Moore’s Law Gives Way to Bezos’ Law

Source: http://gigaom.com/2014/04/19/moores-law-gives-way-to-bezoss-law/

Cloud providers Google, AmazonWeb Services (AWS) and Microsoft are doing some spring-cleaning, and it’s out with the old, in with the new when it comes to pricing services. The latest cuts make it clear there’s a new business model driving cloud that is every bit as exponential in growth — with order of magnitude improvements to pricing — as Moore’s Law has been to computing.

If you need a refresher, Moore’s Law is “the observation that, over the history of computing hardware, the number of transistors on integrated circuits doubles approximately every two years.” I propose my own version, Bezos’s law. Named for Amazon CEO Jeff Bezos, I define it as the observation that, over the history of cloud, a unit of computing power price is reduced by 50 percent approximately every three years.

I’ll show the math below, but if Bezos’ law reflects reality, the only conclusion is that most enterprises should dump their data centers and move to the public cloud, thus saving money. Some savings occur over time by buying hardware subject to Moore’s Law, plus the fixed cost of maintenance, electrical power, cooling, building and labor to run a data center. In the end, I’ll show how prices are reduced by about 20 percent per year, cutting your bill in half every three years.

How we got here

Google was first to announce “deep” cuts in on-demand instance pricing across the board. To make the point that cloud pricing has been long overdue, Google’s Urs Hölzle showed in March just how much cloud pricing hasn’t followed Moore’s Law: Over the past five years, hardware costs decreased by 20 to 30 percent annually, but public cloud prices fell by just 8 percent annually:

Slide from Urs Hölzle's keynote at Google Cloud Live, March 25, 2014Slide from Urs Hölzle’s keynote at Google Cloud Live, March 25, 2014

Having watched AWS announce, by my count, 43 price cuts during the past eight years, the claim of merely a 6 to 8 percent drop for public cloud seems off. (That would be a 2 percent reduction 43 times to get an 8 percent trend line.)

Nevertheless, applying a Moore’s law approach to capture the rate of change for cloud, one would hold constant the compute unit, while the gains are expressed in terms of lower price. Thus, Bezos’s law is the observation that, over the history of cloud, a unit of computing power price is reduced by X percent approximately every Y years.

A bit of digging on Amazon’s Web Services blog shows how Amazon determined the percentage in computing power (X) and time period (Y) on May 29, 2008. The data from 2008 and the Amazon EC2 Spot Instances on April 1, 2014, shows that in six years, similar compute instance types have declined by 16 percent for medium instances and 20 percent for extra-large instances. Assuming a straight line, the pricing would have tracked as follows:

AWS cloud price reduction
Year Price Reduction Comment
20%
2008 $0.800 $0.640
2009 $0.640 $0.512
2010 $0.512 $0.410
2011 $0.410 $0.328 3 years, 50% reduction
2012 $0.328 $0.262
2013 $0.262 $0.210
2014 $0.210 3 years, 50% reduction from 2011
April 1, 2014 $0.210 6 years, 75% reduction from 2008

For the AWS public cloud, X = 50 percent when Y = 3 years, supporting my claim: Bezos’ law is the observation that, over the history of cloud, a unit of computing power price is reduced by 50 percent approximately every three years.

What’s next

Clearly, cloud, as opposed to building or maintaining a data center, is a much better economic delivery approach for most companies.

And how can an enterprise datacenter possibly keep up with the hyper-competitive innovation from Amazon, IBM, Google and Microsoft? Enterprising tech pros know how this is going to play out. They’re way ahead in asking: “Why should we continue to saddle our company with a huge cost anchor called a datacenter or private cloud?”

It looks as though being a cloud provider isn’t going to be like a retail business when it comes to profits, but it may be too early to tell. It’s a bit like the x86 server business IBM recently sold to Lenovo. There will likely be innovation above the core cloud platform for a long time, which might alter the profitability outlook.

Opinions aside, the math doesn’t lie. It’s not question of if we’re moving to the cloud but how — and when.

Greg O’Connor is CEO of AppZero, which specializes in migrating enterprise software applications to and from cloud computing services. Follow him on Twitter @gregoryjoconnor.

Feature image illustration adapted from Steve Jurvetson/Wikimedia Commons

Mobile Now One-Third of Google Organic Search Visits

source: http://www.marketingcharts.com/wp/online/mobile-now-one-third-of-google-organic-search-visits-42043/?utm_campaign=rssfeed&utm_source=mc&utm_medium=textlink

RKG-Mobile-Share-Search-Visits-Q2-2012-Q1-2014-Apr2014

Source: RKG [download page]

Notes: Mobile’s 33% of Google search visits in Q1 2014 represented only a slight uptick from Q4 2013 (32%), but a more robust rise from 27% share during the year-earlier period. During Q1 2014, Yahoo actually saw a larger share (36%) of organic search visits come from mobile than Google. Overall, mobile devices accounted for an estimated 31% share of US organic search visits during Q1, up from 24% in Q1 2013.

