The high-level disconnect in our conversation about online media and advertising – now in its 14th or 15th year – remains the notion that positioning matters to consumer brands but not consumer media.

Eric Picard’s thoughtful piece in iMedia today puts this on display again in his recounting of a panel discussion titled, “The Rise of the Audience Marketplace,” at ad:tech in New York a week ago. During the panel, participant Quentin George, Chief Digital Officer at Mediabrands, reportedly observed:

 ”In a world with such massive overcapacity, the only way for companies to differentiate and capture a disproportionate share of dollars is through building a brand.”

This was a very sensible assertion. Hold that thought.

The panel discussion then veered into talk about media planning and buying online with a great deal said about the rise of new buying solutions such as IPG’s Cadreon and Publicis Groupe’s VivaKi. These fall under the heading of demand-side buying systems, discussed in a recent post to this space.

Demand-side buying systems are energizing media buying companies with a renewed sense of empowerment. There is no harm in this. It represents a transfer of power from certain horizontal networks that have been conducting business this way online for a few years, and keeping the money. Now, the media agencies get to keep the money. The industry needs media agencies (all ad agencies) to feel energized and empowered, so to the extent that certain amounts of planning and buying can be conducted through demand-side agencies, there is no harm in this. Perhaps it will serve as a catalyst to help fix agency comp so that life can continue on a transparent basis ultimately favorable and necessary to marketers.

I digress.

In the midst of the panel’s enthusiasm it sounds like Bill Demas of Turn got up the nerve to suggest that most of the inventory wafting through the demand-side buying systems is non-premium inventory (much as it has always been through the horizontal networks) and that premium inventory is still making it to market thanks to human sales forces and their interactions with human media planners and buyers.

From Eric Picard’s recounting it then sounds like Bill Demas’s observations disappeared quickly under a pile of demand-side enthusiasts. Fellow panelists pointed-out that the idea of premium inventory is a relative concept. Brands care about quality content, but the quality of the audience is not measured by this alone. Basically, quality does not depend upon context.

This is the important question of our day: is the quality of an audience shaped by the context of its media environment.

Back to Quentin George who was on the panel. As he did, marketers will insist - with every justification – that brands matter, and the more complex the environment, the more imperative the need for brand. Brands differentiate.

What does that mean? It means context. Context is the differentiating agent. Context determines meaning. It is everything to brands. It says so clearly in the dictionary (from Answers.com):

1. The part of a text or statement that surrounds a particular word or passage and determines its meaning.
2. The circumstances in which an event occurs; a setting.

Brands are about meaning and circumstance. If they are not, then soap is soap. A car need only be black, as Mr. Ford would have had it, and get a traveler from point A to point B.  One smoke would be as good as another. Brands need positioning.

Yes, brands can certainly exist out of context for periods of time, like I can swim under water or a fish can flap on the ground. I use brands all the time unconsciously. But there are no unconscious brand champions and brand loyalists and there are no automated brands. In my house you will get one kind of vodka, which is an otherwise orderless, tasteless, neutral spirit with one purpose that can be met by any run-of-network vodka that will be (fall-down-drunk, for fall-down-drunk) cheaper. Yet, I am loyal to one brand. Go figure. 

Let’s be frank: really, the question is about money. The world is trying to impose cheap on marketing and context is not cheap. Neither are brands. Our world is hung-up on this problem and we know it. It is a dis-connect if ever there was one.

Truthfully, if there were enough great advertising creative in the world brands might be able to survive out of context. If every ad were brilliant, touching, funny, compelling – even simply polite – advertising could, perhaps, live and breath outside of a naturally supportive, media environment. We are not so fortunate. Advertising is hard. Great advertising is really hard. 

As we continue to bang around the miriad opportunities with which the Internet presents us in order to target our best customers let’s remember the obvious one, present from the beginning, the one that aligns us most with consumers, the one that made Google particularly rich: context. I don’t notice anyone else getting as rich as Google (or Google as rich from anything else).

The only thing I notice is the European Union and the FTC getting ready to drop a safe on our head. Then what?

It’s not all sour grapes that has Rupert Murdoch suggesting News Corp will eventually pull its content out of Google once it converts users to a paying basis. Listening to the interview with Sky News political editor, David Speers, in which Murdoch laid-out his plan to withdraw News Corp content to within paying boundaries, Murdoch makes clear that it’s all about getting serious online.

