This morning, the New York-based company handed out pink slips to about 25 employees, or about 35 percent of its staff, according to a source familiar with the matter.

Lot18 will now employ 46, half as many as it did a year ago.

It is the second layoff in the past year for the startup, which started selling wine online in November 2010.

The first round was tied to the discontinuation of its travel and food businesses, which it had expanded into shortly before raising $30 million in venture capital in late 2011. Investors include Accel Partners, New Enterprise Associates and FirstMark Capital.

This time, the layoffs are connected to a shift in strategy. Rather than exclusively operate as a flash sales company, which sells bottles of wine at a discount to a free membership base, it will also try to sell wine through a subscription model.

The model is already well established by others in the industry, such as Global Wine Company, which runs the New York Times Wine Club, for instance, and Direct Wines, which operates a wine club for The Wall Street Journal.

The recurring revenue stream is far more predictable than getting members to return to the site and pay for single orders. As it stands right now, Lot18 is a marketplace, so it does not own any inventory or warehouses. Instead, the company’s headcount is a considerable expense, as are its marketing costs to get new members — just like other sites, including Groupon. In addition, it subsidizes shipping, since wine is so heavy and fragile.

According to a spokesperson, the new initiative is allowing the company to scale back on the time and attention that the flash sales business requires. However, not all employees will be let go immediately and Lot18 plans to do select hiring for the new business.

In a statement, CEO Jay Sung said: “The team we have — and many of the excellent people who left the company today — worked incredibly hard to make Lot18 strong, but we need to resource according to our new business model and operate the existing business more efficiently with considerably less burn.”

The cuts impacted all parts of the company’s business, including marketing, procurement and merchandising. Andrew Koch, the company’s VP of product, left the company recently, and we are hearing that Barbara Anderson, the company’s chief counsel, is leaving voluntarily. Lot18’s founder, Philip James, remains with the company and is leading the launch of the new subscription business.

In the fourth quarter, the company tested two new subscription services. Customers could either sign up to receive six bottles for $99 a month, or 12 bottles for $149 a month (the first month cost $49 and $79, respectively).

Since its launch, the current club has exceeded its growth targets, the spokesperson said. A new product launch will occur in early 2013.

As I had previously reported, Yahoo’s key business unit — its advertising sales force — is now getting details of a reorganization by its new leader, COO Henrique De Castro.

In making the changes, just weeks ahead of Yahoo’s annual sales conference in Las Vegas on Jan. 21, De Castro is borrowing rather heavily from the set-up of the powerful ad business at Google, from whence he came.

By shifting the sales organization to a “category” model, sales reps at the Silicon Valley Internet giant will sell all of Yahoo’s ad products, as well as its search offerings, across channels in a vertical process organized around advertiser segments, such as automotive, entertainment and packaged goods.

Yahoo has long sold its advertising in a regional and tiered organization against premium and performance inventory in display and search, designed to avoid vertical conflict. Thus, the sales staff have built up advertiser relationships across many areas, which will not work in the new system.

Sources inside the company said regional leaders will now be shifted to running various verticals. There will be support specialists for those areas, too.

Mark Ellis, who was most recently VP of North American sales and global partnerships, will pay a key role in the new org, said sources. It is not clear, though, what role Peter Foster, who has headed audience advertising, will play. Another high-ranking exec, Keith Kaplan, has apparently been shifted to focus on agency relationships.

As I had previously written, there are many different ways to organize sales, but making such major change has potentially large ramifications on Yahoo’s financial performance, at least in the short term, since advertising makes up the bulk of its revenue.

According to numerous sources inside Yahoo, the changes are causing some measure of worry and confusion across the salesforce at the company, since it comes after a lot of wrenching changes over the last year.

That includes the departure of well-regarded Chief Revenue Officer Michael Barrett in mid-October, after De Castro got the COO job. He has left a large gap in sales leadership and in maintaining strong relationships with big advertisers and agencies. De Castro himself is not as well known in the ad marketplace, despite many years at Google in its sales organization.

He will likely have a more high-profile next week at the International CES, the huge annual consumer electronics show taking place in Las Vegas, along with new Yahoo CEO Marissa Mayer, who was a top product exec at Google. The pair is planning on meeting with major ad clients while there, which is their first significant outreach to marketers since taking their new roles at Yahoo.

De Castro had outlined the new ad reorg plan immediately after a multiday offsite with top sales leaders several weeks ago, and said the changes would come at the very beginning of 2013.

The ad staff at Yahoo begin to hear of the changes on Friday, so it looks like De Castro has met his deadline.

In what will be a major shift in how the Silicon Valley Internet giant sells online advertising, Yahoo’s new COO Henrique De Castro has briefed employees on a plan to move its sales organization to a “category” model, according to numerous sources close to the situation.

Simply put, that means its sales reps will sell all of Yahoo’s ad products, as well as its search offerings, in a vertical process organized around advertiser segments, such as automotive, entertainment and packaged goods.

This is how Google, where both De Castro and CEO Marissa Mayer recently worked, conducts its ad sales efforts. (After copying free food and smartphones, staff evaluation efforts and more, What Would Google Do seems to be strategery at Yahoo these days.)

In contrast, Yahoo has long sold its advertising in a regional and tiered organization against premium and performance inventory in display and search.

The move from regional to vertical is a “seismic shift,” said one source quite accurately. That’s because Yahoo’s go-to-market efforts have been designed to avoid vertical conflict and its sales staff have built up advertiser relations across many areas. In a vertical organization, those reps will be forced to give up these long-term relationships with marketers, some of which have been built over years.

There are, of course, many different ways to organize sales — and each has its fans and detractors. But one thing is clear: Making such a major change has potentially large ramifications on Yahoo’s financial performance, at least in the short term, since advertising makes up the bulk of its revenue.

The change might also result in some attrition among the sales staff, said sources, although many at Yahoo are expecting that De Castro will bring in his own execs from outside to help with the transition. (One interesting name I heard floated was former Googler Penry Price, who was close to De Castro when they both worked there. He is currently president of Media6Degrees, an ad targeting start-up.)

De Castro (pictured here) will need all the help he can get as he overhauls Yahoo’s sales efforts. Well-regarded Chief Revenue Officer Michael Barrett left Yahoo in mid-October after De Castro got the COO job.

His departure has left a large gap in sales leadership and in maintaining strong relationships with big advertisers and agencies. De Castro himself is not as well known in the ad marketplace, despite many years at Google in sales (more on that to come).

Currently, the key ad execs at Yahoo under De Castro are Peter Foster, who heads audience advertising, and Mark Ellis, VP of North American sales and global partnerships.

De Castro outlined the new ad org plan to staff immediately after a multi-day offsite with top sales leaders last week, at which Yahoo’s acquisition options in the ad tech market were also discussed.

Sources said De Castro noted that the changes could take place as early as January 1.

De Castro is also planning to have Yahoo’s annual global sales meeting for the end of January in Las Vegas. Last March, the gathering — then set for about 1,300 advertising staffers in Florida — was cancelled due to a restructuring under ousted CEO Scott Thompson.

In addition, sources said, Yahoo is planning on having a much more prominent presence at the upcoming Consumer Electronics Show — also taking place in Las Vegas in January — in order to solidify its relationships with advertisers.

Its big weapon at the giant annual confab will apparently be Mayer, who has not yet interfaced significantly with the company’s big ad clients since taking the top job in July. At CES, sources said, Yahoo is hoping the “Marissa Halo” — i.e. excitement around the telegenic exec — will help boost its business.

Yahoo said today in a regulatory filing that it had hired one of Google’s top sales execs, Henrique De Castro, as its COO.

Earlier today, I had reported that CEO Marissa Mayer had been close to nabbing the advertising exec, who has most recently been Google’s president of partners business solutions.