By: Dr. Augustine Fou Saturday, April 19th, 2014 news No Comments

Who’s Still Watching Live TV?

source: http://www.marketingcharts.com/wp/television/whos-still-watching-live-tv-most-people-42064/?utm_campaign=rssfeed&utm_source=mc&utm_medium=textlink

Ipsos-Americans-Typically-Watching-Live-TV-Apr2014

A couple of new studies suggest that despite the apparent rise in over-the-top video consumption, particularly among youth, the vast majority of Americans usually watch TV programming the old-fashioned way: live on TV. According to survey results from Ipsos Open Thinking Exchange (OTX), that’s the typical viewing method for 81% of Americans; a separate study from BroadStream Solutions similarly finds that roughly 8 in 10 American adults are watching live TV. Predictably, though, live TV viewing skews towards an older audience.

As the Ipsos survey results indicate, 89% of American adults aged 50-64 usually watch TV programming live on TV, a figure which drops to 82% among 35-49-year-olds and 72% among the 18-34 crowd. That aligns with study findings from Nielsen, which show a strong skew towards older age groups for traditional TV viewing in comparison to TV content viewed on computers and smartphones. Other data from Nielsen also shows that older age groups watch significantly more traditional TV than their younger counterparts, although the recent drop-off among youth hasn’t been as drastic as sometimes implied.

By: Dr. Augustine Fou Saturday, April 19th, 2014 news No Comments

Search Advertising Trends in Q1

source: http://www.marketingcharts.com/wp/online/search-advertising-trends-in-q1-42079/?utm_campaign=rssfeed&utm_source=mc&utm_medium=textlink

Advertisement

Costs-per-click are also slowly rising, per the report, although trends in impression volume appear to be more reliant on the individual client set.

Following are some interesting highlights from the reports not covered in the above chart:

  • Tablets captured 58% of mobile search spending in Q1, versus 42% for smartphones (IgnitionOne);
  • Mobile accounts for 28% of all search impressions, and is projected to reach 40% by the end of this year (The Search Agency);
  • CPCs are as high on tablets ($0.93) as they are on desktops ($0.94), per The Search Agency;
  • Smartphones (18%) and tablets (18%) together generated 36% of search ad clicks in Q1 (RKG);
  • Google returned 33% higher revenue per click for advertisers than Bing Ads (RKG);
  • PLAs, which accounted for 29% of Google paid search clicks for retailers, showed an ROI 14% better than comparable non-brand text ads (RKG);
  • Baidu accounted for about 8% of global search ad spend, 7% of impressions, and an out-sized 24% of clicks (Covario);
  • Advertiser revenue from search advertising grew by 12% year-over-year, while shooting up 191% for social advertising (Kenshoo); and
  • Social ad impressions grew 39% year-over-year, although click-through rates w! ere just 0.1%, down 27% year-over-year.
By: Dr. Augustine Fou Saturday, April 19th, 2014 news No Comments

Digital Display Ad Benchmarks, by Region, in 2013

Source: http://www.marketingcharts.com/wp/online/digital-display-ad-benchmarks-by-region-in-2013-42087

Sizmek-Digital-Display-Ad-CTR-by-Region-in-2013-Apr2014Sizmek (formerly DG MediaMind) has released its latest report [download page] benchmarking performance metrics for several online ad types and formats across the world. The study finds that in North America, the average click-through rate (CTR) for standard banners slipped from 0.1% to 0.08%, while flash rich media CTRs jumped from 0.14% to 0.25%. There were considerable differences in ad performance across the various regions studied, although the trends were largely similar.

Standard banner CTRs were for the most part steady last year, despite some movement in a couple of regions. CTRs were slightly higher in North America than in Australia & New Zealand (0.06%) and East Asia (0.07%). Other regions cracked the 0.1% threshold, particularly Middle East and Africa, where CTRs almost doubled year-over-year from 0.11% to 0.19%.

Last year, display/banner ads comprised 19% of online ad revenues in the US.

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By: Dr. Augustine Fou Saturday, April 19th, 2014 news No Comments

Half of Americans Don’t Trust Ads

Source: http://www.marketingcharts.com/wp/traditional/half-of-americans-dont-trust-the-ads-theyre-exposed-to-42006/

Only 3% of Americans completely trust the advertisements they see, read or hear, while 11% don’t trust them at all, according to the results of a survey conducted by YouGov. The survey found that among American adults who see any advertising at least once a month, 44% find them to be fairly (37%) or very (7%) dishonest, and half don’t trust them. The figures were fairly consistent across demographic groups, with a couple of notable exceptions.

That exception was black Americans: just 31% believe the ads they see are dishonest, and an equal percentage don’t trust them. Perhaps brands should rethink the fractional amount of advertising spending they’re directing at black Americans.

