Princeton University
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Computer Science 448
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For this writeup you are not going to focus on your "company". Instead, this writeup revolves around online advertising marketplaces. You're given the choice to assume the role of CTO of one of four large companies; Yahoo, AOL, Facebook, and MySpace. You and your partner should pick two different companies, and then individually write a memo to the CEO of your respective company.
Assume a situation where Google, already the dominant player in search advertising, is also building up a strong position in display advertising, through its DoubleClick and several other acquisitions. Google is acquiring strong positions in most parts of the complex display advertising landscape and technology, and appears to be doing in Display what it did in Search. The other player that matters to you is Microsoft. Microsoft is trying to catch up to Google in search. However, despite significant acquisitions and partnerships in search and display, it is losing money in its online businesses. It's doing very well as a company overall, however, fueled by its other software businesses (Windows, Office, Servers/Tools).Write a memo to your CEO, giving a 30,000 feet overview of the current market situation, outline the direction you want the company to take in this space, and give your specific reasons. Discuss any technical or business advantages your company may have that influenced your opinion. Finally, discuss how should the company deal with other players in the market and what role should the company try to play in the coming years. You are welcome to consult online resources (and then list them). Clearly state any assumptions.
- Yahoo acquired and operates the largest online ad exchange. Yahoo is also a publisher, and runs an ad network that is centered around Yahoo the Publisher. The ad network participates in the exchange that Yahoo owns. The exchange gives Yahoo scale of demand and supply, but is not in itself a profitable business. Yahoo has to decide if it is a media company (a publisher) or a technology company (like an exchange) or both. Yahoo is profitable in the online space, but is experiencing revenue pressure and pressure from investors.
- AOL is also a significant publisher, but is having a difficult time making money online outside of its declining subscription services business (dialup, broadband). It has a strong focus on acquiring and building up content as a publisher. It is much less profitable than Yahoo online, is explicitly in a turnaround situation, and has to figure out whether it wants to be just a publisher in display advertising or also an ad network (it operates one of the largest ad networks, Advertising.com, which it acquired some years ago), or also a platform (providing technology to others, e.g. an exchange, which it does not operate today).
- Facebook is a very fast-growing social network, whose display ad page views per month has just exceeded those of Yahoo and Google.
- The Fox Interactive Network is a network traditionally centered around MySpace, which was extremely popular but has declined substantially in popularity. The inventory on MySpace is relative inexpensive to advertise on. Fox wants to stay relevant, and to monetize well.