Why Are TV Makers Pushing Cadillacs When We Really Want Ferraris?

US-IT-CES-ELECTRONICS

Samsung shows off huge new TV (Photo: AFP/Getty Images via @daylife)

Are TV makers going the way of Detroit in the 1960s? In what many, including those who didn’t bother to attend, are calling a boring Consumer Electronics Show, the star attractions seem to be leviathans such as Samsung’s and Sony’s new 84-inch TV sets. Even they apparently is not amazing enough, because Samsung is promising a 110-inch model later this year.

Size isn’t the only way they’re big, either. Those 84-inchers, which one Sony executive had the audacity to call “Ferraris,” costs $25,000, more than I will ever pay for a car, let alone a TV. And they have more pixels than my never-acute eyesight can ever process–even if there were content created for them, which there isn’t.

Seriously, guys, I’m not buying another TV for a very long time. The screen I’ve got is as big as I can fit in my living room, and that’s not going to change. Even if I did have a bigger living room, a big-ass 84-inch TV would feel faintly embarrassing, like tractor tires on a little pickup.

What’s more, not a single Smart TV feature, no matter how cool, is going to sway me to pony upwards of a thousand dollars for a new set to replace a perfectly fine screen. I’ve got TiVo, I’ve got Apple TV, I’ve got Roku, I’ve got Google TV, and probably there’s some other add-on device I can’t even remember. All of them offer more features and apps than I will ever use.

All of this makes me think of those road hogs of the late 1950s and early 1960s that Detroit insisted on manufacturing shortly before those cheap little imports ate their lunch. The fact is that more and more TV watching is occurring on much smaller screens, especially tablets. The sofa spuds of today don’t drive Cadillacs. We want Ferraris, or even Priuses. …

Read the rest of the post at The New Persuaders.

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13 Questions For 2013 In The World Of Online Advertising

questionsCross-posted at my Forbes.com blog The New Persuaders:

For the past few years, I’ve offered predictions here and on The New Persuaders for what’s likely to come in the next year. I viewed them more as an agenda for what to watch for in the next 12 months than as firm predictions.

But it was too easy sometimes to state the obvious so they’d end up right by year-end. So this year, I’m going to shake it up and throw out a few questions instead. I think I know the answers to some of them, but if many won’t be answered definitively by year-end, they remain top of mind for me and probably for many others in online media and advertising.

So in this, the first full week of the new year, here are some questions to which I hope to start finding answers (and if you’ve got ‘em, sound off in the comments below!):

* Will image advertising finally take off online? I have to believe that as people spend more and more time online instead of reading print publications and watching TV, brand marketers will want and need to reach them there with ads that are aimed at creating consideration for later purchases, not just eliciting an immediate sale like Google’s search ads and too many banner ads. We’re already starting to see signs of such advertising with the early success of Facebook’s Sponsored StoriesTwitter’s Promoted Tweets, and YouTube’s TrueView ads–not to mention the explosion of tablets, which provide a lean-back experience more compatible with image advertising. This won’t be a sudden change, since brand marketers and agencies don’t move quickly, but you can’t tell me there aren’t going to be increasingly compelling ways for brands to influence people online.

* Will native ads reach broad scale? Well, perhaps they will on platforms such as Facebook and–well, Facebook–that already reach hundreds of millions of people. Sponsored Stories clearly have gotten some traction, even on mobile devices. But marketers and agencies won’t create multiple versions of campaigns to serve every new ad format that publishers claim work better than banner ads. Which brings up a related question:

* Will any standards emerge around the social gestures that most of these native ads embody? That’s really the only thing that will ensure that marketers can reach scale across many sites. That wouldn’t be in the interest of big companies such as Facebook and Google, which benefit from proprietary ad formats that can reach their huge audiences. But standards, whether it’s banners of a particular size or ad networks, create a more liquid market that helps hundreds of publishers survive as they provide marketers scalable opportunities to reach big audiences. So are there atomic units of social gestures that could carry brand messages across multiple native ad formats without destroying the appeal of native formats? Maybe there’s a technological fix for this, but it’s clear that a lot more needs to be done.

