Crash the Superbowl

When I recently read about Yahoo's acquisition of Jumpcut, I was starting to wonder exactly how these companies are going to make money.

Turns out Jumpcut is used as an enabler in the viral marketing/user-generated ad contest Doritos. It seems to have the effect of a viral buzz effect in online social networks while simultaneously getting some high quality ads for Doritos.

If you haven't already, take a look at the ads in Crash the Superbowl. What I couldn't help notice is that 3 out of the 5 ads seem to be using some type of accident for humor.

While we're on the topic of user created ad contests, check out some submissions for the Dove's user created ad contest (which was open only to women), supposed to air on Feb 25 during an Oscar commercial break.

If you are from my Wharton class, you may find this description of the JumpCut CEO at VentureBeat somewhat amusing: "He then enrolled into Stanford’s MBA program, where they teach you to start companies."

While we're thinking about monetizing social networking and user generated content, you may also find Prof Percival's comments on valuing social networking ventures quite interesting:

If MySpace becomes the model, social networking sites will be quite different from the classic dot-com bubble companies which tried to cash in big by going public while staying independent. The risks are not the same when an iffy venture is part of something bigger, says John R. Percival, adjunct professor of finance at Wharton. "This is kind of like the oil and gas business. The risk might not be as great as you think, and a high valuation might be justified."

A small, independent oil driller faces a huge risk in drilling a new hole, which may be dry, he says. Compared to that, risks from changing oil prices and demand are relatively small. But the situation is reversed when the driller is part of a bigger enterprise that drills many wells. A dry hole here and there doesn't matter, but changes in oil prices and demand do.

Social networking sites may be risky for their founders and the venture capital firms that fund them in the early years, but they don't appear to be pumping huge amounts of risk to the marketplace the way tech firms did in the late 1990s. "If you have a little bit of money invested in this and you're already invested in other things," says Percival, "frankly the risk is not as big as you think."