by Dana Blankenhorn
Volume IV, No. L
For the Week of December 11, 2000

This Week's Clue: One Pixel Gifs

This Week's Clue: One Pixel Gifs

SSP (Shameless Self Promotion)

Go East, Young Man

Click Here

Doubleclick's Salvation

Clued-in, Clueless

Starting in January "One Pixel GIFs" will replace hanging chads as the national obsession.

The new Congress, anxious to appear both credible and Clued-in concerning online issues, will launch hearings on Internet privacy and quickly move a bill (probably one with John McCain's name on it) aimed at halting abuses. One target will undoubtedly be the use and misuse of one pixel GIFs.

These GIFs, if you don't know, are invisible to the naked eye but can be attached to e-mails, not just Web pages. Like cookies they can be made persistent, meaning they'll report back on everything the user they're assigned to does. Since they're invisible they can provide a wealth of useless data. They can tell e-mail marketers if a message has been opened, if so how often, and what the user did with it after opening it. This can be useful, but the tracking can also be taken to extremes. The GIFs are forwarded with the message, and when clicked on they also launch cookies that track what these recipients were doing with their machines.

There is a ton of ignorance out there about "Internet Privacy" and a burning desire among the press and public to expose the threat and punish the wrongdoers. The desire to expose, to legislate, and to prosecute sloppy Internet salesmen is a natural impulse following this year's Internet Recession. It's part of the search for scapegoats that always follows a disaster. 

The industry figures that lobbying and campaign contributions in the right places will solve the problem. That's great when times are good. When times are bad, when the politicians you're giving the money to feel threatened, it's easier for them to demagogue, and their demands for action will only intensify. (That's the problem with politicians - they don't stay bought. If it's a choice between survival and the people who bought 'em, they'll pick survival every time.) 

The private answer to the real threat is for corporate Intranets to disable the GIFs, or force all browsers in a company to refuse cookies. What this does is make it impossible for sites to customize themselves for individual users. In other words, private actions against One Pixel GIFs may be worse for marketers than public efforts to keep them from being abused, and to punish those who abuse them. 

The industry will say in the hearings that it doesn't want the technology misused, and all the companies involved will claim they would never condone the use of GIFs to track users and report on their movements. My guess is they won't be believed. They shouldn't be believed. Credibility is the coin of the realm in politics, and the Internet industry doesn't have any. 

So a bill will come out. The only question is whether it will be one the industry can live with. And don't go depending on a veto, either. The next President (whoever it is) will be the weakest we've had since the 19th century. 

The Internet offers plenty of opportunities for people to grandstand, demagogue, and appear to take action against evildoers while, in fact, only creating complication and Balkanizing the Web. In its action against Yahoo's auctions of Nazi memorabilia France pointed the way. The next year will see dozens of national (read local) laws seeking sway over every aspect of online life, dragging people who think they're in cyberspace back into the real world, and putting them back under the control of familiar tyrannies. 

The whole fight will make for strange bedfellows. One World activists will find themselves defending all sorts of strange, seemingly indefensible (on a local level) actions. It will be fun to cover, but no fun to be victimized by the new War over Privacy. And the war will start with One Pixel GIFs. 

SSP (Shameless Self-Promotion)

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Takes on the News

Go East, Young Man

I'm tired of talking about the recession. Let's talk about opportunity.

According to eMarketer, a New York market research firm which creates a consensus of everyone else's estimates, the key to success for the next few years is to look overseas for growth, especially toward Asia.

In "The eGlobal Report" for November 2000 , all the aggressive growth estimates for Asia have been raised. The number of actual Internet users age 14 and up, previously thought to be 37.8 million, is now seen as 48.7 million. The numbers for 2004 have also been goosed up, from 113.8 million to 173 million.

That's just the tip of the iceberg. In terms of wireless Internet access, what you'll see in Asia will dwarf anything seen before. For all the excitement over Asian acceptance of wireless data, there were just 4.3 million of them in all of Asia, the bulk in Japan, in 1999. By 2003 that figure will be 184.3 million, out of a total wireless Web population of 329.4 million.

The bulk of this growth will go to Asian companies, of course. China, where the rule of law is a mask for corruption, may be the biggest winner. But there are plenty of other big opportunities out there. I would look especially closely at India, where Bangalore and Hyderabad are becoming the San Jose and Boston of the subcontinent, and where English is commonly spoken.

