talk through the impact to the business this and next quarter. The good news is that we were ahead of where we had planned to be for the quarter, so this push out of business into next quarter is not good, but manageable.
16:30 Since we are near the end of the quarter, I call primary investor and update him on the prospect’s change in timing. We discuss the impact of this on the numbers so that he is prepared to update his partners in his weekly partnership meeting. We also discuss the impact to the two firms currently looking to invest in Valchemy. Nobody likes to deliver less than great news, but my experience is that getting everything on the table in near real time increases the sense of shared ownership from all parties: my staff, employees, investors, even customers.
18:00 Just finished a near 90-minute telephone call with a new M&A deal guy at one of our existing customers. He doesn’t have a lot of deal experience and didn’t know how our application could help with his current deal with a lot of international subsidiaries and therefore complications. I spent a time hand-holding him, reassuring him of my personal experience at Intel working on international acquisitions. I also talked him through how the application could help him, specifically recommending a number of templates and best practices that he could follow to help him. It reminds me of how much I enjoyed the dynamics of doing deals, with every one a unique challenge. The challenge is striking that elusive balance, and then building a company that can do that again and again. That is the intellectual challenge that drives me.
By David Speakman in Silicon Valley
Sharon Wienbar is a director at BA Venture Partners, the Silicon Valley-based venture capital fund for Bank of America.
06:15 Wake up, shower, coffee and breakfast. I’m a creature of morning habit and have my cereal, milk and newspaper almost every day, even with early meetings. My husband gets up earlier than me so he can swim before heading to the office.
07:00 I dial in to a conference call for an out-of-town board meeting. One of my partners is on the board at this company, but our fund usually assigns two partners to each deal. During this call I keep my phone on mute much of the time, as my children come down for breakfast and get ready for school. They’re usually pretty good at being quiet while Mommy’s on the phone, and I have mastered a silent smooch for a good morning greeting. They are off to school at 8am.
08:30 One of my portfolio companies has a board conference call later this morning to approve a new financing. That deal has some issues we need to resolve beforehand, so I first check in with my co-lead investor to make sure we’re thinking about those issues the same way. My next call is to the company counsel to check out how we would implement various different scenarios. Next call is to update the CEO on the investor status and next steps. She’s not happy about a potential delay, but understands and is glad for the head’s up. The company’s not on the ropes, so a few days isn’t a big deal. In the span of 30 minutes I have multiple phone calls with each angel separately and some all together to discuss how we’ll jointly fund our company.
09:30 Another conference call. The CEO gives a business update, which is encouraging. Our big new contract is producing revenue, and other contracts are moving through the pipeline. The board’s special finance committee has met and recommends the company accept the investor terms. The problem is that not all the investors have agreed to the term sheet, so the issue is moot for now. The call ends early, but we will have a follow-up call on Friday.
10:30 I have a couple of interesting calls in voicemail today. Another fund wants to syndicate (share investment in) a new deal they’ve been working on that’s in an area I’m particularly focused on, Internet advertising. Return that straight away, but get voicemail. Another call is from another different Internet advertising exec; he saw an article I wrote for CNET on adware and spyware (http://news.com.com/The spyware inferno/2010-1032_3-5307831.html), and wants to know if I’m interested to invest in his company. Hot dog! That marketing stuff really works when we get a deal in that we might not have otherwise seen. The third interesting call is from the company counsel for a deal I saw several months ago, a digital music device for consumers. She wants feedback on why we turned the deal down.
12:00 Off-cycle partner meeting (lunch is served): We normally have partner meetings on Mondays. This week our hardware team is racing to get a hot deal they’ve been working on for weeks. On Monday we thought the company expected term sheets from new investors in another week or so, but another VC pre-empted with an early term sheet Monday night. We now have to decide whether we want to approve an investment and submit our own term sheet in competition. The partner on point does a great job explaining to us how he wants to mitigate the risk—of course it won’t go away, that’s our job. But he has ideas for how to structure the financing to make it attractive to all parties: management, the inside investors, and us. Our partner has in mind what the company will eventually be worth, thus how much we can afford to pay to make a decent return. We all agree with his suggestions and vote to approve the deal. Now he has the hard job of negotiating with the insiders. My brain hurts from thinking in short intense bursts about a technology area far from my own expertise. But this is exactly what’s fun about venture capital: never a dull moment, always learning something new.
