Posts about small

We hate success

The Justice Department has hired a litigator to look at going after Google and its growing dominance in advertising.

This isn’t surprising, of course. It’s the yin-yang of American business: we love success stories but we hate too much success.

The problem with going after Google is that unlike Microsoft or earlier monopolies, the industries Google affects handed it its dominance on a silver platter. Google didn’t steal it away. Yahoo went to Google to be rescued from erstwhile monopolist Microsoft and to improve its bottom line by hundreds of millions of dollars. Newspapers–non-French-speaking ones at least–hire specialists to make their content more attractive to Google and happily take its ads–including this week’s announcement about Google digitizing and monetizing newspaper archives. See also this week’s announcement by NBC that it is handing over some ad inventory to Google. That’s not just about the money. It’s about bringing in a new population of advertisers that big media couldn’t serve (being too big–irony noted).

The agency side of the business, too, is eager to do business with Google. When I interviewed Rishad Tobaccowalla of Publcis’ Denou for my book, he explained that the giant agency consolidated all its digital divisions so it would have better negotiating leverage with Google, Yahoo, Microsoft, et al — and also so it would gather more data (as Google does) to learn more about users and target ads better.

But Google gobbles up advertising companies, you say. Well, its acquisition of Doubleclick was approved by the government only recently. Has Google gotten too big since then?

I’ve long argued that we do, indeed, need competition in the ad market but it’s not going to come from regulation. It’s going to come from getting off our asses and creating those competitors. I said that we need an open-source ad marketplace. Nobody’s heeded that advice. Meanwhile, Glam has built a non-Google network that has grown to gigantic proportion–CEO Samir Arora told me at a Burda party the other night that it now serves more than 80 million uniques worldwide, more than 40 million in the U.S. with brand advertisers. That is a competitor to Google.

(Full disclosure: I’m writing a book about Google, What Would Google Do? And I own Google stock.)

Chaos 2.0

I’m late to this since my AdAge subscription lapsed, but Bob Garfield (of On the Media and Ad Age) has written an important followup to his seminal Chaos Scenario two years ago. In the original, he argued that advertisers saw the decline of old media but that new media weren’t ready for them (as we indeed are not — see my AdAge column on the topic) — and so the advertisers are left without the means to market. In Chaos Scenario 2.0, Garfield argues that marketers have new ways to do their business directly with customers that no longer require advertising. He warns of “the post-advertising age.”

This is fundamental and important. In media, we have long argued that a new medium does not replace the old one and that ad spending may shift around in new mixes but do not decrease. No more. Now marketers and customers can have their transactions and conversations directly. That is to say, we the customers can get the information we want about products straight from sellers and the more that happens, the less those sellers need to waste money on giving us messages we did not ask for and do not want (aka, advertising). The more that happens, the less money they will spend on ads. Total ad spending will, indeed, decline.

That horrible crashing sound you hear is a gravy train derailing.

Media — news and entertainment — have long been supported by advertising and by the faith that even though it may be a zero-sum game, at least there were billions of dollars of support there for the earning. And profitability for those who got those dollars was very high because of scarcity: scarce space, scarce time, and now scarce consumers. What if there is less? What happens in post-scarcity world? What happens to the media economy? What happens to us?

I’d say that depends on who the “us” is. If it’s big, expensive, monopolistic, overpriced media giants — TV networks, TV studios, radio companies, newspaper companies — they are guaranteed to shrink radically and rapidly. They are screwed. But if “us” is new, small guys who are not addicted to big production luxuries — for whom the definition of big enough is many, many times smaller — there is still plenty to go around — but only if, again, we have the infrastructure in place to make it make it easy for advertisers to support us. We little guys are stuck in Chaos 1.0; we’re not ready for the advertisers. The big guys are stuck in Chaos 2.0; they’re seeing advertisers find better alternatives. And if we’re all not careful, the pie will, in fact, shrink. That’s new.

Says Garfield:

It’s a world in which Canadian trees are left standing and broadcast towers aren’t. It’s a world in which consumer engagement occurs without consumer interruption, in which listening trumps dictating, in which the internet is a dollar store for movies and series, in which ad agencies are marginalized and Cannes is deserted in the third week of June. It is a world, to be specific, in which marketing — and even branding — are conducted without much reliance on the 30-second spot or glossy spread.

Because nobody is much interested in seeing them, and because soon they will be largely unnecessary. . . .

He recites a requiem litany in the media business since his first chaos piece: MTV, Time Inc laying off. . . CBS spun off from Viacom “lest the broadcast business impede growth and depress shareholder value” . . . broadcast networks shutting out their distribution partners to give us shows directly online. . . NBC giving up on the 8 p.m. hour to give us dreck . . . big, bad Clear Channel doesn’t take over the world but is taken over by private equity. . . Knight Ridder and Tribune melt like witches on water and McClatchy doesn’t turn out to be in Oz. . . DVRs will reach half of U.S. households in three years and once we’re all skipping ads, advertisers say they’ll skip TV. . . TV upfront is down. . . Coke and J&J pull out of upfront. . .

