Posts about ads

Cookie Madness!

I just don’t understand Julia Angwin’s scare story about cookies and ad targeting in the Wall Street Journal. That is, I don’t understand how the Journal could be so breathlessly naive, unsophisticated, and anachronistic about the basics of the modern media business. It is the Reefer Madness of the digital age: Oh my God, Mabel, they’re watching us!

If I were a conspiracy theorist — and I’m not, because I’ve found the world is rarely organized enough to conspire (and I found this to be especially true of News Corp. when I worked there, at TV Guide) — I’d imagine that the Journal ginned up this alleged exposé as a way to attack everyone else’s advertising business just as its parent company skulks behind its pay wall and surrenders its own ad business. But I’m not a conspiracy theorist. That’s why I’m confused.

The story uses the ominous passive voice of newspaper scare stories: “…a Wall Street Journal investigation has found…” As if this knowledge were hiding. Cookies have been around as long as the commercial browser, since October 1994. Or was that 1984?

The piece uses lots of scare words: “surveillance technology” … “tracking technology” … “intrusive” … “no warning” … “surreptitiously re-spawn” … “rich databases” … “so powerful and ubiquitous” … and my favorite: “targeted ads can get personal” (well, yeah, that’s the damned point).

The Journal acts as if it has discovered a conspiracy of its own: “Marketers are spying on Internet users — observing and remembering people’s clicks, and building and selling detailed dossiers of their activities and interests.” Gasp! Mabel, hide the kids, the Romans Huns Krauts Commies Marketers are coming!

There is absolutely nothing new — thus nothing newsworthy — in what the Journal promises threatens to be a series.

The Journal does measure its own cookies, finding its site moderate (I count 34 Journal cookies on my new Mac and I don’t use the site often) in what it ominously calls an “exposure index.” Mabel: Bring the Geiger counter!

Well, except the Journal is unique because unlike the other sites the story writes about, the Journal has my personally identifiable information! It has my friggin’ credit card number and name and address and phone number as well as my web behavior and it allows me to be tracked by third parties. The Journal has more information about me than ANY of the sites it warns about. And the Journal is owned by a company some people don’t trust. Hmmm.

It’s a fine thing that the Journal also tells readers how to “avoid prying eyes.” And if enough people do that, then the value of the advertising-supported web falls. Without cookies, the effectiveness and price of advertising would plummet as ads everywhere turn into remnant junk (smack the money), reducing revenue for media sites and reducing their content to junk. Hmmmm….

A story like this might also affect policy as the FTC is looking at regulating online advertising and marketing; its chairman, Jon Leibowitz testified before Congress on the topic this very week. Hmmm.

I think the Journal should have told exactly how it places and uses every one of its cookies and beacons and ominous tracking surveillance spying technology. It doesn’t. The story doesn’t even link to the paper’s privacy policy, which says that cookies and beacons and all that scary surveillance/tracking/spying technologies are used at WSJ.com and its affiliates and also by third parties over which the Journal has no control. Opportunity lost.

If I were an advertising-supported site, I’d be aggressively transparent. I’d tell you exactly what we track and what impact that has on what we serve in advertising and content. I’d create an app to read the cookies placed just for you and explain them. I’d give you the chance to correct information. I’d give you the chance to select your own advertising (now that would be valuable). I’d treat this with radical openness.

Otherwise the scare mongers like those regulation-loving, anticapitalist commies at News Corp. will win the day.

: Oh, and I neglected to point out that it was the very same Journal that had the wingnutty story about privacy and RFID tags on our pants, quoting as an expert a woman who thinks that RFIDs are — and I exaggerate not — the work of the devil. What the hell is happening there? Are they going out for drinks too often with their new neighbors at the Post?

: Oh and here’s more scaremongering from the commie Telegraph in London, which equates Wikileaks’ Julian Assange with Facebook’s Mark Zuckerberg. Man, we are in silly season.

: MONDAY: The Journal campaign against digital advertising continues today with a shocking exposé revealing that Microsoft is a business-friendly business that chose not to release its browser with a default that would have killed ad tracking and targeting. Horrors!

Now if the Journal were really a business newspaper still, there’d be no news there. The news would be if Microsoft did not do what was good for revenue.

Here’s a too-metered Microsoft response to the weekend’s follies from the browser team.

Google finally reveals AdSense cut: 68% on content

At last, Google is revealing its split on AdSense: 68% to publishers for content ads, 51% for search ads.