De Castro is getting a pile of money for taking the job, including a $600,000 yearly base salary and an annual bonus that could double that figure. In addition, the Silicon Valley Internet giant will give him $36 million in stock grants, including a one-time retention equity award of $18 million and $18 million in the form of performance-based stock options.

He is also getting $1 million in “make-whole” cash for forgoing compensation from Google and $20 million in stock to replace his shares at the search giant that will vest over four years.

That is a very big check, although Mayer garnered an even bigger one when she joined the company in July.

Yahoo’s regulatory statement on the De Castro hiring is embedded below in its entirety, so you can read about his new riches for yourself (unless Yahoo’s persnickety legal head tries to block it).

Said a Google spokesperson about the departure: “We’re grateful to Henrique for all of his contributions at Google and wish him all the best in his new role at Yahoo!”

Both Mayer and also former Yahoo CEO Scott Thompson have made previous overtures to nab De Castro, who has held a number of high-level jobs for Google across the globe, including at DoubleClick, in display ads and with major partners.

While he had previously rebuffed those efforts, this time De Castro bit.

There were signs he might this past week, after De Castro canceled a major offsite for his employees, and several attendees who know him well said he was not present at the company’s first night of its annual Zeitgeist event for advertising and publishing clients. The suave De Castro is usually a more noticeable fixture at such gatherings.

This is Mayer’s first big hire at Yahoo, having added only lower-level or less well-known execs to her stable of talent since she was appointed.

She touted the hire in a tweet, although the news was long out the door, while also noting on Twitter it was her first full day at the office since having her first baby two weeks ago.

My first full day back in the office, and I’m excited to kick it off by announcing my new COO, Henrique de Castro: businesswire.com/news/home/2012…

— marissamayer (@marissamayer) October 15, 2012

The hiring does create a potential issue in the sales arena, especially with current head of revenue Michael Barrett. De Castro and Barrett worked together at Google and multiple sources said the pair did not get along there.

It might not matter. While Barrett has publicly said he planned to stay at Yahoo under Mayer — he was hired by interim CEO Ross Levinson this summer before she arrived — many sources said he does not want to be at the company for the long term.

De Castro has a lot of work to do for the big payout he is getting and it will be a big challenge for him to turn around the troubled organization.

Along with declining growth, search market share, engagement and more, Yahoo also has had a management turnover issue of epic proportions.

De Castro will presumably be in charge of making it all better at Yahoo when he arrives sometime before the beginning of the year and is likely to focus on operations while Mayer zeroes in on products.

One area of trouble: While she has lavished attention on cultural issues and on the company’s tech troops, sources said most of the advertising and media leadership at Yahoo have had little interaction with Mayer since she arrived this summer.

Advertising, of course, is Yahoo’s biggest money maker.

The Portugal-born De Castro has a lot of experience here and is decidedly more of a charmer than Mayer.

More importantly, he is a very high-profile hire, as well as a colorful one. He speaks a menu of languages, dresses with a lot of style and is a worldwide traveler. I know him a little bit and find him to be smooth and confident, even if a little cagey.

Before Google, De Castro worked at Dell and also McKinsey.

All this makes him a perfect choice for Mayer, who is also a former Googler, since she has been considering purchasing a range of companies in the advertising tech space. The most likely candidate of late is PubMatic, which has been in early talks with Yahoo about being acquired.

The Silicon Valley start-up would be a solid add to Yahoo’s ad platform offerings, especially if it wants to stay competitive with Google. PubMatic helps publishers effectively manage their display ad inventory, and competes with Google’s AdMeld.

(Ironically, Barrett ran that start-up, which he sold to Google for $400 million about a year ago.)

Here is the De Castro hiring document from Yahoo:

YHOO-20121015-8K-20121015

And here is the official press release from Yahoo:

Henrique de Castro Named Chief Operating Officer of Yahoo!

October 15, 2012

SUNNYVALE, Calif. – Yahoo! Inc. (NASDAQ: YHOO) announced today that Henrique de Castro has been hired as chief operating officer (COO). Reporting directly to Yahoo! CEO Marissa Mayer, de Castro will be responsible for strategic and operational management of Yahoo!’s sales, operations, media and business development worldwide.

“Henrique is an incredibly accomplished and rigorous business leader, and I’m personally excited to have him join Yahoo!’s strong leadership team,” said Marissa Mayer, CEO of Yahoo!. “His operational experience in Internet advertising and his proven success in structuring and scaling global organizations make him the perfect fit for Yahoo! as we propel the business to its next phase of growth.”

“The combination of Yahoo!’s unique properties with high quality content, its renewed focus on outstanding user experience and its massive reach bring tremendous value to users, advertisers and partners,” said de Castro. “This is a pivotal point in Yahoo!’s history, and I believe strongly in the opportunity ahead. I can’t wait to join Marissa and the team and get started.”

De Castro brings more than 20 years experience leading operations, strategy, partner management and revenue generation for some of the world’s leading brands. Most recently, he was vice president of Google’s worldwide Partner Business Solutions group, where he was responsible for advertising platforms and services for Google’s publisher and commerce partners. Prior to that, he led Google’s media, mobile and platforms organization, where he helped to grow the business significantly. Prior to Google, de Castro spent two years at Dell Corporation, where he managed sales and business development operations across Western Europe. He has consulted for McKinsey & Company, where he advised numerous clients across many different industries. His career also includes senior positions in private equity and advertising businesses.

De Castro will join the company on or before January 22, 2013, or as soon as he has satisfied his obligations to his current employer.

Apple began accepting preorders for the iPhone 5 around 12:01 am PT this morning and a little over an hour later the company was forced to move the shipping window for the device forward amid heavy demand. First promised with a delivery date of Sept. 21, the iPhone 5 is now showing a ship time of two weeks.

Evidently the device isn’t nearly as big a disappointment as some have claimed, and consumers aren’t too put off by the absence of those features — unproven features that are hardly ubiquitous in the real world — that some have criticized Apple for failing to implement.

So, as I said, if your intent is on being among the first to own an iPhone 5, you better dust off that lawn chair and the rest of your urban camping gear. Because you’re going to need to stand in line outside an Apple retail store next Friday to get one. And you’ll likely need to get there early. It took iPhone 4S preorders about 22 hours to sell out last year. iPhone 5 preorders were gone in about an hour. Caveat: AT&T, Verizon and Sprint are still promising delivery dates of Sept. 21 on their Web sites, but it’s not clear if that pledge reflects available stock. Presumably, Apple’s inventory numbers are the ones to go by.

Said Topeka analyst Brian White, “Clearly, iPhone 5 fever is in full swing.”

Asked if it had preorder inventory enough to deliver on its still-promised Sept. 21 ship date, a Sprint spokesperson said, “Our projected delivery dates on sprint.com are thoughtful and are based on expected inventory for launch availability.”

“Thoughtful”? I’m not quite sure what’s meant by that either, but there you go …

Apple, Verizon, and AT&T have not yet responded to requests for comment.

Update: Ship dates at Verizon and AT&T have begun to slip by one to three weeks.

With the iPhone, for example, Apple was still boosting inventory levels in the March quarter, with that quarter’s sales benefitting from 2.6 million units added to the channel of products yet to be sold. By contrast, the June quarter’s results saw more iPhones sold to customers than were sold into Apple’s distribution channels.

A similar shift with iPad inventories in the current quarter could dent next quarter’s sales, Apple CEO Tim Cook noted on today’s conference call with investors. The company added in a significant number of tablets this quarter after being supply-constrained in the prior quarter.

Of course, there is also an impact from a weak European economy as well as the fact that Apple didn’t have a new iPhone to sell and lots of customers are expected to hold off until there is one.

“I think there is a lot of speculation out there,” Cook said. “I’m fairly convinced based on what I’ve seen that there is incredible anticipation out there for future products.”

