Darren Herman

Superbowl Ads (Winner/Loser)

You saw it coming a mile away - so I need to live up to the reputation.  The Superbowl isn't just about two solid NFL teams squaring off in Detroit, a few 60+ year old rock'n rollers playing time told riffs on their guitars, or John Madden showing off his amazonian eyebrows...it's also about the commercials.

Paying north of $2.5 million for a :30 second spot is quite the media spend, but there is an ongoing debate whether or not it's worth it.  I'm not going to debate that however - we'll leave that up to another post on another day, but what I will do is take the easy way out and show my favorite clip of the commercial madness:  Bud Light's "Magic Fridge."  I happened to be watching the Superbowl with 15 or so of my friends and this was really the only commercial that everyone thoroughly enjoyed and all concurred that it was funny.  However, did the brands message get through?  That I dont know, and wont be able to measure for a while, however, the recall value of the commercial towards the end of the night (well after the Superbowl was over) was still high and even this morning, I heard a few people talking about it.

The worst spot of the night:  The Hummer H3 ad.  Are you kidding me?!

What does a Venture Capitalist and A&R Rep Have In Common?

If we look at the music industry, it mirrors the venture capital industry. In the music industry, A&R (artist and repertoire) reps go out and find the hottest upcoming act much like how venture capitalists try and find burgeoning startups or businesses that want to get to the next level through Series X funding. After the act is ‘discovered’ in the music world, they submit their demo and press kit (vc world = business plan and presentation) and if it passes the test of the A&R department and board, the band is then signed….much like how it works in the venture capital marketplace.

Coming from the music industry and dealing with the venture capital industry here at IGA, it’s amazing how similar they are. It’s anecdotally funny to hear how bands have close ties to A&R folks, and how businesses have close ties to VC’s. They are used as leverage in each marketplace and a sign of stature.

This is just the beginning of exploring this relationship….

It's All About Me

Since I was young, I've always had an interest in marketing.  Specifically, how brands relate to people and how they can influence culture.  I've written numerous papers on this throughout my academic career and really believe that for brands to be successful, they must speak to people as another person, not just a "enterprise."  Kevin Roberts has talked about this in his fabulous read, Lovemarks.  Reinier Evers has written about this in his Trendwatching.com newsletter.

I subscribe to the notion of the YOUniverse (thanks Reinier).  I couldn't agree with it any more.  The universe is all about the consumer - with the consumer front and center... the way it ought to be.  Today, an article came out in the International Herald talking about how Buyers Want It To Be All About 'Me".  My question - why shouldn't it be all about the buyers? 

I tried to really bring this notion about the YOUniverse to the world when I launched MyPhotoAlbum.com thru FortuneCity.com.  As the founder/Product Manager of MyPhotoAlbum, I realized that all our "competitors" were capitalizing on printing photographs...why not create a photoalbum that users can update/upload and share - and customize it personally at the same time. When you think about it, every single photo album is different.  Why should our online photo albums deviate from this?  It's all about customization.

Just look at MySpace.  I've got a few friends on MySpace who have customized their profiles to an extreme.  It's unbelievable what people will do to customize and exclusify (is that a word?) themselves.  Why shouldn't this world be all about me?  When corporations can recognize this - they will capitalize on consumers and allow for consumers to drive their product lines and lifecycles...not the other way around.

ZipCar - Is It Financially Sound?

A Look Into ZipCar – Financially Sound?

I have a keen interest in the automotive and business world. When I can mix the two together, I get really excited. Being in New York City, I get to experience many startup businesses take shape and try and battle it out amongst thousands of other businesses here in the city. One of the businesses which have struck my attention is ZipCar, which is a per hour rental service. According to ZipCar’s website, it operates in Boston, New York, and Washington D.C.and is profitable in existing markets – while having 2005 revenue of $15 million. Again, according to their site, they have over 40,000 members of which many have paid annual membership fees of $50, or have agreed to spend at least $50/mo.   The typical customer tends to be dedicated urbanites who don’t need a car to commute to work (me), whilst many are under 35 (me), though some empty-nesters use the service instead of purchasing a second vehicle.

Being that we just rented a ZipCar to drive to Boston yesterday, and having sat through a coffee meeting with a few friends coming up with improved and/or new business models, I’d love to explore the ZipCar metrics. According to my calculations (note, I’m not a financial wizard – I’m a marketing  & strategy guy), ZipCar generates $40-45 per car per day after insurance, gas, tolls, and wear/tear.  Note:  this does not include lease and/or car purchase cost.

I have taken today as an example, Wednesday, January 25, 2006 – and looked at 4 ZipCar locations within New York City:  East 33^rd Street, Washington Sq. Village, E 79^th Street, and W 83^rd Street.  Of these 4 locations, they have a combined 18 cars that were rented a total of 194.5 hours out of a possible 432 (as of 11am EST). On average, the per car revenue was $69.11.  Now, it’s time to take costs out of the revenue… the incurred costs are gas & tolls, insurance, normal wear and tear, as well, as lease/downright purchase payment for the automobile.

