Pajama Entrepreneur

Geosign, a startup that raked in $160M in VC funding, blew up one year later after its business model — gaming the Google search engine — was effectively shut down via a change in Google’s algorithm. Read more here.

I live in Amsterdam, everyone should know that by looking at my Facebook profile. Yet, Facebook has inserted this ad for Blockbuster in my news feed. Totally irrelevant to me. This is nothing more than SPAM. In a few months, my news feed will be clogged with utterly useless ads. How do I opt out of Facebook spam?

A study conducted by the Stichting Kijkonderzoek (SKO) in the Netherlands estimates that 28 percent of Dutch households has a DVD or hard disk recorder that allows people to view TV shows and movies whenever they want, and skip advertisements. One quarter of households already has a flat screen TV. Digital TV is growing as well: 8 percent of households have a satellite dish and 4.6 percent have a subscription to Digitenne (KPN Telecom’s digital TV service).

Watching TV via the computer has already increase dramatically. At the end of last year 17 percent watched one or more TV programs on the computer. This is 5 percent more than the year before.

As more people are able to skip ads and watch TV on demand, where does a company that sells detergent advertise? How do brands that traditionally have managed to force people to watch their ads on TV deal with the new reality?

Posted on Rose Cantine last month:

•  Jason Calacanis on Internet pollution and how to stop it
• Users revolt: blog network turns out to be owned by a marketing agency

Here is a screenshot of my Facebook newsfeed dated 10 November 2007. Pay attention to the California Car Insurance sponsored ad in my feed. Is this all Facebook can do - insert stupid irrelevant sponsored ads about California car insurance to a person who lives in Amsterdam?

Facebook is purportedly worth $15 billion. If my company were worth even $1 billion, I would spend at least $100M working on a super-targeted advertising solution and with that kind of money, $100M, I could do it. First, I would definitely ask the person to whom I am showing the ads what he or she is interested in.

Clearly, I don’t live in California. Even without asking me, Facebook would have known NOT to show the ad. Who gets ripped off? The advertiser. Who gets annoyed? Me.

If this is all Facebook can muster, what can I expect next in my feed? Dog and cat food ads, even though I own no pets? Weight-loss diet ads even though I weigh 100 lbs (five feet four inches in height)?

Wouldn’t surprise me. Sloppy, unprofessional work from a company worth bucket loads of money. I am not impressed.

UPDATE: Several hours later, I see on the left hand side of my Facebook feeds, two ads delivered one after the other: (1) Botox and (2) Tired of Dating?

First, I do NOT need Botox. I may be 46 years old but I don’t have hideous wrinkles and the thought of getting large needle next to my head to inject poison sounds gruesome to me. Second, I don’t give a damn about dating or being tired of dating. Where the hell does Facebook get this idea that I need wrinkle-reducing treatments or help in my romantic life? Is my photo THAT bad?

Blyk has finally launched in the UK, with service coming to other European countries in 2008. I’ve been waiting for Blyk to begin its service because the model is totally different from that of other operators:

• only 16-24 year olds can get the service
• they get 43 minutes and 217 text messages free every month
• they agree to receive up to 6 messages per day from advertisers of their choice

Read more on Muniwireless.

This is a much more acceptable way of advertising that Pudding Media.

I don’t know whether to call Pudding Media the most loathesome business model in the world or the most cynical, or both. Pudding Media is the latest company to take advantage of the “free services in exchange for ads” business model. We’ve seen free Wi-Fi in exchange for viewing ads (MetroFi) and free mobile phone service supported by ads (Blyk).

Now comes Pudding Media, founded by two guys who used to do intelligence work for the military. You can see where they got their ideas. This is the ultimate monetization of phone surveillance or snooping. They have a web-based phone service that lets you call any phone number for free (in the US for now), but they (or rather their software) listen in on your conversations and display ads on your browser.

Here’s what the NY Times says:

. . . Pudding Media is eavesdropping on phone calls in order to display ads on the screen that are related to the conversation. Voice recognition software monitors the calls, selects ads based on what it hears and pushes the ads to the subscriber’s computer screen while he or she is still talking . . . The company’s model, of course, raises questions about the line between target advertising and violation of privacy. Consumer-brand companies are increasingly trying to use data about people to deliver different ads to them based on their demographics and behavior online. Pudding Media executives said that scanning the words used in phone calls was not substantially different from what Google does with e-mail. Still, even some advertising executives were wary of the concept.

You might think it’s not different from Gmail, Google’s free web-based mail service that delivers ads on the side. But I think it is. There’s something very intimate about phone calls and I would be completely freaked out if strangers, even if it were a software bot, were listening in on mine. Of course Pudding’s founders don’t think so, having been in the military intelligence business. Does it help them to have the former chief privacy officer of Microsoft on their advisory board? It depends on whether you think Microsoft is a friend or foe of privacy.

I think most people will be freaked out by the idea even though Pudding says they don’t record your conversations.

Where it might work well: the sex chat industry

But I can see where it would be quite popular: in the sex chat industry. The caller dials a number via Pudding’s web-based service, sees ads on the side while he or she is chatting — although I think this destroys the pay-per-chat business model of sex chat businesses unless they offer this free version to their customers in exchange for seeing ads on a web browser (and the ads actually make up the lose in revenue).