Yup, screwed.

But marketers aren’t crying, or shouldn’t be. He continues:

What is certain is that the Brave New World, when it emerges, will be far better for marketers than the old one. What is nearly as certain is that many existing ad agencies and some media agencies will be left behind. And the reason they will be left behind is their stubborn notion that they can somehow smoothly transition to a digital landscape.

He argues that TV has been kept afloat artificially:

But TV isn’t really in the program-distribution business. It’s in the audience-selling business, and there the economics of scarcity still stubbornly reign. Because no other medium offers the reach of TV, advertisers have continued to pay more and more per thousand viewers — which is why Mr. Moonves is commanding higher CPMs; the upfront market has not yet plummeted; and video advertising on the internet, according to eMarketer, will amount to a paltry $775 million in 2007. On TV, it is $65 billion.

But economics will have its due. The law of diminishing returns will eventually prevail. Those who have perennially spent more and more for less and less will finally say, “No more,” and take their money online — whether there is sufficient ad inventory or not. . .

Mass advertising flourished in the world of mass media. Not because it was part of God’s Natural Order but because the two were mutually sustaining. . . . So why assume that either must transition to the new model? Not only is it economically nonsensical, it squanders the very nature of the digital universe, the ability to speak with — not to, but with — the narrowest communities and individuals themselves.

And they will use new methods that have nothing to do with advertising: Word-of-mouth, social, or just direct contact with customers who want information and can now get it from the marketer or — see my favorite example, my Treo — from fellow customers.

Garfield cites the story of an OgilvyInteractive creative director who didn’t buy ads to give away 45,000 tockets for Six Flags’ 45th anniversary; he posted on Craigs List and after five hours, the tickets were taken. But who gets paid for that? Not even Craig.

Garfield predicts some of the means of death of old media and agencies. I’m not sure he’s right about them all. He heralds — as I’ve heard heralded for more than a decade now — that we’ll watch a TV show and click on a car to buy it. I don’t buy that. He argues that we’ll end up paying for more content, supporting it with our money instead of advertisers’. Not sure I buy that, either. But I do agree with this arguments that we don’t like ads, we do want information, and we are in control.

And what he’s really saying behind all that is that the fundamental economics of media are, if not imploding, deflating. That is a big deal and has implications we can’t yet imagine in media and marketing as well as in the proliferation of small media that can afford to live without big marketing — if it’s ready. Hang on. It’s going to be a bumpy ride. Downhill.

Size doesn’t matter: The distributed media economy

No, size does not matter, not in media, not anymore.

I know that’s counterintuitive and counter everything we’ve assumed about mass media. But today what matters is reaching the right people by the right means. That has always been the case. Only now, thanks to connected, collaborative media, it’s finally possible.

I’ll pull together a lot of links around this topic below. But most of them are still trying to measure mass: the new pageview, the
new audience count, the new click. I say the change we’re facing is much bigger than just the obsolescence of the pageview, much more fundamental: Size doesn’t matter. Relevance, credibility, and attraction do.

Instead of measuring quantity, we have to measure quality. And only when we do that will the true value of these new media be unlocked for everyone.

Some of the discussion that is boiling up out there:

* The end of the pageview: Steve Rubel has been doing a good job hammering on the anti-meme that the pageview is over: “The page view does not offer a suitable way to measure the next generation of web sites. These sites will be built with Ajax, Flash and other interactive technologies that allow the user to conduct affairs all within a single web page – like Gmail or the Google Reader. This eliminates the need to click from one page to another.” See, for example, Yahoo grappling with the impact of the unpage. This is not entirely new; it was a problem I grappled with on refreshing chat pages a decade ago. But the phenomenon is growing in both an Ajaxed web and a Flashed video world: What’s a page now? What’s a view? What’s a viewer? A decade ago, I spent months on a tortuous committee of the Audit Bureau of Circulations answering just those questions. Now, it doesn’t matter, or at least, it matters less and less.

* Targeting and verification matter more than size: When I sat in those endless ABC committee meetings, our aim was to come up with the standards against which to audit the circulation or audience — old terms — of web sites. But that effort was eventually abandoned because advertisers didn’t care about verifying the size of a site; only publishers cared about those bragging rights and not enough to pay for auditing them. As it turned out, advertisers cared only about auditing their own flights of ads: ‘Did I get what I paid for (whether that was people or views or clicks or actions or demos or branding)?’ You see, circulation mattered only when you were stuck in the same pages as all the advertisers and you all got the same audience whether that audience gave a damn about you or not. But online, you could find ever-better ways to reach just the people you wanted or who wanted you. Travel advertisers didn’t need to care about the circulation of, only about who saw its ads in the travel section. Oh, yes, advertisers are still buying the old way, but that’s because it’s more convenient — albeit far less efficient — to buy us in bulk. But the mass is gone. Size doesn’t matter.