I had two primary complaints about Google in my otherwise admittedly and obviously wet-kiss book, What Would Google Do?: Google’s policy aiding government censorship in China and its opacity on advertising relationships. The first is pretty much fixed and this morning, Google is addressing teh second. so is the second. (Uh-oh, now I have fewer excuses not to be a fanboy.)

At a press meeting with Google execs in Davos in January, I pressed them about the advertising openness, having discussed the issue with publishers at DLD in Munich right before. In Davos, Google’s president of global sales, Nikesh Arora, replied that the company was reconsidering its transparency on AdSense. This morning, they’re revealing the deal in a blog post (to which I’ll link as soon as it’s up; this news was embargoed for 10a ET). From the post:

Today, in the spirit of greater transparency with AdSense publishers, we’re sharing the revenue shares for our two main AdSense products — AdSense for content and AdSense for search. . . .

AdSense for content publishers, who make up the vast majority of our AdSense publishers, earn a 68% revenue share worldwide. This means we pay 68% of the revenue that we collect from advertisers for AdSense for content ads that appear on your sites. The remaining portion that we keep reflects Google’s costs for our continued investment in AdSense — including the development of new technologies, products and features that help maximize the earnings you generate from these ads. It also reflects the costs we incur in building products and features that enable our AdWords advertisers to serve ads on our AdSense partner sites. Since launching AdSense for content in 2003, this revenue share has never changed.

We pay our AdSense for search partners a 51% revenue share, worldwide, for the search ads that appear through their implementations. As with AdSense for content, the proportion of revenue that we keep reflects our costs, including the significant expense, research and development involved in building and enhancing our core search and AdWords technologies. The AdSense for search revenue share has remained the same since 2005, when we increased it.

We also offer additional AdSense products including AdSense for mobile applications, AdSense for feeds, and AdSense for games. We aren’t disclosing the revenue shares for these products at this time because they’re quickly evolving, and we’re still learning about the costs associated with supporting them. Revenue shares for these products can vary from product to product since our costs in building and maintaining these products can vary significantly. Additionally, the revenue shares for AdSense for content and AdSense for search also can vary for major online publishers with whom we negotiate individual contracts.

Of course, we can’t guarantee that the revenue share will never change (our costs may change significantly, for example), but we don’t have any current plans to do so for any AdSense product. Over the next few months we’ll begin showing the revenue shares for AdSense for content and AdSense for search right in the AdSense interface.

They’re also not revealing splits for YouTube, a program that just started. Note also that big publishers, such as the New York Times Company, have long known — and negotiated — their splits, which also aren’t revealed. A Google spokesman told me last night that these splits hold for classic AdSense pay-per-click ads and also for newer display, CPM ads. They also hold globally.

How do the splits compare? It’s not uncommon for ad networks to take 50% or more. BlogAds, one of the more generous networks, customarily takes 30% on sales it makes and has other models (if sales come through a publisher site, only 14%; they also offer networked sales).

: LATER: On Twitter, I noticed some confusion about agency commissions vs. sales commissions. Agency commissions are on the buy side as ad agencies take a commission — often, 15% — for placing media. That’s not what we’re talking about here. This is a sell-side commission and I know, for example, that when it started, DoubleClick took at least 50% for sales. DoubleClick also serves ads and that’s a separate fee. I don’t have the latest numbers for these separate tasks; if you can add figures, I’d be grateful.

The hunt for the elusive influencer

Maybe there is no such thing as an influencer.

We keep hunting the elusive influencer because marketing people, especially, but also politicians (marketers in bad suits) and media people (marketers in denial) think that if they can find and convince or brainwash that one influencer, he or she will spread their word like Jesus and their work will be done. But I think this quest is starting to look like a snipe hunt.

At this week’s very good Brite marketing conference at Columbia, Duncan Watts, Yahoo research scientist, presented interesting work trying to track down the influence of influencers via Twitter, with help from the data Bit.ly provides about links. He asked — hypothetically, thank God — whether it would be worth it to pay Kim Kardashian $10k for a tweet to her alleged 3.27 million followers. He found that targeting instead lots of people who have far fewer followers would yield “much, much higher ROI.”