14:00 A partner at an out-of-town, early-stage fund has scheduled a call with me. He has a portfolio company with some interesting technology that hasn’t yet generated revenue. He wants to see if one of my portfolio companies, already well along in revenue, wants to buy his company to expand its scope. I listen to the other VC, but then tell him we’ve already considered the idea and want to pass.
14:30 More phone calls with the angel investors who have additional questions about future financing requirements, cash burn, and deal terms. I remind myself to never be an angel investor.
15:00 I take lots of meetings with folks looking for a job—these meetings can be either a real drag or fun and useful, and it’s hard to tell what you’ll get going in to a meeting. This afternoon’s meeting is with a fellow who’s been a serial interim CEO (turns around companies while the board is looking for a new full time CEO) who is looking for a ‘permanent’ CEO position. After the meeting I introduce him by email to a top recruiter who frequently works in our portfolio.
16:00 In between meetings I grab a quick call with company counsel for the deal doing the financing. The lawyer thinks we are fine with the terms I’ve outlined with the angels. He agrees to start drafting a new term sheet and company financing documents with these terms even though we don’t have official board approval yet. Next, I meet a real candidate for a real job, CFO in one of my portfolio companies. The company plans an IPO next year, so a rock solid CFO is a must. Luckily they already have a strong management team and are in a ‘hot’ space, so attracting talent with our best recruiter has been pretty easy. The fellow this afternoon has done it all: IPO’s, international M&A, spin-outs and spin-ins, built finance and infrastructure from the ground up. We spend most of our time discussing the company and his relevant expertise, but then segue to an open-ended discussion of the online music business—if they pay, do customers want to buy music or ‘stream’ it? Why does Apple keep gaining share? Will Yahoo! succeed with MusicMatch, their hot new acquisition?
17:00 I try again to return the call from the potential co-investor who wants to share his new deal opportunity in internet advertising, and this time I get him on the line. He describes the company and potential investment, and it sounds good. I agree to rearrange my schedule for the next day to make an hour’s drive out to the East Bay to visit this company. We want to move quickly.
17:30 I am usually home for dinner, but tonight I have a business engagement, so I call home to check on the kids, their day, their homework, etc. My husband will be home shortly, so I check in with our babysitter, then yack with each of my kids. They are waiting for their Halloween costumes, ordered off eBay, to arrive. ‘When will my Juliet costume come?’ takes up most of the conversation after we’ve reviewed the status of homework.
18:30 Working dinner with two CEO’s in my portfolio who should know each other but don’t. They’re each deeply experienced in their field (consumer marketing) and have even at times been CEO’s of nearly competitive companies, but they’ve never met. I offered to introduce them, so tonight I host a dinner for the three of us at Chez Spencer, an informal French restaurant in a ratty, but freeway-close part of San Francisco. The conversation ranges widely; these two brilliant, extroverted entrepreneurs deliver delicious dinner conversation, which I merely observe part of the evening. After sharing one hazelnut parfait amongst the three of us, we call it a night. One of the CEO’s leaves, and the other and I have a quick intense discussion on our top CFO candidate. Time to drive home to the ‘burbs.
21:30 First things first at home, I keep my regular promise to my girls to tuck each one in with a kiss. They sleep through the nuzzling, but I like it! My husband tells me about his day, and we chat about the rest of the week. After catching up, I do a quick pass at email. I reply to a few items and decide the rest can wait till tomorrow. To unwind for a bit before bed I read, first the newspaper, then a couple of magazine stories. My book club assignment will have to wait for the weekend.
For: eFinancial Careers
Thanks to Sharon Wienbar, a director of BA Venture Partners, the venture capital arm of Bank of America. Familiar with the ‘Day in the Life…’ format, she forwarded eFinancialCareers this spoof email that has been circulating Silicon Valley’s VC community.
Wienbar says the original author is an anonymous CEO of a venture-backed startup firm; the email has been edited for profanity
For: eFinancial Careers
Madison Avenue is waking up to the limitless new opportunities in digital media.
While digital technology continues to rock the music and film industries, major players in the advertising world are paying close attention and smartening up.
Advertisers are devising innovative ways to target messages to specific audiences by embracing, rather than fleeing, new technologies. They are particularly keen, for instance, on understanding the role of commercial-skipping digital video recorders (DVRs) like TiVo, as well as the potential of placing ads on video games and throughout the Net.