* Will the long-predicted shakeout in ad tech companies finally happen? It didn’t really occur last year despite a few middling-big acquisitions by Oracle, Salesforce.com, and Google. This year, perhaps new Yahoo CEO Marissa Mayer will corral a few to try to recharge the company’s ad business. Google, Adobe, and IBM have built out “stacks” of ad tech, but no doubt they can each fill out their offerings. Then there’s Facebook, whose ad exchange is likely to need fleshing out. But even if they each write checks for a few three-letter acronym startups apiece, don’t call it a shakeout. Given the rapid evolution of advertising technologies, and the reality that using data to refine advertising is still in its infancy, it’s a good bet that more companies will still be created than disappear. That should keep the Lumascape as crowded as ever.

* Can advertisers and publishers make ads more personal without scaring people? That’s the $64 billion question, and it likely won’t get answered in full this year. It’s easy for headline-hungry politicians to make a big deal out of Facebook’s latest privacy gaffe or the Wall Street Journal’s or the New York Times’ latest scare story about an ad that followed somebody all over the Web. That’s especially so since Facebook really does push the privacy envelope too far at times, and too many advertisers idiotically chase one more sales conversion at the cost of scaring off hundreds of others or inviting onerous legislation. But making ads more useful to each individual person is not only crucial to online commerce, it’s potentially better for most consumers as well–seriously, I don’t need to see another ad for a fitness center or a new credit card, but that ad for Camper van Beethoven’s new CD had me in a split-second. The answer lies in these two words, everyone: transparency and choice.

* Will mobile advertising work? Well, some of it already does, to hear Google and Facebook tell it. And while those already devalued digital dimes so far turn to pennies when it comes to ads on smartphones and tablets, this still feels more like growing pains than a crisis in online advertising. Sure, the screens are small and people don’t like to be interrupted in their mobile cocoons. So a different kind of advertising is probably needed–clearly, banners don’t cut it on a four-inch screen. But the value to advertisers of knowing your location and maybe the apps you’re using, coupled with knowledge of what your friends like–all with permission, of course–is huge. That permission may be really tough to earn. But if advertisers can offer tangible value, perhaps in the form of useful services related to what you’re doing or looking for or shopping for–and isn’t that the ultimate native ad?–people may loosen their hold on that information.

* Can Larry Page keep Google relevant in the social media age? So far, the no-longer-new CEO has at least kept Google’s mainstream ad business humming. Page has outlasted a year or so of missteps, missed opportunities, antitrust investigations, and bum vocal chords, and arguably emerged with a company that’s leaner, more focused, and more potent than ever. Not only does the recent antitrust victory appear to leave it free to compete unimpeded, but Android is doing better than ever even vs. a very strong Apple ecosystem and Google is about to emerge as a powerhouse in the other half of online advertising: display ads, whether on the desktop or on mobile devices. Page’s big challenge looms as big as ever, though: Can Google play in the social Web vs. Facebook/Instagram, Twitter, Pinterest, and more? I don’t know, but this may be the year Page has to provide a more definitive answer.

* Will TV and Web video ads finally come together on Connected TVs, tablets, or other devices? Sure, at some point. Video is video no matter where it runs, and while personal computer users bristle at pre-roll video ads, I’m betting viewers are more amenable to various kinds of ads when they view video on Internet-connected TVs or tablets. And even on PCs, YouTube’s TrueView ads, which you can skip after a few seconds, have proven successful to the tune of several billion dollars last year. Traditional TV advertising will continue to thrive thanks to unassailable economics of the cable-content cabal. But given extensive work by Nielsen, comScore, and others to provide metrics that can extend across TV and the Web, the latter may finally get some serious coin from brand marketers–if not this year, pretty soon thereafter. Especially if Apple works its magic on the television.

* Will Facebook really tick us off with a new feature or privacy “improvement”? Is Mark Zuckerberg CEO of Facebook? Nonetheless, Facebook’s well-worn playbook of pushing beyond social comfort levels, then pulling back just a bit, means we’ll probably see privacy norms get stretched once again.

* Will Apple ever make a real splash in advertising? Don’t bet your iPad on it. I think even the post-Steve Jobs Apple still views ads the way a lot of Silicon Valley still does (mostly in error): ineffective, inelegant, and crass. Apple itself can make great ads, but selling them is an entirely different matter.

* Will Amazon make a real splash in advertising? Oh yeah. All the pieces are in place, from a huge shopping-focused audience to a nearly bulletproof technology infrastructure. Again, it won’t set the world on fire this year, but we’re likely to see the smoke.

