The book, entitled ‘eMarketing – The Essential Guide to Online Marketing’ is targeted mainly at universities (and businesses). Quirk is supporting the Creative Commons licensing pogram.

Rob Stokes, CEO of Quirk eMarketing and author of the book says, “We have been working with various tertiary institutions, including University of Cape Town (UCT), AAA School of Advertising and the Red and Yellow School for the past nine years. It became clear that there was not enough source material for lecturers and students who wanted to learn more about online marketing. And, what was available was based purely on American case studies which don’t always make sense in the other markets. The thing I am most excited about is that this book is freely available for download. It’s the distillation of all of Quirk’s knowledge and to be able to offer it to all without any limitations is a privilege.

To add to the innovation, Google South Africa is also supporting it!

Stafford Masie, country manager of Google South Africa was very impressed, saying eMarketing – the Essential Guide is “the perfect starting point for anyone entering the world of online marketing.” Google has also included a $15 Google Adwords voucher in every printed book to give people who have never tried the service an easy way to do so.

I really think that this is a phenomenal effort to try and increase the level of education in schools and universities about the area of online marketing – it would be great if this book could lead to more programs and curriculums being created in parts of the world where it’s especially expensive to obtain this type of material for coursework. The future of the Internet is “Free!” – you heard it here first

Please feel free to distribute the following press release:

For Immediate Release:

Synthasite, an AJAX based Web Publishing Platform, emerged today from stealth mode. The 6-person startup based in Cape Town, South Africa was recently spun out from the incuBeta group as a separate stand-alone company that will focus on delivering a world class web based software platform for web publishing, focusing specifically on Widgets & Mashups. Synthasite looks and feels like desktop software, but remains firmly rooted in the browser with no reliance on client side technology.

Synthasite CEO, Vinny Lingham (Founder of a leading Search Engine Marketing company, incuBeta), said the following: “Synthasite’s Alpha [Tech Preview] release today was a milestone in the company’s aim to become the standard for web publishing. We’re releasing it at this early stage in order to allow the community to assist in the direction that we will take Synthasite and we are very excited about the potential for this space, especially with the rapid rise of Mashups & Widgets. Synthasite ushers in a new era for web publishing; where people construct using existing building blocks, rather than build everything from scratch, and publish collaboratively from any machine rather than being stuck on a single PC or OS. We’re very excited about rapidly releasing many of the features on our extensive roadmap. We’re opening the Synthasite framework to the developer community so that they can build their own components and templates, and we will also be enabling source code level editing – although this will only be available in the Beta released, scheduled for Q4.”

Synthasite is also being tested on Amazon’s Elastic Compute Cloud, which in theory allows it to be infinitely scalable, although accounts will initially be limited.

Synthasite is currently being seed funded by Lingham Capital, incuBeta & Miombo Capital, all South African based investment firms.

Update: 5 June

Less than 1000 accounts left! Here is a quick video of the Synthasite Alpha Release:

As many of you know, Synthasite is launching soon (final confirmed date for the Technology Preview / Pre-Alpha is 4th June 07). We are looking forward to showing the world what we’ve been up to. Just to set expectations, we’re not releasing a fully functional application, but instead we’re trying to get feedback from our users in the early stages of development, in order to ensure that Synthasite will ultimately meet expectations by the time we get into Beta. In my previous blog post on Synthasite, I explained that I will be taking over Synthasite as CEO and spinning it out of incuBeta as a separate company, with incuBeta still retaining a small stake. I also indicated that we were going to attempt to move it to Silicon Valley in order to be closer to the action.

To this end, I’ve spent the better part of the past two months chatting with a few of the VC players in the space, both in London & Silicon Valley in order to get feedback, and potentially, Series A funding. The feedback we got just from the meetings were excellent, but most importantly, after speaking with VC’s in London, the view is that if development work can be done in a lower cost marketplace, such as Cape Town and the business development team is based in the business area’s that really meets the requirements of most startups.

So, in order to cut a long story short, I, along with the Synthasite team, will be basing ourselves in Cape Town permanently to develop Synthasite, and instead of moving the entire team across (disruptions and all), we’ll instead look to setup a Biz Dev office when the time is right, in key markets. The best part is, if we keep Synthasite in Cape Town, then there is really no need for a Series A type round of funding.

In order to focus on Synthasite, it was announced internally, and now to the rest of the world, that I will be leaving incuBeta on a full time basis, and moving directly into Synthasite, effective 1 August. It’s been really great growing a startup into an award winning company, but my passion has always been startups and I’m finally able to move into a full time role doing that in Synthasite. I’m lucky that there is a strong management team in place at incuBeta to drive the company forward, and the people on the ground are very capable of delivering. In order to ensure that the company can operate independently of me, there will be a full operational and relationship handover before 1 August.