Any agreement in this area must be fair to both sides. You may be able to offer content, the expertise of a market maker, or access to some U.S. resources Indian companies feel they need -- especially capital resources. Indian companies have the market, and they should take the lead.

The "brain drain" that has filled U.S. technology companies (and banking houses) with Indian names is going to head in the other direction over the next few years. In the process many U.S.-based Indians are going to be hosed, thinking they will be welcome when in fact they're now foreigners. The key to success will be to have trustworthy business partners on the ground, partners who will not over-promise, and who have credibility in the local community. (That's credibility with customers, not just credibility with local politicians.)

This advice is true in spades elsewhere in Asia although I really think India will lead the way. They have more transparency in their markets, more real democracy, and more individual liberty than ever before. Not as much as we have, but the direction is right. Independent business partners with credibility in local markets can take your technologies, your products, and your services and help you build great businesses. Just don't forget to rack up lots of frequent flyer miles before signing off on anything. Eyeball these folks, learn their business language as well as their spoken language, or just wait for them to come to you.

While the biggest growth will be in Asia, the real numbers won't look too shabby here either. Again according to eMarketer the worldwide penetration of the Internet is rising quickly. Only about 5% of adults worldwide are online now, eMarketer estimates. By 2004 the figure will be 14%, a total of 620 million people.

What is the bottom line? There's big growth ahead. The eMarketer consensus estimate for business to consumer revenues worldwide now stands at $428 billion in 2004, up from $60 billion this year. And worldwide online advertising will continue to boom as well. It totaled $4.34 billion last year. It will be almost $19 billion in 2002, $26.12 billion in 2003.

Those companies that survive the current recession, in other words, will see a boom that will make the last wave look like nothing.

Click Here

This should be from the Department of the Obvious Department. Do you know which banner ads get clicked most often? According to Beyond Interactive co-founder Darian Heyman, it's those that have "click here" on them, and prominently .

At first glance this sounds silly. But it works. At second glance this should tell you just how weak banners are as a sales medium. But "click here" does work - especially for direct sales.

The real lesson here is even simpler. All ads, no matter what the medium, need some call to action. The action in a branding ad could be memorizing a jingle, a slogan, or some piece of business. (Wasssup!) In the case of direct marketing the call to action must lead to a sale.

I have said for many years that online advertising by itself is useless as a content revenue stream. The Web lets you lead someone down the entire sales funnel, it lets you complete the sale, and it lets you perform customer service functions. Content sites need to help their business partners do all these things, and extract a share of the value they create while doing so.

But do click here .

Doubleclick's Salvation

It has become very fashionable lately to dump on Doubleclick. (I've done it many times.)

But the problems of the current Internet recession are creating a valid business model for the ad network it should seize upon. Left and right, sites are laying-off their sales staffs and looking, essentially, for rep firms. Real Networks' Rivals.Com is just one example of the trend .

Consider all the elements that go into the creation and placement of advertising. Doubleclick is in some of these areas, but not all of them. They're mainly involved in the execution of campaigns and on follow-up research. All this is based on technology. If they represent anything, it's the network, not the individual sites on it.

But just as TV buyers buy ads on shows, not on networks, and "spot" buys always draw a high CP/M than the upfront, so it is on the Web. Representing individual properties, by themselves, will always draw the biggest money, not just for the sites but for their handlers. Until now the big ad firms have let the biggest sites do this on their own. Now the sites are abandoning the job - the time has come to move in.

Clued-in, Clueless

Clued-in is New Jersey Judge Kenneth C. MacKenzie of Superior Court in Morristown, who ruled that Dendrite International has no right to the identities of anonymous posters who, in fact, did it no material harm. It's the first victory for anonymous sourcing on the Net. A key Clue for the 21st century - there is a First Amendment right to anonymous speech.

Clueless is Mark Cuban , Broadcast.Com founder and now owner of the Dallas Mavericks NBA team. Cuban spammed 1,000 friends with a NBA all-star ballot pre-punched for his stars, with all recipients identified in the "to" field. Cuban then blamed a "configuration problem" for the spam. It's his brain that has the configuration problem, not the PC.

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