YouTube becomes TheTube

I doubt very much that YouTube founders ever used video clips of TV re-runs to describe the value proposition of their remarkable business. Today, however, as widely reported, YouTube announced that in mid-April it will cordon off a portion of its web site and give it to the TV grown-ups in order to create clean, well-lit conditions for advertisers.

My Pappy always said leave the dance with the one that brung ya. YouTube was not brought to the dance by TV grown-ups. It was brought to the dance by the great unwashed, a term to describe all of us that have not otherwise been cleansed by traditional media filters.

So the wait continues for a new advertising generation willing to get its hands dirty by touching the end-users.

It’s official: Microsoft is a media company

The Guardian.co.uk reports that Steve Ballmer will be named Media Person of the Year at the Cannes International Advertising Festival in June which can only mean that Microsoft is now, officially, a media company. That makes perfect sense to me. Maybe now we can stop calling it “ad:tech“, which continues to send the wrong signal to marketers about the media opportunity online versus technologies such as television and radio. Media is about the content.

Ad networks need to decide whether they work for publishers or advertisers

A report appearing in Editor & Publisher concerns another treatise on Ad Networks, this one emanating from Northwestern’s Media Management Center, called “Online Ad Networks: Disruption – and Opportunity – for Media Business.” Similar to the Bain report for the IAB that caused a stir last year, the Northwestern report carries a simple message: leash your ad networks. They can be great companions, but watch what you put in front of them because they will eat until they die.

The nub of the matter is an awkward paragraph deep in the report: “…the publisher’s goal is simple: make the most money possible from an ad. The network has the very same goal – for itself. And the advertiser, naturally, wants to reach a potential customer for the lowest cost possible.” The awkwardness derives from the fact that a short time ago, maybe less than six or seven years, the paragraph would have read this way: ”…the publisher’s goal is simple: make the most money possible from an ad. And the advertiser, naturally, wants to reach a potential customer for the lowest cost possible.” Now, there’s this bit in the middle about the ad network, which is crowding around the bowl, scarfing down food “for itself.”

Unfortunately, three’s a crowd, and everybody’s feeling it. Left alone on a desert island one of these three players – publisher, network or advertiser - is going to eventually get it in the neck. And you can guess which one it will be. 

Networks can’t be in business for themselves and survive: they have no proprietary audience or customers. They have to work in the interest of one constituency or the other, publisher or advertiser. If it’s the advertiser, great; bad luck for the agencies - already questioning who’s their friend and who’s their frenemy - though can ad networks become proficient across media platforms? If not, better for networks to serve Internet publishers for the reason that it results in expertise versus other media and aligns them with the object of all media desires, the audience. In that case, not ad networks, but publisher networks. We like that version here at Burst.

But, whichever, each ad network must decide whom it serves. Just pick one. Either choice gets us on our way and helps remove a significant barrier to establishing the value of online media for both buyers and sellers.

Are consumers playing games with Facebook?

OnlineMediaDaily - Section Two (“Around the Net”) hit the in-box this afternoon and the lead item was from VentureBeat reporting on Facebook’s about face on its latest redesign in response to user criticism. Goodness, I thought, these poor people at Facebook can’t seem to make anything stick. Then I thought back to the redesigns I’d been around during my career with magazines and newspapers and recalled the howls of protest that attended all of them. USA Today was a biggie - not necessarily a redesign of an existing property, but a redesign, none-the-less, and there was a furious amount of whining and nashing of teeth among the newspaper elite when it launched. After years as a small pocket-size magazine on the scale of Reader’s Digest, Yankee Magazine reinvented itself recently by going to a standard 8 1/2 X 11 magazine format. I determined to be a sympathizer with the editors of Yankee and think positively about the new look when it happened. Others were not so determined and editors dutifully published their letters many of which went something like this: “Like my father and his father before him I have been a subscriber to Yankee Magazine. Now, sadly, after nearly forty years I must cancel my subscription. Good-bye Yankee.” The redesign, however, stayed. And, the letters ended. And the world moved on.

This got me thinking about some of the equipment that may be necessary in order to publish in a consumer-controlled world. Conviction, is one thing. Discipline is another. A loud-speaker to broadcast “Testing. Testing. 123,” may be another. Finally, perhaps, patience. 

I have no opinion on the Facebook redesign. I am a Facebook user, but not much of one. Avid users may have compelling reasons for why the new look was unacceptable. Facebook editors (I’ll call them editors) may also have compelling reasons for why rolling-back this latest iteration was necessary. Apart from all that, however, we should worry about recognizing when consumer-control has turned into a game. Anyone that has brought-up children will know what I mean. There is that ”Ah Ha!” moment whilst attending to a small child in a booster seat at a table who drops a spoon on the floor. As a responsible adult you pick-up the spoon and place it back in front of the child. You carry on your conversation with the other adult in the room if there happens to be one. Then, “Bink!”, the spoon hits the floor again. You pick it up. “Bink!”, down it goes. “Bink!” Which is when it hits you that this is a game and you stop picking-up the spoon, or take it away.