* Will Marissa Mayer turn around Yahoo? Not this year. Still, I wouldn’t be surprised to see signs of a real turn for the first time in about five CEOs. But the real turnaround will take years–if Yahoo’s board has the patience. That’s still an iffy bet worth about as much as a share of Yahoo stock.

* Will I ever figure out the appeal of Reddit and BuzzFeed? Gosh, I hope so. I get that these guys attract massive traffic, but neither site does much for me. Reddit, in particular, seems so random that I guess it must be the channel-surfing of today’s generation, only with somewhat more worthwhile nuggets. But for pete’s sake, there’s so much noise for the signal you get, and even the most popular noise can be many hours, days, or even months old. Go ahead, call me a geezer who doesn’t get it. You wouldn’t be the first, and maybe you’re right. So I will continue to click over to them until I see the light, my brain explodes, or the next phenom looks more worth wasting my remaining years on.

I have a lot more questions, but I’ve got to stop before too much of 2013 is gone.

Here Are The Top 20 Ads You Actually Chose To Watch On YouTube This Year

From my Forbes.com blog The New Persuaders:

 

A big reason YouTube has been on a roll lately, due to hit $3.6 billion in gross sales this year, is its TrueView ads that advertisers pay for only if people view them at least 30 seconds. At least 65% of ads inside videos use this format now.

So what did people choose to watch this year? YouTube this morning revealed the top 20 most popular ads of 2012. The YouTube Ads Leaderboard was chosen based on what the Google video unit thinks are the most potent signals of viewer choice – the ad’s number of views, how much of it people chose to watch, and the percentage of non-ad views, with all of the ads here eliciting at least as many “organic” views as paid.

What’s most striking about the ads, which range from repurposed TV ads to spots created just for YouTube, is the popularity of the longer-form commercials. Many of the top ads are five minutes long or more.

The message: Create an ad that’s good enough, and the supposed short attention span of online viewers vanishes.

Here’s the complete list, with links for easy viewing:

1. Nike “My Time Is Now
13. Old Spice “Old Spice | Blown Mind
14. Old Spice “Old Spice | Bounce
19. Old Spice “Old Spice | Bed
20. Old Spice “Old Spice | Vending Machine

Can’t Get Enough of Gangnam Style? Check Out AdTech Style

From my Forbes.com blog The New Persuaders:

Geeks love to insert themselves into the zeitgeist as much as anyone, and tech-inflected parodies of popular songs have become a staple of Silicon Valley folks who–let’s face it–struggle to live normal lives while working around the clock.

No surprise that they’re particularly popular in the arcane world of advertising technology firms, which have the additional problem that nobody knows what the heck they do. So today, we have a parody video of–what else?–Gangnam Style.

This time, ad tech leader BlueKai did up a pretty good marketing ploy parody based on South Korean singer PSY’s runaway YouTube hit. Most of it still appears to be in Korean, so I can’t vouch for whether the PSY stand-in is mouthing the words that appear in English subtitles. But the signature opening line clearly subs in “Oppan ad tech style,” and from there you have to depend on the subtitles to get the very inside jokes.

Amid shots of people dancing in server farms and bland Silicon Valley offices, plus cameos by ad tech figures such as Luma Partners’ Terry Kawaja, the video pokes fun at the industry’s infamous acronym epidemic. “Activate… with the DMP! … Optimize, verify, and inform those buys! … HEEEEEY, Sexy data!”

Like I said, it’s inside stuff, so half of you might be amused and the other half won’t know what on Earth they’re talking about. But it’s ad tech, so what else is new? And who thinks Gangnam Style‘s popularity was based on humdrum things like words?

Actually, this isn’t even the first Gangnam Style parody from Silicon Valley. A couple of months ago, there was a startup-oriented one starring a bunch of Valley entrepreneurial luminaries. Watch that one, and you don’t need to watch any more of Bravo’s lamentable Start-Ups: Silicon Valley reality show.

