Who is Louie Volpe?

June 11, 2009 § Leave a comment

 

Who is Louie Volpe?

Type the word “holiday” into almost any search engine and “Holidays.net” emerges as the top return on a list of results 100,000,000 to 200,000,000 long. Founder Louie Volpe has been the owner and proprietor of Holidays.net for over 15 years and in that time the web site has paid the rent, put his children through college and employed people in addition to himself. It began as a simple side-line venture to his early web development business. Today, it’s what Louie does, and he has been supported by advertisers from all over the world keen to reach people when they are planning for the holidays – something people do, yes, all over the world.

This week the IAB released the results of a study by two Harvard Business School professors showing the deep roots the Internet has sunk into the U.S. economy and the contribution it now makes to not only users, but thousands of small business people. As a Company with deep roots of our own going back to the commercial beginnings of the Internet, we can confirm that the lives of countless people, like Louie Volpe, have been supported by the growth of this remarkable media industry, thanks largely to revenues derived from advertising.

Once upon a time it was mostly a pipe dream for most of the publishers that Burst, and others, support to leave their day jobs and pursue a small business career that might be attached to their personal interests and passions. Today, many publishers have done just that, like Louie Volpe.

The IAB’s research is aimed, in part, at interest groups trying to prevail on government to regulate the Internet economy with privacy legislation that would knee-cap online advertising. The closer we get to the issues as an industry the more we realize that there is a gross misunderstanding of how online advertising works among the people setting the tone of the discussion.

Online advertising is anonymous, anonymous in the way that newspaper and cable subscriptions are not. No names. No addresses. No people at the other end that can be recognized.

Except Louie Volpe and many thousands more like him who create the rich fabric of the Internet on which people have come to depend, all over the world. These people need to be recognized by everyone in this discussion.

Here is the release announcing the IAB’s report:

WASHINGTON, D.C. (June 10, 2009) – Interactive advertising is responsible for $300 billion of economic activity in the U.S., according to a new study released today by the Interactive Advertising Bureau (IAB). The advertising-supported Internet represents 2.1% of the total U.S. gross domestic product (GDP). It directly employs more than 1.2 million Americans with above-average wages in jobs that did not exist two decades ago, and another 1.9 million people work to support those with directly Internet-related jobs. A total of 3.1 million Americans are employed thanks to the interactive ecosystem. These are the key findings of the first-ever research to analyze the economic importance, as well as the social benefits, of the Internet.

The study, commissioned by the IAB was produced by Harvard Business School professors John Deighton and John Quelch, along with Cambridge, MA-based Hamilton Consultants. The study was designed to provide an impartial and comprehensive review of the entire Internet economy and answer questions about its size, what comprises it, and the economic and social benefits Americans derive from it.

“This is the first time anyone has undertaken a comprehensive analysis of the size and scope of the Internet economy and measurement of its economic and social benefits,” said Professor Deighton, the Harold M. Brierley Professor of Business Administration at Harvard Business School, and an author of the study. “I am convinced the results of this study will prove useful for business leaders, legislators and the educational community.”

“This study underscores that the Internet ecosystem is generating an increasing level of economic activity in every corner of the nation,”said Professor Quelch, the Lincoln Filene Professor of Business Administration at Harvard Business School and a co-author of the study.

The study looks at the entire interactive marketing ecosystem, which includes:

The ad-supported Internet, narrowly defined as the content and usage supported by an estimated $23.4 billion of Internet advertising in 2008

  • E-commerce
  • E-mail, the cornerstone of lead generation and customer care for many companies
  • Enterprise websites, the Web sites that businesses, large and small, develop and maintain for communication.
  • Among some of the other important findings:

    Small businesses have thrived as a result of the Internet:

    • There are more than 20,000 Internet-related small businesses in the U.S. that provide a variety of services such as web hosting, ISP services, web design, publishing, and Internet-based software consulting. Many of these businesses have 10 or fewer employees.

    Internet-related employment is particularly important to certain areas of the country but exists in every one of the 435 U.S. Congressional Districts. Some Congressional Districts have more than 6,000 Internet-related employees.

