Facebook deal is all about the "inventory"

Excerpts from the blog

"Inventory" is the word I kept hearing when Microsoft and Facebook announced their deal Wednesday.

Kevin Johnson, president of the Platforms and Services Division, twice mentioned how much inventory the deal was providing for Microsoft's AdCenter business: "This deal brings more inventory and more value to that ad platform. At the same time it enables both parties to collaborate as Facebook looks to develop new ad type as it relates to the social experience."

By inventory he was referring to space where Microsoft can place ads for clients. It may seem like there's an infinite number of Web pages, but there's actually limited premium real estate for companies to hang their billboards.

That's why the online ad titans are so aggressively pursuing contracts like the one Microsoft made to be Facebook's exclusive ad platform.

It's also one of the great tricks of search advertising. Every time you click search, you're helping Google or whomever create a page with inventory that can be sold to advertisers. But that's high-volume, low-rent stuff.

Facebook is like a prosperous new suburb, a place with lots of opportunities for a developer like Microsoft to build and rent space to companies.

What I have trouble reconciling is the scarcity of inventory and the difficulty Web startups have breaking into the major leagues. I guess users are limited in the amount of personal-time inventory they have, and hot sites like Facebook are allegedly where they spend more of that time.

People are quick to write off Microsoft's ad business because Google seems to have it all. But Facebook helps Microsoft's inventory build critical mass, and it's a great place for Microsoft to develop and show off its new post-search ad technologies.

Zillow's latest move

First it was Craigslist, then it was Google and Yahoo.

Now Zillow is emerging as the latest big threat to newspapers, which are watching a series of Internet companies go after their dominant share of advertising and undercutting them with free services.

At least that's how I read Wednesday's announcement that Zillow has signed a deal with ERA to display the realty firm's listings on Zillow's site.

ERA is just the first announced user of Zillow's Listings Feed service. The Seattle Web company is also in talks with other brokerages about Zillow Feeds.

The feeds could increase Zillow's usefulness by adding more "real" properties about properties, but I wonder if it will also diminish one of the company's original promises: To upend the real-estate market by giving consumers new tools to independently search for and evaluate the value of homes, similar to the self-service effect Expedia had on travel.

With Listing Feeds, Zillow is providing free exposure to brokerages. In return, they're helping Zillow build and refresh its property database and providing traffic that will help Zillow sell more ads.

This is the Craigslist strategy: Offer free listings that lure advertisers from newspapers, then take the community of users that have relied on newspapers' classified ads.

Newspapers blew it by cutting classified prices and by taking that community for granted, but they have done a great job with categories such as real estate that are a cornerstone of their business.

Remember they're not just paper products — virtually all newspapers are providing online services for brokerages to list properties online, as well as local Web sites where buyers and search for homes.

It's hard to compete with free, which is what Zillow is offering, but the site also has a long, long way to go before it has papers' reach and market penetration.

Sold on Neil Young

The real reason Salesforce.com Chief Executive Marc Benioff was in Seattle on Wednesday wasn't to pitch his company's new development platform.

It turned out he and co-founder Parker Harris wanted to catch the Neil Young concert here Tuesday night, so they decided to stay over and update local journalists on the company's progress.

This material has been edited for print publication.

Brier Dudley's blog appears Thursdays. Reach him at 206-515-5687 or bdudley@seattletimes.com.