I would expect any reader here would know about the two red hot new categories on online commerce – private product sales and group coupons – both becoming very popular by offering time-sensitive deep discounts to large Internet audiences. Gilt Groupe and Groupon are respectively the best known in U.S., but grand-daddies like France’s Vente-Privée towers over Gilt, and new competition is coming on fast and fierce. The growth in these sectors is for good reason. These models generate a huge amount of upfront revenue for the provider who only later pays the actual manufacturer or service provider their cut.

But the success of these business will also be their Achilles’ heel. There’s a rumor (I have not been able to verify) that Todd Sawicki found the news that Gilt Groupe has been so successful at selling top-notch unsold clothing inventory that the well items intended for retail is drying up. It’s said that They are doing direct deals with manufacturers to produce lines explicitly to be sold on Gilt. It is estimated that 35-40% of Gilt’s women’s clothing sold will have been acquired direct from producers, even though the implication is that everything is high-end liquidized inventory. While it’s a great score to buy a $2,000 suit for $380, it’s another to buy a good looking, but poorly made $380 suit for $300 dollars. People on the private sales sites are not there to get decent deals on low and medium quality goods, they are there to get great deals on high quality goods. When the quality drops, so will the customers, when the realize they could get the same item’s elsewhere at the same price without being forced to make the purchase in the site’s short time frame.

Silicon Alley Insider did some good comparative research on other companies (such as overstock.com) selling unsold inventory at deep discounts. Since these businesses were all premised on relieving markets of excess inventory, they all bump up against a very firm ceiling once excess inventory is gone. This isn’t to say they aren’t great businesses, they are, but it does mean it will be very hard for Gilt to have enough inventory to match the demand it creates. Add to this equation there presence of 5 or more fast-follow competitors in almost every vertical and we should expect to see quickly shrinking margins as newcomers bid up what’s left of the inventory.

For the coupon sites there is a different but similar Achilles’ heel related to volume. At first I was stunned that businesses were offering services at 25%-33% of retail cost, and moreover making this offer to hundreds or thousands of people. These are local businesses not factory production lines. More customers mean more work. Detailing a car, whitening teeth, or giving helicopter lessons does not get cheaper because you suddenly have 500 new customers. In many ways it gets more expensive because you’re obligated to service huge volume over a short period. But businesses aren’t doing it tactically to increase short term sales, they’re spending marketing dollars to land long-term customers at a short-term loss. This is reasonable (if they actually on top of their marketing/ROI game), but makes it very unlikely they’ll make such an offer again now that they’ve built a huge new pool of leads.

In this very forthcoming review by a helicopter pilot training schools the problem is made quite clear. The school wanted to do a Groupon as a marketing campaign to get more student. They certainly got people’s attention, but likely too much. They are now obligated to give 2,400 introductory lessons at such a cheap price the instructors have to do them all voluntarily. One can assume it will be a very long time before they agree to doing another Groupon, and when word gets out other businesses might try and estimate the true cost in advance instead of listening to a pitch that says “how could you lose by getting more customers then you can handle”. So like Gilt and the private sellers, the success of Groupon and the coupon sites means they are draining a pool they can’t refill.

It will be very interesting to watch. Will these businesses be able to adjust their models to allow for reduced short-term sales, but ensure their long-term success? Will hyper competition make this a race to the bottom and if so, who will get caught holding the bag? The start-ups? The companies that acquire them? The companies that give them their inventory?

Word is Hawaii is spending a lot on advertising right now. Kudos to sfgate.com for doing a connected, multi-placement ad on their homepage without the requirement of any moving elements.

A couple weeks ago Facebook quietly made stats available to Facebook Page administrators so they can see engagement stats of Facebook users and their brand pages. It’s incredibly helpful and detailed.

Here’s a screen shot of stats from Dogster’s Facebook Page for this week:

Yesterday I got an email from Facebook with a consolidated view of stats from all our Facebook Pages. This is an excellent move by Facebook, considering how popular their Fan Pages have become. We have 6 branded Facebook pages and getting core data in a single email saves a lot of time. Facebook totally missed what brands want when they launched Beacon, but they’re really nailing it with the box ads and fan pages.