    Interactive advertising has substantially reduced what consumers have to pay for access to the Internet and for e-commerce products and services. In addition to its financial contribution to the U.S. economy, the Internet has produced large social consequences as an infrastructure and platform, providing American society comprehensive qualitative benefits that include:

    •  Universal access to an almost unlimited source of information
    • Increased productivity (output per unit of capital or labor, or increased consumer utility at a lower cost)
    • Innovation in business practices, consumer behavior, commerce and media
    • Empowerment of entrepreneurs to start small businesses, find customers and grow
    • Environmental benefits derived from saving natural resources lowering pollution through the reduced use of petroleum-based fuels and paper

    “The results of this study confirm the vast influence and driving importance of the ad-supported Internet to the overall economy,” said Randall Rothenberg, President and CEO, IAB. “By understanding the total contribution of the Internet to the U.S. economy, we can more accurately assess the impact of potential legislative changes on the Internet’s operations, particularly the consequences of any actions that would alter ad-supported business models.”

    The research divided the Internet ecosystem into 14 different types of companies:

    • Internet service providers (ISPs)
    • Hardware providers
    • IT consulting and solutions companies
    • Software companies
    • Web hosting and content management companies
    • Search engines and portals
    • Content sites
    • Software as a Service (SaaS)
    • Ad agencies and support services
    • Ad networks
    • E-mail marketing and support
    • Enterprise staffs and subcontractors responsible for Internet advertising, marketing and web design
    • E-commerce companies, including physical delivery
    • B2B e-commerce

    To read the full study, please go to http://www.iab.net

    Advertising must feel the human condition. Data doesn’t get it there.

    June 10, 2009 § Leave a comment

    Aldon Hynes and I are on the same page. I don’t know Mr. Hynes, but in his post in digiday:Daily discussing Stephen Baker’s talk at the digiday:Target conference in New York yesterday he is scratching his head over the possible limits of the data targeting thing online, and I know that feeling.

    As reported by Hynes, two very important points got made by Stephen Baker in his address at the conference: 1) If you talk about targeting people they will feel invaded, but if you talk about customized service they will feel rich; 2) there aren’t enough agency creatives in the world to accommodate all the targeting that might derive from the availability of online data with customized messages. Ergo, advertising is left to think and act at a group level. 

    The first point has especially strong ramifications: if you can whittle down to nearly me with all your targeting, then the opportunity better be a good one, made to order and fit. If you whittle down to me and the offer is, simply, come on in for a test drive, I may decide to move where you can’t find me. This places a considerable burden on marketers once they connect with a finely-tuned audience. The offers need to be customized.

    Hynes turned to playwright Tom Stoppard to help make a broader point about current rage over data:

    “It reminds me of a great line from the play Travesties by Tom Stoppard.  In it, a Dadaist artist has a wonderful line to the effect, “It is the responsibility of the artist to laugh, and jeer, and howl, and belch at the common delusion that infinite generates of causes can be inferred from effects.”

    And he suggests:

    Perhaps creatives at ad agencies need a little more Dadaism in their own work.  Instead of targeting fifty year old white males of a specific education and income level in Woodbridge, CT that own a dog, a cat, a hybrid, and have children in gifted education programs, they should target people that want to feel like they are accepted and belong to some group, people that are concerned about the economy, people with complicated emotional ties to their families, people that feel a little self-conscious when someone seems to stare at them from across the room…or so many other demographics that don’t really narrow things down very much but instead reflect the human condition.”

    Of course, reflecting the human condition in enough detail to tell one shape from another has been the Internet’s most compelling media planning feature since the beginning. The Internet is “brought to you” by the human condition.  This is true of all media (a great reason to be in the business), but offline the human condition is available in a few standard programming sizes. Online, the human condition is available in all sizes.

    Aldon Hynes raises the point that the human condition is largely about sharing and belonging. By design, however, data takes people out of their groups and reconstitutes them. In the process it is hard, if not impossible, to replicate the experiences and preferences that brought audiences together in the first place – around a web site, or a blog or social group – in a way that shares the value of their human condition with the advertiser.  

    J.C. Herz  made much the same point in 2001 in the Industry Standard: 

    “The richness and complexity of an online experience, like the richness and complexity of a city, is created by the people who live there as they engage with the place and each other.”

    Data can surround the advertising plan, but to achieve real results the advertising plan must surround the human condition.