What that says to me — ironically — is that trying to find the big influencer with big audience is really just old mass marketing in a cheap dress. Old mass marketing (go with the largest numbers … and breasts) isn’t economical; neither, it turns out, is marketing to just one or a few powerful people — the mythical influencer. That brings us to a new hybrid to mass marketing, which is what I think Watts is suggesting: Target many people who at least have some friends who’ll hear them. (Disclosure: This was a key insight in the development of the company 33Across that made me invest in it.)

Or to put this question in the current argot: Is there more influence in the tail than in the head? If you talk to 100k people who talk to 10 people each, do you get more bang than talking to one person who has 1m followers? (Watts did also say that a combination of mass and tail marketing is effective.)

In his talk, Watts referenced me and Dell Hell as an illustration of influence. But I protested. I’m no influencer, I said. When I wrote about Dell, I had no juice in the tech/gadget world; still don’t. I then pointed to the amazing Dave Carroll, he of the “United Breaks Guitars” viral phenom, who’d spoken earlier, and said he was no influencer in airline travel or customer service. What was influential in both cases was not the messenger but the message.

But if it’s the message that is, indeed, the key to influence then there’s really no way to predict and thus measure and replicate its power; messages spread on merit. That is a frightening idea for marketers because the viral influencer in social media — pick your buzzword — is their messiah for the digital age, the key to escaping the cost and inefficiency of mass media (and the cost and apparent tedium of real relationships with us as individuals). If you can’t bottle influence, you can’t sell it.

Now it’s true, of course, that the most magnificent message ever won’t spread if no one hears it, if a person with zero followers on Twitter says it. (Tree, forrest, etc.) But a banal message in Miss Kardashian’s Twitter feed — I know, it’d never happen — will go thud and die no matter how many people she speaks to if no one cares about it. Some people need to gather around the speaker for what she says to be heard. But more people doesn’t equal more influence. And this doesn’t make that speaker an influencer. The speaker is merely a node in a network.

So the message spreads not because of who spoke it but because the message is worth spreading. What makes us spread it? First, again, we spread it if it resonates and it is relevance; it has value to us and we think it will have value to others. Second, trust or authority is a factor. If I see Clay Shirky or Jay Rosen or Kevin Marks tell me to click on a link I’m more likely to do so because I respect them and trust their judgment and I’ve found in the past that clicking on their links tends to be worth the effort. They give me ROC (return on click). But if I followed Miss Kardashian (I don’t) and she told me to click on a link, I’d be less likely to, both because I don’t put her in the same intellectual corral as my other friends and have no relationship with her and because I have seen that clicking on her links gives me lousy ROC. Is trust or authority or experience influence? In a small circle of actual friends, I don’t think so. And in any case, having only a small circle of friends isn’t the one-stop-shopping influence marketers are seeking.

So abandon the hunt, marketers. You’re not going to bag the influencer. She doesn’t exist (well, one did but she quit her TV show).

What does this mean then for marketers in social media? I think it means they need to reread The Cluetrain Manifesto (out in a 10th anniversary edition) and recognize that messages and influence aren’t the future of marketing; conversations and relationships are. No getting around it. No shortcuts.

Think about it: I don’t want someone to influence me. I don’t want to be influenced. The whole idea of looking for influencers is so old marketing: spewing messages to people who didn’t ask for them. So looking for influencers only perpetuates the mistakes of marketing past. Stop.

: MORE: Brite organizer David Rogers wrote about influencers and Watts earlier.

Marketing’s next

Meredith, the magazine publisher, is taking on functions of ad agencies, as the Wall Street Journal describes in detail today. It’s a smart move by Meredith and it’s inevitable as we shift from selling scarcity to selling service to marketers. Meredith is taking on the functions of a creative agency. In a networked media ecosystem, I also think that media companies will take on the functions of the media-buying side.

See also this piece arguing that a company should invest not in marketing but in its relationships with customers.

Just two anecdotes in the ongoing shift that will hit the ad industry just the way it has hit media.

(Disclosure: Meredith brought me to Iowa to talk about WWGD? last year.)

Next to the gallows: Newspaper coupons

The best reason that some newspapers have to stay in print — at least a few days a week — is to distribute coupons and circulars (free-standing inserts, or FSIs, in the jargon). But as newspaper circulation declines below critical mass and as digital means of delivery of coupons and bargains catch on, the FSI line of business is the next to fall over the cliff for papers.

