Posts about advertising

No silver bullets

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Lewis DVorkin performed a miracle with Forbes … almost. He almost rescued a dying brand, almost helped get it sold to a new owner, and almost rescued the Forbes family and its no-doubt-regretful investor Elevation Partners. I respect Lewis’ inventiveness and innovation. He has done the best he could with the brand he had.

But there’s only so much that can be done urgently with old media on the descent. As Steve Forbes himself said announcing the sale of a majority stake in his company to a group of Asian private-equity investors and cataloguing how his business used to be run: “The web has made this way of doing things obsolete.”

The Times, quoting unnamed sources, says the deal values Forbes at $475 million, but the Financial Times’ John Gapper properly asks:

Axel Springer, a leading European magazine publisher and digital company, was supposed to be interested in Forbes. But it and other media buyers dropped out early. Forbes had reportedly been hoping to sell the entire company for more than $400 million. That didn’t happen. Whatever the real valuation, given the buy-out of Elevation Partners — which had invested in Forbes in 2006 getting a reported 40% for $250-300 million, valuing the company then at under $750 million — and given the large chunk that Forbes is left with, I’d guess the family got something in the borderline nine figures. [I should add that as one commenter elsewhere points out, I'm not even trying to make a guess at such things as liquidation preferences for Elevation.] Not a deliriously happy ending for the Capitalist Tool, but — as people told me this week when I complained about turning 60 — it beats the alternative.

When DVorkin returned to Forbes in 2010, where he had been executive editor a decade before, with the purchase of his startup True/Slant, he brought with him what looked like a solution for a dying brand: He used that brand as candy to draw more than a thousand contributors to write mostly for free — the top few traffic attractors can make a decent buck — adding onto the work of a few score Forbes staff journalists. Thus he simultaneously exploded the quantity of content Forbes could serve while reducing the total cost of content to nearly nil. Now I’m all for media opening up to more voices, but let us acknowledge that not only the price but also the overall quality of Forbes content declined.

At the same time, the business side, headed by Mike Perlis, used that dying Forbes brand as candy for advertisers: Come appear on Forbes.com with your own pieces labeled “Brand Voice.”
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I’ve long said that if you have to put a link next to a label saying “what’s this?” then the label clearly isn’t clear enough. This was a pioneering entry into the the so-called native advertising that is now overtaking media everywhere. Just as it was supposed to be the salvation of Forbes it is now supposed to save legacy media.

Beware the silver bullet. It can backfire.

The problem in the end for Forbes, I believe, is that the brand became even more devalued. I illustrate this very simply: Now, when I see a link to Forbes on Twitter, I don’t know whether it is going to take me to (1) the good work of a Forbes journalists, (2) the good work of a Forbes contributor, (3) the bad work of one of many Forbes contributors, or (4) the paid and wordy shilling of a Forbes advertiser, e.g.:

Thus, I hesitate three beats before clicking on a Forbes link. That is the definition of a devalued media brand. And that is precisely what other media companies should fear as they more and more try to fool their readers into thinking that what we used to call advertising is now something else that can comfortably live under brands, enigmatically labeled.

The real lesson of Forbes is that there are no easy answers and quick solutions for transforming legacy media companies. DVorkin became a key tourist attraction for media executives touring New York. I know because I took many of them to meet Lewis. He generously shared his means and methods. But I also told these executives that the path was not without the peril I just described.

Media executives are looking for quick fixes still.

Tablets were going to save them, returning to them the control of user experience and business model the link had taken from them. Hearst Magazines has had some success with tablets. But salvation does not this way lie.

Pay walls were going to save them, finally recognizing the value of their content online. But as Gannett has learned, after grabbing cash flow the first year, growth stops. No Moshiach there.

Ad marketplaces were going to save them — or at least let them compete with Google. But programmatic advertising — those ads that follow you all around the web telling you to buy that kayak you looked at once on Amazon — commodify media. They value direct data about a customer over the context media provides — that is, it’s better to show a kayak ad to a kayak buyer than to buy an ad next to a kayak story. This is why I argue in the start of a white paper I’m finishing now that we must shift to a business based on known relationships with people as individuals and communities rather than as a mass.

