When i visited the San Jose Mercury News yesterday, what did we talk about? Advertising and how newspapers were going to make it online.

Well, one trend we’re seeing big time is the move to social networks. Facebook alone has more than 100 million people on it. When you add MySpace, Microsoft’s new network, Hi5, LinkedIn, FriendFeed, Twitter, and others, these networks are seeing some sizeable traffic.

But how do they monetize? Well, Facebook has been seeing a bunch of ads lately.

Problem is banner ads just aren’t working well anymore. Most users ignore them and the smartest users use software that blocks them from being seen at all.

So, how do you overcome those problems? Make ads that people play with and want to talk to their friends about.

That’s what Kevin Barenblat’s firm, Context Optional, does. One of his Facebook apps is driving 60,000 users a day to the website that sponsored it.

In this two-part video we take a look at both the kinds of apps that Context Optional is building, but in the second part we look at the whole Facebook marketplace.

Part I, six-minute video.
Part II, 10-minute video.

Let’s say you are a bank, like Washington Mutual, and you’ve been forced to join another bank. What happens to your data center? How do the IT guys left in charge reduce cost? What other things are happening in the data center to squeeze cost out and return investment dollars fast? Well, today I went over to Cisco’s headquarters to see what they are doing in their datacenters. There I met James Urquhart (here is his Twitter account, he was just hired by Cisco because of his CloudComputing expertise and blog, titled appropriately “Wisdom of Clouds“) and friends who gave me a 20-minute tour. I uploaded the video to both Kyte.tv and Facebook (I’m continuing to test out various video services, here you can see that Facebook has dramatically better quality video).

Cisco datacenter tour on Facebook.
Cisco datacenter tour on Kyte.tv.

Some of the things they showed me:

1. Virtualization technology lets you join many different applications onto one machine.
2. Unified fabric. That means that you can join all your different databus and network types into one common wire. In this case they are showing FibreChannel being delivered over Ethernet.
3. Automation. I saw a demo of VFrame, which can turn on and off servers automatically based on load, and perform many other management tasks from one computer. This lets you run a datacenter using fewer people.
4. Cloud Computing and Cloud Burst. I first heard of Cloud Burst techniques when I visited 12seconds.tv last week in Santa Cruz (they have a popular service that you can use to put up very short videos — trying to be the video Twitter). They told me that most of the video you watch is on their own servers, but if your video gets popular their systems automatically send everyone over to Amazon’s S3 service. This lets them do a lot more with very few of their own servers (makes things much cheaper) but also helps them scale in case they get linked to by a popular site.

Anyway, thanks to Cisco for inviting me over and having good humor on a day when their stock was hammered. We’re all getting used to this new economy and it’s good to see a big company look for ways to help its customers out.