Rick Edmonds at Poynter writes about an NAA study that says the coupon business for newspapers is under siege. Meanwhile, Coupons.com brags that the growth of digital coupons is surging; printouts of deals at Coupons.com alone equaled $858 million last year. This comes as coupon use in America is growing overall for the first time in 17 years; we redeemed 3.3 billion last year, a 27% jump over 2008. Sunday coupons still account for the lion’s share of the business, but online is growing fast.

Newspapers defined themselves and their barrier to entry by their production — we already know what is happening to paper — and distribution — now we see what is to become of that.

It’s not just coupons that are affected. When I visited the very smart people at Best Buy a few months ago, I came to see that their circular is media as well; it provides value to manufacturers and consumers. Large retailers, like manufacturers, need effective distribution and as newspapers shrink, they will need to look at alternatives.

Is that the Postal Service? Well, they, too, are losing a fortune (more on that soon). Most of what the Post Office delivers today is advertising and I certainly don’t want to subsidize that with my stamps or taxes, so I’d expect advertising postal rates to rise, which will also put pressure on coupon and circular advertisers, motivating them even more to find ways to make digital work.

The problem with digital coupons and circulars has been portability: the extra and inconvenient step of printing out supresses use. But now enter the smart phone and the long-fabled day of the smart, mobile coupon may actually arrive. If I can check into a flight with a scan of my iPhone shouldn’t I be able to buy toilet paper with it? The value of that redemption is greater for the advertiser because (a) it may cost them nothing — no need to use media as a middleman if I receive deals directly and (b) the advertiser will know a lot more about me; that data itself is terribly valuable and (c) this allows the advertiser to target with far greater relevance, which (d) is better for us customers.

I think there’s a short-term opportunity here for someone to craigslist (as a verb) the newspaper distribution business, creating the means to deliver in key markets with greater reach and better Zip code targeting, drastically undercutting both newspapers and the Postal Service. As coupons do move to mobile and digital, this business will go away, too, but it won’t have much in the way of shut-down cost so there’s a way to disrupt the last dying ember of an industry and get some nice cash flow. If I were a coupon company — and News Corp. is — I’d do it myself.

The point: expect the coupon and FSI business to head over a cliff and with it, another important revenue stream for print papers, giving them more reason to abandon print.

ONE MORE THING: I’ve told this first part of this story before: When I was Sunday editor of the NY Daily News and we came back from a strike, we didn’t have coupons because Murdoch was feuding with our new owner, Robert Maxwell. When they did return, our circ went up 100k. Those people were buying coupons more than the paper.

Now the second part: I later proposed to a publisher starting a coupon magazine that would be sold at supermarket checkout. Yes, I said sold. I wasn’t going to charge readers for content. I was going to charge them for advertising. Didn’t happen, sadly. Still think it was a good idea.

Stop selling scarcity

If you are selling a scarcity — an inventory — of any nonphysical goods today, stop, turn around, and start selling value — outcomes — instead. Or you’re screwed. Apply this rule to many enterprises: advertising, media, content, information, education, consultation, and to some extent, performance.

* * *

Start with advertising. I wrote in my report on a local advertising sales roundtable we held at CUNY that sites should shift from selling media — their own inventory of banners and buttons — to selling services for merchants, helping them succeed through networks of local sites and also through Google, Yelp, Twitter, Facebook, email, mobile, and whatever comes next … helping them with their business. The merchant doesn’t give a rat’s ass about your limited supply of space and eyeballs; the merchant cares about sales and return on investment. As Max Kalehoff advised in a comment on that post, “Sell the outcome.”

At a Paley Center breakfast this week, Sirius CEO Mel Karmazin — a titan of ad sales in broadcast — was blunt about the current state of advertising in media: “There’s just too much supply,” he said, “and I don’t think that supply is going to go away. The leverage is on the part of the buyer as opposed to the seller.” When there’s limitless supply, pricing is not based on supply and demand. These are the new economics of media.

Thus the value is in results. That, of course, is what Google realized when it sold clicks instead of pixels, aligning its interests with those of the advertiser and sharing the risk, which motivated Google not to sell scarcity but to create abundance in the form of AdSense. This, for Google, produced a practically limitless supply, which in turn yielded ever-better relevance, effectiveness, and ROI.

Or as Karmazin famously told Google in Ken Auletta’s book: “You’re fucking with the secret sauce.” He recounted his reaction to Google’s strategy at the breakfast: “You want advertisers to know what will work and what doesn’t? That’s bizarre…. Oh, my God, I don’t want to be in that business.” In most media, Karmazin said, the lowest rates were paid by direct response: “The people who knew what worked were the ones who paid the lower rate.” That bubble is irreparably burst.