    Reports of the death of advertising are exaggerated

    June 9, 2009 § Leave a comment

    Over at Buzzmachine.com Jeff Jarvis has been speculating on the decline of advertising in a one-to-one world linking consumers with marketers. Google presumably makes this possible. Social networking presumably makes this possible. They are the high-tech conduits of word-of-mouth, which has always had the underlying responsibility for building brands. Give consumers the power on their own through these and other tools to talk about brand experiences and marketers can cut out the middleman: advertising.

    Rumors of the death of advertising are driven as well by the fact that advertising grew so pervasive and intrusive off-line that skipping commercials became a business, starting with the remote control, then the VCR, then TiVo, Napster,  the iPod, etc. James Fallows gave time in his Atlantic Monthly blog last month to the idea that newspapers aren’t dying; instead, advertising is dying and dragging newspapers and other media down with it.

    Here’s my take: nothing is dying. Newspapers aren’t dying, TV isn’t dying and advertising isn’t dying. To be sure, there may be a few deaths in the family, but the distinguished line of TV, print and advertising  inheritors can look forward to a continued life of citizenship.

    As an industry we have discussed that changes may have to be made by some of those inheritors in order to carry on their legacy. For the most part this means specialization, or enhanced relevancy. Newspapers don’t have to disappear, but they may have to stop trying to be all things to all people. Ditto most every media business. But, fortunately, most media types have shown themselves willing and capable of successful adaptation over the years, enough to ward off extinction.

    Now it is important, however, to come to terms with the significant role that advertising has played in the survival skills of media through the years. Today, most media are utterly dependent on it, new and old. That dependency is making it hard for advertising to change in the ways it needs to in order to catch-up with others in a consumer-driven world. As the thing so totally and utterly responsible for powering the New Media Age advertising has been feeling recently that the world needs it more than it needs the world. Some have even said so.

    Well, Jeff Jarvis and others are speculating this may not be true. I don’t agree; but their conjecture is not uninformed. The world dislikes advertising – the Internet world, I think, most especially – and the reason why is simple: advertising insists it has the right to be rewarded, which is fundamentally out of step with what every sensible marketer knows is true about the world in which it does business today – rewards are given at the discretion of consumers. The rather astonishing trail over the years of advertising innovations designed to reward advertisers online such as adware, pops-ups (then pop-unders), flashing banners, interstitial, home page take-overs, and even pre-roll have done nothing except leave room for the doomsayers to howl at the moon.

    Can it be advertising by this or any other name if it is not so insistent and demanding? Can advertising let go and give itself over to the care and judgement of the users groups and web pages and the mobile telephones of consumer generations today and tomorrow? Can it be successful at cultivating consumer trial and loyalty? Yes, it can, if it agrees to second place behind the consumer.

    Consumers have rewarded advertisers many times over the years that agree to see it their way. Research has regularly documented that subscribers especially value the shopping circulars in their Sunday newspapers, which despite the onslaught of new media still splash out of the paper onto the kitchen counter every weekend. What is a fashion magazine to readers without the fashion advertising? There is as much anticipation today over Super Bowl commercials as there is the game, a reward to advertisers for their bold creative efforts. The brilliant Herb Schmertz forever changed corporate image advertising and showed how to constructively engage audiences by underwriting Masterpiece Theatre on PBS in the 1980s for Mobil Oil.

    Put the consumer first and great things can happen for business, including the business of advertising. Unfortunately, not enough of that takes place online where, instead, it was suppose to be pay-back time for advertisers: one-to-one advertising, nothing lost or wasted. A little “me time” for beleaguered ad executives desperate to show that, “Yes, we can.”

    Bad idea. Wrong for the times. Especially wrong for the medium and its value proposition to users. Of all places, the Internet, a consumer-driven, owned and operated, ours not yours, media tapestry with genetic hyper-sensitivity to third-party encroachment and control was the wrong place for advertising to insist on the spot at the front of the line. After much banging around, we are now in serious trouble of regulation that is thoroughly disconnected from practical reality and – worse – out of proportion to the more significant encroachments that exist offline. And, unfortunately, the facts really don’t enter into it. As of now, it’s perception not reality. How ironic.

    As a consumer I have no satisfactory response for advertisers that have been denied for so long the answer to Mr Wanamaker’s question. When I’m not busy selling the virtues of vertical niche content online, I am a media consumer and as a consumer I have no reliable guidance for advertisers that wish to engage me.