Apple executives carefully avoided giving any details on those new products, beyond reiterating that iOS 6 would come sometime this fall. But, the company did express its usual optimism.

“We could not be more confident in our new product pipeline,” CFO Peter Oppenheimer said.

According to sources close to the situation, Yahoo has hired high-profile advertising exec Michael Barrett to be its chief of revenue.

Sources said Barrett will be in charge of ad revenue and operations worldwide, including units in the U.S., Europe and Asia reporting in to him. Barrett will report directly to interim CEO Ross Levinsohn when he starts in July.

(Update: Yahoo confirmed the hiring in a press release.)

The move to hire the experienced Barrett — who has been working at Google since it bought an ad tech company he ran a year ago — is a significant one, giving the company a boost in its most critical area of business.

It is also a clear signal that the Silicon Valley Internet giant is about to make major changes to its ad business going forward. According to numerous sources, Yahoo is again mulling a plan to abandon or sell its large parts of its ad tech business and rely on third-party vendors.

In fact, it has been in talks with Google about taking over its automated ad sales and ad network operations, while focusing instead on premium ad sales and sponsorships. Yahoo is also considering turning its entire search business over to Microsoft, with which it already has an ad partnership.

“Yahoo is going to be a media company again — in the digital ad sales business and not in the ad tech business,” said one person.

That impending change has already caused much debate within Yahoo already, with sides drawn between those who think Yahoo should not outsource its core ad technology and those who believe that the company lost the battle to others already — most especially Google — due to poor execution over the years.

While there have been a variety of multibillion-dollar plans drawn up by some to double down on Yahoo’s ad tech business, that effort has now been supplanted by a feeling that the company needs to quickly get out of businesses it cannot win in or see growth.

Barrett is one of the few obvious choices to usher in a new era, given his long experience in all aspects of both digital and traditional media.

He used to work with Levinsohn at Fox Interactive Media, but came to Google a year ago, when the search giant bought AdMeld for $400 million. Barrett was CEO of the supply-side advertising technology platform, which worked on behalf of publishers by trying to get the best prices for their inventory from a variety of ad networks.

Barrett has also worked in ad jobs at a range of companies, including AOL and Disney Online, as well as at Meredith Publishing and Newsweek. He even previously worked at Yahoo, when it bought GeoCities, back in the Web 1.0 era.

As part of the changes, sources said, current Americas sales head Rich Riley will be stepping down from the job he just got under ousted CEO Scott Thompson. He will remain at the company, but it is not clear in what position.

Looks like the software glitch that plagued early versions of the handset — and prompted Nokia to offer replacement devices to consumers affected by it — hasn’t had much of an effect on inventory. The company says that far more consumers have opted to patch their Lumias with the software Nokia has provided than have swapped them for new ones at a local AT&T store.

In other words, if the cyan version of the Lumia 900 is out of stock at AT&T’s online store (as it currently is), it’s because it’s sold out for the time being, not because Nokia is scrambling to update and recertify returned handsets.

“The inventory situation is primarily a function of demand because we are seeing that most customers are opting to keep their units and simply update via Zune,” Nokia spokeswoman Karen Lachtanski told AllThingsD. “So the impact of customer swaps is insignificant. We are producing more devices to satisfy demand as quickly as possible.”

That’s a good sign, indeed. And further evidence that sales are exceeding expectations, as Paul Roth, AT&T’s president of retail sales and service, recently claimed.

With the holidays nearly upon us — and a stockpile of unsold PlayBooks sitting in inventory — Research In Motion is giving its struggling tablet its steepest price cut yet. Tomorrow, a number of Canadian retailers will slash $300 off the PlayBook’s list price across the entire line. That means $199 for the 16 gigagbyte model; $299 for 32GB, and $399 for 64GB. And, come Black Friday, Staples and others presumably will do the same in the U.S.

So, $199 — not bad for the tablet that was to be “a quantum leap over anything that’s out there.”

[Image credit: Staples]

Well-known online advertising exec Frank Weishaupt, who recently ran North American marketplaces for Yahoo, will join ad display performance firm Criteo to head up sales.

Weishaupt, who left Yahoo several months ago, will be based in Boston and will be hiring up to 100 salespeople. He’ll report to another former top Yahoo sales exec, Criteo President Greg Coleman.

Interestingly, one of the pair’s most pressing challenges going forward will be the recent move of Yahoo to block “retargeting” firms.

In a post last week, Peter Kafka wrote that Yahoo told Criteo and others that “it would stop selling them its ‘Class 2’ remnant inventory, which the companies used to purchase on behalf of clients and essentially resell at a premium. The idea, theoretically, is that Yahoo will sell more of those ads itself.”

Here’s the official press release:

CRITEO TAPS FRANK WEISHAUPT AND EXPANDS FOOTPRINT; OPENS BOSTON OFFICE

Leading online advertising performance platform expands US presence with Boston office and hires Former Yahoo! digital media veteran

PALO ALTO, CA — (NOVEMBER 14, 2011) – Criteo, the global leader in performance display today announced that Frank Weishaupt, former Vice President, North American Advertising Marketplaces at Yahoo!, will join the company as SVP of Sales. The company also announced the continued expansion into the US Market with the opening of an office in Boston, which will focus on sales and service to mid-market advertisers and publishers. With offices in over three continents, Criteo now employees over 400 employees while serving personalized ads on behalf of over 1200 e-commerce clients across 20 countries globally.

“Criteo is committed to bringing performance to the display advertising landscape,” said Greg Coleman, President of Criteo. “I am thrilled to have Frank, a true industry veteran with a very successful track record of scaling sales organizations, join the team to continue our momentum. Our goal at Criteo is to bring our solution to a wide variety of advertisers and publishers, and Frank will be focused on helping meet that objective.”

As a 15 year digital media veteran, one of Weishaupt’s key priorities will be to build a sales organization in Boston focused on mid-market advertisers and publishers. Weishaupt has been a key part of exponential growth for several of the world’s most influential digital media companies.

“Criteo has created a name for itself as the global leader in performance display advertising. I am excited to have joined a company that is committed to growth and a team with such passion to drive this industry forward,” said Frank Weishaupt, SVP of Sales at Criteo.

Prior to joining Criteo, Weishaupt held several key management at Yahoo! over a 10-year period. Most recently he had General Management responsibilities for the US Display, Search, and Ad Technology businesses. The focus of the role was overall monetization strategy, pricing and yield management, strategic direction of the Yahoo! Ad Network, and general management of the ad platforms and global exchange.

Weishaupt holds a bachelor’s degree in engineering from Northeastern University.

Criteo is hiring and looking for team members to join the global leader in performance online advertising marketing.

San Francisco-based Federated Media Publishing said it has bought Lijit Networks, a smaller online advertising analytics and tools firm.

The price for the Boulder, Colo., start-up — which was founded in 2006 — was undisclosed, but it has received just under $29 million in venture funding from firms such as Foundry Group. Federated said Lijit would continue to operate independently, “but in conjunction.”

In an interview yesterday, Federated CEO Deanna Brown said the buy was to round out offerings for its clients and to better compete in a world where most of the online ads go to the top five players.

“I am excited we can give both publishers and advertisers more tools for engagement and monetization,” she said.

Federated, which lost big social-media news site Mashable earlier this year, also benefits from increased scale and inventory of sites.

Lijit CEO Todd Vernon, who will become EVP of technology at Federated, said that it was ever more important for ad-focused firms on the Web to “deliver the entire stack.”

“Lijit has a core competency in the media business, and combined with FM’s best-in-class sales force, we can offer everything needed to do effective online campaigns,” he said.

