Pride goeth before a fall: consumer magazines talk about building an ad network

According to Advertising Age, rival consumer magazine publishers are talking about working together to build an ad network in order to offer competitive reach compared to other ad networks.  Foremost in the minds of the publishers is the price of their inventory, which has been decimated by third-party ad networks, in their joint estimation. Now, they have determined, it’s time to circle the wagons.

Presumably, salespeople at each magazine would be allowed to sell across the ad network. Or, participants could be envisioning a dedicated network team apart from the rest with shared responsibility for sales. Or, they may be thinking of one person per sales force exclusively responsible for network sales. The parties may be looking at the Newspaper National Network (NNN) as a model, which has done reasonably well for its newspaper clients offline – albeit, as a stand-alone business. 

Whatever. The reality is this (and it bites): a horizontal consumer magazine ad network is the wrong model. Don’t do it.

Aside from the fact that magazine publishers, much as competitors in any other field group, have never shown themselves to be especially good colleagues and collaborators except when attending awards banquets, the horizontal network model will not protect them from brand erosion, the source of all value. If they propose to compete on reach, for performance, by selling across each other’s properties price will enter into it – and the price will be lower. If charging less on one’s own for one’s self can make one feel better, then we must come to terms with the fact that one is not protecting brand; one is protecting pride.

Pride in something has value. Pride for the sake of pride does not. And, today, in truth, there is altogether too much pride being confused for brand among major media companies.

Time to get over it.

A little competition is the thing to make everyone feel better and to support brand value. If magazines want to compete with ad networks they should, indeed, start their own, but they should be proprietary, vertical networks that sink deep roots under their brand promises and take aim at competitive brand properties, as always.

Horizontal generalizes. Vertical specifies. Brands are a set of specific promises, including media brands. If consumer magazines try to compete on reach they will compete on price, thus giving the market permission, effectively, to plan and buy accordingly. Under those circumstances, third-party horizontal ad networks will win. 

Don’t do it. Compete on brand and drill deeper into the proposition.

How? Build vertical brand networks by inviting independent web publishers to assemble under established media brands and sell down through those networks. Voilà, reach happens. Price will follow reach down, but for independent publishers anything above a $1.00 is a win. Bring them $5.00 cpms and they will slay dragons for the provider. Speak in admiring tones about their work and the admiration will cause them to shine. The shine will cast a glow on the market and, voilà - brand halos.

Right now, it’s apparently in the heads of people at consumer magazines that everyone will be judged better if they keep in the exclusive company of each other. For better or worse, snobs don’t really behave that way. Mostly, they conspire continuously to undermine their neighbors and gain the advantage, and this is how it will be with a consumer magazine network.

The status quo, relying on third-parties that are unaligned and unvested in the brand, is clearly no way forward. Consumer magazines are right to want to seek new partners. They would be wise to pick ones that desire them to be successful in the future and are willing to provide unconditional support.

Who is that going to be? It will be the have-nots, the wanna be’s, the aspiring and the yet-to-be-discovered - the Great Unwashed in the Internet wagon train heading west.

And…if you build it, they will come.

Chewing on media’s next wave – Part II

Further to the post in this space earlier this week (“Chewing on media’s next wave”), is this item from EContentMag.com, by Kinley Levack, suggesting that vertical ad networks are coiled and ready for take-off. There are many thoughtful comments in this piece, courtesy mostly of the people at NetShelter Technology Media which has a network of 150 independent web publishers. Explains co-Founder and CEO, Peyman Nilforoush:

“We have a different kind of media model—our model is really taking that ‘Wisdom of the Crowd’ idea and bringing it to media. In the old media model, you have editors who are well-known and produce influential content, and that’s essentially how expertise and information were distributed.”

Indeed. Essentially, old media was a smoke stack business. Think of it as factory media. Raw information materials came in from around the world, and content came out in neatly wrapped packages, delivered by truck and channel. New media is agrarian. Think of it as a garden in every back-yard, the produce of which growers throw in the back of the pick-up and bring to the local market every week (the vertical media network). The metaphor surely has legs in the context of our lives today: we could say new media is the equivalent of buying local. We could also say it is the equivalent of sustainable farming.

It’s not clear to me if Peyman Nilforoush is talking about media brands or brand advertisers when he says, “The core of it is, ‘OK, this is a totally new marketplace, so if I don’t harness it, what happens?’ If I’m not getting into this ecosystem and finding a way to integrate my brand, that means that I’m becoming less and less relevant every day because I’m playing it old school while my audience is being influenced by the wisdom of the crowds.” But it doesn’t matter, because his comment applies to both. It is the wise choice of the Food Network Family in our earlier post (see above) to decide to share its brand in order to create a marketplace, and the wise choice of marketers that decide to shop there.