    “When would be a good time to talk?” I don’t know. I suppose when I’m in the mood. I suppose when I’m thinking about whatever it is that I’m thinking (note veiled, commerical reference to vertical niche content above).  I suppose if you have something clever to say. But I need my space. Please don’t hover. If I have questions, I’ll ask. That’s my attitude and, I suspect, the attitude of many consumers.

    I don’t know how Mr. Schmertz measured the effectiveness of his corporate underwriting experience back in the 80s. It was a sensation and gave him a certain celebrity along with his pioneering use of op-ed advertising positions. He wrote a book. I suppose he did some research to measure favorability of Mobil among the opinion-leader demo that was his target. Still, today, however, I expect to see Mobil (now Exxon Mobil) as the underwriter of Masterpiece Theatre and I will forever associate the company with citizenship, whether I agree with them or not. And while it may or may not be connected, I really have always favored their brand when buying gasoline, which leads me to report, sadly, that Exxon Mobil is pulling out of Eastern Massachusetts. The stations will be replaced with Gulf. Ifeel like I’ve lost a life-long community connection that I had learned to trust – a connection that had its roots in advertising and gave me something interesting along the way.

    Advertising is about consumers and no one talks about the death of consumers as a marketplace constituency. Make advertising the servant of consumers, in the way advertisers do their products, and its future is assured.

    Digg Ads proposes a radical idea: put the consumer first.

    June 5, 2009 § Leave a comment

    The new Digg Ads system has at least one very good idea at its core worth paying attention to: the consumer. This makes it different than most of the advertising intiatives out there which typically feature the advertiser or publisher vying for first place, and the consumer dead last – always odd to see in an age of “consumer control”.

    Think about advertising with yourself as the consumer. Think about the advertising you would like to see that makes sense to you. What sort would you vote for as you make your appointed media rounds?

    It remains to be seen if the Digg Ads embedded message, “advertorial” formula will strain credibilty with users. Advertisers that get involved should take pains to stay transparent and avoid the temptation to game the system by appearing too much like content; in other words, keep consumers first. But, the Diggs initiative has its heart and mind in the right place. It is nice to think that the greatest consumer driven media business would finally usher in consumer driven advertising.

    Content wants to be free. Advertising wants to be accountable. It’s a tough time to be a new media child.

    June 4, 2009 § Leave a comment

    The story in Daily Finance reporting on Jonathan Miller’sspeculation that one day Hulu may charge for content has ricocheted around the news forums and digests. Boy, I’ll tell you, every time media companies take a step or two towards the invisible fence line surrounding the free content playground online the dog collar starts spitting electrodes. Posters to the column on Daily Finance were quick to jump on Miller’s comments:

    “The fact that executives are still trying to figure out a way to charge for content online is mind boggling to me. It doesn’t work. Hulu was an ingenious idea. Since people were watching shows online for free anyways, why not create create an online platform and shift power back to the networks.”

    “Another exec with no clue. I love Hulu in its current incarnation, and would certainly abandon it if it wasn’t free. What an idiot.”

    Most of the 60+ posts were like that. The first poster (above) linked to a survey on a related topic at EngadgetHDthat asked, “How much would you pay for HULU on your TV?” When I took the survey the score was pay “Nothing”, 4,590 (76.6%), to pay “Something” (there were a few options), 1,401 (23.3%). I was among the “nothing” crowd.

    Michael Kinsley’s article eight years ago in Slate, “It’s not just the Internet”, is still the best thing that’s ever been written on the subject of content economics. It should be required reading for media professionals. The truth is, content for a consumer audience is free, offline and on. If it’s not for free, it’s for darn near nothing. It’s underwater. It’s in the red. It costs the producer, not the consumer of the information.

    So, of course, advertising has foot the bill for content for 30 years, maybe more, and grew weary of it at the start.  Despite their carrying costs advertisers got no input into the editorial products, little input into the position of their messages, and only some insight into how much of their investment reached its target – which was maybe half. Advertising has wanted a little money back, too.

    The Internet, consequently, has grown-up in the midst of a stormy relationship and the impact on its personality has been profound. If ever there was a child that needed a little play time, it has been the Internet.

