Posts about Ad

The real media consolidation: Google

Erick Schonfeld at TechCrunch and Ashkan Karbasfrooshan at HipMojo make critical calculations about Google’s growing advertising hegemony. Bottom line: Google controls nearly 40 percent of online advertising.

Now pair that news with the folding of TimesSelect. Consumers, as we used to be called, won’t support media and journalism with their money. Advertising will. We will become entirely dependent on advertising. And what happens when Google controls the majority of online ad revenue in this country? They’re headed there, for as a TechCrunch commenter points out, Google’s online ad revenue and share of revenue are growing faster than online advertising as a whole.

On the one hand, we should be grateful to Google for enabling the support of much new media. On the other hand, we should fear teh vice in which Google holds our privates. That’s where media power is consolidating — not in old conglomerates (some of which now depend for a good bit of revenue on who? — on Google.)

I’m not blaming Google for getting to this point. Big, old media handed them this opportunity on a platter. Google was the one company that truly understood the economics of the open network. It understood that it could grow much bigger enabling than controlling. We in media should have followed that model. We should have asked WWGD. What would Google do?

So what do we do now? We need new networks that identify and create new marketplaces for new value — greater value than the coincidence of words on a page, which Google sells. We need to create our own high-value networks (e.g., hyperlocal news). We need open networks that compete with the closed aspects of Google; openness is water to the witch of an opaque network like Google’s.

TechCrunch’s facts & figures, built on HipMojo’s calculations:

$3.98 billion (Google’s U.S. revenues in the first half of 2007)/$9.99 billion (IAB’s estimate of total U.S. online ad revenue in 1H07) = 39.8 percent.

For the first half of 2006 the numbers are: $2.732 billion (Google’s U.S. revenues in 1H06)/ $7.9 billion (IAB’s estimate of U.S. online ad revenues in 1H06) = 34.6 percent.

Update: As one commenter points out below, this means Google is out-pacing the growth of online advertising by a wide margin. Total online advertising revenues grew 26.5 percent year-over-year, while Google’s ad revenues grew 45.7 percent.

Now ad in Bob Garfield’s chaos-scenario contention that ad spending as a whole will fall because companies will have more direct relationships with customers around media. I saw some things at Dell that back this up (more on that when my story appears in two weeks or so). Google will get an ever-bigger slice of an ever-smaller pie.

About that butt

I’ve been meaning to mention the elephant in the room: that naked butt to the right, the happy ass. Some of you like it. It led Scott Heiferman to click on it and find “transcendent navigation.” Stowe Boyd sees a connection between an ad for toilet seats and reading newspapers. But this appropriately self-described curmudgeon was offended, so much so that he couldn’t bare bear to link to me and chose to steal a post of mine. That’s fine.

I’m proud of the ad, not because I’m a customer for $1,000 toilet seats (not made for the Navy) but because it represents my return to Blogads, where you should feel free to buy an ad and replace that ass. Hint, hint.

This means I’ve left Federated Media. I have nothing but respect for John Battelle and FM, but it was not meant to be. I earned less there than I had earned at BlogAds and I think I know why. Battelle’s original vision was to sell high-value federations built around blog authors and topics. Of course, I liked the idea, it appealed to both my ego and greed. But it turns out that selling a federation of media wonks is hard. It’s possible, I think, if you find just the right advertisers who want to reach my dear fellow media wonks (read: you). But that would take a lot of effort, it would be an expensive sale as a result. Federated had more immediate success selling big advertisers like Best Buy, but I can’t compete with all its placements when it comes to traffic. Federated also went down a road they called conversational marketing, where I didn’t want to go. So I decided to shift. I wish FM the best of luck; I’m rooting for them to make blogs profitable, which will mean more blogs get made. God’s work.

I’m relieved that blog advertising pioneer Henry Copeland at Blogads would take me back. And that butt is my first ad, the fruit of Blogads’ sales. My second was for a serial killer (a Showtime show). And I’m happy to have both of them. If I make a lot of money on those ads, maybe I can afford one of those toilet seats, which are pretty amazing (but don’t take that as an endorsement . . . this isn’t Pay Per Post).