Shifting to a relationship and service strategy over a pure content strategy will take not only urgency but also time, with much experimentation and failure and a need for patient capital — likely not the Hong-Kong-based private-equity investors Forbes now has, not the hedge funds that Digital First Media has, not the public owners that Gannett and Time Inc. have. This won’t be easy.

I’m not saying that DVorkin and Perlis ever thought that what they were doing was easy. But others did. They hoped that Forbes would show the way to a solution for all their problems. Well, so much for that. That way lies the skin of your teeth.

Attention v. relationship economy

Oddly, Google chief economist Hal Varian analyzes newspapers‘ problems and prescribes solutions strictly from an old-media perspective — based on attention to marketing messages — rather than an internet (namely, Google) perspective of relevance and relationships.

In a speech to Italian journalists, Varian says that “the basic economic problem facing news is increased competition for attention” and that newspapers must use such tricks as tablets and dayparts to get people to spend more leisure time with news so they can show them more ads (ignoring, for one thing, the fact that advertising abundance — championed by Google — lowers advertising prices and takes from newspapers the pricing power they once had). “The fundamental challenge facing newspapers is to increase the time people spend on their content,” Varian says. “More time reading the newspaper online translates into more online ad revenue.”

I couldn’t disagree more. Pardon me for suggesting to a Googler that we would be better off asking, what would Google do?

Google reinvented the advertising model, moving past attention as a proxy for intent (“if they see my ad I can convince them to buy my product”) and placement as a substitute for relevance (“men read the sports section and men buy tires, ergo we will advertise our tires in the sports section”). Google also killed the beloved myth of mass media that supported it for a century: All readers see all ads so we charge all advertisers for all readers. Google understands that users have variable value that is increased the closer it can get to delivering relevance and intuiting intent through signals — search, location, context, behavior as well as consuming content — which come from having a relationship of mutual value with the user.

The last thing newspapers should do is continue to try to shovel their old relationships, forms, and models into a new reality. No, don’t just sell space for messages to advertisers (for they’ll soon wake up and realize the pointlessness of the exercise). Don’t try to recreate old forms in new devices like tablets. Don’t measure the value of relationship as page views or time spent. Don’t think your primary value is manufacturing content that you then try to sell.

Newspapers and other former media outlets should become — as Google is — services that still inform — that is their core value — but now can use their own signals to learn about and return relevance to people as individuals and communities rather than masses, thus deriving greater value in the transaction.

For example, through my use of its Maps, Google knows where I live and work. My local newspaper doesn’t. When I ask for “pizza” in search, Google doesn’t give me a hundred archived articles with the word “pizza” in them but gives me the nearest pizza (soon, I hope, the best pizza, the pizza I’d most likely enjoy, the pizza my friends like with ever crisper relevance … and crusts). If my newspaper knew where I lived and worked — if it gave me reason to reveal that — it could target content to me the way it already tries to target ads. Why does *every* newspaper site still treat its home page as a one-size-fits-all print page when it could prioritize news that might be more relevant to me?

The reason: because newspapers still believe in the myth of mass media; they want to hope that with enough time you will look at all the pages they make and all the ads on them. That is the old attention-based media model Varian still recommends. This is also why newspapers continue to sell advertisers space for messages when instead they should be helping those merchants build better relationships with customers. But first, newspapers have to learn how to build relationships themselves.

That is the lesson Google teaches us. That is the new media market Google, more than anyone, created.

Media, left out of the relationship

Note who’s missing in Tanzina Vega’s New York Times story today about the monster merger of ad agencies Publicis and Omnicom.

Media — TV, radio, magazines, newspapers, online — are nowhere to be seen. This merger, they all say, is about the ad agencies joining together to defend at the 11th hours against the real behemoth in the business, Google, as well as Facebook and Twitter. And the battleground is Big Data (when did that become a proper noun?) — that is, knowing about people, or having a relationship with them.

I’ve been arguing that media should stop thinking they’re in the content business and start believing they are in — or should be in — the relationship business. But we don’t know jack about people. We see people as a mass. We lived for a glorious century by the myth of mass media: that all readers see all ads so we can charge all advertisers for all readers. Thus we simply wanted *more* readers (or unique users, whatever you prefer to call us). Media companies are proud when they learn our email addresses but, of course, that is nothing but an excuse to spam us. My email address says *nothing* about me.