In many ways, this has been a lifestyle decision, and I’m going to also try to cut down on the tremendous amount of air miles that I continue to rack up! As many of you may understand, the disruptive nature that flying around the world has on a person, on an almost monthly basis will eventually wear you down! I would like to spend at least the next few months firmly grounded in Cape Town, enjoying the life there (and I’m in Johannesburg right now!). Charlene, my wife & co-founder, will also be leaving the company to pursue her studies further and we’re planning on taking some much needed time off and we’re going to spend those airmiles going to places that we haven’t yet seen over the next year.

On a final note, in addition to Synthasite, I have setup a small Venture Capital fund for Cape Town based startups, called Lingham Capital (no site just yet), and I will aim to assist them with small amounts of seed capital and expertise in building their businesses, all of which will need to be globally focused in the medium term. I do not intend on investing in more than 5 startups at any one time, including Synthasite. My only other investment so far is SkyRove, which is a Social WiFi business based in Cape Town and after 1 August, I will be assisting Henk (the CEO) with taking his business to a global audience.

It’s really sad to be leaving incuBeta, but I know that all my relationships both internally and externally are all intact – so it’s not really a goodbye! I’ll probably post more reflections on this, and a slideshow later this week – but this was just a relatively quick heads up.

The full members of the board are:

Adam Viener, Imwave, Inc.
Connie Berg, FlamingoWorld.com / iShopDaily.com
Craig Cassata, MrRebates.com
Dan Murray, Ravenwood Marketing
David M. Lewis, 77Blue
Eva Klein, FatWallet
Jennifer Nissenberg, Upromise
Jeremy Palmer, QuitYourDayJob.com
Michael Coley, Amazing-Bargains.com
Paul Nichols, Ebates.com
Scott Jangro, MechMedia, Inc.
Scott Kluth, CouponCabin.com
Steve Schaffer, Vertive, Inc
Vinny Lingham, Clicks2Customers.com

In addition, Kerri Pollard made the following message:

At Commission Junction, we are always looking for ways to develop sustainable relationships and improve our services to our clients in order to drive quality results. Keeping with that tradition, we aspired to enhance the communication channel between Commission Junction and our publishers. As a result, I am proud to introduce our Publisher Advisory Board (PAB).

The objective of the PAB is to help Commission Junction build mutually beneficial solutions for the future. To meet this objective, we have recruited a group of notable, established publishers from within our network to serve as the voice for their community.

Commission Junction will proactively obtain feedback from the PAB regarding successes or opportunities they observe throughout the lifecycle of a business or technical initiative. The PAB will collaborate with the Commission Junction executive board to implement enhancements in order to warrant success for all parties.

I look forward to working with this esteemed group of individuals, and I cannot wait to watch their ideas come to fruition at Commission Junction.

Sincerely,

Kerri Pollard
Vice President, Client Performance
Commission Junction, a division of ValueClick, Inc.

“The two days will consist of meeting the CJ/Yahoo! Affiliate Team plus top Y! Executives, product discussions from each property included in the Y! Affiliate Program, Panama roundtable session, Yahoo! Developer Network presentation and the future of the Yahoo! Affiliate Program.”

This is a hugely positive move by Yahoo! and kudos to them for driving affiliate marketing into the mainstream online marketing channel. This cements affiliate marketing as one of the key online marketing channels, and for a group the size of Yahoo! to embrace affiliate marketers so closely, it really does show both momentum in this space, as well as recognition of the value that affiliate marketers can offer to both large and small enterprises.

I’m not going to rehash the background and deal info, referenced at SearchEngineLand, but instead, I’ll try to explain what I see the market impact as being.

I’ve long argued the point that we should be able to price keyword by partner on all the major search engines, as they all have quite different conversion rates and “Not every click is created equally”, to paraphrase. The AOL deal has forced Google to make this move, and I think it will probably hurt their margin numbers and not just their revenues. Overall, it’s probably close to a zero sum gain as the money will flow to AOL, but their cut will just reduce. I haven’t done the math, but they might be just slightly worse off on revenues, but definitely down on margin.

Also, this impact will hurt many of Google’s partner sites that relied on high conversions from AOL to “slip” clicks through the door at higher than market value (respective earning or value per click), because of the fact that marketers cannot price each partner differently.

This is quite a complicated post, so please bear with me – I’ll try to explain this as simply as possible.

Currently, when buying Adwords ads, you pay a single price for a click & keyword that goes to Google’s distribution network.

For example (and I’m using hypothetical, BUT REALISTIC numbers here), let’s say that a keyword received 100 clicks and the breakdown by partner is as follows:

25 Clicks from AOL – 5 Conversions
50 Clicks from Google – 4 Conversions
25 Clicks from Google Partners – 1 Conversion

Total Clicks = 100 x CPC of 25c = $25 in costs
Total Conversions = 10 divided by $25 in costs, leaves us with a $2.50 CPA (Cost Per Acquisition)
Assume an average position of 3 and as you can see from above, AOL has the better conversion rate.