It strikes me that Facebook may be well-advised to let the spoon sit on the floor next time.

Advertising does not have to fail on the Internet

Eric Clemons, Professor of Information Management at The Wharton School, sounds pretty much at the end of his rope today in Tech Crunch where he implores that “There Must Be Something [his emphasis] Other Than Advertising.” In tones that are decidedly anti-intellectual, Professor Clemons presents himself as just another citizen who has simply had it with the pushing, shoving, in-your-face, me, me, me of advertising behavior. Mostly powerless to do anything about it offline except sit by while traditional media whithers and dies from years of abusive commercial behavior, he dooms advertising to failure on the consumer-powered Internet. He says, “Pushing a message at a potential customer when it has not been requested and when the consumer is in the midst of something else on the net, will fail…Consumers do not want advertising…consumers do not trust advertising, and consumers do not need advertising.” 

I like this guy. I don’t happen to agree that advertising online will fail, but I can recognize the frustration in Professor Clemons as my own. I have been in the advertising and media sales business for nearly 30 years, but as a consumer I have experienced first-hand the torturous intrusion of bad advertising into every day – all day – life. Mercifully, many years ago came the remote control, then cable, then VCRs. Finally, the Internet, which now gives me what I want, when I want it. It is an elegant business proposition that has been substantially ignored by the advertising classes who insist on using the Internet in inelegant ways, because they can.  If that persists, then I agree with the Professor: advertising will fail online. If advertisers overwhelm the market with disingenuous response ads, or insist that consumer data is the “new creative”, consumers will remain in a state of permanent revolt, and government – always afraid of revolt – will regulate. We will have the Internet Pennysaver, in perpetuity. Advertising will hang suspended between old and new media. The :30 commercial will be neither dead nor alive; the full page ad in a newspaper will exist for only a fraction of its original audience; “General Interest” will still define too much content that produces too much waste.

But, while consumers are indeed in control they are not the only ones with rights. Content producers have rights, too, and so do advertisers. Professor Clemons hopes that content providers might be able to charge for content, which is the idyllic solution, as always, for getting rid of advertising. The evidence, however, suggests consumers are willing to put up with advertising more than they are willing to pay for content. The cost of a newspaper has been under water since my Grandfather was reading them. Even the newspaper generation made it clear it would not pay fair-value for a copy. As much as consumers may distrust advertising, they distrust content, and they are not given to risking money on it. Yes, it’s a pity all these newspapers are going out of business, but something else will come along to take their place. Consumers think like that.

Of course, that something else is the Internet, and without question part of its allure is the price: it’s free.  It’s free and abundant. It’s hard to think about how all of that free content could convert to paid, especially since most people would agree that the quality of the content might be worth – well – less than newspapers. And it’s hard to see how the Internet would remain “about freedom”, as Professor Clemons says at the end, if all that content went away for lack of a currency to support and/or (more accurately in most cases) simply encourage it.

At the end of the day there are no quid pro quos online. Nothing entitles publishers to charge a fee for content and nothing entitles consumers to a market without economics. Advertisers may sometimes feel that everyone is having a jolly good time at their expense, but everyone was here first. Advertisers wanted in. If anybody wants to exercise their rights in the relationship, they can choose to go away and not come back.  That would seem almost impossible for any of us today – consumers, publishers or advertisers – which is why I don’t agree with the Professor that advertising will fail. We need it and it needs us.

Having such corresponding needs is surely not a bad thing, in life as in business, and the Internet can be the thing to reconcile consumers and advertisers along the lines that Professor Clemons suggests in his commentary, which is along the line that context matters. What I want, when I want it. It’s an old concept, but paid search demonstrated its upward potential online. As Clemons points out, though, search and paid search results have become so heavily manipulated that its consumer value has quite possibly gone astray. But, what is search except the tip of the ice berg, and isn’t it harder to manipulate what lies beneath than what lies on the surface?  

Below the surface is a super abundant resource of goods and services and places and adventures conforming to the immensity of human interest and those that would market to them. One for every person. And one for every advertiser.

Living with the handicappers

One of the most interesting things to have watched and experienced over 14 some years in the Internet space is the education, if you will, of the broader financial community in the media and advertising business. On one level it has been inspiring to watch capital markets swarm to an idea and erect a booming business metropolis where only a short time ago there was nothing. On another, it has been thoroughly disruptive to the orderly migration of the advertising business to its new life in a digital age. Case in point is the fascination that Henry Blodget shared yesterday with Ross Sandler of RBC over the fact that at current growth rates Facebook could surpass Google in total unique visitors by 2011 or 2012. Blodget went so far as to exclaim in the title of his post, “Facebook could kill Google.”

The commenters to Blodget’s post in the Silicon Alley Insider were mostly united in their response, which was ”So what”? Indeed, I agree. But, it is still so interesting to observe the irrepressible urge of people in the financial community to handicap the race, whatever it is. Sadly, it is not a benign sort of behavior as people like Henry Blodget can still cause the market jerk its head around and even tear off in wayward directions. (Sigh.) Perhaps that’s the price one pays for having  benefactors.