7 Great Places Online To Track Hurricane Sandy

Google Crisis Map of Hurricane SandyFrom my Forbes.com blog The New Persuaders:

Assuming you’ve got power or even a cell phone signal by now, media and tech companies and tweeters galore are providing instant insight into where Hurricane Sandy is heading. Here are a few that go well beyond the reporter-in-the-rain TV coverage:

* Weather Channel livestream: The cable channel that no doubt will be seeing ratings skyrocket is running a livestream on YouTube of the latest news and frequent warnings about what to do (stay home!).

* New York Times live updates: The newspaper is posting live updates mostly on official news, along with an interactive map of evacuation zones.

* Wall Street Journal liveblog: The paper’s continuously updated blog has a wealth of information, including on-the-scene reporting of how folks are coping with the storm.

* Twitter: The hashtag #sandy brings up a (forgive me) flood of tweets related to the storm. Oddly enough, it’s not a trending topic, though “East Coast” and “FEMA” are. And not surprisingly, some people are finding ways to make a joke out of potential tragedy. A tweeter named @HurricaneSandy tweeted: YOU THINK I’M BAD? SEE WHAT HAPPENS IF MITT ROMNEY GETS ELECTED. Still, as in many crises, Twitter remains the place to get the latest, on-the-scene, unvarnished news. …

Read the complete post at The New Persuaders.

Google CEO Larry Page Speaks! Big Reveal: $8 Billion In Mobile Revenues

From my Forbes.com blog The New Persuaders:

Investors have had a chance to digest Google’s third-quarter earnings longer than they expected, but they still have indigestion over the disappointing results. Can CEO Larry Page (yes, he will speak!) and his executives provide a Maalox moment on their earnings analyst call?

We’ll find out shortly, starting at 1:30 p.m. Pacific. You can watch it here as well. Keep refreshing for updates through about 2:30 p.m.

Update: It looks like Motorola was the chief culprit. Yes, less lucrative mobile ads seem to be a factor, but not one Google seems overly concerned about–it’s at least the third time I’ve heard executives say that mobile eventually could be better than desktop ads. Indeed, I was struck by the mention that one reason for the rise in costs that led to lower profits was sales of the probably near-zero-margin Nexus 7 tablet–which was striking for a single, non-advertising product. For better or worse, Google’s betting big on mobile, from ads to devices, and expects whatever shakes out to be positive. Investors clearly aren’t so sure.

And we’re underway. Page still has a strange froggy voice–seriously, really strange like he inhaled too much helium, so I can understand why he hasn’t spoken much in public. Anyway, he’s keeping his remarks short. You can read the prepared remarks on Google+. We had a strong quarter, he says, and I’m really happy with our business. Revenue was up 45% from a year ago.

Today, we leave in a world of abundance–abundant information and abundant computing. Many of us feel naked without our smartphone. Google is super-well-placed to take advantage of these opportunities. We’re seeing tremendous innovation in mobile advertising. Eventually, he adds, it will work even better than desktop ads.

We took a big bet on Android back in 2005. Most people thought we were nuts. Today, there are over half a billion Android devices, with 1.3 million more being activated every day. He suggests everyone go out and buy a Nexus 7 tablet.

Our run rate a year ago for mobile advertising was $2.5 billion. Along with apps and Google Play, it’s now over $8 billion. That’s quite a business, he says mildly–though based on the new way it’s calculated (see below), it may not be as amazing as it seems.

We had spread ourselves too thin. We sunsetted 17 more products last month. It’s more important than ever we converge our services.

We want to make advertising super-simple for our customers. Today, separate campaigns for desktop and mobile makes it more difficult and mobile opportunities often get missed. Advertisers should be free to think about their audience while we do the hard work optimizing across channels.

That’s the gist of his first widely public remarks (he spoke the other day at Google’s Zeitgeist event to the media elite).

Now CFO Patrick Pichette goes into some detail….

Read the complete post at The New Persuaders.

Advertising Experts: Ignore Google’s Earnings, It’s Doing Just Fine

From my Forbes.com blog The New Persuaders:

After reporting disappointing third-quarter earnings, and giving investors a few extra hours to sell their shares to boot, Google saw its shares hammered before trading was halted. But while Motorola Mobility, which Google acquired for $12.5 billion in May, clearly is a big drag on the company, ad folks say its core business is just fine.

Bryan Wiener, CEO of the digital marketing agency 360i, a specialist in search advertising in particular, says Google’s core business still appears healthy. The only hitch, he says, is that mobile ad prices per click are still 30% to 50% lower than desktop clicks, but he says that gap is narrowing as mobile cost-per-click continues to rise.