Let’s assume that your breakeven point is $2.50 CPA. Now, because Google runs a single blind marketplace, there is no price discrimination, which means that there is cross subsidization of keyword value (you pay an average price for everything, yet some clicks are worth more and others are worth less).

For the record, our logs indicate that AOL has the best conversion rate across all Google partners, and this simple means that if there is a separate marketplace for AOL, that prices across the Google Adwords network (especially direct) should fall, IN THEORY (see conclusions).

Now, let’s assume that we removed the AOL numbers:

50 Clicks from Google – 4 Conversions
25 Clicks from Google Partners – 1 Conversion
25c CPC x 75 Clicks / 5 conversions = $3.75 CPA

By AOL moving out of the marketplace, this would effectively mean that the remaining traffic would become too expensive, because AOL would not be cross subsidizing it (and obviously, they know this already, and that’s why they want their own marketplace). This would mean that prices would drop in order to offset the drop in traffic quality.

What would this mean for AOL?

$2.50 CPA x 5 Conversions = $12.50 / 25 Clicks = 50c CPC – almost DOUBLE what Google was raking in for them by cross subsidizing, is what the merchant would be willing to pay direct on AOL, because of the higher conversion rate.

Now, here are the possible conclusions vis a vis Google CPC’s:

1. Google CPC’s will drop as marketers move their spend directly onto AOL and adjust ROI’s according on Google. This will impact Google’s financials, as they will have to pay out a lot more money to AOL.

2. Google CPC’s will increase as dumb money floods the market because marketers are either too lazy or overworked to load AOL campaigns (highly unlikely in the long term) and instead they make it more profitable for Google to show Adwords direct ads for AOL, than AOL marketplace ads. I doubt this would occur though, but it’s a possibility.

3. Google CPC remain unchanged as AOL take-up rates are too low to impact the overall conversion number in the short to medium term.

So, logically speaking, by removing the “bane of mankind” *according to me* (Cross Subsidization) from the Adwords system, we as marketers will be able to align ourselves far more closely with the value per click.

Where do I get this insight from? Well, as an affiliate marketer, we have to watch the earnings per click very closely. EPC is a key metric and we are also able to distinguish (using our proprietary technology) the different conversion rates and therefore effective EPC’s per network partner for all the search engines. This data allows us to derive very accurate statistical models and also understand how the market is interpreted (well, as best as possible) by other players.

Every cent we spend is our own, so we have to ensure that we’re as closely aligned to value per click or EPC as possible, and therefore we’re very excited about the AOL prospects, but realise equally that it’s a lot of work.

I think this is a great move by Google and I applaud them. They’ve thrown the gauntlet down to the other search engines, and let’s see how they respond!

Basically, James already details what I said during the show, but just to clarify what I mean by Return on Effort, here is my short and simple take on things:

The question was asked as to whether or not it is worth spending time on 2nd tier (non-Google/Yahoo/Ask/MSN) search engines and running campaigns with them.

There are a couple of key issues here, one is market growth (momentum) that Google in particular has, and the second is ROE (Return on Effort)
Let’s make the following assumptions for the US market search engine market (taken from VastPlanet):

Google Market Share = 53% (with AOL)
Yahoo Market Share = 28.1%

MSN Market Share = 10.5%

Ask Market Share = 5%

The Total for The Titans is a whopping 96.6%.

Now, until Snap, Become, Miva & all the other 2nd tier engines send traffic out of the massive :- combined 3.4% market share that they have & I can’t see the logic in advertising with them, and here is why:

If in one of our campaigns at Clicks2Customers, we have to allocate a campaign management resource to setup a campaign on a 2nd tier engine (which we don’t deal with). Now let’s assume for a decent sized researched campaign of 5,000 keywords with dedicated ad copy (as all engines are different and have differing editorial rules), it takes them 100 hours to do (and that’s quick, using our technology and existing processes).

Let’s assume that currently on Google, we are running with 50,000 keywords and generating $100k a month in sales and in our category, we’re getting 5.3m impressions (searches) per month. All things being equal, by the ratios above, the maximum searches we would get out of ALL the 2nd tier engines combined, would be 340,000 searches with 50,000 keywords. Let’s further assume that we went with the largest 2nd tier engine (not even sure who that is) and the engine had a 20% market share, then I’m going after a market of 68,000 searches related to my product/service – if you divide that further with the fact that you’re only loading 5,000 keywords – it would get scary, so I will neglect to include this in my calculations.

Again, ceteras paribus, if you just work out the back of the envelope stuff, then the absolute maximum that this traffic is worth to me if it converted even just as well as Google does is $1,283 in sales (which I highly doubt, as there are large amounts of Clicks Fraud on 2nd tiers). And that’s with a 20% market share which is not even possible in such a fragment tail-end market.