Media companies could know a great deal about us as individuals. Our content interests are a good signal — Google understands that and so does the NSA (says prior whistleblower Thomas Drake, “content is gold for determining intent”). But we in media have no good means to gather, analyze, act on, and exploit that signal beyond simple behavioral targeting.

I argue that media companies should be able to get people to build the trust to reveal themselves because media companies can give them value in return. Provide me traffic help and you’ll learn where I live and work and then you can target your content and advertising to my locale, delivering greater relevance and value. Right?

No. Google, Facebook, and Twitter listen to our signals. Omnicom and Publicis realize the value of those signals. They all understand the worth of relationships. And what do we do in media? We put up paywalls and scream about copyright. Garg.

LATER: Here’s Om Malik’s take on the merger. I agree that the net deflates.

Since 1920, US advertising industry revenues have hovered between 1 percent to 3 percent of the US gross domestic product. This pie is now shared between television, newspapers, magazines, radio, cable with Google, Facebook, Twitter, Yahoo and thousands of other digital outlets. Of course, Internet often brings measurability, targeting and interactivity — which leads to a sort of deflationary pressure on industries that have traditionally benefited from ambiguity. Stock brokerages and travel industry were the first two industry to be baffled by this new reality.

In the End Was the Word and the Word Was the Sponsor’s

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We used to know what ads were. They had borders around them — black lines in print, a rare millisecond of dead air on TV, the moment when the radio host’s voice became even friendlier, letting us know he was now being paid to peddle.

Today, under many ruses and many namessponsored content, native advertising, brand voice, thought leadership, content marketing, even brand journalism — advertisers are conspiring with desperate publishers to erase the black lines identifying ads.

When I started Entertainment Weekly, a sage editor sat me down and summarized in one sentence the magazine industry’s voluminous rules about labeling what we then called “advertorials”: “The reader must never be confused about the source of content.”

Confusing the audience is clearly the goal of native-sponsored-brand-content-voice-advertising. And the result has to be a dilution of the value of news brands.

Some say those brands are diminishing anyway. So sponsored content is just another way to milk the old cows as they die. Lately I’ve been shocked to hear some executives at news organizations, as well as some journalism students and even teachers, shrug at the risk. If I’m the guy who argues that news must find new paths to profitability, then what’s my problem?

Well, I fear that in the end we all become the Times of India, where paid advertising and news content are allegedly mixed so smoothly in some areas that readers can’t tell one from the other. Worse, at some news organizations, editorial staff do the work of writing this sponsored content. They become copywriters.

Mad Men Don Draper Peggy Olsen

At the same time, many of these news organizations are using their brands as candy to attract legions of new contributors, which can drastically lower the cost of content. Mind you, I’ve applauded that spirit of openness and collaboration as well as that newfound efficiency.

But here’s the issue: Some media properties have taught me to pause before following a link to them. Sometimes, I’ll find good information from a staffer or one of many contributors who brings real reporting or expertise. Sometimes, I’ll find a weak contributor — or staff — piece that adds no reporting or insight; it merely regurgitates what others have written when a link would be better. (Beware headlines that start with “how” or “why” or include the words “future of” or “death of” or end with a question mark; chances are, they add nothing.) And then sometimes I’ll find one of those sponsor-brand-native pieces only vaguely labeled to let me know its source.

My problems with these trends in news media:

Inconsistency. I no longer know what to expect from news organizations that do this. Yes, I’ve heard editors claim that they work with both contributors and sponsors to improve the quality of their submissions — but apparently, not enough.

Brands used to be selective both because the scarcity of paper or time forced them to be and because that became key to their value. Now they want more and more content. Making content to chase unique users and their page views rewards volume over value.

Conflict of interest. First, let me say that I think we in news became haughty and fetishistic about our church/state walls. The reason I teach entrepreneurial journalism is so that students learn about the business of journalism so they can become more responsible stewards of it. I argue that editors, too, must understand the business value and thus sustainability of what they produce.

That said, I worry about journalists who spend one day writing to serve the public and the next writing to serve sponsors. News organizations should never do that with staff, but I’m sorry to say that today, a few do. Freelance journalists are also turning to making sponsored content to pay the bills.