    Listen to the shrill voices of it’s guardians: Be accountable. Don’t skulk. Answer me! Act responsively. You get nothing until the work is done. Why can’t you behave like a grown-up? What’s it worth to you? What’s the matter with you? Why are you crying? Here, try this. Try this. Try this! 

    Michael Kinsley said in his 2001 article, “Information has been free all along. It’s the Internet that wants to enslave it.” Funny how that statement rings true as it pertains to the other partner in the relationship, the advertiser. Do you hear the echo? It resonates through the whole matter.

    It’s a tough time to be a media child. You really have to wonder about the parents.

    Adify Media’s transparency claims are 14 years too late.

    June 3, 2009 § Leave a comment

    Adify Media (div. of Adify Corp) announced a few new appointments to run sales for their emerging media sales business. Glenn Fishback, late of Turn and Claria, will be the new SVP of Media Sales.

    I expect it was someone in their PR department that put these words in Glenn’s mouth in the release announcing the appointments:

    “In today’s competitive marketplace, Adify Media has created a unique and differentiated alternative for brand advertisers. No other media provider today can offer site by site transparency and performance visibility, brand safety, and targeting efficiency all under one roof,” said Fishback.

    Oops. There is at least one other media provider that offers site-by-site transparency – with all the trimmings, notably site level reporting – and that is the Burst Network. The Burst Network has been transparent, site-by-site, since it was founded in 1995.

    You can access the list of all the web sites that the Burst Network represents by searching on “Content” here: http://www.burstmedia.com/brand_advertisers/our_channels.asp

    Here’s where you can “access” the list of all the web sites Adfiy represents. Good luck. http://web.adifymedia.com/site/index.php/publishers/

    Forbes.com study shows the gaps left open in the brand advertising sales proposition online

    June 2, 2009 § Leave a comment

    Forbes.com released results from a survey of top marketers conducted in February and March that got very different play in the two places I saw it picked-up, thanks to my various news digests. The difference is interesting.

    Adweek reported that marketers still regard the Internet as a direct response tool. Their piece was titled, “Most Marketers Ignore Brand Metrics Online.” Over at MediaPost, editors gave coverage to the Forbes study under the heading, “CMOs not satisfied with Ad Nets,” (meaning ad networks).

    The results of the study, which polled 119 marketers, seem to imply that advertisers may retreat from using display advertising as a vehicle for direct response messages. They like Search and Email. Ad networks, as major purveyors of cheap, direct response display advertising over the past few years, get stuck in the cross-hairs of that change. Hence the varying treatment of the story in Adweek and MediaPost while the market figures-out what’s going on and who is likely to be affected.

    I suspect that some of the ad network spin is coming from Jim Spanfeller, CEO of Forbes.com, who is a consistent spokesperson for brand publishers and brand advertising online, and a frequent critic of ad networks. Quoted in Adweek, Jim says,

    “On the Web specifically, advertising has moved into more demand fulfillment as opposed to demand creation. That’s not really advertising. There’s nothing wrong with it. Doing search marketing and point-of purchase displays all works, but it’s not advertising. It’s not about creating demand and improving brand metrics.”

    In MediaPost, he says,

    “Ad network spending is all about demand fulfillment while direct-to-publisher display is much aligned with the traditional advertising goals of demand creation.” 

    Unfortunately, I think Adweek probably has the story line right in its title, “Most Marketers Ignore Brand Metrics Online.” But don’t just blame ad networks. The survey data has very little to do with ad networks. The survey data implies that Marketers still don’t respect the Internet as a branding vehicle and that makes all display advertising purveyors guilty. 

    Jim Spanfeller has the gumption, at least, to say “it’s not advertising” when he talks about the pervasiveness of what he calls “demand fulfillment” advertising online. I’m not sure I agree that it’s not advertising, but I take his point. Too bad we didn’t have Jim nearby when the industry as a whole was rolling-out its fulfillment value proposition in 1995 extolling the one-to-one results and risk-free benefits of online advertising.

    The Forbes.com study shows, once more,  just how ill-advised that positioning strategy was. We should hope that our ability to encourage brand advertisers to see the engaging and deeply relevant value of online media to audiences gets here before digital technology levels the playing field for all media, especially TV.

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