* * *

So what are you to do if you are media? First, you have to align your interest with marketers if you have any hope of still helping them, still adding and then recognizing value. Marketers will, as Bob Garfield so forcefully states in The Chaos Scenario, build their own, direct relationships around media, without advertising. Or as I’ve been obnoxiously stating it, advertising is failure — it’s what you do when you don’t have a valued relationship.

Relationships. That’s what the business of media must become. In our New Business Models for News, we began — just began — to project the value of the relationship a new media service can have in its community: creating events; educating; gathering and selling data; selling goods directly (as the Telegraph does, quite successfully); running networks to help others succeed; saving money by collaborating. This is why the notion of charging your best customers — cutting off your richest relationships with a toll booth — seems so dangerous to me.

Instead, we must also align our interests with those of the community, with the people formerly known as the audience, helping them do what they want to do, adding value and recognizing it that way. We need to make ourselves their platform.

Content is not a scarcity. You can no longer sell it as such. That’s one of the morals of the Demand Media and Wikipedia stories: Like it or not, for many different motives, there’s always someone out there who can create content that serves a similar purpose, that answers the same question, that is just good enough. Selling content as if it were a consumable — indeed, calling the people who use content consumers — is now outmoded.

Information is not a scarcity, or at least it isn’t scarce for long. Yes, when I don’t know something, then the answer is scarce. But now it’s much easier to get that answer; Google will have it in .3 seconds and if it doesn’t and if enough of us ask it, then someone at Demand Media will write it for me and the rest of the world for $20. When news is new, its value is scarce (as Thomson Reuters Tom Glocer says, his information has its highest value in its first 3 milliseconds); but then that value deflates.

The new media economy gets even more complicated because putting our content and information out there is how it gets distributed, how we find new people, how we build new relationships, how we realize new value.

You can no longer afford to make yourself scarce.

* * *

In education, we’re fooling ourselves if we think that we can maintain our scarcity-based economy: only so many chairs to soak in the wisdom of that teacher. It’s a wildly inefficient system — especially in our industrial-age knowledge factories that try to turn out people who memorize the same answer instead of invent new ones.

Earlier, I’ve speculated about the idea of an educational ecosystem with star professors whose lectures are widely available (as is the case with MIT and Stanford) and who gain value (books, speaking gigs) through being broadly distributed. Then we have local tutors who give us the specialized instruction and consultation we need.

Thus we have performers and consultants. There is still value in unique performance. We will continue to buy tickets to concerts by stars (but we won’t pay for the Muzak covers of their songs on elevators). We will buy books. We will pay to sit in a movie theater with popcorn. The new competition in the case of media and performance isn’t that someone will make a good-enough version of what we do but that there is more call for the public’s attention.

Quality is a scarcity. But it is a real scarcity. You may think that your newspaper’s version of the Super Bowl is better than the next, but good luck trying to build a business on charging for it. No, you have to be recognized by enough people as being the best — so many that they spread the word for you — if you want to have a blockbuster. It’s still possible. But in an economy of abundance, it’s ever harder and thus riskier and more expensive to get that hit.

This is also why value shifts from creation to curation: in a world of overabundant content, it’s the filters we need.

If you’re not the star performer (or professor), if you’re the consultant (or tutor) who works much more locally, you do indeed have a scarcity: your own time. That scarcity works against you. So it’s in your interest to scale as best you can. That is why people like me blog. The more we share our ideas, the more attention we draw, the more business we can get, the more efficient we are. I’ve even tried to convince big consulting companies and headhunters and international organizations of this; didn’t get far.

* * *

The real story in nonphysical goods is one of deflation. Value in once-scarce — well, once-controlled — commodities like news, information, and advertising decline as the internet explodes creation and competition. The internet also destroys the ability of many to control distribution and thus value. But at the same time, the internet drastically increases efficiency thanks to platforms and open distribution and the ability — no, the need — to specialize and collaborate. The bottom line in many of these enterprises — as we tried to show in our New Business Models for News — is that they may be profitable, only smaller. Both sides of the ledger deflate.

This is why the old controllers of scarcity have such trouble rethinking and remaking themselves for the economy of abundance. Their reflex is to control more, when that only decreases value.

So stop selling scarcity. Scarcity has no value. Results and efficiency do.

