Posts about ads

The local ad opportunity (and the danger of losing it)

The promise of local ad support for news will come only if a new population of very small businesses can be served in new and effective ways – before Google beats everybody else to it. That’s apparent in the results of Webvisible and Nielsen surveys reported by MediaPost (via Marketeting Pilgrim and Frank Thinking), which show that local marketers are leaving newspapers and the yellow pages but are still dissatisfied with – and don’t pay enough attention to – internet marketing. Factoids:

* 42 percent of small businesses say they use the local paper less and 23 percent use yellow pages less – while 43 percent use search engines more.
* “Though 63% of consumers and small business owners turn to the internet first for information about local companies and 82% use search engines to do so, only 44% of small businesses have a website and half spend less than 10% of their marketing budget online.”
* “Only 9% are satisfied with their online marketing efforts.”
* Mediapost found a disconnect in how small-business owners act as business people and marketers vs. how they act as consumers. That is, as consumers, they use and are satisfied with the internet and search to find other local businesses, but as marketers themselves, they use online less.

In these stats lies a big – but fleeting – opportunity: serving local businesses by helping them use online well. By this, I don’t mean doing what local newspapers have been doing: trying to sell them display or directory ads, just as they did in papers but in a new medium. Instead, I mean redefining what it means to help them succeed online. This might mean helping them place ads smartly on Google with good SEO (see Fred Wilson’s tweet out of our New Business Models for News Summit at CUNY). It might mean finding was to help local businesses interact more meaningfully with their own communities. It might mean enabling armies of citizen sales people – neighbors who really know their local businesses – to serve and sell those advertisers. It might mean providing tools to help local businesses create better (more informative, more SEOed) online presences and providing them data to show them their return on investment. I might mean finding other means to efficiently sell local businesses (can phone rooms ever work?). And so on…..

The assumptions I so often hear about local advertising – it doesn’t work; it doesn’t pay enough; small businesses are ignorant – need to be updated. The assumption that most needs to be updated is that a business needs an ad. It may need other tools to be found in search and to reach the right people and to improve relationships with them. All that may count as marketing, but not necessarily with an old ad in a new medium.

30 days of WWGD? – The link changes everything

Here’s a second day’s snippet from What Would Google Do? I’m going to jump all around the book, picking bits here and there. Today’s is on advertising. But first, here’s a link to a Newsweek Q&A about WWGD?

* * *

For more than a century, the public face of companies has been their advertising, slogans, brands, and logos. How much better it would be if a company’s public face were that of its public, its satisfied customers who are willing to share their satisfaction, and its employees who have direct relationships with customers. Brands are people.

If that’s the ideal, then here’s the goal: Eliminate advertising. Or at least fire your ad agency. Oh, you won’t get rid of advertising entirely. You should be so lucky. But every time a customer recommends you and your product to a friend is a time when you don’t have to market to that friend. It is possible today to think that one good word can spread as far as an ad would. This scenario is not hypothetical. When I had my problems with Dell, I could see them losing sales as people came to my blog and left comments saying they’d just decided not to buy a Dell, often adding that they’d told their friends their vow as well. There’s no telling how much one pissed-off customer costs you today. The contrary is also true. A happy customer can sell your products. Now that bloggers are praising Dell online, new sales accrue as customers reconsider the company. When Dell started offering discounts to users of Twitter, who passed the word to more users, the company added $500,000 in sales in no time.

The more your customers take ownership of your brand, the less you will spend annoying people with your ads. I can hear your agency: You can’t hand messaging over to the people; they’ll be off-message. Well, tell your agency their message may be off. Your customers have always owned your brand.

Advertising is your last priority, your last resort, an unfortunate byproduct of not having enough friends?.?.?.??yet. Learn this lesson from Google, which spends next to nothing on advertising. It became the fastest growing company in the history of the world without marketing. It grew thanks to its friends, not through ads. In its “10 things Google has found to be true,” the company says its “growth has come not through TV ad campaigns but through word of mouth from one satisfied user to another.” The generation that has that damned “Yahoo-ooo” sound stuck in their heads thanks to untold millions spent on commercials is the same generation that used and spread Google instead, for free.

Google gets out of print

I’m not shocked that Google abandoned its effort to sell print ads for newspapers. When the program started, I was dubious because I said that it could commodify print brands (magazines at first). As it turns out, newspapers also didn’t hand over decent inventory — that is, space — to Google and so the program was not of much value to either Google or the papers.

One of the great blown opportunities in the history – yes, history – of newspapers will be their failure to set up networks to get new advertisers and dollars. The disastrous New Century Network should have been nothing but an ad network, but papers overcomplicated it and then didn’t support it because they all wanted to control. I told the AP a decade ago that it should become an ad network for papers but that was never going to happen. Networks could have sold the quality of papers. Now they sell remnant space.

Magazines don’t look so slick now

First, the grim reaper came for newspapers….

Now magazines are looking bad and worse by the day. The latest: A major distributor is adding a surcharge, according to Keith Kelly in the NY Post.

Anderson News earlier this week informed publishers that it would impose a 7-cent charge for each copy of a magazine that it delivers to stores, and warned that any publisher that refuses to pay the fee could no longer count on Anderson to distribute its magazines….

Publishers, which have until Feb. 1 to agree to pay the new fee, are balking at Anderson News’ move, which would drive up costs at a time when most magazines are hurting. Indeed, American Media, which is already on the brink of bankruptcy, could be hit with a bill of up to $12 million, one source estimated. Another source said People, which has one of the best sell-through rates in the business, could be hit with up to $15 million in extra charges….