Moving on on MoveOn

The New York Times director of acceptable advertising (a job title that sounds rather than being the minister of silly walks) gives a good explanation of policies that led to the pricing of the now notorious MoveOn Patreus ad — far better than the company spokesmen last week.

The MoveOn.org ad was published because it complied with our standards. This ad was also accepted because it is our ongoing desire to keep our advertising columns as open as possible to the public, which we believe is a First Amendment responsibility. I would also point out that this ad was similar to other ads that criticized President Bush, former President Bill Clinton, and countless other public officials.

Within the category of political or advocacy advertising it is common practice throughout the newspaper industry to offer a standby rate in addition to open rate advertising. When a group buys a standby ad, it can request a particular date for it to be run, but receives no guarantee that it can appear that day. The lower cost of such ads reflects the flexibility that gives us. Any political or advocacy group calling up today to request a standby ad would be quoted the same rate that MoveOn.org paid.

TV explodes: The chain reaction hits critical mass

Internet usage is now approaching TV usage — in the US, the UK, Australia, Germany, and Japan — according to an IBM study to which Om Malik points us. Note also that TV networks’ share of online TV viewing is only about 33 percent, below YouTube and barely ahead of Google and social networks in the U.S. — and the alternatives are only beginning (in the life of internet video, it’s only 1954).

Why the hell isn’t online advertising approaching parity with TV advertising? Because advertisers are slow. Says IBM:

The global findings overwhelmingly suggest personal Internet time rivals TV time. Among consumer respondents, 19 percent stated spending six hours or more per day on personal Internet usage, versus nine percent of respondents who reported the same levels of TV viewing. 66 percent reported viewing between one to four hours of TV per day, versus 60 percent who reported the same levels of personal Internet usage. . . .

Despite natural lags among marketers, advertising revenues will follow consumers’ habits. . . .

Saul Berman, IBM Media & Entertainment Strategy and Change practice leader, said, “The Internet is becoming consumers’ primary entertainment source. The TV is increasingly taking a back seat to the cell phone and the personal computer among consumers age 18 to 34. . . .”

Unless, of course, your cell phone is a computer. Hat tip: Steve Jobs.

IBM, being a big-iron company, analyzes what this means to its fellow big companies. That’s where most of the consulting money will be. But it’s not where most of the change — and perhaps power — will be. Says IBM:

To effectively respond to this power shift, IBM sees advertising agencies going beyond traditional creative roles to become brokers of consumer insights; cable companies evolving to home media portals; and broadcasters and publishers racing toward new media formats. Marketers in turn are being forced to experiment and make advertising more compelling, or risk being ignored.

I prefer to look at the opportunities this profound disruption brings:

As we already know, of course, anybody can make TV (second hat tip Steve Jobs), distribute it (YouTube et al), and market it (via the link). The problem remains that even though the costs are a fraction of the old, big stuff, you can’t support it with advertising … yet. But that will come. Witness today’s announcement that YouTube has settled on its means of delivering ads. See also this from the IBM survey: 63 percent in the U.s. said they would watch advertising before or after quality, free content (34 percent said they’d be willing to pay). Speed up, advertisers.

As for advertising agencies becoming “brokers of consumer insights”: they should wish. Before, agencies and media were the gateways to the audience. Now, companies can converse directly with customers and get plenty of insights without gatekeepers. I’d rather be Facebook than an ad agency, wouldn’t you?

Cable companies becoming “home media portals” is a fancy way to say pipe. Period.

Broadcasters and publishers shouldn’t be racing to new media formats for one-way content. They should be racing to enable new kinds of relationships among communities of information.

And marketers shouldn’t just be experimenting with new forms of marketing — though they should. They should be trying new means of conversation with their customers.

Some more findings from the U.S. IBM survey:

* “Content” is now, at last defined as conversation as well. Use of content services: 45% social networks; 29% user-generated sites; 24% music services; 24% premium video content for TV (not sure what that means); 18% online newspaper. Ouch.

* 58% have already watched online video and 20% more are interested.

* DVRs are good for TV: 33% watch more TV as a result (58% the same)

* 74% contributed to a social network; 93% contributed to a user content site. Who says that forums are only for nuts, blogs for early adopters, and photo services for geeks? Everybody’s making content. Why do they do it? Feel part of a community, 31%; recognition from peers, 28%. Conversation.