* * *

Then again, people are spending big money — billions — for a virtual market with a virtual scarcity in virtual goods: pixels on a screen. It’s absurd, of course, that anyone can create a scarcity and market value for fictional food for fictional cows, but it’s making money. In this economy, I think we see both the dying gasp and a parody of scarcity.

* * *

NewBizNews: What ad sales people hear

Recently, at CUNY, we held a roundtable for ad sales people from hyperlocal blogs to big newspapers to hear what they are hearing from local merchants. We’re wrapping up our research for the New Business Models for News Project — indeed, it was Alberto Ibargüen, head of the Knight Foundation that funded this work, who said he really wanted to hear sales people’s perspective — and beginning research for Carnegie-funded work on new ad models, products, service, and sales methods, working with The New York Times on The Local. Some of what we learned; the first four are the most important to me:

* Most important, I think, is that we won’t be selling media to merchants — banners ‘n’ buttons — so much as we will be selling service: helping them with all their digital needs, including optimizing them in Google and Yelp and social media and mobile. I’ll write a post with more thoughts on this shortly.

* Voice matters. Local bloggers said they are must-reads because of their voice in the community (the human voice of the neighbor over the cold voice of the institution) and that — along with a constant flow of posts and news and the audience and conversation that attracts — makes them must-buys for advertisers. One blogger made the newspapers visibly jealous reporting that advertisers are coming to the blog asking to advertise because they had to be there. Another way to look at this: The service must be part of the community. One of the bloggers covers new businesses in town because that’s news; ads may follow but even if they don’t, the site will cover commerce in the community.

* There is interest in network sales. One newspaper exec in the room said she’s jealous of the new advertisers smaller bloggers get and would be interesting in having those bloggers sell into her site. The blogger is also interested in getting revenue from larger advertisers via the newspaper’s sales. That networked approach is key to the optimization of value we projected in our new business models for the local news ecosystem: the advertiser can be better served by appearing in more services with easier purchase; the large site can get new customers it could not otherwise afford to sell; the small site can get large advertisers it could not otherwise attract; all ships rise on this tide. (However, we must find a new word instead of “network,” as it has low-value cooties associated with it. Alliance? Ecosystem? Suggestions?)

* We at CUNY are going to be investigating the possibilities for citizen sales — new sales forces and new sales businesses that can sprout up alongside and help support the new news businesses. The group saw potential here but also saw the need for training and quality control.

* It’s clear that local merchants still need education. In the early days of the web, we had to sell advertisers not just on the value of our sites but on the value of the internet itself. That effort continues with smaller advertisers. That means that there’s a greater cost of sales. It also means that this is a means of sales — come to our internet seminar (a technique that is working for various of the participants). And I see a role here for organizations such as universities (not to mention chambers of commerce) to help local merchants understand the value of the internet.

* Local ad agencies also need education still.

* There was some debate about the sophistication of local advertisers and their need for data, but it’s clear that in many cases, media have to collect, analyze, and present data on performance and return on investment. One of the more established companies said all that matters to small advertisers is ROI (return on investment: feet to the door and ringing cash registers). One of the newer companies said more data is needed to prove performance and value. In some cases, we will measure will be attention, in others leads produced, in others sales, and in others more intangible measurements about community and relationships. At our conference on new business models for news in the fall, Gannett talked about research it did with Ideo that found that very local merchants need discovery (read: search) but in many cases, their customers already now they’re there; so what they seek is better relationships with their communities; how do we deliver and measure that?

* The simpler the better. Local merchants are not buying CPM-based advertising. They’re buying timed sponsorships. They want to see the ad they bought on the site.

* Google is playing a bigger and bigger role in local (via the web and now mobile). Some local merchants don’t bother having a site; their ads link to their Google place page.

* One old law of sales is still true: get one butcher advertising and that helps force the next one to join in.

* Self-serve platforms for buying advertising are not the answer. Sales is still needed. I’ve heard that in more than one horror story about low revenue from build-it-and-they-will-come efforts. Once an advertiser is sold, I’ve also heard of success in enabling them to update their ads (e.g., providing them with advertiser blogs).

* Replicating print ads online doesn’t work for advertisers or readers. No surprise there; the only surprise is that publications and merchants still try.

* There are other products besides advertising to sell: email, events, coupons (which work well for many local sites). There was some debate in the group about the value of video as a vehicle for advertising and as a form of advertising itself. More experimentation is needed.