Facebook really misjudged brand/advertiser needs when they launched Beacon in 2008, but they’ve been nailing it since. Have you noticed how many ads/promotions display a facebook.com/brand_name URL vs. the brand’s actual URL. Facebook has also done a great job with their new style of targeted ads. Many brands have well over 100,000 fans on their Facebook Page and we can assume serious money is being made by business giant and tiny through this new exposure and engagement. These new analytics allow a brand to transition to tracking real ROI on their campaigns which is critical for long-term adoption. I wish Twitter would do this too. (Ahem to anyone looking for a new twitter business to make.)

We were a little late to the game, but are making up for lost time. Here are examples of data for Dogster and Catster from the first weekly summary

This week’s summary for the Facebook Page: Dogster
+284 Fans this week (5,118 total Fans)
616 Wall Posts, Comments, and Likes this week (980 last week)
1,460 Visits to your page this week (3,260 Visits last week)

This week’s summary for the Facebook Page: Catster
+75 Fans this week (2,239 total Fans)
222 Wall Posts, Comments, and Likes this week (450 last week)
466 Visits to your page this week (685 Visits last week)

You can bet our social media team will be using these weekly benchmarks to drive up fans, interactions and visits and keep them up.

Do me a favor and follow some of our fan pages ;)

  • facebook.com/dogster
  • facebook.com/catster
  • facebook.com/snuzzy
  • facebook.com/catatar
  • facebook.com/dogatar

Finally, a big congratulations to Facebook for overtaking Google as most popular site in the U.S. This is astounding. They have simply out-executed every other Internet property in regards to building what the mass consumer wants.

SXSWi was just as hit or miss as always. The best panels flop and the stumble upon talks open doors in your mind. But as always it was about the extended conversion with dynamic people sets that make it one of the most worthwhile events of the year. On any given day I felt like I only learned a couple items of value. But collected together it equals roughly a month or two of research work accomplished in a couple days.

Here’s what I learned at SXSWi 2010 this year that I thought would be helpful for others.

20% of all books sold on Amazon cost $0.01. Used book sellers do that as they can make a profit on shipping alone. Amazon get a good cut of the shipping payment too so they don’t care if you buy a book new or that same book used for $0.01. Advice for a book seller that gets on a best seller list is to remove the book from Amazon to keep the book from flooding into the used sellers.

The amount of data created by humans in 2009 exceeded that of all data created by humans prior to 2009. [Updated. Source: Andreas Weigend / HBR via Rob Gonda's presentation.]

Fashion-related sites are very in-style. There are too many of them, but they’ve been so poor for so long, many are trying to rectify that. Polyvore is recommended as is ModCloth and ChicTopia, and Burda Style. However the virtual “try on clothing” sites do not seem fully baked … yet. I expect great things in that space, however.

Games and game mechanics are becoming a part of everything as a way to engage customers. I think this will be mostly ephemeral outside of actual games but is trending like a wildfire now.

The Semantic Web is a attempt at contextually organizing data on the web and it is mostly as semantically meaningless a name now as it’s always been. There will be big advances, but at least for the coming year if you hear people preaching or promising about how the Semantic Web (sometimes even referred to as Web3.0 or Web4.0) is about to blow up, you can tune them out for at as it’s just not there yet. Semantic web developers aspirations are very worthwhile, and there are some VERY interesting projects underway to expose data and information motion on the web in ways other then a traditional search engine. Wolfram Alpha is the best example. Ask it where the space station is right now or how old the earth is and it will use the data it accesses from across the web to actually calculate the it’s position. But there’s still more hype then reality in making more sense out of the data we already use to find info on the Internet. But in 5 years keyword-based searches will only be a small percentage of the ways information is retrieved from the Internet.

CCS3 is very interesting and is on the cusp of being supported by all browsers. Here is what CSS3 makes possible w/o hack or the support of other elements (such as images or javascript).

  • rounded corners

  • drop shadows

  • color gradients

  • Canvas (see canvas below)

  • display text anything at a rotated angle

  • Customize display of just first or last items in a list.

  • displaying text in non-standard fonts (caveat: that font has to be downloaded, not that universal yet.)

Here’s a nifty site to test it out.

HTML5 is also very impressive but it will be months or years before all browsers support it. Here’s what you can do with HTML5

  • display videos neatly on a page w/o using Flash

  • The addition of specific content tags that act like div’s but explicity clarify the section’s purpose: <head>, <nav>, <article>, <footer>, <section>, <aside>. The benefit here is that search engines or anyone can know for certain what is what on the page. Seem trivial but will offer a lot of utility IMHO

  • build canvas pages (See Canvas below)

  • It’s very feasible to serve HTML5 pages that gracefully downgrade to HTML4 if the browser doesn’t support it. The Google homepage does this already.