Magazines have a sell-through rate of around 38 percent and the surcharge would apply not to just the copies that are sold but to all unsold copies as well.

And magazine advertising is falling in the dumper – and it’s sure to get worse as the impact of the crash deepens. The Wall Street Journal reports at 17% plunge in ad pages in the fourth quarter against a year ago. For the year, they were off 12%.

TV’s next as auto, retail, and consumer categories suffer.

And they say the business model for the internet is crazy. At least it has no physical costs. Oh, I know, media online is supported by advertising, too, but the real opportunity there is to replace mass ads with a mass of niche ads. That is what Google did. Though Google, too, will feel the impact of the crash, it has room to grow while mass media do not. The crash is only accelerating — as in pouring accelerant on a fire — the fundamental shift in the economics of media. The change is big, fundamental, and permanent.

Google: Monopoly or marketplace?

Joe Nocera tells a cautionary tale in today’s NY Times about Google’s power in advertising. The man who runs Sourcetool.com complained to the Justice Department after Google found that his site didn’t live up to its standards and raised the rates on him (Google’s way of shooing away sites it doesn’t approve of). The implication is that Google can wield too much power as a monopoly.

But in the Google age, nothing is as it seemed.

I don’t want to be accused of being an apologist for Google (which will happen anyway because my book is admiring) but I can see their stance on Sourcetools. It’s not a splog — the owner puts effort into building a useful directory, Nocera says — but it does look and act like one. Google is trying to protect us from sites — even paying advertisers — that detour and delay us from getting the answer to our question. If I ask for earthmoving machinery, I’d like to get the link straight from my first search (on Google) rather than being directed to Sourcetool, where I’ll take five more links to get a not-very-satisfying list of companies. Google says it always focuses on the end-user.

Nocera and Sourcetool point out, though, that Google holds the power to raise prices and disadvantage sites without explanation or appeal. That raises fears that it can and will act as a monopoly.

Except the issue isn’t that Google is a monopoly. It’s that Google has become the marketplace. It where we all go for information. It’s where advertisers go for us.

It’s no different from a newspaper. Even when there were two papers in towns, one of them was the marketplace for homes, cars and jobs. That allowed the paper to set rates as high as the market could bear, which was very high. Google would say the difference is that it doesn’t set rates, the market does in auctions for keywords. Except in this case, by punishing Sourcetool, Google did set the rate. And it has the power to do that.

craigslist is also no different, except that Craig Newmark set most rates at zero. He’s the marketplace now and now that he has us by the neck, he could raise rates — as eBay did once it dominated the marketplace it created (though that invited competition from Amazon, Etsy, et al).

What it comes down to is trust. Once a service becomes the marketplace, do we trust them not to use that position to gouge us? There really is no alternative. The closest was Yahoo and now even it is coming to Google to sell ads because that will be far more profitable — that is what the Justice Department antitrust division is investigating now.

But if the Feds rule against the Yahoo deal, it is in essence stealing hundreds of millions of dollars not from Google but from Yahoo. It is restricting Yahoo’s access to the marketplace. That would be as unfair as Google unfairly punishing a site that doesn’t meet its standards.

The first obvious solution is transparency. If we all knew Google’s standards and trusted that they were, indeed, looking out for the end-user and if Sourcetool knew Google’s standards and abided by them, that would blunt Sourcetool’s complaint. Indeed, part of its complaint is that it can’t find out the standards. But then here comes the Google age wrinkle: If Google revealed its standards, it would only be feeding the needs of evil spammers, giving them to manual to game the system.

Still, the bigger Google gets, the more trust will be an issue. I think they need to look at alternatives. Why not, for example, establish an appeals panel made up of advertisers and users to adjudicate issues such as Sourcetool? This would require Google to hand down its laws — or more to the point to draft its constitution: the definitions for good sites rather than spam, not in algorithm-busting detail but as high-level goals. But another Google era wrinkle appears: scale. When the web is developing by the minute, it’s impossible — and potentially limiting and dangerous — to write even the broadest definition of what’s good. And your good is not mine.

It’s all about trust. The question will be whether I trust Google or the government or the market more. I’ll take the market first, Google second, government third. If Google uses its power monopolistically and maliciously, I believe it would hurt Google’s business as some painful proportion — not all — of its audience and advertisers look for alternatives and then as entrepreneurs and competitors see the opportunity to meet that need.

The government didn’t need to go after Microsoft. Google has. That it is say, the market created an opening Google is now trying to fill with Docs and now Chrome. The irony here is that Microsoft, so long burned by antitrust harassment, is not empathetic with Google’s possible plight at the hands of the same tormenters but it wants to join in the tormenting. But that’s a different drama.

I’m not sure whether Google was unfair to Sourcetool or not. I don’t think it’s a very good service; I see it as a delay and detour, though not a malicious one. Nocera is sympathetic to Google’s view: “Listening to Google executives explain how the company’s algorithm works, I came away largely convinced that Google was operating in good faith.” But then, we need to ask whether Google used its power well in this matter.

Larry Lessig famous wrote that code is law. Today, Google is law. It is up to Google to convince us — the market — that its law and enforcement of it is just. To do that, it must be as consistent — which gets harder the bigger you are — and open as it can be.

(My Guardian column, up Monday, also touches on another solution: Competition.)