At CUNY, our next step will be performing research with local advertisers/merchants. Then we’ll work on R&D on new ad forms. Then we’ll try to train citizen sales forces. This is the next step in our work on new business models and sustainability for news. Stay tuned.

: LATER: In the comments, Dave Chase of SunValleyOnline adds great notes:

Great observations and consistent with what I have heard/seen from working with lots of local advertisers at SunValleyOnline which is one of the sites talked about in the CUNY “census” you guys did that has managed to build a reasonable (and profitable business). I generally agree with what you’ve laid out but will amplify or differ with a few items.

1. Education: Hands down the biggest need I’ve seen. Sales people need it. Merchants need it. Local agencies/marketing consultants need it. Citizen ad sales will really need it. It’s the reason I collaborated with a former colleague to create a how-to resource for local merchants on marketing in the digital age that I’m making available to the ventures I’m involved with. I believe there’s scalable ways for local sites to tap into this without having to do all the training themselves that can also serve as lead generation.

2. Tools for advertisers to manage their own ads: Despite having two tools (Impact Engine and Mixpo) that have very easy interfaces and through much encouragement, virtually no advertiser is taking advantage of it. They simply want us to take care of it. The advertisers I’ve worked with aren’t sophisticated at all from a marketing perspective.

3. VideoAds: This is primarily a function of the size of advertiser you are going after and where they’ve advertised. Generally, it’s the bigger advertiser who has run TV ads before that will be candidates to move $$. Turns out one of the categories where $$ are finally starting to move is political ads. The recent Supreme Court decision will accelerate that. Dynamically built videoads is a particularly promising area and is something that took place in the recent Massachusetts Senate race (on the winning side). There’s some powerful tools that allow A-B testing, message optimization, etc. that are accessible even to the smallest advertiser.

: And Max Kalehoff says it well in the comments: “Sell the outcome.”

Google news

First, the news: Google told me today that they would consider giving more transparency about revenue splits in Adsense.

At a private meeting with a dozen and a half media people at Davos with CEO Eric Schmidt, President of sales Nikesh Arora, search boss Marissa Mayer, YouTube founder Chad Hurley, and counsel/”chief diplomat” (Schmidt’s joke) David Drummond in a Davos apartment dolled up with lava lamps, the execs discussed China, the company’s push into display, critics from France to News Corp., Android and its phone strategy, and news.

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AdSense: At the DLD conference in Munich Monday, Burda CEO Paul-Bernhard Kallen, on a panel with Drummond, said publishers wanted transparency and their “fair share.” I asked him, a fair share of what — AdSense? Kallen said yes. And that put a fence around this debate. Drummond went on to emphasize that publishers do not deserve a share of a search for a camera that doesn’t involve their content. He also said transparency could be discussed.

At today’s briefing, Arora said that the company was considering more transparency. I confirmed with Google’s people that this was new. I suspect that they’re not going to promise the possibility and not deliver something.

I’m happy about this because, with China, this seems to strike off my two biggest complaints — both in What Would Google Do? — about Google: its prior lack of support of free speech in China and its hypocrisy on transparency and ad rates.

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China: “We made a decision that was consistent with our values,” Schmidt said. “We’re not going to operate differently in China as opposed to the rest of the world,” said Drummond.

When is Gooogle going to do something? “It should happen soon,” Drummond said.

Was Google’s original stance on China — making it an exception to its own rules — a mistake? “We said consistently we would evaluate the position,” said Schmidt, “and people didn’t believe us.”

On the attacks, Schmidt said the company had a moral need to “make sure our systems are safe from attack anywhere.”

They wouldn’t discuss any details about any discussions with China. One editor asked whether Google was upset that other companies — especially those that also suffered attacks — have not come forward to openly support Google. I went farther and said that Microsoft had thrown Google under the bus and backed up over it. Schmidt repeatedly said that he manages Google, not other companies. “We speak for ourselves.”

Drummond said the problem of censorship is not in China alone. Hurley said YouTube is blocked in China, Turkey, and Iran “because of freedom of speech.”

“I believe this is an evergreen story for Google and other online companies,” Schmidt said. “As the world goes online, every country is going to have a discussion about what’s appropriate and what’s not. And a lot of these organizations [that is, governments] have not really thought through what they’re doing. We have a strong view about transparency.” [It’s about to get a little stronger, it seems.]