Murdoch observes that very few (actually, he says, “no web sites anywhere in the world”) make serious money. Likewise, he observes that “search people” – i.e., visitors to News Corp content that arrive by search engine – are not loyal readers of content. Ergo, they are not serious.

Therein may lay the calculation Murdoch and News Corp are doing in connection with their strategy to get consumers to pay for content and, then, deny access to all the non-paying transient onlookers who come courtesy of Google. The strategy advocates a retreat to defensible, higher value positions. As everyone has freely (no pun) pointed out it means much smaller audiences. But Murdoch’s comments suggest that News Corp has taken this into account and it doesn’t care. What have big audiences and an over-abundance of inventory given to the world but ad networks and lower prices? It’s time to get serious. It’s time to get back to business.

The issue of “serious money” is an important one. It has confounded traditional media companies online since the beginning. Plenty of money flows through plenty of big web sites, but the end results in terms of profitability have been underwhelming, certainly in Murdoch’s view. For many of the Internet’s largest players it has been equally disheartening to ponder a future full of exertions to grow traffic by relying on competitive third-parties, while struggling to raise advertising prices in an ocean of inventory. As Murdoch asserts, there is not enough advertising to go around for any web site to make serious money.

There are two ways to chase after serious money as a publisher, however, and one of them is to be small. Having tried big, Murdoch may be coming to terms with the alternative.

The media world has been addicted to “big” for years. Big has meant serious money thanks to advertising. But, that hasn’t translated online where smaller, independent publishers capable of generating $1 million per year in revenue out of a spare office thrive, while large publishers huffing and puffing to do 50x – 75x that amount feel unfulfilled.

Online there is, in fact, plenty of advertising to go around allowing many, many publishers to feel like they are making serious money. The Internet landscape is dominated by those publishers, and collectively they are changing the rules, agreeing to work for lower prices and agreeing to be positively delighted with sales results that wouldn’t keep News Corp in corporate jet fuel for a week.

At the same time the advertising community is slowly, but surely, shedding its own dependence on big. Ad networks have left one positive impression, which is that it is possible to aggregate many sites online for less and see results that are equal to or better than what $30 CPMs on big sites may have delivered. The taste left by some ad network experiences was bitter, but the implications of a freer, more open, and more targeted market have broken-through.

Most publishers couldn’t survive without Google and other search engines to direct people to their web sites; nor could most Internet users, which should assure the market of free and open access to search engines of one sort or another for many years to come. News Corp, however, has considerable resources of its own to drive traffic to it web properties. It may not be the sort of traffic that earns it a top 10 or even top 20 position among its peers, but perhaps they’ve stopped caring. Perhaps big isn’t quite so important in their calculations anymore. Having experienced the tiresome affects of being big online perhaps Murdoch is getting serious about Internet strategy.

And he may be right. Seriously.

In case it has escaped anyone’s attention, the European Union is dangling the online advertising industry outside a window and threatening to drop it on its head over the issue of privacy (ClickZ, 11-06-09; Ad Age, 11-05-09.)

Incited by bad behavior at Phorm and BT, which evidently collaborated on unannounced ad targeting tests relying on the more detailed user data available through BT’s ISP business (not very helpful), the EU is taking legal action against the UK in order to compel it to impose tougher privacy standards. In the meantime, the EU is advancing legislation through its parliament that amounts to an opt-in requirement for all tracking cookies, which are the things that make the world go around for advertisers and publishers online. If the EU succeeds with that legislation the world will end at the English Channel and European web publishers will find it hard to attract the advertising that is important to sustaining their web sites.

That should be a matter of some concern to the EU parliament. Are not the voices of probably hundreds of thousands of European web publishers meaningful to the debate? Not all of those publishers – perhaps very few of them – are in it to make beaucoup amounts of money. But the money doesn’t hurt when there are provider bills to pay, and family objections to overcome that result from many hours at the computer composing thoughtful web sites and blogs. An evening or two out for dinner, a new automobile, a school tuition paid, always help to quell dissent among an artist’s inner circle of dependents and care-givers.

Never mind the taxes and the votes that go missing when commerce is affected. We recognize this is the EU we’re talking about and that taxes and votes might not be the drivers they are in the rest of the Western world. Still, there is the matter of the artistic freedom and the ability of a huge segment of the Internet’s publishing fabric to survive that should be considered. What will happen to all those voices? How will Europe be represented in a post-apocalyptic, post-cookie world of its own making? What of our Global Village, which benefits from so many connections online and seems especially relevant to the very notion of a “European Union” in the world?