* The widgetization of the web: Niall Kennedy called it back in July: Pages are now made up of widgets that operate like multiple pages themselves. But this is about more than adding cool stuff to your site. See how MySpace is built with widgets from elsewhere and how Flickr is spread via widgets. This is a new means of distribution.

* The people are your distributors: One day this week, seven of the top 10 viral videos — determined by links and embeds, that is, by recommendations rather than just traffic — were performances by James Brown, following his death. (By the way, I didn’t see these videos on the most-viewed lists on YouTube; those are the old, mass lists people still look at but they’re pretty much meaningless). This tells me that the people will distribute your stuff if given a chance; they jumped onto word of Brown’s death and they served relevance. Note well that you don’t need everyone doing this; even as Wikipedia’s content is made by the fabled 1 percent of its users, so can the new networks of information be driven by 1 percent of their members.

* The distributed media economy is taking over: This last week, Google was said to surpass Yahoo as the second most visited site on the internet after Microsoft; this comes after MySpace surpassed Yahoo in pageviews. But the truth is that Google surpassed them all long ago, for Google is not a site; it is a platform. Every piece of Google — like the ads on this page — counts as another pageview, if you’re still counting them. This is why I keep saying that Yahoo is the last old-media company, relying on controlling content and marketing to attract an audience to see ads, but Google is the first distributed platform, no longer making the people come to it but going to the people wherever they are. And see James Brown: The people will take you to the people, if you’re good and if you’re lucky and if you let them.

Add to this the notion that advertising can be content (the viral ad) and that ad creative gets tangled up again with media and distribution (being on MySpace is itself the brand statement) and you continue to unravel all the old assumptions about the media economy; see Scott Karp arguing that the page view will be dethroned by innovation in advertising.

And mess things up even more when you start tearing apart the methodologies of measurement. Fred Wilson, on the board of Comscore, begins to address this. I argue that any paneled, sampled measurement scheme will simply not work in this new world. Full stop. The Nielsen method of putting together a sample of people who represented the rest of us cannot work in the mass of niches, for you cannot have a sample that is ever large enough to measure the tail. You can’t measure quantity.

So pageviews are obsolete already, thanks to Ajax and other unpage technologies and to the widgetization of content, funtionality, and branding: Again, what’s a ‘page’? Audience measurements are obsolete, at last, thanks to the fact that the former consumer is now also the creator and distributor: What’s an ‘audience’? Mass measurements are dead, thank God, because we are now joyfully fragmented into the mass of niches: Who’s a ‘user’?

The truth is that we, the former audience, have long paid only scant attention to the old, quantitative measurements: Box office numbers and Nielsen ratings were curiosities. We have always measured, instead, relevance, trust, usefulness, interest, attraction, action, value. Those are the measurements that matter, always have been, only now media must catch up to us. And when media and marketers do, they will give us greater value and get more in return.

This is about far more than the damned pageview.

See also:
* Scott Karp on the fallout for media and creative ad agencies.
* Michael Parekh.
* Evan Williams last summer on the dying pageview.

It has always been us

So the Time person of the year is you. Otherwise know as us.

Well, I suppose I should give Time some credit for recognizing the power of the people. Only thing is, there’s no news here. This is nothing new. We have always been in charge. It’s just that the people who thought they had the power now have no choice to but hear us and recognize that we are, and always have been, the boss.

This is stated in the hammer-and-chisel language of a Time tome:

But look at 2006 through a different lens and you’ll see another story, one that isn’t about conflict or great men. It’s a story about community and collaboration on a scale never seen before. . . . It’s about the many wresting power from the few and helping one another for nothing and how that will not only change the world, but also change the way the world changes. . . .

The new Web is a very different thing. It’s a tool for bringing together the small contributions of millions of people and making them matter. Silicon Valley consultants call it Web 2.0, as if it were a new version of some old software. But it’s really a revolution. . . .

And for seizing the reins of the global media, for founding and framing the new digital democracy, for working for nothing and beating the pros at their own game, TIME’s Person of the Year for 2006 is you. . . .

I don’t disagree with a thing they say. I just want to turn down the volume a bit. And people think bloggers like me get overheated.

This year’s cover reveals that the notion — or they would like to think, institution — of a single person of the year in the single biggest news magazine is such a social anachronism. It is a vestige of the mass era. It is the conceit of mass media that they could pick one person who mattered for the world and that we would listen.

So it’s wise of Time to pick many people. That’s the way the world really works. There are many worlds within our world and many leaders in them. So if Time were doing its job properly, it would highlight a million people of the year. But, of course, it can’t. The form doesn’t allow it. And the form is what led to massthink. But mass is over. And I see this as Time’s admission of that. And so for that, I applaud them.

God knows what they’ll put on the cover near year. (Knowing them, it may well be God.)