Here’s the official press release:

Federated Media Publishing To Acquire Lijit Networks

Combined Entity Will Power More than 77,000 Independent Publishers Across the Web Via Comprehensive Advertising, Analytics and Reader Engagement Tools

SAN FRANCISCO, October 4, 2011 – Federated Media Publishing, which powers the best of the Independent Web, today announced the acquisition of Lijit Networks, Inc. Lijit is a leading provider of advertising services, audience analytics and reader engagement tools for online publishers of all sizes. The combined entity will reach nearly 300 million global unique visitors according to Quantcast.

Lijit, headquartered in Boulder, Colorado, will continue to operate independently but in conjunction with the rest of Federated Media Publishing. Lijit CEO Todd Vernon and COO Walter Knapp will take on corresponding EVP of Technology and SVP of Platform Revenue responsibilities at Federated Media Publishing and will report directly to Federated Media Publishing’s CEO, Deanna Brown. Additionally, Lijit board member Seth Levine from Foundry Group will join the Federated Media Publishing board of directors, effective immediately.

With the addition of Lijit Networks’ existing publisher relationships, Federated Media Publishing will now reach more than 77,000 online publishers and nearly 15,000 expert communities, making it one of the largest companies to power publishing on the Independent Web. The acquisition vastly expands the combined company’s inventory of sites, offering premium advertisers improved scale and reach.

Publishers Will Profit and Flourish

Lijit helps publishers more thoughtfully interact with and better understand their audience by providing analytics and engagement tools that build deeper relationships, lengthen time on site and increase page views. These robust and actionable audience analytics and reader engagement tools leverage intent, behavior and demographics to help publishers of all sizes increase revenue and better engage their readers.

Additionally, the combined advertising services provided by FM and Lijit will give publishers of all sizes a revenue stream that complements existing sales efforts and helps grow and monetize their website businesses, no matter what the size.

Advertisers Can More Easily Analyze and Engage

The combination of Federated Media Publishing’s premium online advertising and conversational marketing programs and Lijit’s proprietary data collection tools will empower advertisers to better understand user intent, contextual relevance and demographic information. And by leveraging the combined entity’s extensive publisher relationships, advertisers will have unprecedented scale on the Independent Web.

Introducing Programmatic Buying to the Independent Web

Programmatic buying is one of the fastest growing trends in digital media and the introduction of Lijit’s robust RTB exchange will equip media buyers with one of the largest platforms available. Over the next few months, Federated Media Publishing and Lijit will develop a series of private exchanges that will highlight leading independent publishers. These exchanges will allow brands to engage active, passionate consumers found in highly conversational online communities and publications, while delivering premium CPM rates via FM’s conversational marketing programs.

Quote

“The Lijit Networks team is just as passionate and committed to powering publishers as we are at Federated Media Publishing and that was a crucial element to this decision,” said Deanna Brown, chief executive officer, Federated Media Publishing. “Our combined relationships, proprietary tools and conversational marketing services will be invaluable to publishers and advertisers alike.”

“Federated Media invented how to leverage authentic voices and engaged conversations that exist in the Independent Web,” said Todd Vernon, founder and CEO of Lijit Networks. “The combination of the two companies is a game changer in the industry that unlocks new opportunities for both companies and our combined publisher network.”

]]> http://allthingsd.com/20111004/federated-media-buys-lijit-networks/feed/ 0 http://allthingsd.com/20110324/groupons-andrew-mason-talks-about-no-not-exec-shakeup-but-groupon-now/ http://allthingsd.com/20110324/groupons-andrew-mason-talks-about-no-not-exec-shakeup-but-groupon-now/#comments Thu, 24 Mar 2011 13:04:19 +0000 Kara Swisher http://kara.allthingsd.com/?p=41962

Yesterday, BoomTown had a cheap Chinese lunch and a chit-chat with Groupon CEO Andrew Mason in Silicon Valley–but not about what most people want to talk to him about.

That would be the departure of the Chicago-based social buying site’s President and COO Rob Solomon and who is on the very short list of candidates the hot start-up will replace him with.

Oh, I tried to get him to ‘fess up about all that, but Mason would not bite, except on his Kung Pao Chicken.

Instead, all he wanted to talk about and show off is Groupon’s latest real-time deal innovation, which it is calling Groupon Now–and which Mason has been touting a lot of late.

“It’s deals in a time window linked to a location,” said Mason. “Until now, no one has had the assets to fix a merchant problem that was viciously subject to a chicken-and-egg situation.”

By that metaphor, Mason means real-time deals by location, rather than via emails, doled out and paid for immediately, taking advantage of perishable retail inventory.

And, of course, using the burgeoning smartphone phenom via an app with only two buttons:

“I’m Hungry” and “I’m Bored.”

Which pretty much covers most of humanity’s main complaints.

The company is rolling Groupon Now out to thousands of merchants in early April, first in Chicago, San Francisco and Washington, D.C.

“Even the most popular restaurants and businesses are never completely full,” said Mason. “Groupon Now can help them even out the flow of customers.”

It’s this push and pull that Mason hopes will move “Groupon 1.0″ to the next level.

More importantly, Groupon Now is the start-up’s attempt to thwart rivals hot on its heels, as well as grow into the gazillion-dollar valuations being bandied about for its possible IPO.

But all of those competitors have moved into the real-time space too, from LivingSocial Instant to offerings from OpenTable, SCVNGR to Yelp to Foursquare. And, of course, there are also big efforts coming from both Facebook and Google, whose $6 billion offer Groupon turned down.

Now, no surprise, everyone is second-guessing that decision, putting a lot of pressure on both Groupon and, especially, Mason.

Who–despite all the hype and attention he has received–still has that prenaturally calm Midwestern affect.

“It is more important that we are the ones bringing relevant deals to consumers from our merchants,” he said. “That is all that matters.”

]]> http://allthingsd.com/20110324/groupons-andrew-mason-talks-about-no-not-exec-shakeup-but-groupon-now/feed/ 0 http://allthingsd.com/20110315/overstock-says-no-shortage-of-inventory-in-the-world-thats-ripe-for-discounting/ http://allthingsd.com/20110315/overstock-says-no-shortage-of-inventory-in-the-world-thats-ripe-for-discounting/#comments Tue, 15 Mar 2011 20:25:49 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=3578 In so many ways, Overstock may be considered the original flash sales site.

Founded in 1999, the Salt Lake City company offers a wide variety of merchandise, ranging from bedding and home decor to appliances and sporting goods–at discounted prices.

But with a little bit of marketing polish, the practice has become a new, chic burgeoning industry.

A discount center conjures up imagines of large warehouses with cement floors full of unsold items. A flash sales deal, however, leads you believe you’ve found a pair of designer jeans for half off after sifting through dozens of boutiques on Rodeo Drive.

With that in mind, a micro industry of flash sales sites has been born.

The Gilt Groupe, HauteLook, One Kings Lane, Rue La La and Jackthreads all have their own niche, focusing on curating clothing for women or men, or furniture and home decor.

One big question is, is there enough inventory to sustain it all?

“It’s the dirty little secret in manufacturing,” said Overstock’s CEO Patrick Byrne. “The answer is that there is far more than you can possibly think. A company will say they don’t have overstock, but if you talk to the CFO, they will ask, ‘what can you truck away?’ The world is filled with excess inventory and is looking for channels to get rid of it.”

But just because the inventory is there, Byrne doesn’t believe they can all survive.

“We think the world only needs one pipeline, and we’ve built the one pipeline to do that,” he said. “The suppliers are better off with one big pipeline. If one pipeline emerges, where all the liquidation gets done, there will be price integrity in the rest of their marketplace. It’s our aspiration to be that one thick pipeline.”

On average, he said Overstock’s inventory is about 60 percent off the manufacturer’s recommended price. He said, general retail stores sell items for an average of 15 percent off and Walmart is even more heavily discounted at 30 to 40 percent off. Sites like Amazon.com, are normally somewhere in between, and flash sales generally claim discounts of 50 to 70 percent.