Online advertising in the U.S. is targeted to the U.S. and it represents most of the advertising in the world. If the EU goes dark online tomorrow many global marketers will be affected, but in those EU places only. North American web publishers will prosper. Global web providers such as Google and Yahoo! will be inconvenienced, but they can choose over the years whether to pass or play in the EU depending on whether they can make a living.

The fastest growing markets in the world are in the east. So far, China is not proposing to choke web publishers in that part of the world with draconian privacy measures. It has different problems, the solutions to which – involving more publishing freedom – work towards a positive future for marketers and publishers. Not so EU policies, which work against the future of publishers.

It may come to pass, therefore, that web publishers in three-quarters of the world will eventually speak for all of it, including the one quarter left out in Europe. Any government’s instinct to protect its people is understandable and desirable – including on the matter of Internet privacy – but the EU should carefully consider the extent to which such uncompromising privacy legislation will deprive its constituents of a voice in the New Information era by depriving its enablers, the web publishers, the commercial means to make it heard.

It’s a very good sign to see more chatter about the need for senior marketers to re-assert the strategic value of marketing inside organizations, which is the point of Scott Davis’s piece in Ad Age.

It boils down to trust.

Online Media Daily reports that Needham & Co. analyst, Laura Martin, was dispensing doses of reality to a packed house at the OMMA Video conference in Los Angeles last week. Referring to Hulu, she observed that it’s not especially difficult to take $3 billion worth of product (meaning, programming from Hulu’s participating owners such as NBC, ABC and Fox) and give it away successfully online to the delight of millions of users. The question is how to make money from that give-away which, Laura Martin suggested, could take the industry 10 more years to answer.

Actually, we can probably answer the question right now: Hulu won’t make money - not, at least, TV kinds of money. Some money will be made, for sure, but not TV kinds of money. So, if that means Hulu will end up squandering the equity of major media brands by offering $3 billion in programming online for free, better cut and run.

Unless Hulu is really saving TV by being free.

Consider that Hulu attracts 38.5 million viewers according to the measurement service, comScore. With such large audience numbers the business instinct is to, 1) charge for content, or 2)  insert commercials in front of those 38.5 million viewers as many times as possible. Laura Martin has ideas for both, with content fees for archived programming the most easily accessible. Other options that charge for new or existing content and/or rely on the routine of television commercials are more problematic, and Martin thinks it may take 10 years to successfully introduce those options with the audience.

With regards to advertising, Laura Martin estimates that Hulu inserts four ads per hour on Hulu. That compares to 32 30-second spots that are shown every hour on television for the same programming. It’s not clear from the Online Media Daily report if we’re meant to think that 32 commercial breaks per hour represents the model for Hulu, but the delta between four commercials an hour and 32 per hour implies plenty of revenue upside if the Hulu people would just get on with selling more of it.

Sadly (or not), they can’t. While there is programming capacity online to absorb $3 billion worth of inventory it is highly questionable whether there is commercial capacity to absorb the equivalent of $65 billion in video TV advertising, or even some reasonable fraction thereof.

For one thing, as noted by the Online Media Daily story, the average Hulu viewer spent one hour and 17 minutes watching videos on the site in the month of August, which compares favorably to 3.7 minutes for online video consumption, per viewer, across the rest of the Internet. Elsewhere, Neilsen reported that online video consumption in total had climbed to over three hours. These metrics don’t add together, but between the three of them it seems clear that the average amount of time spent consuming online video per month is still not the thing dominating people’s schedules.

In contrast, according to the first number I could lay my browser on (which happened to be at CNN.com), in February the Neilsen Company reported television viewing at an all-time high of over 150 hours per viewer, per month which it attributed to the rise in the number of cable channels (“many, many more cable channels”) and DVR and TiVo devices.

In other words – as we’ve heard before – the introduction of more relevant programming combined with technology to avoid commercials is helping sustain and grow TV viewership. From this we could take it that 32 30-second commercials per hour is not the model, even where the model supposedly exists. People don’t like commercials. This is partly the reason they like Hulu.

While it may seem counter-intuitive, therefore, the brand equity impact of Hulu on the multi-billion dollar equity value of giant television media franchises may be very positive right now, and may go negative the more its caregivers try and transform Hulu into television by introducing more commercial messages.

As a way around some of these problems and possibilities, one can get the sense from talking to online video enthusiasts that they are waiting for the day when 150 hours of viewing time exists without regard to platform, Internet or television, and where screens are connected and become one. This is the “Eventually-the-Internet-will-become-television” argument in which Internet video strategy simply docks with television and its $65 billion in advertising review. It says that traveling at the vaunted speed of Internet time returns us to the spot from which we left. It’s a boring outcome, it ought to seem, for new media, and a rotten one, too, for consumers in a consumer-driven world.

