Cashing Out: The Week of March 18th – 24th 2012 in Online Marketing News
Senate approves amended JOBS act, CROWDFUND act
It look as though the startup game might be in for a big change, as the senate this week approved two new pieces of legislation concerning crowdfunding.
March 22, in a vote of 73 to 26, the senate passed the Jumpstart Our Business Startups (JOBS) Act, a bill that seeks to make it easier for small businesses to solicit investments from a large number of people online.
Additionally, TechFlash explains “it also will encourage more companies to go public by exempting them from some Securities and Exchange Commission regulations in the first five years after an initial public offering,” while allowing them to offer up to $50 million in public stock without SEC registration. That’s ten times more than the previous limit.
Prior to the Senate’s approval of the legislation (with some amendments), the JOBS Act had already been passed by the House, which will now have to okay those changes made by the Senate before it can be signed into law by President Barack Obama.
And while the JOBS Act has raised some concerns in the business community that making crowdfunding easier also increases the chances of fraud in the process, The CROWDFUND (Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure) Act adds some measures that will help guard against that.
Passed by the Senate March 22, the bill still allows businesses to raise up to $1 million a year through SEC-approved crowdfunding, or $2 million when accompanied by audited financial statements, but investments will be limited by the income of the investor.
“For example, investors with an income of less than $100K will be capped at 5 percent, or $2K investments, and those with incomes over $100K will be capped at 10 percent, or $10K. On top of that, the bill also requires crowdfunding sites to provide protection, including investor education materials that inform people to ‘the risks associated with small issuers and illiquidity,’” writes TechCrunch.
Naturally, there are some who believe the legislation is too restrictive and others who argue it isn’t restrictive enough.
TechCrunch quoted SEC Chairman Mary L. Schapiro as saying that the JOBS Act “removesÂ too many investor protections, and opens up the more vulnerable to ‘fraudulent schemes disguised as investment opportunities,’” Meanwhile, Econsultancy notes “skeptics of additional regulation contend that these rules won’t really provide greater protection to investors and will create the same kinds of barriers that currently making raising money so difficult for young companies.”
Either way, the legislation seems a fairly balanced means of providing small businesses with some exciting opportunities, without completely ignoring the threat of fraud.
Though The Small Business & Entrepreneurship Council, as quoted by TechFlash, did Â say of the the amendment that it â€œunnecessarily restricts the potential of crowdfund investing,” it admitted after the legislation had passed that the JOBS Act is nevertheless “a powerful package with significant benefits for the small business community.”
With threat of new suits, Facebook buys 750 IBM patents
If you thought the latest patent suit brought against Facebook by Yahoo wouldn’t be the last, you’d be right. And, moreover, you’d be of the same opinion as Facebook itself.
Apparently under no illusions that claims of patent infringement won’t be a continuing threat, the social network has just bought itself some pretty good insurance against patent trolls.
Though neither party has confirmed the deal yet, Bloomberg Businessweek reported March 22 that Facebook has acquired Â 750 patents from IBM.
Unsurprisingly, the patents cover a wide range of technologies, including software and networking, and would significantly bolster Facebook’s defenses, the report says:
â€œThe acquisition would swell the size of Facebookâ€™s portfolio, which includes at least 56 issued patents and 503 filed U.S. patent applications.”
Meanwhile, the timing appears to be spot on, as a fresh patent infringement suit just has been filed against the social network â€“ this time from Canadian IT company Mitel, TechCrunch reports, adding “there is emerging evidence of others, including AOL, filing fresh patent applications to cover ever more aspects of social media services.”
So Facebook’s purchase of IBM’s intellectual property serves a dual purpose.
As TechCrunch notes, before this deal,Â “Facebook was in danger of having to either settle with Yahoo or license the old tech giantâ€™s patents to avoid uncertainty heading into its own IPO. It could have tried to invalidate Yahooâ€™s patents in court, but that case could have spilled over its IPO date and scared away investors.” But now, the IBM patents will be handy in counteracting Yahoo’s suit.
“By fighting fire with fire, it may be able to avoid a costly settlement or a plummeting post-IPO stock price. Instead it could come to a cross-licensing agreement with Yahoo or sue the old web portal in response if negotiations break down,” TechCrunch argues.