The main issue is not so much that advertisers view mobile ads as less effective. There are actually two other issues.

First, there’s still less competition for mobile ad space. And since Google ads are sold by auction, less competition means lower prices.

Why is competition less? That brings up the second issue: It’s not yet clear precisely what impact mobile ads have. They don’t work exactly the same as desktop ads, where people customarily conduct a search, click on an ad, and then a certain percentage buy the product. That’s easy to track.

On their mobile phones, however, people are more often searching for a store, rather than looking to complete a transaction online. They may well end up buying in that store–some companies are starting to provide ways to track that connection, and marketers anecdotally know it’s happening–but separate databases for online and store activity still means it’s tough to close the measurement loop.

Wiener thinks that will get solved eventually. Even in the short term, mobile search ads that are still Google’s bread and butter are better positioned to show their value than mobile display ads, which may appear in hard-to-track apps and still aren’t standardized enough for marketers to spend big bucks to reach broad scale. That means Google for now is likely to fare better in consumers’ rush to mobile than, say, Facebook and Yahoo. “Everybody is still bullish on mobile search,” says Wiener. “But it’s still very early in the game.”

Looking ahead to the fourth quarter and beyond, says Wiener, “our clients are cautiously optimistic” about search ads in particular despite the uncertainty of the economy and the election. …

Read the complete post at The New Persuaders.

3 Reasons Google Missed Q3 Earnings Estimates

From my Forbes.com blog The New Persuaders:

Google’s shares plunged this morning by 9% after the search giant’s third-quarter earnings came in considerably lower than expected. The results were accidentally released hours earlier than expected, leading to a halt in the shares’ trading for a time.

Google earned a $9.03 per share profit before certain expenses, far below the $10.63 Wall Street consensus estimate, and down 20% from a year ago. GAAP profit was $6.53. Net revenues after paying partners for traffic were $11.53 billion, up 19% from a year ago. That also missed the Street’s estimate of $11.9 billion. Paid clicks, a key indicator, rose 33% from a year ago, and cost per click, another key measure but one whose meaning is murky, fell 15%.

So what happened? Here’s a quick assessment, which will be supplemented in a new post following the 1:30 p.m. Pacific earnings call:

* Costs jumped. They were up 71%, to $11.4 billion. It appears much of that increase came from Motorola Mobility, which Google acquired for $12.5 billion in May. After all, the acquisition added more than 20,000 employees. As Citi analyst Mark Mahaney said in a note to investors: “Bottom line divergence partly due to Amortization expenses, which came in at $317MM vs. our $197MM estimate. That contributed perhaps $0.40 of the EPS shortfall.” Update after the earnings call: But not just that. CFO Patrick Pichette specifically mentioned costs of selling the likely near-zero-margin Nexus 7 tablet Google released during the quarter–a single product line, so the company’s is clearly pushing it hard.

* Motorola losses were huge. The unit posted a $527 million loss on a GAAP operating basis. Mahaney again:  “Another major delta was Motorola, which generated $151MM Op Loss vs. our $28MM estimate.”

* Ad revenue didn’t set records. It was up 16% from a year ago. Although lower cost per click isn’t always an indicator of a problem, in this case, the fourth consecutive decline has investors wondering anew if it’s due to the lower prices mobile ads get or even competition from the likes of Facebook. …

Read the complete post at The New Persuaders.

Congrats, Facebook, You’ve Hit 1 Billion Users. Now What?

From my Forbes.com blog The New Persuaders:

So 1 billion people now visit Facebook at least once a month, according to CEO Mark Zuckerberg, who celebrated with that weird new ad. That’s an amazing milestone for a company only eight years old, fully justifying the glut of press coverage this morning. But is it getting too big for its own good?

I’m not just talking about the usual stuff a company faces as it grows very large–antitrust concerns, privacy worries, hiring quality, and the like. Google, Microsoft, IBM, and many others have faced and still face these issues. But such challenges haven’t taken any of them down. And even as they start (or continue) to be concerns for Facebook, they likely won’t sink it either.

The biggest concern I have is whether Facebook could–as a direct result of getting what seems likely to be just about everyone online to use it eventually–lose what’s special about it. After all, is it enough simply to be the biggest social network? Does being the biggest, as Zuckerberg and many others inside and outside the company implicitly assume, automatically make it the best?