For now, perhaps it’s better to think of the three-hours of time per month that viewers online devote to video as brand-reinforcing time. Contrary to the idea that $3 billion in free programming online is destructive, it may be that it is terribly important to driving programming loyalty and repeated use offline, on television, and to supporting a $65 billion business despite the corrosive effects of fragmentation and commercial-skipping technology.

Once again, new media provides for older generations.

The news last week that AOL has grown the number of journalists it employs – inclusive of full and part time, or freelance – to 3,000 from 500 since Tim Armstrong took over this year has stuck with me. I’ve been thinking, “Three thousand journalists? Why?”

I went back online to find the story and what’s clear from all the search results is that the growth in the number of journalists has been going on at AOL all year. TechCrunch was impressed when the number hit 1,500 in July. Since then, according coverage in TechCrunch of the Web 2.0 conference in San Francisco last week, the number has doubled to 3,000. Doubled. Since July.

Tim Armstrong has declared that content will be king in his remake of AOL and I have been rooting for him on that basis. He knows from his Google days that content – ergo, context – has a propitious effect on advertising. But, 3,000 journalists? Why?

Part of it may be driven by Patch, the hyper-local information resource of which Armstrong was an owner and which got sold to AOL after he joined the Company. Fulfilling a hyper-local information mission will rack-up journalists quickly. Part of it is clearly MediaGlow, AOL’s collection of proprietary content web sites that are refugees of the by-gone portal era. But, in reports, Armstrong hints at a tech strategy – a content management strategy – as the driver of AOL’s appetite for journalistic talent.

Hmmm.

The New York Times Company, according to their 2008 annual report, has roughly 9,000 employees. Nearly half of them, 4,000, or so, work for the New York Times Media Group. The New York Times Media Group is inclusive of The New York Times, The International Herald Tribune, NYTimes.com, and the New York Times News Services Division, which – among other things – supplies syndication services to 1,500 newspapers and magazines in the U.S. and 80 countries worldwide. Thus, roughly 4,000 people, not all of whom are journalists, gather and distribute content, globally, preserving the highest levels of quality.

The New York Times Company also owns About.com. The About.com team of 235 people (also per the 2008 Annual Report) supports 770 About.com guides. These are freelancers writing on more than 70,000 topics that have produced over 2 million pieces of original content over the years.

Suddenly, in a side-by-side comparison, I am afraid of what 3,000 AOL journalists are likely to do to the neighborhood. Do we really need another Internet?

Seriously, what incremental value are 3,000 journalists likely to produce for us online and, as importantly, for AOL? Editors at the New York Times would be delighted for more reporting resources. Without them, I’m still overwhelmed by the content they generate on an average day and most certainly on Sunday.

Digital doesn’t require as many trees and won’t accidently strike and kill a dog in the driveway, but, even so, how will 3,000 journalists succeed in adding meaningful value to an online experience in a way we can grasp and explain? A mere 770 guides at About.com manage to inform us on over 70,000 topics and all I can say is, gee, that’s a lot. How’s that working out for them? Would another 2,230 guides able to inform us on an additional 202,727 topics transform About.com from hero to super hero, or – better – catapult its beleaguered parent, the New York Times, into the digital age with the most mojo of any information outlet online? If the answer is yes then - please! - do it, and let the misery end.

It’s a very hard question to answer online: How do you successfully exceed the value of all the parts? It’s a question that, no doubt, has gnawed at AOL for 15 years (almost exactly). Once it was King. Then, the peasants overran the village and sent it into exile. It has as much to be bitter about as every other main stream media player that saw their estates carved up and given over to condos.

Tim Armstrong is committed to restoring AOL’s brand luster which is a good and worthwhile thing that ought to benefit the community – kind of like restoring Grand Central Station in New York. But with 3,000 journalists one senses AOL comes as an army, not as a trading partner. Marching ahead of a horde, pulling a hidden bit of technology, one senses it is back, and it is pissed.

A ray of light at the end of the tunnel: Ad Age reports that ad agencies are finally getting their dander up over compensation. That’s a welcome bit of news to concerned blogs everywhere – like this one – that believe the pendulum has swung too far to the austere side of the ledger in the matter of  providing agencies with a living wage.