About a year ago, Overstock jumped on the bandwagon to launch Eziba.com, which focuses on selling a small number of items, ranging from furniture to jewelry, at heavily discounted prices via a daily email.

Eziba has the boutique look, with large photos of the products and colors bleeding off the page. That’s in sharp contrast to Overstock’s more straight-forward layout that stresses searching and browsing for items that are displayed in small thumbnail pictures.

Byrne said one of the big differences between items sold on Eziba and those sold on Overstock is the amount of inventory in stock.

Items on Eziba may have up to 5,000 on the virtual shelves, whereas products sold on Overstock have only a couple of hundred left.  Another difference is that there’s only a dozen or so items for sale on Eziba at any given time, while Overstock’s inventory spans 300,000 items (not including books and movies).

One of the big differences between Eziba and the competition is that it’s able to leverage Overstock’s infrastructure.

For instance, Eziba customers get the same customer service as Overstock and have the same flat-rate shipping of $2.99 an order.

So far, Byrne says the introduction of other sites has not affected the company’s business.

“It’s like swimming around in Lake Michigan and asking did you bump into each other. The world is so much bigger than anyone gets. It’s so enormous,” he said.

Overstock has been steadily growing over the years.

In 1999, the company recorded revenues of $1.8 million, and last year, revenues totaled $1.1 billion. Still, it’s a microcosm of the super-large e-commerce world. The company’s stock is trading at $14.31 a share for a market cap of $333.4 million. In contrast, Amazon’s is valued at around $75 billion, and eBay is worth $40 billion.

Generally, Byrne categorizes the company as a nice profitable company that has built a very solid foundation over the past few years.

He said the recent stability, compared to the start-up years, gives him the chance to experiment with new lines of business. ”We are very agile. We can develop new things really quickly and snap them into the platform we’ve built.”

In addition to Eziba, the company also runs Worldstock, a site that helps artisans from around the world sell their crafts online. Byrne made the recent decision to give all of its profits to a charity that’s focused on helping build classrooms in developing countries around the world.

It’s also recently launched Main Street Revolution, which helps small business around the U.S. sell their goods online, ranging from children’s clothing to specialty home-made cookies.

The company’s latest endeavor includes experimenting with a significant rebranding of the Web site.

In January, it introduced the domain name O.CO, which is a shortcut to its regular Web site. During an initial introductory period, customers who shop at O.CO will receive free shipping.

Byrne said the reason behind the name is to have a more recognizable brand across the 90 countries it operates in. While the domain name will change permanently internationally, the company is only experimenting with the name domestically.

]]> http://allthingsd.com/20110315/overstock-says-no-shortage-of-inventory-in-the-world-thats-ripe-for-discounting/feed/ 0 http://allthingsd.com/20110216/inside-twitters-sales-machine-a-secret-guide-for-advertisers-video/ http://allthingsd.com/20110216/inside-twitters-sales-machine-a-secret-guide-for-advertisers-video/#comments Wed, 16 Feb 2011 16:45:01 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=29862 Twitter hopes to generate something like $100 million from advertising this year, but first it has to teach people how to buy its ads. Here’s how it’s doing that: A hand-holding how-to video, which walks through everything from pricing to dealing with angry users.

The tutorial, which runs 40 minutes, is up on YouTube, but it’s unlisted and is only accessible via a private link. Thanks to a helpful reader, I’ve been able to watch it myself, and I’ve uploaded it at the bottom of this post so you can see it, too.

But it is 40 minutes long–and most of you don’t need to watch all of it. Here’s what you need to know if you’re interested in advertising, technology and Twitter’s first attempts at making real money:

Promoted Tweets, Twitter’s first big ad product, hasn’t taken off.
Instead, at least for now, Twitter is pushing customers to spend most of their money on Promoted Accounts, its pay-per-follower product it rolled out at the end of last year. Twitter tells advertisers they ought to spend $4 on Promoted Accounts for every $1 they spend on Promoted Tweets–the original Google-style ad concept CEO Dick Costolo introduced last year. Twitter says that’s because it’s a lot easier to buy the former than the latter, because there’s a lot more inventory available. (And because Promoted Accounts will “turbocharge” Promoted Tweets.)

Promoted Tweets should get a big push in the next month or so.
Until now, the only way you’re going to see a Promoted Tweet is if you click on a search term that someone has purchased, or if you’re using Twitter app HootSuite. But Twitter says the ads will start running in users’ regular “timelines”–the primary Twitterstream they see–on its own Twitter.com site, by the end of Q1. That’s going to make them much more visible, and should hopefully help with the inventory problem noted above.

Twitter is telling customers to expect an “engagement rate” of 1 percent to 3 percent.
Ad buyers are usually trying to measure success by figuring out how many people looked at or clicked on an ad. Click-through rates for most Web ads are very tiny, and according to an ad buyer who has seen Twitter’s presentation, the company says a realistic click-through rate is 0.3 percent. But “engagement” rates–which measure when a user retweets an ad, or likes it, etc.–are supposed to be much higher. My tipster, by the way, says Twitter is requiring new ad buyers to make a purchase of at least $5,000 worth of inventory in order to participate in the company’s beta tests.

Twitter is warning buyers that some users will have a problem with their ads.
At the end of the presentation (around the 35-minute mark), the company takes time out to coach buyers about “dealing with negative user feedback,” which it more or less assumes they’ll be getting. “People are averse to change, especially when it comes to advertising, and this type of feedback is to be expected,” Twitter’s off-screen instructor explains. The company’s suggested coping strategy: Don’t worry! The complainers are an “extremely marginal percentage of the total.”

[UPDATE: So how do the ads actually work? A Twitter ads tester would like to share their experiences with the rest of the world, but can't.]

]]> http://allthingsd.com/20110216/inside-twitters-sales-machine-a-secret-guide-for-advertisers-video/feed/ 9 http://allthingsd.com/20110131/exclusive-seeking-better-search-results-ebay-finds-experts-at-bing-and-facebook/ http://allthingsd.com/20110131/exclusive-seeking-better-search-results-ebay-finds-experts-at-bing-and-facebook/#comments Mon, 31 Jan 2011 21:00:54 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=2159 EBay has hired two search experts away from Facebook and Microsoft Bing as it prepares to roll out new features on its site, we have learned.

The company has confirmed the appointments of Scott Prevost to the position of VP of product management on search and Dennis DeCoste to the position of director of research, where he will manage such technical topics as data mining and machine learning.

Prevost will start immediately. DeCoste is a couple of weeks into his new job.

The two hires will focus on delivering changes to the e-commerce site’s homegrown search engine, by better matching items in its inventory based on a consumer’s search terms or interests.

The company is now working on the next-generation of search, according to the company’s research labs, which lists both “search” and “machine learning” as two of its top priorities. Recently, eBay rolled out the ability to sort by “Best Match,” and will soon be launching other versions on eBay.com. “Through great strides we’ve made in applying machine learning to our search engine, search results will continue to become more relevant with each use,” says a labs post.

Previously, Prevost was the principal development manager at Bing, where he led a team of developers who were responsible for a bringing a variety of Bing features to market, including complex stuff like adding “captions and summaries to search results, reference answers and query processing using natural language techniques,” according to Prevost’s LinkedIn profile. Before that, he served as the general manger and director of product for Powerset, which Microsoft acquired in 2008.

Before joining eBay, DeCoste was a research scientist at Facebook, where he worked to improve a number of products, including ad matching, search ranking, link recommendation and spam detection. Prior to that, he was a principal scientist at Microsoft and a director of research at Yahoo Research, according to his profile on LinkedIn.

We also reported exclusively today that eBay’s PayPal subsidiary has hired Sarah Brody, formerly at Apple, to lead Global Design.