Meanwhile, Facebook, which is still a young company and has a smaller patent portfolio than some longer established tech companies, can use the intellectual property to further protect against suits from others.
Bloomberg Businessweek cited a February 1 document from Facebook, which read â€œwe expect the number of patent and other intellectual property claims against us to grow.â€ And in order to protect itself against those claims and ensure the success of their IPO, it’s going to have to bulk up that patent portfolio.
“Already, Facebook ranked No. 28 on the list of companies most frequently targeted in patent cases last year, with 22 suits, according to LegalMetric.com. Thatâ€™s more than companies such as Cisco Systems Inc. and Yahoo,” writes Bloomberg.
Zynga buys OMGPOP, gets Draw Something
In this week’s most highly publicized tech acquisition (and that’s saying something) social game developer Zynga announced in a March 21 press release that it has just bought game developer and creator of Draw Something OMGPOP.
Though Zynga has scooped up over 35 other social games as part of the deal, and while, “as a part of the Zynga family, OMGPOP will focus on building new mobile IP and strengthening its existing portfolio of fun and creative social games,” it seems the big lure here was “cultural hit” Draw Something.
Much of Zynga’s press release focuses on the strength of the Pictionary-style game, in which friends ask each other to guess what they’ve drawn.Â “The OMGPOP team has created a game that’s fun, expressive and engenders real social interaction,” says Zynga founder and CEO Mark Pincus.
And, judging by the fact that Draw Something has been downloaded more than 35 million times since its launch six weeks ago, he’s right. Not to mention the fact that, according to the Apple App Store, the game is now ranked the number 1 word game in 84 countries.
Changes to Draw Something are certainly on the way. TechCrunch quotedÂ OMGPOP CEO DanÂ Porter who said during a media call that â€œweâ€™re going to continue making the game more social” with the possible introduction of chat and a function that allows you to save drawings to your mobile device, for sharing later on.
The companies have not yet confirmed the price of the deal though TechCrunch reports a rumored $180 million and $30 million earnout, and Mashable puts the price in the the same ballpark with an estimatedÂ $210 million in cash and employee retention payments.
Amazon makes $775M acquisition of robotics company Kiva
Looking to improve the automation in its fulfillment centers, Amazon has just announced its $775 million acquisition of robotics maker Kiva Systems Inc.
The company already supplies robots that automate the fulfillment process â€“ delivering packages to workers and moving them about the warehouse â€“ to Gap, Office Depot, Staple, Toys “R” Us, Walgreens and others, claiming to improve productivity by “two-to-four times as many orders per hour,” Kiva founder Mick Mountz told TechCrunch. Providing systems at $5 million a pop, Kiva has been growing at a rate of more than 100 percent every year, says TechCrunch.
“Amazon has long used automation in its fulfillment centers, and Kivaâ€™s technology is another way to improve productivity by bringing the products directly to employees to pick, pack and stow,” Amazonâ€™s VP of global customer fulfillment Dave Clark said in the official press release. “Kiva shares our passion for invention, and we look forward to supporting their continued growth.”
According to Reuters, it appears that another company with an enormous warehouse presence, Wal-Mart, recently passed up a chance to buy Kiva, for reasons that “it did not see an attractive return on the investment.”
Though, as TechFlash points out, “Wal-Mart might not have been as interested in Kiva as Amazon because it’s not a e-commerce retailer like Amazon.” For Amazon though, which spent $4 billion last year in outbound shipping costs, “saving a little time can save a lot of money,” says Mashable.
Provided approval of the deal from Kiva shareholders, the acquisition should go ahead without any hindrance.
Affiliate tax unanimously approved in Georgia
Under the banner of House Bill 386, the state of Georgia has just passed into law the so-called “Amazon Tax.”
The legislation â€“ which would impose a sales tax on goods sold in the state whether the seller has a physical presence there or not â€“ passed in the House with a vote of 155 to 9, then got unanimous approval from the 54 members of the Georgia General Assembly.
And while the Atlanta Journal-Constitution (AJC) quoted Georgia Governor Nathan Deal, who lauded the bill, saying “this package is good news,[...] it means our state is more competitive and is a state where we can grow jobs,” those who have followed the affiliate tax in states where similar legislation has already been passed may say otherwise.