I have worked out that the gas cost is approximately $15.63 per car per day and the insurance plus wear/tear is approximately $10 per car per day.  This brings the net figure down to $43.48.  Since these cars aren’t the fanciest, mostly being Mazda Matrix’s, Volkswagen Jetta’s, and BMW 325’s (amongst others), I have taken the average lease cost of $360 per month and broken it down over 30 days ($12). If we deduct the $12 of the car cost from the $43.48, we have $31.48, which is the income per car per day. Since these cars are parked at garages and other locations around the city, there needs to be a flat fee paid per garage by ZipCar, OR, a revenue share per location. I’m not sure which it is, but has to be roughly 10% of the car per day, which is ~$7….so, the actual income is just over $24 per car.  If we take 25 days of operating the car, we’ll see that each car generates $600 of income for ZipCar, or roughly $7,200 per year.  I’ve heard rumors that ZipCar has over 400 cars, which brings their revenues in around $2.88 million per year.

Since the only way that this model can scale is based on amount of cars on the road – we can see why ZipCar tapped Benchmark Capital as an investor…to the tune of $10 million dollars back in July 2005. The venture capital was used to help ZipCar expand into the western urban markets, specifically, San Francisco, Seattle, and Portland.

I’m going to keep my eyes on ZipCar… it’s a model that I’m interested in and since it blends technology (look at its website, especially its booking system), automotive, and the business world. I’m a zipster as they are called…

Digital Rights Management Rant

I’d love to see someone innovate within the space of digital rights management (DRM) to create a universal digital media subscription or “right.” What I mean by this is the following:

I have an Apple iPod (new version, sleek black)

I have a media center PC that powers a 42” LCD

I have a laptop (Sony VGN-TX670p)

I have a cellphone (Blackberry 7100)

I’d like to download a song off my media center PC, that will be able to be used on my ipod. Subsequently, I want to be able to bring it to my laptop and maybe even have the shorter version of it as my ringtone or ringback. So, if I spend $0.99 cents for a song, it should come with the rights to utilize it across multiple platforms and the ease of portability between devices should allow for this. Where is this?  It’s not here.  I can’t tell you how many times I’ve paid for and downloaded songs of iTunes twice. Once on my media center pc, and once on my laptop. When I log into itunes on my media center pc, I should have the same account, library, and interface that I would have if I was on my laptop. Doesn’t happen.

A buddy of mine has a Sprint cellphone (Samsung) and has the opportunity to download a ringtone for $2.50. That’s pretty high….but it only lasts for 90 days!  WOW.  What’s going on here?

Internet Radio vs. Satellite Radio

There is much speculation of satellite radio becoming the next Betamax.  As a current shareholder of Sirius Satellite Radio (SIRI), this scares me.  The power of hearing that ubiquitous Wifi/WiMax is coming to the USA within the next 2-3 years can essentially put satellite radio out of business...why?  If you can get wireless internet access within your automobile within any state, highway, town, city, etc - why do you need satellite radio?  Programming and running the operations of a satellite media company are extremely expensive, as is launching satellites into orbit.  For Internet radio such as Live365.com or Apple ITunes, you can listen to any one of their stations while traveling in your car...and it's just like listening to Internet radio.

Now, the quality of satellite radio over FM radio is not even comparable.  However, if we have ubiquitous wifi or wimax, the speeds of the broadband will hopefully be fast enough that we can have the least loss-less compression available for the best sound quality.  As a shareholder of SIRI and also a subscriber of XM Radio, I'd like to see what the satellite providers will do to protect their positioning.  Thoughts?

Apple: PowerBook or ProBook

awApple's done it!  They've gone to the darkside.  Well, I believe this dark side will be very fruitful for Apple's market share position.  Apple currently has around a 2% share of the computer market and moving over to Intel based chips, it'll allow them to improve the speed, architecture, as well, as develop applications that will compete with the PC marketplace.  The folks who need to watch out now are our friends at Dell, Gateway, Lenovo, and other major market players.

Apple shocked the world today as well with a $5.7billion sales quarter, up almost $900million from analyst predictions.  They also shipped 14 million Ipods in Q4 of last year which was up 3 million from analyst predictions.  Great job Apple!

Open Internet Television

We were fooling around in the office late this afternoon using Andrew's new handheld digital video recorder that he received for the holidays.  After 10-15 minutes of shooting video, he compiled a 30 second intro scene to a television show (the part where the beginning credits roll) and it looked really, really good.  Almost to good for the limited software he was using.