]]> http://allthingsd.com/20110131/exclusive-seeking-better-search-results-ebay-finds-experts-at-bing-and-facebook/feed/ 0 http://allthingsd.com/20110131/microsoft-takes-another-stab-at-selling-its-own-ads-by-getting-someone-else-to-do-it/ http://allthingsd.com/20110131/microsoft-takes-another-stab-at-selling-its-own-ads-by-getting-someone-else-to-do-it/#comments Mon, 31 Jan 2011 11:00:53 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=28878 It’s about time! Or, more accurately, “real time”: It’s taken Microsoft several years to get its head around the idea, but the company is finally going to start selling its ad space via a “real-time bidding” exchange, just as Google does.

The difference: Instead of running the exchange itself, as Google does, Redmond is going to outsource the work.

In February, ad tech start-up AppNexus will begin selling Microsoft’s “non-premium” display ads via its own exchange. And Microsoft will essentially pull the plug on AdECN, the exchange it bought in 2007 but only began testing a year ago.

If you’re not remotely interested in advertising technology, here’s the takeaway: Lots of smart people predict that display advertising will be moving to “real time bidding,” which allows buyers and sellers to set the price of a single ad impression in milliseconds.

That efficiency makes plenty of sense from a buyer’s perspective, but it will inevitably chip away at publishers’ pricing power–which is one reason big sellers like Microsoft haven’t embraced it yet.

Microsoft sort of announced the move last October, when it participated in a $50 million investment in AppNexus. Microsoft and AppNexus have been deliberately playing down the move, for reasons I can’t quite fathom–it’s not as if players like Google haven’t picked up on it.

(And that Microsoft-AppNexus connection may or may not have had something to do with a falling-out between AppNexus and Google last year.)

In any case, it’s now formalized: Microsoft will throw all of its unsold inventory into an exchange that AppNexus will power, starting with ad space on Windows Live Hotmail. Then it will add in all of the inventory on MSN properties, and eventually ads from third-party publishers that Microsoft is working with, like Viacom.

Which doesn’t mean Google will be quaking in its boots.

At the start, AppNexus figures it will be moving more than 10 billion ad impressions a month through the exchange, which sounds like a lot. And it is! But Google’s AdX is many times larger–it’s a safe bet that it’s doing more than one billion impressions a day, and likely much more.

Still, Google’s giant lead isn’t necessarily insurmountable. For starters, the universe of display advertising is much more fragmented than search. So no matter how much inventory AdX picks up, there’s always going to be lots of ad space that Google doesn’t get its hands on.

And because Google’s so big, there’s a very deliberate effort by lots of buyers and sellers to make sure they have other options. So underdog Microsoft–I can’t get over how odd it is to type that–will get at least a look-see for quite some time.

]]> http://allthingsd.com/20110131/microsoft-takes-another-stab-at-selling-its-own-ads-by-getting-someone-else-to-do-it/feed/ 0 http://allthingsd.com/20110113/memory-chips-are-about-to-get-cheaper/ http://allthingsd.com/20110113/memory-chips-are-about-to-get-cheaper/#comments Thu, 13 Jan 2011 16:28:00 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=1718
Market research firm iSuppli says it expects a “huge drop” in the selling price of computer memory chips this year. After a run-up of more than 77 percent in price for DRAM chips during 2010, it expects a drop of nearly 12 percent this year.

DRAM is the ultimate commodity chip market, and its boom-or-bust cycles are legendary. When demand picks up, manufacturers like Samsung, Hynix and Micron always rush to add manufacturing capacity–prices pick up; chips become scarce.

Everything seemed to be going well for the chip companies until the third quarter of 2010. After five straight quarters where the average price for a DRAM chip increased, it suddenly turned south as demand for notebook PCs slacked. That’s in line with what Gartner and IDC reported yesterday about the PC market.

There’s good news for consumers, however. All that stacked-up inventory has to go somewhere. If you’re planning to buy a notebook this year, the base models will now start shipping with four gigabytes of memory instead of two. And for those who bought a machine with only two in the last year or so, upgrades will be more affordable.

The one bright spot for the memory companies? You got it: Smartphones and tablets. Memory content in phones is expected to increase by nearly two-thirds. And the 57 million tablets that iSuppli expects will ship this year will also need some DRAM. More details here from iSuppli.

]]> http://allthingsd.com/20110113/memory-chips-are-about-to-get-cheaper/feed/ 0 http://allthingsd.com/20110105/yet-more-money-for-ad-tech-turn-raises-20-million/ http://allthingsd.com/20110105/yet-more-money-for-ad-tech-turn-raises-20-million/#comments Wed, 05 Jan 2011 17:25:05 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=27644 A lot of smart people think there’s already too much money jammed into advertising technology start-ups, but more keeps coming, anyway. The latest infusion is a $20 million funding round for Turn Inc., a “demand-side platform” that’s supposed to help advertisers buy lots of display advertising inventory. Turn has raised $57 million to date, which means any exit is going to have to be very big to make investors happy. Reminder: Google bought DSP Invite Media for $81 million last year. And Microsoft, another potential acquirer, has thrown its weight behind rival DSP AppNexus.

]]> http://allthingsd.com/20110105/yet-more-money-for-ad-tech-turn-raises-20-million/feed/ 0 http://allthingsd.com/20101220/ebay-acquires-berlin-based-brands4friends-for-200-million/ http://allthingsd.com/20101220/ebay-acquires-berlin-based-brands4friends-for-200-million/#comments Mon, 20 Dec 2010 17:05:09 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=856 It’s been a busy shopping season for eBay, which has made its third acquisition in as many weeks.

Today, eBay said it has acquired brands4friends, a German online retailer for $200 million in cash. Earlier this month, eBay announced the acquisitions of Milo, which keeps a database of local retailers’ inventory, and Critical Path, a mobile application development shop.

EBay expects brands4friends to strengthen its position as a leading online fashion destination in Europe. Brands4friends claims to be “Germany’s largest online shopping club,” which offers top brands at reduced prices to members through limited daily offers.

Online shopping clubs account for 20 percent of online fashion sales in Europe, according to eBay’s own research.

The 3-year-old company has about 3.5 million members and 200 employees.

As part of the deal, eBay will also assume brands4friends’ equity interests in U.K. shopping club secretsales.com and in Japan’s brands4friends.jp. The acqusition is expected to close in the first quarter, pending regulatory approval.

]]> http://allthingsd.com/20101220/ebay-acquires-berlin-based-brands4friends-for-200-million/feed/ 0 http://allthingsd.com/20101216/google-myspace-finally-land-new-ad-deal/ http://allthingsd.com/20101216/google-myspace-finally-land-new-ad-deal/#comments Thu, 16 Dec 2010 15:58:34 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=27136 Google and Myspace have finally struck a new ad deal, replacing the three-year, $900 million pact that expired this fall.

The two companies aren’t handing out details on the new pact, but have made it clear that it’s not going to be anything like the old one, which provided Myspace and the rest of News Corp.’s Web properties with massive guaranteed payments.

But we’ve known that for a long time: The first deal got done when Myspace was white-hot, and Google was competing fiercely with Microsoft to lock up prime real estate.

Now, of course, Myspace is well into a protracted decline, despite News Corp.’s efforts to turn it around (News Corp. also owns this Web site). And Microsoft isn’t nearly as aggressive as it used to be on these kinds of deals.

The real question for Myspace is what happens now. News Corp. has been quite clear that it’s not happy with the site’s performance, and if anyone were willing to pay anything for it, I’m sure Rupert Murdoch would be happy to part with it.

But who wants to buy a shrinking, money-losing Web site? News Corp. may not be able to do that much about the audience decline, and the money-losing part is tougher to fix than it seems from the outside.

That’s because Myspace is still stuck amortizing fees it picked up in the go-go years, like the big settlement/licensing deal it struck with Universal Music Group, which allowed it to start up MySpace Music in 2008.