Though Schmidt joked about Drummond as Google’s diplomat and apolgized for mixing metaphors, he emphasized that Google is not a country, does not set laws, and does not have a police force — or diplomats This is a government-to-government issue, he said.

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Google’s reputation: I asked whether it was lonely at the top, getting grief from France to Germany to News Corp to China. Is it because Google is so big? Is it because it is putting itself on the ledge? Is it a PR problem? Schmidt said no.

“Google is fundamentally disruptive because of our innovation,” Schmidt said. “Google, because of our architecture, does things at a larger scale than others can. We are in the information space, which everyone has an opinion on. … You asked me how does it feel from a Google perspective? It feels as if we’re in the right place.” These aren’t crises, Schmidt said. He treated them as a factor in doing business. “It’s constnat. It’s because it’s information that maters.”

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Innovation: Schmidt later talked about the difficulty we all know companies such as this can have: growing big and killing innovation. He talked about the canonical Silicon Valley story: a company starts, it innovates, it grows to middle age, it grows bored, it is sold to another company. Schmidt et al are clearly aware of that threat. Apple, he said, has “proven the model of innovation at scale.”

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Phones: Will they have a tablet? “You might want to tell me what the difference is between a large phone and a tablet,” Schmidt said.

How will they make money on phones? “Not to worry,” Schmidt said. “We do not charge for Android because we can make money in other contexts.”

The strategy, he said, is to establish volume for application development to follow. “The phone is defined by the apps,” he said.

Schmidt took my Nexus One and demonstrated Google Sky. Mayer said the guy in charge of mobile uses Google Goggles to take pictures of wine labels and search on them so he can sound smart: “It tastes of apricot blossoms.” Mayer told Schmidt about Layar (a very neat agumented reality program I wrote about here earlier); he didn’t even know about it yet.

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The economy: “The recession is very much behind us,” Schmidt said. “We see growth and successful businesses I think pretty much everywhere in the world.””

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Display ads: Schmidt said the company is “trying to apply the science of Google to the display space. Display is likely to be our next really big business globally.”

Arora said that today marketers buy sites when they want to buy audiences. He said Google will “bring measurability to the process of display” and it is “trying to find a way for the industry to bring the entire inventory together.” That is, “most agencies and buyers don’t have the tools to aggregate across publishers.” Schmidt added: “Before the google question was applied to this, you couldn’t have scale.”

Isn’t this just an ad network? Arora said it would be a collection of networks, an exchange that would “allow you to separate the best owners of inventory from the best sellers of inventory.” I don’t understand what that means and will ask.

Aren’t publishers going to see Google as again disintermediating them and hurting their brands? I asked. Google said the platform will bring greater transparency, more inventory, faster, with scale and speed and that publishers who participate will gain more revenue from the inventory they have (and don’t sell). Indeed, I was talking with one newspaper editor before the meeting as he lamented the small size of the percentage that is sold.

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Relations with newspapers: “We depend on high-quality content,” Schmidt said.

Mayer said Google will help publishers make more money. It will create better advertising products for them, improving display. It will provide ads that are more relevant. It will support pay efforts.

She also said Google is working on making news as compelling as possible. “The issue is one of engagement online: if they spent more time online it would be much easier to make money with it,” she said and then added that publsihers must “bring the news to users’ digital doorsteps.” Amen. I’ve written often here about the challenges of engagement and the need to think distributed. Those are ripe areas for Google to help news.

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YouTube: Schmidt said he was very pleased with YouTube and that it was making money but he and Hurley wouldn’t get in the slightest bit specific about the definition of making money (profit? cash flow?) let alone numbers. “In the last year, Chad managed to figure out a way to make money using partners and their video content on YouTube,” Schmidt said. Hurley said it took longer than expected to get their because of delays in bringing in Doubleclick. He said they have a sales force selling video in 20 countries. They also recently made a deal with channels 4 and 5 in the UK to distribute content and they’re going to live-stream cricket.

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Pay: Will Lewis of the Telegraph asked “what’s it like being so brutally attacked by News Corp. What side of genius to you think their pay wall idea is?” Of course, Google’s execs didn’t take the bait.

They talked about hybrid business models and said they’d support them and pretty much left it at that.

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Globalization: Schmidt said a majority of Google users are outside the U.S. and he expects that soon most revenue will come from outside the U.S.

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: The Guardian’s Alan Rusbridger on the briefing: Google as a country.