Thus, I hear of some journalism educators who wonder whether they should be teaching their students to write for brands. Please, no. My journalism school doesn’t do that. Others schools already include courses in PR and advertising, so I suppose the leap isn’t so far. In any case, brands will hire our students because of the media skills we teach them and we need to prepare them for the ethical challenge that brings.

Brand value. Some news companies are exchanging their brand equity for free or cheap content of questionable quality and advertising dollars of questionable intent. As someone who champions disruption in the news industry, you’d think I wouldn’t care about dying legacy media brands. But I do. I see how legacy news companies can bring value to the growing news ecosystem around them through sharing content and audience and someday soon, I hope, revenue. If the legacy institutions lose their value — their trust, their audience, their advertisers — then they have less to give, and if they die, there’s more to replace.

Now here’s the funny part: Brands are chasing the wrong goal. Marketers shouldn’t want to make content. Don’t they know that content is a lousy business? As adman Rishad Tobaccowala said to me in an email, content is not scalable for advertisers, either. He says the future of marketing isn’t advertising but utilities and services. I say the same for news: It is a service.

I’ve been arguing to news organizations that they should stop thinking of themselves as content businesses and start understanding that they are in a relationship business.

News organizations should not treat people as a mass now that they — like Google, Amazon, and Facebook — can learn to serve them as individuals. Can’t the same be said of the brands that are now rushing to make content? They’re listening to too many tweeted media aphorisms: that content is king, that brands are media. Bull.

A brand is a relationship. It signifies trust and value. Advertising and public relations disintermediated the relationship that commercial enterprises used to have with customers over the cracker barrel. Mass media helped them bring scale to marketing. But now the net enables brands to return to having direct relationships with customers. That’s what we see happening on Twitter. Smart companies are using it not to make content but to talk one-on-one with customers.

Here’s where I fear this lands: As news brands continue to believe in their content imperative, they dilute their equity by using cheap-content tricks to build volume and by handing their brand value to advertisers to replace lost ad revenue. Marketers help publishers milk those brands. And the public? We’re smarter than they think we are. We’ll understand when news organizations become paid shills. We understand that marketers would still rather force-feed us their messages than simply serve us.

What to do? The reflex in my industries — journalism and education — is to convene august groups to compose rules. But rules are made to be pushed, stretched, and broken. That is why that wise Time Inc. editor over me at Entertainment Weekly (as opposed to the oily ones who tried to force me to force my critics to write nicer reviews) summed up those rules as a statement of ethics. Again: “The reader must never be confused about the source of content.”

Well, if we’re not in the content business, then what is the ethic by which we should operate now? I think it’s even simpler: “We serve the public.”

If we’re doing what we do to fool the public, to sell them crappy content or a shill’s swill, to prioritize paying customers’ interests over readers’, then we will cannibalize whatever credibility, trust, and value our brands have until they dry up.

So am I merely drawing a black rule around advertising again? Don’t we hear contributors to a hundred news sites rewrite the same story every day — that advertising is dead? Well, yes, advertising as one-way messaging is as outmoded as one-way media. Oh, we in media will milk advertising as long as advertisers are willing to pay for it. But we know where this is headed.

Then do media companies have any commercial connection with brands? Can we still get money from them to support news? I think it’s possible for media companies to help brands understand how to use the net to build honest, open relationships with people as individuals. But we can teach them that only if we first learn how to do it ourselves.

Some will accuse me of chronic Google fanboyism for suggesting this, but we can learn that lesson from Google. It makes 98% of its fortune from advertising but it does so by serving us, each of us, first. It addresses its obvious conflict with the admonition, “Don’t be evil.” (When Google has failed to live up to that ethic — and it has — its fall came not from taking advertisers’ dollars but instead from seeking growth with the help of malevolent telcos or tyrannical governments.) Note well that Google sees the danger of sponsored content, which is why it has banned such content from Google News.

Whether you like Google or you don’t, know well that it provides service over content, enabling it to build relationships with each of us as individuals while also serving advertisers without creating confusion. Google is taking over huge swaths of the ad market by providing service to users and sharing risk with advertisers, not by selling its soul in exchange for this quarter’s revenue, as some news organizations are doing.