Those aren’t operating costs, but they’re still real, and they don’t go away. “You start off every year $70 million in the hole,” says a person familiar with the company.

So how else can you cut costs? There are some obvious ways to go, and they won’t be pleasant for Myspace’s remaining staff.

UPDATE: Nature of news on the Web–this story was a scoop for all of about three minutes. Here’s the release–note the news about the Myspace inventory being offered via Google’s DoubleClick Ad Exchange.

MYSPACE AND GOOGLE RENEW AND EXPAND SEARCH
AND ADVERTISING AGREEMENT

LOS ANGELES and MOUNTAIN VIEW, Calif., December 16, 2010 – Myspace and Google, Inc. today announced a multi-year agreement to renew and expand their long-standing search and advertising relationship. Under the terms of the new agreement, Google will continue to power Myspace search and search advertising and will also provide additional display advertising services to enhance the rich
entertainment content experience inherent on Myspace.

This agreement brings together Google’s expertise in search and advertising with Myspace’s strength in social entertainment. Specifically, the agreement provides Myspace with:

Web search and search advertising
Full display ad solutions (including participating in the Google Display Network and DoubleClick Ad Exchange)

“We’re thrilled about renewing our partnership with Google. Their best-in class technology will continue to provide our consumers with a robust search experience,” said Nada Stirratt, Chief Revenue Officer of Myspace. “We look forward to participating in the Google Display Network and DoubleClick Ad Exchange to increase yield across our display ad inventory.”

“We’re excited to deepen our partnership with one of the largest social Web properties in the world, Myspace,” said Henrique de Castro, Vice President of Global Media and Platforms at Google. “We’re pleased that our technology will benefit Myspace’s users on its newly redesigned site, and that Myspace has chosen our display advertising solution to increase its returns.

]]> http://allthingsd.com/20101216/google-myspace-finally-land-new-ad-deal/feed/ 0 http://allthingsd.com/20101214/qa-vc-alex-ferrara-dishes-on-the-business-of-shopping-and-selling-online/ http://allthingsd.com/20101214/qa-vc-alex-ferrara-dishes-on-the-business-of-shopping-and-selling-online/#comments Tue, 14 Dec 2010 14:00:44 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=531 With big-ticket e-commerce acquisitions, like Amazon’s $500 million purchase of Diapers.com and Soap.com, and now the failed attempt by Google to purchase Groupon, we decided to chat with Alex Ferrara, a partner at Bessemer Venture Partners, to get a sense of the current state of the market.

Bessemer has an impressive list of e-commerce bets: It was an investor in Quidsi, the parent company of Diapers.com and Soap.com, as well as in Yelp. And personally Ferrara is involved in other deals, such as Yodle, which helps local businesses market online, and OMGPOP, a social gaming company. Yesterday, it announced an investment in Shopify, which provides tools to help businesses sell products online quickly.

eMoney: So, you’re background is actually in computer programming? Does that help you evaluate deals?

Ferrara: I was a software engineer for many years, using Java and Microsoft languages, and I had the pleasure of authoring an O’Reilly book on Web services [O’Reilly & Associates’ "Programming .NET Web Services"]. I don’t know if it helps me, but it causes me to gravitate toward good technology and product teams.

Your most recent investment is Shopify?

Yes, we just closed last week. I just loved the team and was impressed by the product and the tech DNA that these guys had. It provides a commerce platform that can quickly serve small as well as larger businesses. They have about 10,000 to 11,000 customers as of today–and they’ve watched a lot of small businesses grow into larger enterprises.

My view of this whole small- and medium-sized business space is that they have a lot of the same pain points as large enterprises….Shopify delivers 80 percent of the functionality of larger, more expensive and cumbersome e-commerce software packages at a fraction of the cost. It offers a range of very sophisticated features around inventory management, marketing capabilities, as well as shipping and fulfillment–all of the capabilities you would get in an expensive package. They are democratizing the whole expensive enterprise software functionality.

E-commerce is a mature business that’s been around for a long time. Is there more innovation that’s happening in the space?

I think the market that Shopify is going after is less about taking share from existing players, and more about the next generation of businesses that are getting started today. A lot of those are mainstream local retailers.

Let’s say a trillion-plus has been spent in local retail, and it’s starting to move online, so that’s a big business. It won’t fully move online, but the local retailers need something besides their Main Street shop. Plus, the retailers want to tie in their physical locations, and use phones to manage their store, and take advantage of [Shopify's] technology to manage their business, whether its physical or online.

An Apple store was the first retail experience I had where I could swipe my credit card anywhere in the store–there was no waiting in line at the register.

Why can’t all retail experiences be like that? Shopify is going to do that, by moving everything to the cloud, whether you are going to a physical store, to the Web or on a mobile device. It should be one and the same.

What do you think of the local e-commerce market, especially given Google’s reported $6 billion offer for Groupon?

From what I’ve seen from afar, Groupon seems like a big business. If the rumors are true, it’s interesting to see Google having an interest. I look at them mostly as a self-serve ad company, which is mostly about technology and automation. Groupon has built a big local salesforce–it’s the inverse of Google’s approach.

I think it says a lot about how Google must be thinking about growth opportunities. To get to the local market, you do need the local salesforce. Self-serve works for a portion, but at the end of the day you need a sales channel.

So, you do think Google needs a local salesforce?

I’m guessing, but it strikes me as something that could be very compelling when [Groupon is] combined with [Google's] machinery. You could leverage each other’s data to do better at targeting for serving ads.

What about all the Groupon copycats?

Time will tell. It’s one of the questions I’ve thought about a fair amount. I don’t know. We have not invested, and clearly there’s a lot of smart people who think there are alternatives and a big enough opportunity to support competitors. I wouldn’t be surprised if it’s big enough. There’s a number of players doing quite well. It’s a good time to be No. 2 to 4.

The big question is, how valuable will it be for the end-business over time. There’s not a lot of historical information on that.

What’s the role of mobile in e-commerce going forward?

For a lot of the local businesses, [mobile] fits so perfectly, and it’s got to be a huge part of any local product offering. A lot of the local merchants are mobile, as well. They don’t have large staffs to rely on and are wearing lots of hats. They want to provide service to their customers on the go–the iPhone and Android really enable that. That’s why Shopify made an iPhone version that helps the merchants to do that.

On the consumer side, they’ve also seen an increase in willingness to make purchases on mobile. It’s expected to grow exponentially, and we have some pretty good data on Shopify. Purchases on mobile are starting to grow quickly.

What about virtual goods? You are an investor in OMGPOP, a social gaming company.

They monetize and generate a good portion of revenues from virtual goods….One of our former investments is Playdom and they did a fantastic job. [Yes, they did. In July, the Walt Disney Company acquired Playdom for $763 million.]

We are bullish on digital media and gaming. We are seeing more and more game mechanics being applied to other business models. For instance, companies in financial services or online education are having their products include game mechanics to drive behavior and make the product experience more intuitive.

Still opportunities for start-ups, with giants like Amazon around? What would be your advice?

There’s a tremendous opportunity internationally. I think it would be challenging to go head to head with Amazon in certain categories. You can’t differentiate on price, and you can’t differentiate on customer service because they are impressive. This isn’t my area of expertise, but as a firm, we see that there’s a space for international e-commerce companies. They understand the local market and the nuances of the local market, and can be in an area that has been overlooked. If they can get scale, they have a chance.

Or niche opportunities, like Diapers?:

That’s a team that did a fantastic job. They provided a great level of customer service. Whenever I told people we were investors, strangers or friends would say, “I love it.”

