THURSDAY, AUGUST 2, 2007

ADVERTISING IS CONTENT WAITING TO BE AGGREGATED (Terry)
AR&D's Simulpath™ strategy for clients includes brand extension, multi-platform distribution tactics, which most companies understand and accept. But the second path is Media 2.0, and this is where our thinking as mass market leaders is really challenged. It is so counterintuitive that it often requires consistent exposure to new ways of thinking before the light bulbs begin to go off.

The disadvantage we have is that Silicon Valley is well-versed in Media 2.0. Its progeny also aren't encumbered by ties to a legacy platform that requires attention. As such, path two is all they have to know.

One of the goals of this newsletter is to provide big picture rationale for the things that are building up around traditional media companies, things that we either don't have time to see, can't see, or, as is often the case, just plain won't see. This offering is one such view.

The biggest mistake I continue to see media companies make is misunderstanding or underestimating (as evidenced by their behavior) the disruption that's dismantling their business. By now, there's general agreement among media types that the web is our salvation, and a real sense of desperation has finally made it to the top tiers of management. Washington Post Company's Chairman and CEO Don Graham told Forbes Magazine: "If Internet advertising revenues don't continue to grow fast, I think the future of the newspaper business will be very challenging. The Web site simply has to come through."

The problem is "the web site" isn't going to come through sufficiently to offset losses to legacy platforms, and this is what I mean about misunderstanding or underestimating the disruption.

The real threat is beneath the surface of what looks like an iceberg called Multi-Platform distributionThe disruption is what J. D. Lasica calls "the personal media revolution" in his seminal book, "Darknet, Hollywood's War Against the Digital Generation." Glenn Reynolds, in his book "An Army of Davids," calls it "the triumph of personal technology over mass technology." The disruption is supported by internet pureplay companies, including Google, whose Adsense program allows anybody to advertise and anybody to host advertising.

No news and information content-driven web "site" is going to stop the disruption for media companies, because the personal media revolution (PMR) includes advertisers. This is what institutional media and the advertising industry that supports it fail to understand or accept. Advertisers, both big and small, simply don't need traditional media companies to distribute their messages. They can and are doing it for themselves.

Craigslist is a child of the personal media revolution, because it uses technology to allow people to post their own ads for free. It has destroyed the newspaper classifieds business. Yelp is a burgeoning consumer review site that is producing significant results for advertisers and threatens to become another Craigslist. This one impacts display advertising by providing a more relevant place to put ads.

Most media people consider the PMR and see only blogs and vlogs and other forms of content. In so doing, they miss the truth that the PMR is more about a revolution of advertising than one of media content. Businesses are building their own sites, because it's easy. They're beginning to host advertising on their sites, turning them into media companies. They're making their own content and posting it on YouTube (see: FlushTV) and experiencing a freedom to experiment that they've never known.

The following statement from Cory Treffiletti's most recent MediaPost "Online Spin" about Yelp ought to terrify every media company in the country. He was at his doctor's office when the subject of marketing came up:

...the doc mentioned he saw a dramatic increase in his business because he recently signed up with Yelp. As a direct result of being on Yelp, the office saw 100 customer inquiries in just five days, which blew away any previous advertising efforts (none of which had resulted in more than five to eight new customers as a direct result). This blew my mind...
The mind-blowing aspect is that, like Craigslist or even Google, nobody's asking the permission of Madison Avenue to do this kind of thing. The people — including businesses — are doing it for themselves.

This means our approach of advertiser-supported content is increasingly archaic and backwards, along with our efforts to innovate therein. We simply must come to terms with the reality that the evolution of local media IS the evolution of local advertising. Content must follow advertising, not the other way around.

This is counterintuitive and, hell, counter everything, but advertising IS content in Media 2.0. How else would you describe Craigslist or Yelp or YouTube channels or video classifieds or episodic streams on business sites or a host of other applications? Google's monster Adsense program is really just a widget that delivers ad content to millions of websites unaffiliated with any traditional ad network, many of which we'd hardly describe as "media."