So, assuming I could spend my 100 hours on Google, and push my campaign performance up by just 10% with an extra 5,000 keywords, then I would be pushing the needle on my revenues by $10,000 (a nearly 400% increase in ROE), why would I bother with 2nd tier engines? I know the argument (from the 2nd tiers) is that it’s cheaper, etc – but at the end of the day, spending those hours improving clickthrough rates and other metrics like conversions etc, will translate into greater savings anyways on the majors like Google – so I don’t buy that argument.

Most Google PPC campaigns I have seen are not even 50% at peaking in terms of digging into traffic in the long tail, and most people are so worried being on other engines that don’t matter and waste their time there. Mine the Google keyword gold instead, and when you’re finished making triple digit gains, then go visit Yahoo and then MSN, and then finally, Ask.

Lather, rinse & repeat.
Someone today said to me that no one ever made a fortune by worrying about the numbers after the decimal. I think that this definitely holds true in this case.

Also, my brother recorded the following clip on his cellphone on the night of the awards – he’s understandably quite excited:

For the record – the numbers in there currently are just proxy and no indication of what our financial plan for Synthasite is

We’re launching Synthasite Version 2.0 on 1 June 2007 and in terms of the rebuild it will have taken us a total of 6 months from concept to deployment, using a core team of 3 full time engineers, 1 QA/Server infrastructure resource & some very agile methodologies (utilizing Basebamp & Rally) to launch Version 2.0. By comparison, Version 1.0 took the inputs of over a dozen people and about 2 years of development to complete. Couple that, in addition to the fact that we were building an AJAX application way before it was even called AJAX, means that there was a large amount of R&D that went into evolving the product, none of which was wasted, and ultimately led us down the new path that we are walking.

We aim to relocate the Synthasite team (6 people in total) to Silicon Valley in the next few months and run Synthasite from there, spinning it off as a separate entity to incuBeta – which as a Group is growing quickly in many areas, hence the reason to apply a more dedicated and focused team to grow Synthasite. I will be leading the company from there and I have effectively taken over as CEO of Synthasite.

Update: Here is the video embedded for your convenience.

Why are we doing the move? Paul Graham’s article on “Why Startups Condense in America” somehow struck a chord with me. Synthasite is South African homegrown technology, but in order for us to grow the business and stay ahead, it seems like the most obvious move is to base ourselves at the center of the the tech world. That’s not to say that you can’t grow a tech business elsewhere, but for most techies & geeks, at some point in your life, you want to be in a startup in Silicon Valley! Also, I had a meeting with Reid Hoffman, CEO of LinkedIn back in January and he basically said to me that (admittedly biased), it’s no coincidence that global companies such as eBay, Yahoo, Google & YouTube are all within a few miles from each other – good point!
Why have we done the rebuild? In short, when we started building Synthasite – Internet Explorer had a 90% market share and Firefox was a 1980’s movie starring Clint Eastwood. That was then and this is now – the new version of Synthasite will be cross browser compatible and have a host of other great features. Bear in mind that we’re only going with an Alpha launch in June, with Beta expected sometime around Q3, not everything will be in the first build.

Another good reason for the relaunch was that the market has evolved considerably since the original planning and build phase, and it was good to take a step back and create a vision for Version 2.0 before jumping straight in. Much of what has been done up to now has been trial and error – with great feedback from our Version 1.0 Beta testers. We now know where we are going, and in the spirit of all things “Web 2.0″ we’ve gone back into Stealth mode until June 1st.

So, a bit of advice to other Internet startup entrepreneurs that I have either learnt the easy way, or the hard way (not going to say which!):

1. Read Jason Fried’s Getting Real
2. Bootstrap Version 1.0 and get it out there ASAP – user feedback is imperative
3. Talk to other entrepreneurs who have been there, done that
4. Don’t bother the VC’s until you’re really ready with a focused offering – you only really get one shot to do a solid pitch.
5. Just do it! Stop planning and start prioritizing. It’s amazing what we can achieve when we focus and take action.

Here are some of the VC blogs that I read regularly – I don’t necessarily know these guys, but trust me, judging from their content, they know what they are talking about – and it’s worth taking a page out of their book, err… blog.

• FirstRound Capital’s Josh Kopelman – RedEye VC – Most notably, his most recent post.
• Crosslink Capital’s Peter Rip – EarlyStageVC
• Hummer Winblad’s Will Price – Particularly this slideshow/powerpoint that he produced.
• August Capital’s David Hornik – VentureBlog
• Guy Kawasaki’s – How to Change The World
• Union Square Ventures’ Fed Wilson – A VC – I particularly liked this post on widgets.
• YCombinator’s Paul Graham