Chewing on media’s next wave

Jon Friedman talks about the early going at Food Network Magazine in his Marketwatch Media Web column, and offers that it may be a model for magazine publishing going forward. Friedman ticks off a few other examples – Martha Stewart, obviously, and Rachael Ray and ESPN Magazine. I’m not really sure, however, that launching line extensions is really new or different in the media world, as his own examples document. National Geographic has done pretty well going the other way, from magazine to television. Also, TV Guide. Likewise, the Saturday morning outdoor blocks on television – all the fishing and hunting programs – were largely the initiative of outdoor magazine people, notably George Bell. Accordingly, does Food Network Magazine represent “media’s next wave?”

Probably not, but that doesn’t mean that Jon Friedman is missing the point. Leveraging media brands across platforms is standard trade craft; leveraging media bands to create media networks is where it goes next, which is actually something Food Network has been working on online over the past few years. The “Food Network Family” is inclusive of Healthy Eats, Recipezaar.com, Food2 and others. Food Network is becoming a network in a complete sense of the word, sharing the strength of the brand not just across platforms, but across complimentary properties – properities independent from Food Network’s editors.

Do people call this curating? Curating is maybe media’s next wave. Hearst – which publishes Food Network Magazine – curates magazines. Food Network is curating - by partnership and through acquistions - a food and living lifestyle, which needs no boundaries.

Can the Online Publishers Association learn how to share value?

The Online Publishers Association(OPA) and comScore are hitting the road with a study about the ability of display advertising to support brands online. Excellent news.

The report in Mediaweek talking about the study takes a shot at ad networks – “Perhaps not surprisingly, besides defend display ads, the report also touts the power of branded content sites (rather than say, ad networks” - but we feel fine about that and are inclined to agree that not enough networks do enough to sell the value of content online. Most of them can’t, because they don’t work transparently with their publishers, which makes it hard to extol the virtues of place and position and content quality – all the things, frankly, that attract users.

That said, the OPA remains an emblem of one of the Great Barriers to advertising progress online. As an entity, it is informed by the right instincts and sells the right things online – notably, the important value of content - but it feels it must contest the ability of anything besides the large, branded media members it represents to create that value. That is preposterous. It is like anyone contesting the wisdom of self-government. Really. If, instead, the OPA or its members - as experienced advocates - could embrace the audience engagement created by the thousands of niche publishers that, in fact, make up most of the Internet, then the OPA could do a great service, and play a larger role, as an advocate of the value of online overall – and value might, after all, see daylight online. It has a clear advantage over the IAB in this regard, which has had to pick its way through all manner of sellers and agents, many of which got rich doing end-runs around value.

You see our problem. One trade group is conflicted. The other trade group is conflicted.

It’s a pickle.

Who is Louie Volpe?

 

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 www.iab.net

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

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/

Ad Networks are not for the faint of heart

First, this disclaimer: Doug Wintz has worked closely with Burst’s adConductor business in the process of sourcing  and securing ad management solutions for his ad network customers. Doug is a customer and we think Doug is very smart for all the reasons that are on display in his iMedia piece today about starting your own ad network.  

This post is not about selling Doug more stuff, however. It is, actually, about the earlier post in this space about the hubris of the Internet, “Taking ourselves too seriously,” wherein the realities of the marketplace and the limits of technology to overcome them are discussed. Doug Wintz’s experience and his column today tell more of that story. So, you want to start your own ad network. Per Doug, what you need to know is that success is people-driven. It is about having the tools, but also the willingness to meet the needs of web publishers in your network. It is about customer service.

Customer service is the part that has foiled many online. It implies interaction, which implies middle-men, which some would rather have outlawed online in favor of strictly automated relationships. Have your computer call my computer. But that is not marketplace reality. In many respects – and perhaps ironically, but only because the industry has insisted on seeing it differently – the Internet is more people and relationship-driven than offline media, which is largely impersonal and impenetrable (have you written to an editor lately?). Web publishers are mostly people and not businesses, and their sense of self is correspondingly more acute. They want advocates and problem-solvers and response-givers. They want partners. For that reason entering the ad network business is not for the faint of heart, as Doug Wintz says.