Blacks’ relative trust in advertising is notable as most other demographic breakdowns featured narrower gaps in perception. For example, men were more likely to distrust advertising than women (53% vs. 47%), but not to a large degree. Similarly, while 18-34-year-olds proved most distrusting of ads (53%), 35-54-year-olds, the least-trusting, weren’t too far behind (42%).

Interestingly, distrust for advertising tended to rise alongside educational attainment: some 65% of those with a post-graduate degree distrust advertising to some extent, versus 44% of those with a high school degree or less.

By: Dr. Augustine Fou Friday, April 18th, 2014 news No Comments

Mobile Now One-Third of Google Organic Search Visits

Source: http://www.marketingcharts.com/wp/online/mobile-now-one-third-of-google-organic-search-visits-42043/

Source: RKG [download page] Notes: Mobile’s 33% of Google search visits in Q1 2014 represented only a slight uptick from Q4 2013 (32%), but a more robust rise from 27% share during the year-earlier period. During Q1 2014, Yahoo actually saw a larger share (36%) of organic search visits come from mobile than Google. Overall, […]

By: Dr. Augustine Fou Friday, April 18th, 2014 news No Comments

Search Marketers’ Take on Ranking Factors for Search

Source: http://www.marketingcharts.com/wp/online/search-marketers-take-on-the-ranking-factors-increasing-in-importance-this-year-42057/

BrightEdge-Growing-Important-of-Search-Ranking-Factors-Apr2014

Source: BrightEdge [download page]

Notes: About 7 in 10 search marketers feel that it will be more important this year to understand the correlation between social sharing of pages and ranking for those pages. While studies (such as this one) have found social signals to highly correlate with search rankings, Matt Cutts has denied[YouTube video] that Google gives any special treatment to social signals. Meanwhile, 85% of search marketers believe that it is more important to measure rank across mobile devices this year and about 8 in 10 see it more important that content efforts are connected to ROI.

By: Dr. Augustine Fou Friday, April 18th, 2014 news No Comments

Majority of Local Searches on a Mobile Phone End With an In-Store Purchase

Source: http://www.marketingcharts.com/wp/online/majority-of-local-searches-on-a-mobile-phone-end-with-an-in-store-purchase-42047/

Some 78% of local searches conducted on a mobile phone result in a purchase, and 73% of those purchases are made in-store, according to the 2014 Local Search Study from Neustar Localeze and 15miles, which measured the last action taken by more than 3,000 users of local business internet search. That suggests that a majority […]

By: Dr. Augustine Fou Friday, April 18th, 2014 news No Comments

US Local Mobile Ad Spending Will Overtake National Mobile Outlays In 2018

Source: https://intelligence.businessinsider.com/welcome

Local mobile ad spending in the U.S. is about to take off.

  • By 2018, local mobile ad spending in the U.S. will comprise 52% of all mobile ad spending, according to a forecast from BIA/Kelsey. Local spend will hit $15.74 billion in 2018, compared to $14.56 billion in national spend. BIA/Kelsey defines local mobile ads as ads that are geotargeted.
  • Local spend growth will far outpace that of national spend. In the five years between 2013 and 2018, local spend is expected to grow by an average 40% per year, compared to 27% average annual growth for national spend.
  • Local search will continue to comprise the largest share of local mobile ad spend, but its share will decline. Search made up 62% of local spend in 2013 but will only make up 50% in 2018.
  • Native-social local mobile ad formats will grow at the fastest rate, and will pass local display spending in 2018. Native social ad spend is expected to grow 81% per year on average from 2013 to 2018 and will make up 22% of local spend in 2018. Native social ads refer to ads on social networks that display as regular posts or messages.

The shift to local ad spending will actually be driven primarily by national brands looking to incorporate more location-based initiatives in their ad campaigns, according to BIA/Kelsey. Many are utilizing click-to-call ads, click-to-map, and more generic geotargeted ads for their local branches.

A big reason why analysts are so bullish on local native-social ads on mobile is because of Facebook’s and Twitter’s growing interest in leveraging location-based data. Of course, Facebook and Twitter are among the two largest mobile-social networks; mobile makes up 77% of Facebook’s audience and 76% of Twitter’s.

Twitter recently tested a click-to-call button on local ads for certain brands, with the end goal being to get users to engage more frequently with Twitter’s advertisers. Click-to-call is a highly effective mobile ad format made popular by Google Maps and Yelp.

In addition, Facebook recently incorporated a new feature that will allow users to share where they are traveling to. The effort should help Facebook gather more location-based data on users, which will allow the network to display more in-feed ads and sponsored stories from the local businesses in the area where users are traveling to.

Click here to download the chart and data ! in Excel

USMobileAdSpend

Here is a look at how each local mobile ad format will perform into 2018.

LocalAdSpendFormat

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By: Dr. Augustine Fou Thursday, April 17th, 2014 news No Comments

Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.

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