My advice to news organizations: Move out of the content — and sponsored content — business and get into the service business, where content is just one of your tools to serve the public.

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(Crossposted from Medium.)

Selling ads by time, not space

I just saw some mind-bending work Chartbeat is about to release about measuring the time users spend exposed to an ad online.

As background, to quote Chartbeat CEO Tony Haile: “Chartbeat monitors activity by checking in with users every second and looking for signals (mouse movement, key strokes, etc) that show they are actively consuming the content in front of them. This means they can measure how long readers spend actively engaged on a page and what parts they’re reading. Because of this Chartbeat knows how long are actively reading while an ad is in view — both for an average user and the cumulative time of all users.” Chartbeat then did some internal research that found high correlation between engaged time exposed and a user’s ability to recall the advertiser’s brand and message. This has many implications:

* Measured this way, ads that appear down alongside the middle of a story turn out to be more valuable than the supposedly premium banners at the top of the page. That’s because people quickly scroll past those banners and all the big hair on the top of the page — logos, promos, and all that — to get to the substance of an article, where they spend time. So inventory that was undervalued becomes more valuable.

* Chartbeat suggests this means that quality content that engages people longer yields better ad performance. That, they say, would be a good thing for better content makers everywhere.

* Now web publishers can sell time like broadcasters — only this is assured exposure time. Advertisers like buying time. Will this make them more comfortable with buying on the web?

* I think this enables publishers to take on some risk for advertisers — guaranteeing them assured exposure time — thus increasing the value of what they sell.

* I wonder whether this spells trouble for the big-ass ads and takeovers we users try to escape as quickly as possible.

* I also wonder whether this spells trouble for the slideshows and other gimmicks that pump page views without increasing time spent exposed to an ad.

* I’d like to think this opens opportunities to find new value in ads next to videos and games and also — this could be important — mobile pages (though don’t think that mobile’s value will come from exposure to messaging; it will still come from knowing people and serving them relevance and value). The longer we spend on a page, the longer we see the ad, the more valuable the ad should be, right?

* I can only hope that this is another nail in the coffin of the dangerous, old-media-like metrics of unique users and pageviews. Engagement will matter more.

A sample report on an ad location:

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Those who declare advertising dead are Mark-Twaining-it, I think. There are still many things to learn to find more effectiveness and value in advertising online. This is just one lesson. I say the real value of the net and mobile is in relationships: in learning more about people by delivering them more value so we can be trusted to deliver them greater relevance and value and, in turn, extract greater value from the interaction. More on that later….

It’s not about content: Part I

Brands (read: advertisers) are following media down the wrong path, deciding that they, too, are media now and that they, too, should make content to draw customers to their messages (thereby, by the way, getting rid of that middleman, media).

I’ve been arguing that media should build their futures around relationships, using content as a tool to that end. I’d say that is even more true of brands.

Yesterday, Samir Arora, CEO of Glam (where — full disclosure — I’ve been an adviser), tweeted a link to Marc Andreessen arguing that Ning, the company he cofounded and sold to Glam, is about to come into its own as it is remade for brands. That got me thinking about brands’ direction.

Whatever platform they use — Ning, Facebook, Google+, Twitter, blogs or all of the above — is less the issue than the culture that enables its brands and its employees — every one — to talk with and build relationships of value and trust with customers.

We’ve all seen this happen on Twitter when we get pissed off at some unfair or unrighteous action by a company; we appeal to sanity; an employee — sometimes the official tweeter, sometimes just a decent soul — rescues us; our relationship with the company is redeemed.

That is the model for brands online. I thought we’d learned that years go. Apparently not quite. Today not only are brands making content in their own domains but they now want to make content in media’s space; we used to call that an advertorial but now that is apparently called — in jargon that appeared from nowhere — “native advertising.” WTF does that mean?

Mind you, brands should indeed create content and make it available — about their products so we can find every question we have answered. But that’s utility. That’s not what brands talk about when they become media. They make this:

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Huh? How is that really any different from slapping a banner onto content? Oh, yes, it’s supposed to make us associate the Droid Razr Maxx HD with exotic locales and long battery life. But Motorola would do better to finally produce a decent phone, in which case, we the users would advertise it. I do hope that’s a lesson Google teaches them. Google understands the value of building relationships with individuals and using knowledge about them to deliver relevance and value. Isn’t that the wise future of media … and marketing?