IE 6/7/8 are the browsers with the least support for CCS3 and HTML5 though they do have many of these functions available via proprietary scripting/formatting options. The big news here is that on Tuesday Microsoft announced that IE9 is in the works and it will be CSS3/HTML5 compliant

Canvas is a browser-based presentation format that uses CSS3 and HTML5 which allows a drawing surface that can be embedded in a page with a tag that you can then draw into using JavaScript commands (thanks @Hoopz for the clarification) for the display of highly dynamic content such as games, real-time charts, design tools. These are all things the can be done very well in flash, but no longer require the flash plugin to work (great for mobile phones) Canvas won’t be mainstream anytime soon, but it already a great option if you know your user base user a CSS3/HTML5 Canvas-enabled browser.

Digg is about to overhaul the way their popular service works. This is as risky are New Coke, but I think it’s going to be very popular and something they had to do. If you don’t change on the web you become irrelevant. The announcement was important enough for CNN news to put it on their homepage so take some time to understand what their doing:

  • Each user will see a homepage custom-tailored to them

  • They’re replacing their 20-odd content categories with a limitless structure open to whatever people want to classify. (This is what has worked for StumbleUpon for so long and I’m sure will be appreciated)

  • A user’s weighted authority will be based not just in on-site participation, but on their social activities all over the internet. Thus if you are new to Digg, but have much respect on twitter or Facebook then Digg won’t treat you like an untrusted agent. (I wonder if they’ll include Reddit and StumpleUpon eventually ;)

  • They’ve also entirely redone their back end to allow for significantly better scaling and ability to launch new code anytime to any section.

  • They are going to add back to their site the ability to see a number of ranking displays they strategically suppressed previously. It was suspect that feature removals were to weaken power diggers control, so it says a lot they are returning them

  • Also of note is the day after the announcement they had already communicated with the changes and announced for the first time the resumption of some features they had taken from the power users. This is VERY smart. While it’s gaming of the system by power users that is forcing this overhaul, it’s also the power users that bring so much content and quality to the popular items. If you throw them out with the bath water you’ve lost your baby.

Austin, Texas experienced an 0.8% employment growth from Dec ’07 to Dec ’09. Austin did not have a recession. Home prices below $1 million did not go down. The population is growing by 50 people a day.

I saw a working FitBit for the first time in use by a couple friends. Sleek and small and discrete (even the display area is hidden) they track distance walked, calories burnt and current caloric burn. They both said putting a number of their distance and caloric burns strongly motivated them to do better each day. The device also has a bracelet you wear at night that can monitor how long and how well you slept by your hands movement. I want one, but apparently they have severe production challenges that keep them waiting lists long and delivery dates floating.

Whales communicate at a frequency of 20 hertz. Historically they used to be able to communicate over thousands of miles due to the way sound waves travel in water. Since the advent of the combustion engine (which blasts out sound waves in the same range) whales can now only communicate over 150 miles max.

If you want to blog regularly you should do it every day. If you do it once a week, it’s easy for it to become once a month. Even if you don’t have something profound to write every day, write something. (Advice from the successful daily writer Jon Steinberg who got it from the prolific Fred Wilson)

Pea shoots are a Shanghainese specialty that are at many restaurants that they never put on the menu, that they’ll deny they have if you order in English. You’ve got to know the Chinese name for them. The explanation is that they are so fundamentally chinese that a westerner couldn’t understand them, like giving a Fabergé egg to a baby.

Different needs for planning now vs soon: Plancast works better for coordinating future activities. Foursquare and Gowalla work better for coordinating current activities. For what it’s worth my greater circle of contacts are more active on Foursquare then Gowalla.

I’ve also learned it’s about time we redesign this blog. It’s added to the list.

We’ve been getting a lot of digg traffic lately. Here are the visits during a big spike over a 2 day period. Check out what browsers Digg users use. Firefox is 65% and Chrome is 12.3%. Wow! Chrome is definitely being adopted by the early adopters.