It brought me to realization that we could create vidcasts pretty easily (a podcast, but with text) and distribute them as mini television shows on an online video publishing platform.  We can harness the power of the open internet though its distribution ability, DRM, payment processing and clearing houses, and media serving capabilities and open up a huge possbility for open Internet Television.  Realizing what everyone has been talking about for the past year regarding Jeremy Allaire's startup, Brightcove, of which Barry Diller is on the board...this leads me to a new or adapted/innovated business concept.  Why not create a self publishing catalog of videos that are treated as a television channel.   They can be watched on the television or media center PC, or any other piece of equipment where you can view media.  We can then wrap the content with either subscription payments, single transaction, or ad-supported and generate revenue.  Sort of the Live365 of the video areana.  I like this...

Predictions for 2006

Thoughts on 2k6 - Darren Herman

I am a bit late to the prediction party but due to travel (Los Angeles, Santa Monica, and Las Vegas), I’ve just not had the time to sit down and write my thoughts.  Friends such as Rafat Ali(PaidContent.org) have accumulated large lists of various sets of predictions so I’ll just list a few of mine:

1. Television is changing.  We’re learning that digital cable is the first step to what will become next-generation television.  Having a selection of <100 channels is no longer the case, and moving forward, they’ll be thousands of channels.  Interactive television is on its way – and anybody with determination and the right tools will have the ability to put together a television channel.  These channels will be delivered through the Internet protocol straight to television sets.  Do I believe that this will happen overnight?  No.  The adoption rate of this will take years, but companies such as Narrowstep and thePlatform will start to do very well.  Think Live365.com (Internet Radio) and Blogger.com (Blogs) for Television.  We’ll see a bunch of venture financed startups here.

2. Gaming. I’ll put up the disclaimer right here:  I’m a co-founder of IGA Partners, the #1 global in-game advertising media company.  Now, with that said, I believe that the adoption of video games into advertising campaigns and media mixes are going to become a line-item.  There are already many folks within the industry who understand how important games are to brands such as Ogilvy’s Brandon Berger, SMG Play’s Saneel Radia, Y&R’s Sam Huxley, and many other forward thinkers.  However, it’s time that the adoption curve moves past the “early adopters” into the mainstream of the media buyers and we’ll see some major campaigns in video games.  Now, with that said, video game advertising is not simple to accomplish as every single campaign must be contextually relevant to the game itself.  Nielsen Entertainment and Mediaedge:CIA released their studies last month, as did IGA Partners with our case studies for Subway, FHM, and Redbull and we’re uncovering the same basic principles:  GAMERS FIRST – if the campaigns make sense to the gamers, they’ll have greatest impact.

3. We’re going to see a “Pointcast” type network emerge for media.  For those who do not know what PointCast was, it was a startup formed in 1992 that provided relevant news and information to your desktop thru a push application.  See the Wikipedia definition here.  Pointcast didn’t fail due to it’s amazing product- it failed due to poor management and the timing of the marketplace.  I’d like to see Pointcast come back in some iteration that may bridge iTV, iRadio, Internet, and video games.  Do I believe that media can be 100% ad-supported?  Not all of the media, but there are certainly a mass quantity of media that can be – so lets get Pointcast up and running and support that relevant media.  (I’ve got an idea, so contact me)

4. Everyone has to touch on Google in their predictions list.  It’s just the “thing” to do.  So, I have many friends at Google in the games, search, advertising, and acquisitions departments and I’m writing based on non confidential talks with each of them.  We all know that they’ve been buying dark fiber across the USA.  They’ve quietely rolled out WiFi in the City of San Francisco (here).  It isn’t enough that they control most of the Internet’s searches, but they’re also going to control much of the access to the Internet.  There are some mumbles of Google creating a mini “cube” that will allow for both wired/wireless broadband access – as, well, as be a conduit for televisions as their iTV cable box.  Just think of the applications.  And no, I don’t own any of their stock.

5. Last prediction for 2006:  Apple.  Where are they going?  I’m a huge Apple Computers fan.  Most male teenagers growing up would have pictures of Pamela Anderson or Daisey Fuentes on their walls, however, I had 3 framed pictures of the iMacs and iBooks from various Macworlds. Yes, a total Mac freak, but I’m writing this on my Sony Vaio TX670P as my iBooks rests across the apartment.  Apple is playing in two worlds right now and possibly should pull a “Viacom” which would mean:  split into 2 companies, iTunes and Apple Computers.  Why?  The music division is vastly different than marketing iMacs or Cubes – so why keep them together under the same profit/loss center?  I’d like to see Apple separate them out – and not forget about their computer line (lets start shouting Intel…).

Sirius Tops 3 Million Subscribers

Sirius Satellite Radio Inc. said Tuesda that it recently topped more than 3 million subscribers to its subscription based satellite radio service.  Rival, XM Satellite Radio has over 5 million members and is expected to announce just over 6 million members shortly.