]]> http://allthingsd.com/20101214/qa-vc-alex-ferrara-dishes-on-the-business-of-shopping-and-selling-online/feed/ 0 http://allthingsd.com/20101206/google-expected-to-outgrow-apple-in-mobile-display-ad-market-in-2011/ http://allthingsd.com/20101206/google-expected-to-outgrow-apple-in-mobile-display-ad-market-in-2011/#comments Tue, 07 Dec 2010 00:48:32 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=53688 The mobile advertising market is ballooning, as is Google’s share of it. Of the $877 million spent on mobile advertising in the United States this year, 59 percent of it went to the search sovereign, according to an updated assessment by IDC. Meanwhile, Apple claimed just 8.4 percent share, Yahoo 5.6 percent, down from 7 percent last year, and Microsoft 4.3 percent, down from 6.3 percent.

Clearly, Google rules the mobile ad market in the States in much the same way it dominates search. That said, it’s important to note that the mobile ad market as defined by IDC includes both search and display ads and that the advertising business of some of the companies figuring in IDC’s report doesn’t extend to mobile search.

Apple, for example.

In the mobile display market, Apple claims an 18.8 percent share, which basically puts it neck and neck with Google with its 19 percent share. A short distance behind, Millennial Media has 15.4 percent. And behind Millennial, Yahoo has 10.1 percent.

And in front of them all: “Other,” with 20.5 percent (click image to enlarge).

So the leaders of mobile display advertising have yet to be decided, though Apple and Google have staked the largest claims to date. But while the the two companies are essentially tied right now, IDC’s Karsten Weide tells me Android’s growing presence in the mobile space means it will likely overtake Apple in display as well.

“Even if display was decisive for the war, I expect Google to outgrow Apple there in the coming year, primarily because Android devices will outsell Apple’s iOS devices,” Weide said. “More devices means more mobile Internet traffic, means more ad inventory that can be sold to advertisers, means more revenue. That said, search will remain more important than display in mobile and may well increase its market share even more. A lot of the mobile traffic is about finding things while being on the road: shops, restaurants, hotels…and that means search traffic, be it in traditional search queries or map searches. Google stands to benefit from this.”

]]> http://allthingsd.com/20101206/google-expected-to-outgrow-apple-in-mobile-display-ad-market-in-2011/feed/ 0 http://allthingsd.com/20101130/google-cuts-off-appnexus-and-the-ad-tech-world-shudders/ http://allthingsd.com/20101130/google-cuts-off-appnexus-and-the-ad-tech-world-shudders/#comments Wed, 01 Dec 2010 00:57:00 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=26488 AppNexus, a high-flying ad technology start-up, just had a bad few days. The next few weeks could be rough, too.

That’s because over the weekend, Google suspended the company’s access to the ad giant’s “real time” ad exchange. The move isn’t permanent, but it’s still likely to cut directly into AppNexus’s business, and it’s a very big deal for the ad tech industry.

“It’s a bombshell,” says a competitor.

AppNexus offers customers several different services, but its most important one is acting as a demand-side platform (or DSP) for clients who want to buy display advertising inventory. The bulk of that comes from Google’s DoubleClick Ad Exchange, and for now, that’s gone.

What happened? Google won’t address the incident directly, but a statement the company released today implies that it has problems with at least one AppNexus client and an ad they’ve placed:

To protect users and publishers, the Ad Exchange has extensive, widely-published policies for a range of issues including ad quality, ad content and malware. We have technologies to detect violations, and when a customer is in breach of our policies, we take action, including potential suspension from the Ad Exchange. AppNexus is a great partner, and we’re working with them through this issue to get them back on the Ad Exchange.

Via email, AppNexus President Michael Rubenstein, who left Google to join the start-up a year ago, stresses that the cutoff is “temporary,” and adds:

We’re modifying our process of working with Google to create a new arrangement whereby AppNexus clients wishing to access Google inventory will have their own individual seats on DoubleClick Ad Exchange, but will continue to serve impressions through AppNexus.

In practical terms, that means AppNexus’s ad buyers will need to set up a contract directly with Google before it lets them access its inventory again. (You can read an email Rubenstein sent to his clients on Monday, explaining the new terms, at the bottom of this post.)

That could take weeks for each ad buyer. Or they could simply take their business elsewhere and skip the process. Google itself has its own DSP, via its purchase of Invite Media earlier this year.

“I would expect a lot of these clients can’t really wait several weeks,” says Tony Katsur, general manager at MediaMath, an AppNexus competitor.

Ad industry executives tell me Google has cut off other DSPs from its ad exchange in the past. But AppNexus is a particularly high-profile player. In October, it raised $50 million in funding that included money from Microsoft, which has yet to fully embrace the “real time” display ad market itself.

Some industry insiders I’ve talked to are muttering darkly about Google sending some sort of message to Microsoft, or trying to steer business to Invite, or some other conspiratorial motives.

But none of that makes much sense to me. Google is under intense scrutiny that’s only going to get more severe. And crippling a partner–even temporarily–is the kind of thing that’s going to raise plenty of eyebrows.

Hard to imagine Google making this move lightly, and without a very good reason.
—–
Here’s the text of the email that Rubenstein sent to AppNexus clients yesterday:

From: Michael Rubenstein
Date: Mon, Nov 29, 2010 at 4:41 PM
Subject: RE: Access to Google AdX Inventory
To: Michael Rubenstein

Important Update:

Further to the notification below regarding the disruption of access to DoubleClick Ad Exchange supply, AppNexus has been in continuous contact with Google to resolve this issue. At present, Google’s position is to require all AppNexus buyers accessing Ad Exchange inventory to have a direct contract with Google in order to restore access. To be clear, this will not impact your ability to use AppNexus as your RTB platform for buying Google inventory, but simply means that you will in the future remit payment for media purchased on DoubleClick Ad Exchange to Google directly, rather than to AppNexus.

Your account manager will contact you tomorrow with details on how to proceed with restoring access to DoubleClick Ad Exchange.

We thank you for your continued patience and support as we work through this.

Regards,

Michael Rubenstein

—— Forwarded Message
From: Steven Giacomelli
Date: Sat, 27 Nov 2010 18:35:20 -0800
Subject: Access to Google AdX Inventory

Dear Client,

Beginning at 7:00 PM ET / 12:00 AM UTC, our monitoring alerted us to the fact that our real time bid requests from Google’s AdX had dropped to zero. We are investigating on our side and are also working with our contacts at Google. Currently we have no ETA for a resolution. We will update you as more details become available.

Thank you for your patience,

Steve

[Image credit: Nesher Guy]

]]> http://allthingsd.com/20101130/google-cuts-off-appnexus-and-the-ad-tech-world-shudders/feed/ 4 http://allthingsd.com/20101109/the-shipping-news-plenty-of-iphones-for-the-holidays/ http://allthingsd.com/20101109/the-shipping-news-plenty-of-iphones-for-the-holidays/#comments Tue, 09 Nov 2010 18:40:48 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=52178 It’s taken the better part of four months, but iPhone 4 supply has finally caught up with demand. Ship times for the device fell to 24 hours yesterday for the first time since its June launch, which bodes well for Apple as it it heads into the holiday season.

“We believe the iPhone should see continued solid growth into the December quarter with support from improved inventory in the US,” Barclay’s analyst Ben Reitzes said in a note to clients today. “Apple has now expanded distribution to Target (Target also sells the iPad) to join others including Apple stores, AT&T, Best Buy, Radio Shack and Wal-Mart. Perhaps more importantly, we believe availability is improving overseas, with the iPhone 4 set to ship for its first full quarter in China. International demand seems strong into calendar year-end.”

For the quarter ending in December, Reitzes figures Apple will sell 14.8 million iPhones, with sales ramping up after that, assuming the company moves to a multicarrier model in the states. Says Reitzes, “As we move into C1Q we continue to believe it is quite likely that we will see the iPhone introduced on Verizon in the US which should continue sales momentum. By CY-end 2011, we believe Apple will have more than 2 carriers in the US, which could help its market share vs. Android significantly.”

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