One reason for the new interest: desperation. TV ads, once a stalwart of the brand-building community, no longer pay the same dividends. Younger people are watching less television than previous generations. According to October/November figures from audience monitor Nielsen Media Research, 7 percent fewer men between the ages of 18 and 34 were watching TV than in the same period of 2002. This is a new breed, raised on computers, movie rentals, dozens of cable channels, and video games.
Madison Avenue advertising executives won’t let this audience go without a fight. Why? Studies from sources including Advertising Age and the International Advertising Association indicate that consumer-buying habits of men under 35 are malleable and more receptive to advertising-inspired brand switching. (After 35, these studies say, brand loyalty is set in everything from deodorant to cars.)
Nielsen says the tune-out trend is highest among men between 18 and 24. That group is more likely to play video games or watch DVDs than kick back with TV programming. Advertisers are, in turn, adjusting their approach to fit the lifestyle of their audience. Case in point: as network TV ratings fell, annual video game sales have more than trebled from $6.5 billion in 2000 to a projected $20.8 billion in 2003, according to NPD Group and U.S. Bancorp Piper Jaffray. Agencies are in turn following the money beyond TV, collaborating with video game manufacturers to pay for product placements in the games. That is good news for video game makers, which are expected to rake in more than $700 million in advertising fees annually by 2005, according to data from Forrester Research and Jupiter Media. That is seven times more than in 2002.
Satellite and cable TV companies dependent upon TV viewers are also keeping a sharp eye on rapidly increasing DVR penetration (see chart). Many plan to provide the service in a two-pronged attack designed to both woo more customers and convince their current base to upgrade to premium services. This will further boost a mounting market; Nielsen says that DVR ownership grew by 50 percent over the last year to about 4 percent of U.S. households.
Advertisers are eager to tap into the underdeveloped potential of this growing audience. TiVo, one of the leading DVR platforms, is working with advertisers and audience measurement services to gauge viewer habits in extreme detail. Unlike Nielsen’s TV ratings, which measure viewing in 15-minute chunks, TiVo can break down data to the second. Advertisers get a clearer picture of ad campaign successes – and failures.
In 2004, advertisers utilize DVR technology to determine the specifics (houses, zip codes) of who watched, or skipped, their ads. They may also monitor which commercials are watched repeatedly, to better clue in on what is entertaining – and effective. With DVR technology, consumers can also request longer versions of commercials. It is an advertiser’s dream to spotlight special interest while increasing the cost-to-success ratio. Whether they are offering extended trailers of the next Lord of the Rings movie or ads for a new make of car, advertisers are managing DVRs as an advertisement delivery medium.
Meanwhile, the Internet will remain the king of targeted digital advertising in 2004. In a recent Forrester survey of 95 U.S. marketers and advertising agencies, Internet advertising captured the two highest planned growth areas next year with more than 60 percent of surveyors saying they planned to increase spending on digital advertising. More than 50 percent of respondents said they planned to spend more money on Web advertising, while only 20 percent planned to increase spending on traditional advertising print and broadcast.
The main driver is targeted search, a niche developed by Google, Goto.com, and Overture. Two years ago, advertisers were complaining that print-style Web banner advertising was ineffective. Today, they have been won over by the manner in which the Internet provides quick response from a targeted search, something neither print nor TV can offer.
The advertising industry is set to lead the media sector in 2004. Ad buyers at established firms are facing the global challenges of a digitally altered media landscape head on, intent on taking advantage of new opportunities to reach both specific niche and more broad-based target audiences.
PLAYERSGoogle, Yahoo: The titans of targeted search should reap most of the benefits as this already-profitable business grows.
Comcast, EchoStar, Hughes Electronics/News Corp, Time Warner: Look for these cable and satellite TV providers to push DVRs and more digital programming services to boost revenues.
Scientific-Atlanta: Looks to be the big set-top box winner as the two top cablers, Comcast and Time Warner, push DVR technology in 2004.
Atari, Electronic Arts, Microsoft, Vivendi Universal Games: Video game makers are set to increase revenues from in-game advertising product placement.
ALSO IN MOTIONAnti-spam crusaders: The election year prompts state and federal lawmakers to press passage of tougher anti-spam laws.
Search turf wars: Google and Yahoo, the current leaders in search-based advertising, face new competition from Microsoft, which plans to launch a similar service.
Interactive marketing: Interactive TV has been promised for years, but now with DVRs, digital cable and satellite infrastructures have finally emerged.
For: Red Herring