Let’s make the marketing departments of clients part of the conversation, as well.

In a side-bar to the piece in Ad Age about Forrester’s proposal to re-make Brand Managers into Brand Advocates (see earlier blog), Rishad Tobaccowala, Denuo CEO, observes that marketing departments are getting smaller at exactly the time they need to be getting bigger. This is about the most important thing to be thinking about in our business today.

The media and marketing world is doing just what it’s supposed to do – and has ever done – in order to keep up with the growing complexities of society: it is getting more complex. The marketing business, however, is still being made to atone for the excesses of the last era, when costs continued going up long past the point of observable returns; when advertising was in its extravagant period of broadcast television and mass circulation newsweeklies.

It is time to move on. More risk-taking in defense of the business. Better compensation. More, not fewer people. These are things marketing needs to be working on in a complex world.

Brands need advocates. Marketing needs advocates, too.

I am waiting for a new report from Forrester Research that Ad Age says is due out this week that will offer insights on how brand marketers should behave in the digital world. According to the Ad Age story, the guts of the report will focus on familiar themes about the need to be faster and more nimble, and the need to be open to new sorts of partnerships, especially with the media, that are less reflective of the long-term ad agency associations that are industry legend. A summary observation in the report is that “Brand Managers” should be re-christened, “Brand Advocates,” which is an interesting point, and the one that most caught my attention.

I remember Stu Upson, the CEO of Dancer Fitzgerald Sample, the ad agency in New York where I first worked after graduating from college, addressing the New York office in a rare all Company meeting to talk about the loss of a major client. I don’t remember all the things he said about the client loss, but I remember what he said about the business of advertising. He said advertising is not about giving consumers the information they need to make an informed decision about products they buy – and he used the word “bunk!” to underscore his objection to that notion. We are advocates, he said, along with our clients, of their brands. We are advocates.

There’s a bit of the “so-what-else-is-new” to me, then, in Forrester’s recommendation that marketers re-brand “Managers” as “Advocates”, but fine; Perhaps what Forrester is sensing about the current state of brand marketing is an urgent need for advocacy given the amount of change that has occurred over the past thirty years, and given that in the violent tumble of new media brands are losing track of their audience and audiences are losing track of brands.

Online we are doing a lot to push the value of brands – media brands, that is – away. We seem to imagine that we can distinguish between the value of media brand relationships and consumer brand relationships. We think competing for brand advertising is desirable, but dependence on media brand relations in order to do so is not. That’s a significant disconnect. It implies that the context of things – and all brands are contextual – matters only part-time. Bunk! If the relationships that consumers have with particular media brands are irrelevant then the relationships they have with all brands are irrelevant. Also bunk, of course. Brand relationships matter. Context matters.

Context has simply improved and multiplied. Call it fragmentation. (Everyone else does.) The media world has fragmented. So what? The consumer products world has fragmented, too. I stood in line at Starbucks this morning. Fortunately, by the time I got to the register I was chatting with my wife on the mobile telephone and had her to walk me through the choices. The coffee business is fragmented. Who would have thought it could happen?

All of which is to say that Forrester may sense the urgent need for Brand Advocates in order to weave back together the fragmented pieces of their brands and brand relations. Happily, the media world is configured to help. It can segment reach against the normal Joes that just want coffee and the other Joes that want Grande Cappuccinos. And, it can do it in the context of those relationships.

A few more media brand advocates to join the consumer brand advocates and we should be good to go.

As widely reported (but mostly slept-through) the FTC issued guidelines on October 5th subjecting bloggers to endorsement and testimonial rules that are different from traditional media. The IAB and it’s CEO, Randall Rothenberg, responded today (see links below).

Rothenberg’s open letter to FTC Chairman on his clog, quotes the FTC report, which says:

…that bloggers may be subject to different disclosure requirements than reviewers in traditional media. In general, under usual circumstances, the Commission does not consider reviews published in traditional media (i.e., where a newspaper, magazine, or television or radio station with independent editorial responsibility assigns an employee to review various products or services as part of his or her official duties, and then publishes those reviews) to be sponsored advertising messages. Accordingly, such reviews are not “endorsements” within the meaning of the Guides…

Never mind the financial pressures that traditional media is under that might tempt them to say a few kinds words about their sponsors. We accept that the Captains of traditional journalistic integrity will go down with the ships without uttering a false endorsement. 

Double standards are just wrong, however, as Rothenberg and the IAB fairly point out.

Twitter your Congressman.

Randall Rothenberg’s Clog

IAB release.