“I am the Long Tail”

In a story today about the IAB’s preparations to erect defenses against the regulatory advance of government, MediaPost featured a link to the IAB video, “I am the Long Tail” that was released at its annual meeting in Orlando three weeks ago. The video (below) is a poignant look at just a few of the people and personalities responsible for weaving together the fabric of the Internet. Without them, no Google and no Yahoo!  Without them, AOL might have remained a walled-garden with millions of subscribers.

There were probably 600 people at this years IAB Annual Meeting. We relish the idea that someday there will be thousands, such the ones in the video. Think of the Los Angeles Memorial Coliseum, or the Javits Center in New York as appropriate meeting venues. It’s a good image to conjur with legislators. And with advertisers.

It’s not just an online creative problem.

Nice interview by Rich Cherecwich in iMedia today with Lars Bastholm, Creative Director at AKQA, to discuss “What’s crushing creativity?”, which refers specifically to creativity online, although I don’t know why the question shouldn’t be put to creativity offline. A :30 commercial may feel substantially more satisfying to a marketer compared to a 728 x 90 leaderboard, but it’s of no greater value if it’s not memorable. And there’s very little memorable advertising breaking-through these days, if you ask me as a consumer.

As it happens, I think Lars Bastholm speaks about a broader problem when he says: “…it’s not that you can’t do something fun with banners. It’s that we’ve effectively managed to kill them by plastering them everywhere and making rigid rules for what you can do in order to maximize sales, not actual consumer satisfaction or consumer enjoyment of the marketing we’re doing.”

Really, how different is this lament from the one we would make about any commercial media? The only difference online might be the extent to which we should be additionally mournful for having failed to act with any restraint early on before “plastering” the market with ads that don’t have much more to say than, “Click Me!” It’s not like we didn’t know, thanks to the remote control and VCR, that consumers were having issues with advertising.

Bring back 15% agency commission.

Another conversation over lunch today with a long-time media industry executive who was full of enthusiasm for a  media planning spin-out currently incubating inside his ad agency. He brought with him more data supporting the fact that TV and newspapers get a disproportionate amount of the ad dollars relative to audience penetration. He hopes that his company’s solution will offer more media planning neutrality to repair some of that dis-proportionality and help truly engage consumers. A great idea.

So, I launched into my current riff that media planning, as it stands, can’t afford to be neutral. Fees currently paid to media planning and buying companies cannot sustain deep dives into new media – notably the Internet -  even though it is well-known and documented that that’s where the people are. My friend acknowledges that the costs of buying online are 3x – 5x the costs of buying TV or print. “A page in the Wall Street Journal!” he exclaims, “Cheap to buy. Very profitable.” Is it any wonder to us that newspapers still enjoy a greater share of overall ad dollars than the Internet?

I was impolite enough to ask how his new media enterprise will get paid for its work. “Well,” he said, “Agency commission, of course, is dead. We work on hourly rates.”

Rats. This is our problem. Fees and hourly rates. It means new media is not cost effective to plan and buy. There’s too much of it. The consequence is that traditional media forms such as TV and newspapers continue to enjoy allocations that exceed their value in today’s multi-layered information marketplace. The consequence is also that online display advertising continues to huddle around a handful of larger, branded properties – something like 70% of ad dollars on the top 10 web properties is still the reported norm. There is not the financial incentive or capacity to venture deeper: We know the oil is there, but we can’t afford to drill for it.

We can fix the problem by spending more online and leveraging existing cost structures. This should be our first choice. But while I, personally, don’t think it’s fraught with too much peril, clients may disagree who want POVs and appropriate metrics assigned to every new possibility. Alternatively, we can fix agency comp.

“What do you suggest,” my friend asked?

“A return to 15% agency commission,” I answered. Let’s face it, the oil-drillers online are getting paid substantially higher rates than 15% arbitraging – i.e. planning and buying – media budgets. And, it’s not transparent. Restoring agency commission in a new media world restores an important degree of accountability in a process that is currently rewarding older, shrinking media platforms, and undermining growing media platforms.

“Good luck,” said my friend, in a tone that meant, “That’ll be the day.”

Yes, well, but the alternative is to side with those who say the days of ad agencies are over - that they are relics of an old media age along with old media. 

So, is this why media continues to be allocated disproportionately to traditional media? Because agencies see newspapers and TV as extensions of themselves and are bound to save them? Do we think twenty-five year-old media planners who don’t know much of life before Yahoo!, and grew-up on Facebook and MySpace are determined to save newspapers and television? Do we?

No. I don’t think so. Fix comp.

Shift Happens (Or, “Who’s for fighting – Part II”)

The latest edition of the Shift Happen videos (below) - just reaching my small corner of the world – is cruising past 2.5 million views on YouTube. What it does for me, as an advertising and media professional, is make me thankful again to be at work during an extraordinary information revolution. It reminds me that, no, I don’t miss the good old days of magazines and newspapers, though I loved them. And it makes me nuts that the advertising business sits in a corner, forced by its minders to stay indoors while the world plays outside.

Who’s for fighting?