Something to Dwell on

Media Post reported on the new Dwell Partner Network today, a collection of more than 30 design and architectural web sites “to bring together Web sites featuring the people, the experts, the products, the innovative ideas and the ongoing conversations taking place around design.”

Please put aside the fact that the Dwell Partner Network will be powered by Burst Media’s adConductor platform, which is mentioned as part of today’s announcement. The network model that Dwell brings to market is the right one for a distributed, fragmented media economy such as we have today. It marries the need to preserve the relevancy of media to audiences with the need for media to have scale - both good things.

What would Dwell’s alternatives be in a traditional media environment? Buy more architectural and design magazines, or start them from scratch. Perhaps do nothing. Each option is risky and expensive and hard to scale if you want to grow. As a result, the temptation – not at Dwell, but certainly in other places over the years – has been to add content (or programming) tangential to the core editorial proposition and/or to simply make the content more accessible to larger, non-endemic audiences that will be less willing to pay.

Now (long before now, actually) comes the Internet and the chance to scale without compromising media brand promises. Build a network. Imbue it with the power of a dominant brand. Invite dedicated content producers to join your table. Enjoy the reach you need to be efficient for advertisers with the intimacy you need to be effective for them. Add value to audiences by the addition of appropriate advertising messages. 

High reach + high composition. It’s a beautiful thing and something to dwell on.

Burst Media Launches Wellness Network for Advertisers

In our continued efforts to present targeted offerings to brand advertisers, Burst Network today launched the Burst Wellness Network, a vertical advertising network with some impressive stats:

• 120 web sites that address fitness, health, and wellness
• 54 million monthly ad impressions
• Great member sites like Wellness.com, Discovery Health, and Full Fitness

Click here to see the full set of stats, and here to see our previous network releases.

In a Troubled Economy, Online Media will thrive

Jarvis Coffin, CEO of Burst Media

As we embark on the second half of 2008, the online advertising industry in the U.S. continues to advance despite the challenge of a stagnant overall economy. The last time the industry faced such tough times in 2001-2, it was mowed down. But today it seems we are stouter and of surer foot, having matured our business and client base considerably over the last seven or eight years. Last time the Internet got battered by the real world it fell down. Back then, no one sought refuge online. Today it is television and newspapers that are feeling the pain as buyers and seller look to the Internet as high ground.

Much of the gains in online ad spending over the past year can be attributed to the flood of performance driven advertisers taking advantage of the deluge of low cost inventory coming from social networks and portals. However, brand advertisers are not sitting back and just watching. They are as eager as ever to fish where the fish are, which is clearly online, and the industry is responding to this demand with a number of solutions that address their needs. The one getting the most press attention is the rise of Vertical Ad Network.

Vertical Ad Networks introduce brand marketers to the targeted audiences and interest-based destination web sites that users depend on in their daily lives. Burst Network, with its history of strong publisher relationships, brings these sites together and can craft a network that is highly content focused and highly relevant to a particular demographic that a marketer seeks to reach. Currently Burst Network operates several Vertical Ad Networks including Burst Moms Network, Burst Green Network, CDKitchen Cooking Network and RealGM Sports Network among others. Since the beginning of the year these networks have enhanced our relationship with brand advertisers, and they resonate well with brand-focused media planners. These networks are transparent, perform well, and provide the kind of brand lift that marketers dream of.

Why do vertical networks matter in a down economy? Let’s compare them to traditional ad networks like Advertising.com and large vertical sites like iVillage. Burst’s vertical networks offer a hand selected set of engaging, well-designed, audience-focused sites. Large ad networks do not provide the level of transparency required by brand owners, and single sites do not offer the diversity of interests that a target audience may have. For example, a Mom may be on a parenting site, a career site, and a news site within one session. Burst’s Moms Network captures all of those “sides” of Mom through sites like Coolmath.com, BlueSuitmom.com, and MomsWhoThink.com. The reach that an advertiser gets from the Burst Moms Network is 9%, nearly identical to the reach of the iVillage Women’s Network. Furthermore, the Burst Moms Network has a greater saturation of women 25-54 with children in their household (composition index 8 points higher) than iVillage, and a greater diversity of content to reach Moms in a more contextually relevant ways. What this means for an advertiser is minimal media waste, and for the publisher it means better CPMs from their ad network partner.

While I don’t believe the Internet will emerge unscathed from the rising tide of uncertainty, it will emerge more confident and, ultimately, dominant. Leadership emerges in trying times. Expect the Internet to lead the way forward from these.