“As a result, [Demand Media is] soliciting feedback from marketers around the development of a performance-based advertising service that would connect them with [the Livestrong.com] audience. We believe vertical advertising strategies like this are an important part of the future of new media, and it compliments a lot of the work that we are already doing with branded advertisers around display ads, sponsorships and deep content relationships.”

This quote above is from Larry Fitzgibbon, EVP of Brands, Demand Media and was posted to their company blog in May 2009.

The reality is that In May 2011 many big and medium companies will be kicking themselves for not creating vertical content and integrated brand opportunities for advertisers sooner. I suppose Tim Armstrong announcement that AOL (errrr Aol) that verticals were the future of their business should have put the strategy on everyone’s radar … but how many companies were even listening to their peers growth strategies in Q2 of ’09?

Wired just today ran the article AOL Becoming Automated, On-Demand Content Factory. Though Aol has some great verticals and 10s of millions of legacy users, they’ve got a lot of problems and it’s a very big ship to turn around (though ‘dry dock and relaunch’ might be the more fitting analogy.

Although we chaff at the terminology Dogster, Inc. does nothing but build verticals – serving everyone from the obsessed and the reticent – and the reason it works so well is we spend more time than anyone else with the big brand companies in our sectors that want to reach our audiences. No one knows online pet advertising like Dogster, Inc. That simply comes from obsessing over it for almost 6 years, building key relationships and making sure every ensuing campaign works better for the audience (and thus the advertiser) year in and year out.

We are very pleased to announce we are seeking an awesome Internet Advertising Operations and Project Manager.

Our ideal candidate has had 3+ yrs of ad ops experience and 1-2 yrs of project management experience, is completely data driven and understands the entire digital media process from a design, engineering, business development and sales perspective. This is a really great opportunity to work with a profitable dynamic start-up. The position is 6-month contract that we hope will lead to a full time gig for the right candidate. Rock stars only.

The Advertising Operations and Project Manager is responsible for coordinating and managing all aspects of the ad operations process including: ad trafficking & optimization, managing inventory, reporting, customer service and billing (with accounting), defining and managing project time lines, leading client meetings (with sales), evaluate analyze and apply IO parameters – defining work time lines and managing client expectations to that time line, collecting and managing all creative assets, working with engineers and designers to build custom campaigns, working with sales & our clients to help define project goals.

Required Skills:

• 3-5 years experience in online advertising in advertising operations or traffic coordinator role

• 1-2 yrs of project management experience

• Detailed understanding of the digital media process

• Ability to work with design, engineering, business development and sales teams as well as clients to define product specifications and schedules

• Ability to manage schedule and scope so projects launch on time defect-free and amazing

• Meticulously think through the user experience aligning both the end users interests and that of the client in building custom ad campaign products

• Expert level knowledge of Microsoft Excel

How to Apply:
If you meet all of these qualifications AND have more to offer, Please email cover letter and resume to: jobs[AT]dogster[dot]com

We are very proud to have just released our first iPhone app into the app store. We released it in partnership with Jim Young, on of our Angel Investors who co-founded the HotOrNot empire. (Talk about a smart money value-add investor ;)

The app let’s people quickly make a profile, find other users either like or near them and start chatting it up. It’s called The Dog Park (naturally) and is meant to mirror the casual, easy sociality that comes amongst dogs and dog people at the real dog park. Install it now for free and check it out.

There’s a built system that allows people to give gifts and send photos to other users with points earned simply by using the app.

Here are some screen shots. Woof! Woof!

A screen shot of who is online in the Dog Park

A screen shot of a chat conversations I’ve had

You earn free points to give gifts to other dogs simply by using the app

Sarah Lacy wrote an article about Dogster over on Tech Crunch, to let people know about our upcoming ad sales partnership with our buds over at I Can Has Cheezburger!

We’re super excited to be working with the I Can Has Cheezburger group of companies and look forward to developing this relationship further! We know you know about I Can Has Cheezburger and Hot Dog, but make sure you stop by FailBlog and ItMadeMyDay.com and check out what else Cheezburger founder Ben Huh and his gang are up to…

Click here to read the whole article over on Tech Crunch.

Three of the biggest Groups in the Dogster community, The Best Lil’ Doghouse In Dogster, Tiny Paws And Furiends Cruise Line & Miss Dixie Monroe’s “Dixie” Land have decided to have an end of summer block party bash.

You’re invited, of course. It’ll be going on in all three of those groups simultaneously.