51 posts from March 2004
It's not a surprise to my readers that i am very interested in the ways that technology is driving change in the advertising and media business. You are probably tired of me talking about Adsense and Adwords and how they work, why they work, etc.
Well i am not alone. David Kirkpatrick's Fast Forward column this week is about all of these issues. He's as convinced as i am that we are just seeing the beginning of how this will all play out.
One of my readers named Giordano sent me an email over the weekend that i've been thinking about on vacation. He asked "Are VCs accountable"?
Well, yes they are surely accountable to their investors, called LPs in the industry vernacular. VCs need to generate returns that are significantly better than what the LPs could get in the public markets in order to compensate the LPs for the risk they are taking by investing in venture funds. And individual VC firms need to compete with each other for the LP's capital and so each VC firm is looking to outperform its competition.
But i think Giordano was asking another potentially more interesting question. Which is, "are VCs accountable to their portfolio companies?". Giordano's writes about the VCs he's seen in action:
From those experiences, I’ve got the impression that the attitude of most of them is one of carelessness: they know that, should they put money in your company or not, they will always have a job, and will find another gig without problems. Since most of them are not career VCs, but come from successful managerial and financial careers, they feel they don’t have nothing to prove.
Sure, they must prove that their investments are profitable and well-chosen to continue managing the money they’re in charge of now, but it doesn’t seems that they have to motivate the businesses they choose.
That's a pretty big indictment of the venture business. And i believe that there may be a lot of truth to what he says. Because i think many VCs forget that their most important consitituency is the comapnies they invest in.
I have a friend and mentor who has been in the investment business for 40 years. He started a hedge fund of funds long before anyone even knew what a hedge fund was. And he was quoted in a recent article as saying that he had always focused more on his relationships with his hedge fund managers than his investors because, "my father was in the manufacturing business and he taught me that his relationship with his suppliers was always more important than his relationships with his customers". I found that to be an incredibly revealing concept.
I will assert that the suppliers in the venture business are the entrepreneurs who create the companies we invest in. They are our most important relationship and we must be accountable to them and the companies they create. Those who fail to do this part of the business well will not suceed over the long term.
Since I bought the keywords "blog" and "venture capital" a week ago, i've gotten almost 3,000 impressions of my ad served on Google ad networks. For some reason, they've all been against search pages and none have been against contextual targeting (ie AdSense). I need to figure out why that is the case.
I've gotten 17 total click throughs for a CTR of 0.5%. I would assume that's about average. I've paid a total of $16.73 for these 3,000 impressions and 17 clicks.
The results on the two keywords were very different. "venture capital" performed well. "blog" did not. And that makes sense because this is what my ad says:
Musings of a VC in New York City
A Great Venture Capital Blog
Here are the results for each keyword
Blog - 1,078 ad impressions, 1 click, CTR-0%, cost per click $1.00
Venture Capital - 1,839 impressions, 16 clicks, CTR-0.8%, cost per click $0.99
I am going to stop my ad campaign for now until i can figure out how to get onto contextual pages as well as search pages and how to get my CPC down to where i think it should be.
Meanwhile, I continue to make make money on AdSense. Since i started on March 5th, 12 days ago, i've made a total of $48.55 for The Grameen Foundation. The average day is $3/day and the average click through rate for ads running on my site is 3.3% which i think is very good.
The Gotham Gal got a meaty new Nitro board. Here she is doing some fine tuning on the inaugural ride.
I am skiing/snowboarding this week with my family. So the posts will probably be more about powder, corn snow, sun, and the beautiful rocky mountains than my usual fare.