And while Bill Heath,Â the senator who carried the bill to the senate claims “the plan represents a savings from state and local taxes of $262 million over the next three years,” as cited by the AJC, the journal also notes that “analysts worry that it will be years before the full impact of the bill is known, while some lawmakers privately noted that official projections show the bill causing state revenue to increase by the third year.”
Meanwhile, Econsultancy, which has followed the affiliate tax closely in most states where it has been proposed laments “Alas! Experience in other states shows quite the contrary,” arguing that “affiliates get terminated by online retailers who do not want to collect the tax (read: job loss),” and that “instead of collecting additional revenue, states actually reap a loss of tax revenueÂ (in unpaid state income taxes).”
Econsultancy cites as examples Rhode Island, where researchers at the University of Tennessee estimated an “average annual loss [...] equal to 2.5 percent of the state’s total sales tax collections in 2007, ” and Illinois, where, based on numbers from the Illinois Department of Revenue, The Chicagoist determinedÂ “an actualÂ decreaseÂ in use tax collected of over $11 million.”
Google updates AdWords for display campaigns, integrates Admeld into ad exchange
In a March 22 post on the AdWords blog, Google announced some changes tailored specifically to improving display ad campaigns.
In language laden with Cinderella references and metaphors, the company mused “for nine years, AdWords customers have been buying display campaigns through an interface designed for search. This is like trying to run in glass slippers — it might work, but itâ€™d be a lot more effective with the right running shoes.”
But that’s all about to change, says Google, with a new tab in AdWords just for bidding on, targeting, and optimizing display campaigns. Along with the update, display ads will also start to be matched to pages based on keyword, thanks to an “enhanced the contextual engine,” says ClickZ.
Google offers the example of a Caribbean Islands Travel Agency to illustrate the benefits of tying display to keywords in this manner:
“In the past, you would have created themed ad groups targeting vacations to Turks and Caicos and the Caribbean. Now, with this new keyword level transparency you might realize that the keyword “Turks and Caicos vacations” is 4 times more profitable than the keyword “Caribbean vacations.” You can optimize your campaigns to aggressively target these high performing keywords, and be more conservative on â€œCaribbean vacations.”
But display isn’t the only area of ads that Google is reworking.
After acquiring Admeld back in June, Google is launching the first part of the integration between the two companies, reports AdExchanger:
“Over the next few weeks, Google will be rolling out AdX Connect, which represents the full immersion of Admeld’s clients to the DoubleClick Ad Exchange.”
AsÂ Neal Mohan Googleâ€™s VP of display advertising told AdExchanger, what this signifies is the first phase of the integration of tools for advertises and publishers:
“We want to move away from a world where thereâ€™s the ad exchange and then thereâ€™s Admeld [...] that doesnâ€™t just mean taking the best functionality from Ad Ex and putting it in Admeld and vice versa â€“ though, of course, thatâ€™s part of it. What I mean is that it should apply to all channels, all formats as well. It should work not just for desktop display, but for publishersâ€™ video inventory, mobile inventory. If you are a publisher, you should just be able to go to this one unified product and manage all of your yield in one spot.”
This week in marketing studies and reports:
13 percent of Europeans have scanned QR codes on outdoor ads
According to an analysis from CBS Outdoor and Kantar MediaÂ of 9,000 Europeans across 6 markets, 13 percent of Europeans have scanned a QR code on an outdoor ad, even though 40 percent showed an awareness of QR codes.
Despite this discrepancy, Econsultancy argues that, “in comparison to other interactive mobile technologies, QR codes are still performing well,” citing the report’s findings that “‘the technologies with greatest potential are those which simplify the user experience’ andÂ that the mass use of smartphones is bringing ‘added strength’ to outdoor advertising.”
96 percent of mobile games played at home
Mobile games may not be so mobile after all, according to a new survey of 15,000 U.S. consumers from mobile entertainment portal MocoSpace, reported on by TechCrunch. The study found that 96 percent of those who played mobile games do so at home, and that 53 percent play in bed.
These findings are supported by data from Miniclip, also released this week and reported on by TechCrunch, which found that “44 percent of people surveyed for the report said that they mostly played mobile games at home.”