* How is content marketed today? Peers. Primary reason for viewing content on a user site: 46% said the recommendation of a friend.

* But here’s the fly in my future-of-advertising ointment. Asked which ads “most affect your imopression of a product or company,” TV commercials on major networks got the lion’s share.

Microsoft’s video virus

I perused the Viral Video Chart and came across a produced video dramatizing the divorce of a beautiful woman labeled “consumer” and her husband labeled “advertiser.” All he cares about is himself; he just doesn’t understand or listen to her.

It’s clever and slickly produced and it turns out it was produced by Microsoft to pitch its “digital advertising solutions” (which, by the way, will only expand when and if it takes over aQuantive). It’s the rare case I’ve seen where a company set out to create something viral and succeeded, at least as measured by the Viral Video people and by its ratings: 31,000 views as of today. The video links to a blog that is all about making the movie and explains why they made it: “We want to try and tell that digital media is not about technology but about quality of communication, about the interaction between 2 people. There is no better medium than a movie to symbolize the one-to-one communication between people, in this case between an advertiser and a consumer.” Precisely how Microsoft changes the conversation between advertisers and — note my word change — customer, I’m not sure.

A big deal

Microsoft just bid big bucks to buy ad company aQuantive. The net of this:

Content is not king. Distribution is not king. Money is king.

Microsoft has tried to go into the content business and the distribution business and has failed at both.

Google went into the advertising business. It has won. So now others are trying to catch up: WPP buying 24/7 and Microsoft buying aQuantive. With Razorfish in its stable, this is also a service company that builds platforms for media companies. The great need now is to enable the commercial infrastructure that supports the activities of this world.

The wages of vlogging

At a panel I moderated today at Streaming Media East, Robert Scoble says he is being paid “six figures every quarter” — that is, something above 400k — for his online video efforts.

: Robert adds, importantly, that his company gets paid that much by advertisers. Sadly for him, it doesn’t all go into his pocket. Cost of sale, as we say.

Smartest media quote of the year

“We can’t expect consumers to come to us. It’s arrogant for any media company to assume that.”

Quincy Smith, president of CBS Interactive, said that in today’s Wall Street Journal explaining CBS’ smarter-than-most strategy for a distributed media economy.

This is the way all media executives should be thinking: Go to the people, don’t make the people come to you. That’s expensive for you and inconvenient for them and it’s just not going to happen — or, it’s no way to build a media business model anymore. Says the Journal:

A year ago, CBS Corp. announced the creation of Innertube, an entertainment channel on CBS.com designed to make the company a player in online video. It streams video of sporting events, news reports and reruns of shows such as the hit comedy “How I Met Your Mother.”

CBS’s new chief Internet strategist now jokes that the Web address for Innertube should be “CBS.com/nobodycomeshere.”

CBS, after a year of experimenting with various Web initiatives, says that forcing consumers to come to one site — its own — to view video hasn’t worked. Instead, the company plans to pursue a drastically revised strategy that involves syndicating its entertainment, news and sports video to as much of the Web as possible. It represents a stark departure for the TV industry. . . .

Starting this week, an expanded menu of CBS’s video content will be available for free to consumers on as many as 10 different Web sites ranging from Time Warner Inc.’s AOL to Joost Inc., a buzzy online video service that is just rolling out. The company calls its new venture the CBS Interactive Audience Network.

Importantly, they’re also going through services that let us embed and distribute their stuff. That’s the greatest win of all. Why not encourage your audience to recommend and distribute your good stuff. It’s free marketing. It’s the endorsement that matters most. It’s only wise. But media has always been about control, about selling scarcity. So it’s damned hard for these guys to shift their mental map of the world and realize that they are not at center, we are. What they defined as inside is outside. This requires them to turn their world inside out. CBS is doing that.

Meanwhile, see the Stuart Elliott column in today’s Times all about networks trying harder to keep viewers in, how to keep them from changing the channel or TiVoing. What they should be asking is how they can take their stuff out. Think distributed.

Note also that NBC is shifting an inch by airing one of the Law & Orders on USA first, then on NBC. That says that NBC isn’t the center of the universe. But this doesn’t go quite far enough. Why not air it online first? If you don’t, NBC, Dick Wolf will someday. That’s what the studios of the future are doing now.