Voluntary media

Two important but too-unsung women in media — performer Amanda Palmer and Google ad exec Susan Wojcicki — met at an idea this week: that media and advertising are becoming voluntary.

They also touch on ideas I’ve been trying to write about: that media should be in the relationship business, not just the content business. In other words, media’s value isn’t necessarily intrinsic in content — as in, “you should pay for this product because the work to create it has value” — but can be realized in the relationships that form around content.

First, the amazing Amanda: She gave a rousingly received TED talk that has been seen almost half a million times already in which she argues that artists should not be afraid to ask for support, a lesson she learned as a street and stage performer and on Kickstarter. The nut of it via BoingBoing: “By asking people, you connect with them, and by connecting with them, they want to help you. ‘When we really see each other, we want to help each other. People have been obsessed with the wrong question, which is, How do we make people pay for music? What if we started asking, How do we let people pay for music?'”

Value comes to Amanda through relationships. Given the opportunity, people want to support her. In a very good post today, Reuters’ Felix Salmon contrasts her model with Andrew Sullivan’s. His purposefully mimics big media’s — from The New York Times to The Times of London: building a pay wall around content because content is valuable, damnit.

I’ve been arguing to media that relationships are more valuable. Knowing people because you have their trust and give them value builds a rich and deep relationship — builds data about that relationship — that can be far more valuable for far longer than a mere transaction.

The problem in media is that we are not built for that. We are built to serve the masses. Hell, we made the masses. Our manufacturing and investment and technology and business models have all been aimed at serving people in bulk, never as individuals because that wouldn’t scale, not in the age of presses and broadcast towers.

But now relationships do scale. See: Google. Now serving individuals scales even better and is even more valuable than mass media. Enter Susan Wojcicki, senior VP of advertising at Google, who wrote an important post on Google+ about the future of advertising. The nut of it: “In years to come, most ad views will effectively become voluntary.” Or as she also put it, choice shifts to the user in both content and advertising.

Just as it becomes difficult — in an abundance-based media world — to force people to pay for content, which is no longer scarce, it also becomes impossible to force them to see advertising, which may become more scarce (and perhaps more valuable). That means it won’t be advertising. It will be something no one — including Google — has invented yet. But Wojcicki’s thinking about what that can be. I’d bet on her finding it over a legacy media company just as I’d bet on Palmer finding a new model faster than a record company can.

The argument about paywalls — and copyright and the value of content — is the wrong argument. It’s an argument about trying to preserve old, industrial media model in a very different technological reality. I get accused of trying to kill paywalls or free content. I’m not. I’m just arguing that we need to recognize new opportunities because if we don’t, someone else will. Read: Google. Read: a street performer.

The discussion we should be having is how better to build valuable relationships of trust with people as people, not masses, and then how to exploit that value to support the work they want us to do. We can’t force them to do what we want anymore. For now, media are voluntary.

Advertising is next

Condé Nast is a house built on smoke and mirrors — that is, to say, on brand advertising. So it is astonishing to hear its CEO, Chuck Townsend, essentially toss the company’s business model out the window of the Death Star in what The Times frames as “a fundamental overhaul of the advertising-based business model.” This, folks, is surely the real product of the McKinsey studies undertaken at Condé, not a few magazines folded but a new strategy. In a phrase:

Advertising is fucked.

I’ve said that Rupert Murdoch’s paywall is also essentially his surrender of any hope that advertising can be grown or even maintained. He gave up and shrank like George Costanza’s privates. It’s one thing for the dirty digger to give up on car ads. It is quite another for Condé to go off its diet of Madison Avenue and Seventh Avenue in favor of a parking meter.

Photo: Flickr - wallyg

“We have been so overtly dependent on advertising as the turbine that runs this place, and that is a very, very risky model as we emerge from the recession,” Condé CEO Chuck Townsend told The Times. “In a company like ours where 70 percent of our margins are generated on the advertising side, we must develop a much, much more effective financial relationship with the consumer.” That is, get money from the consumer instead of the advertiser.

Good luck.