I’m not so sure. And that’s without even falling back on the old look-what-happened-to-MySpace argument. The fact is that Facebook doesn’t do a lot of the social activities people participate in online as well as others. Twitter is way better in many ways for disseminating news. LinkedIn still does professional networking far better. No one has made video sharing easier than YouTube (yes, it’s a social service too). Pinterest, Reddit, and others are seeing massive growth thanks to a pretty clear focus on doing one thing well.

And Facebook? As well as it facilitates connections with friends, its overriding appeal is not any particular features. (OK, except for sharing photos–but even there, it felt the need to spend a billion bucks to buy Instagram.) Facebook’s key advantage now is largely that all your friends are on Facebook too.

Of course, that’s a huge technical and business feat for Facebook–nothing to be minimized, as evidenced by the fact that no one else accomplished it. But is that enough to catapult it to the next level?

Maybe. But as its growth slows, I wonder if essentially becoming a social utility that Zuckerberg long said Facebook should be is distinctive enough a mission to maintain its momentum. One random item that gave me pause today came in passing on a BusinessInsider post on Facebook’s recent move to allow advertisers to “retarget” its users with ads:

The most valuable inventory for re-targeting until now has been Yahoo Mail, because:

  • It has huge scale.
  • It’s engaging enough that you’d only want to click on an ad to leave if you really wanted to leave.
  • The people who use it tend to leave it open as a tab in their browser all day.

In all three ways, Facebook.com is very similar to Yahoo Mail.

Yikes. Facebook is now like a boring email service? Now, it’s probably unfair to extrapolate this comparison in a particular realm of advertising to Facebook overall. But it reflects the reality that Facebook’s ubiquity is inexorably steering it toward becoming something like the new television. Another mass medium, even if it’s a uniquely interactive mass medium.

I guess there’s nothing wrong with that, and in fact there’s a lot right with it, for Facebook’s business. I just can’t shake a nagging feeling that achieving this ubiquity–as Zuckerberg put it today, to “connect the rest of the world”–isn’t enough of a raison d’etre.

So the question now is what Facebook will do with that ubiquity. Maybe simply facilitating those connections is enough. But at this milestone moment the company itself chose to highlight, it’s worth posing some existential questions to go along with that existential ad:

Why is Facebook here?

Is sheer ubiquity sufficient for Facebook to achieve Zuckerberg’s lofty goals?

As Facebook becomes a service for everyone, does it become special to no one?

Google To Steal Facebook’s Display Ad Lead in 2012–A Year Early

From my Forbes.com blog The New Persuaders:

After seeing Facebook vault into the lead in U.S. display-ad revenues last year, Google will take the top spot this year, according to a new forecast from market researcher eMarketer.

The search giant’s display revenues in 2012 will jump almost 39%, to $2.31 billion, while Facebook’s will rise 24% to $1.73 billion and Yahoo’s revenues barely budge to hit $1.39 billion. Overall, display ad revenues will rise almost 22% this year, to about $15 billion, thanks to Google’s and Facebook’s growth, the continuing explosion in ad inventory thanks in part to mobile advertising, and more spending on video ads, especially on YouTube.

But that number is down a bit from eMarketer’s previous forecast because of lower display ad prices on ad networks and continuing wariness by big brands to up their display spend significantly. Google and Facebook combined will account for nearly 30% of display ad revenues this year, rising to 37% in 2014.

What’s more, according to eMarketer, Google will lengthen its lead in the next couple of years in these banner, video, and social ads that are the mainstay of most commercial websites, reaching $4.4 billion in 2014 to Facebook’s $3.2 billion and a moribund Yahoo’s $1.5 billion. Microsoft and AOL also will continue to see relatively flat revenues.

What’s going on here? For one, Google’s display-ad engine has begun to rev, thanks to its YouTube video site, its mobile ads, and its DoubleClick ad-buying and ad exchange business. At the same time, Facebook has seen its growth slow recently, raising questions in the minds of investors about the effectiveness of its social ads and its relative lack of mobile ads. Earlier this year, eMarketer had forecast that Google wouldn’t capture the display lead until next year. …

Read the complete post at The New Persuaders.

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