The company plans — like Murdoch — to try to suddenly get new money from consumers who for years — long, long before the internet — have been accustomed to almost-free content: $1-per-issue luxe magazines that cost probably four times that to produce and distribute (not to mention the tens of dollars it takes in marketing to acquire that subscription with advertising and schwag — a purse for Glamour readers or the fabled sneakerphone up the street at Sports Illustrated).

Condé promoted Bob Sauerberg, former head of consumer marketing (read: circulation) to its presidency. Bob is one of the good guys of Condé Nast (I don’t mean to damn him with faint praise there … sorry, couldn’t resist); he’s smart, mature, experienced. (I worked with him a good deal when I was at Advance’s parent company and he was at Fairchild; I should add that none of what I’m saying here comes from the slightest contemporary knowledge of the company; haven’t been in the cafeteria for many months.) Bob knows management and consumer marketing. The age of the ad sales guy is over because the age of the ad is over.

The problem is going to be that there is only more competition in content and so trying to suddenly charge more flies in the face of basic economics. The absurdity of the strategy struck me yesterday as Amazon tried to sell me a subscription to Time for 28.8 cents an issue while Time is trying to sell its iPad issues for $4.99 and I see no reason to buy either. In what world do these economics make sense? In their dreams.

“I want to collect income from the consumer,” Townsend told The Times earlier. “An annual magazine subscription may be something like anywhere bet[ween] $12 and $24. So I’m currently locked into a model that says I get a buck or two a month. How about I get a buck for a click?”

Dream on.

They’re not wrong that they need to get money from consumers but they’re not going to get it for content. Sorry guys. But as Google schooled the newspaper industry (I’ll substitute appropriate words):

The large profit margins [magazines] enjoyed in the past were built on an artificial scarcity: Limited choice for advertisers as well as readers. With the Internet, that scarcity has been taken away and replaced by abundance. No [dreaming] will be able to restore [magazine] revenues to what they were before the emergence of online [content]. It is not a question of analog dollars versus digital dimes, but rather a realistic assessment of how to make money in a world of abundant competitors and consumer choice.

Instead, I suggest they have to get new revenue through commerce — through selling the things they once advertised now that advertisers are deserting them to sell direct. Problem is, that’s hard, as Condé knows best from its experience with Style.com, which started as an attempt to create a high-end store (I worked there then). They created it in partnership with a retailer and the retailer bagged the effort when times got tough in the first bubble; it then became another ad-supported site. But the strategy wasn’t wrong. Problem is, there is no retail expertise in the company.

More recently, Condé should have bought Net-a-Porter but instead luxury conglomerate Richemont snarfed it up. (Disclosure: I spoke at Richemont’s corporate retreat recently.) Condé should buy Gilt to establish new skills, a new relationship with customers, and new revenue. Its content then becomes just added value: the Cinnabon’s in the mall.

A media company going into retail and selling in areas held by former advertisers has precedent: Media News’ Salt Lake City paper became a real estate broker and undersold the entire business in town. The Telegraph, as I like to point out, sells everything from hangers to wine to betting to its readers.

But if Condé and other media companies are going into retail, they need entirely new skills of merchandising and sales, an entirely new financial structure to cope with inventory costs and tight margins, the ability to cope with entirely new competitors and suppliers (that is, former advertisers — but, worse, Amazon), and an entirely new efficiency (forget the cafeteria; they’d be lucky to have a Wal-Mart lunch room with vending machines as a profit center).

They also have to defeat a calcified, entitled culture. For that, I’d suggest they buy Gawker Media to get the incredibly popular competitor Jezebel and to infuse the company with a new culture. Make Nick Denton editorial director and COO and then watch the fun.

I doubt they heard any of this from KcKinsey because in the few encounters I’ve had with them they remix known models rather than invent new ones, which is what is called for here. I’ll bet they proposed cutting some costs (done) and remixing revenue (started) when what’s really needed is a complete restrategizing.

Or maybe I”m wrong. Maybe 4 Times Square will become the world’s lushest mall, with one helluva food court.

Nevermind my advice. The moral of this story remains that advertising is next to fall into the black hole (as a Time Inc. president once dubbed this damned internet thing). Welcome to Bob Garfield’s Chaos Scenario.