Don't get me wrong. There will always be mass marketing and the need for brand advertising in places with large numbers of eyeballs, but those eyeballs can now go where they want, bring the information they seek to themselves via place-based distribution, and find anything they want or need through search.

Hence, one of our new missions is to enable commerce via the personal media revolution and use that to bring eyeballs to our content. Such a concept would bind us to the local advertising community, which includes thousands of businesses that don't advertise with us now, so there is no downside to such a goal.

Consider this illustration. If we built an application that aggregates advertiser content for a particular sector, the "media" question is how do we organize that information in such a way that makes it universally accessible and useful? This is the Google mission (it ought to be our mission), and it's interesting to note that they refer to themselves as an advertising application, while observers call them a media company.

If we organized such a niche or sector-driven aggregator, it would be supported by our niche content, which then maintains our role as journalists within the community and provides a vehicle for traditional ad models. Think an advertising/commerce portal supported by news and information content. It takes the focus off of content distribution — and economic theories of mass marketing and scarcity — and puts it directly on enabling commerce.

Most media company web initiatives, including many that are very creative, begin by creating a content business with the assumption that the advertising community will support it. Meanwhile, the web itself is speaking to businesses in a language we don't understand (but they do), so that formerly safe assumption is simply no longer a guarantee. We must remember that everybody is a media company now, thanks to the triumph of personal technology over mass technology.

If we can begin to see our content as supportive, place-based distribution becomes much easier to understand as well.

(NOTE: An AR&D Media 2.0 Strategic Brief on this will be available for clients later this month.)   <Permalink>

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PEOPLE WILL REGISTER - IF YOUR SITE DESERVES IT (Steve)
There's no question that having registration on your site helps you gather more information about your audience which, in turn, helps you sell better-targeted advertising. And there's no question that registration generally annoys people. But there's also no question people will register for a site if the site is worthy of the effort.

I hear it a lot in meetings: "Nobody will register." "People hate registration." "If we make people register, they'll go somewhere else." But this is wrong. The truth is people will register for sites if they believe that the transaction is a good one: I give you my information and in exchange I get a product that is worthy of my information. Online, information is currency. So the question isn't "Should we require registration?" but rather "Is our offering worth someone's information?" I know of a local media site that switched to a registration mode after years of success as a non-registration site. It saw an immediate drop to 60% of its normal traffic. But then, within just a few months, the traffic levels went right back up to where they had been all along. The audience decided that the site had content that was worth the transaction.

I will not subscribe to every local news site, at least not the way they are now. You don't go into a magazine store and buy every magazine - you pick the one that you think is worth your $3.95. If I can get the same news from another site for free, why should I subscribe to yours? What are you offering that's worth my information? The answer "our trusted name and reputation for journalism" is not enough.

However, invite me into a community, and you just may have me.

I just registered for USAToday.com. They recently undertook a massive site reorganization that includes a lot of social web elements. Key among them are the abilities to recommend and comment on the stories in the news. Go to the front of USAToday.com and you'll see comments next to every story and the number of times people recommend the story. This opens a whole new level of the understanding of "most popular" stories. What is the most popular, anyway? USAToday.com breaks out that broad category by "Most read," "Most commented," "Most recommended," and "Most emailed." It's interesting to see how the stories change in those categories, too - the stories people email the most aren't always the ones they comment upon the most or, ironically, recommend the most.

USAToday.com features reader comments at the top of its site, which surely tempts people to contribute more. (After all, that's why people send "letters to the editor" of newspapers.)

Have your local news site emulate this model. Heck - steal it. It's not hard. Invite comments next to every story. Have the audience vote on stories (you'll learn a lot about their tastes while you're at it, too) and share them in ways other than email. Create better ways for them to share their pictures, videos and stories with you and with each other. Aggregate information and share it across borders.

Do that, and you'll earn my name, gender, age range, email and zip code easily.   <Permalink>

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VERTICAL BRAND NETWORKS (Jarvis Coffin, CEO, BURST! Media)
Jarvis CoffinScripps Networks, a subsidiary of E. W. Scripps Company, recently acquired Recipezaar, a user-generated recipe and community web site with 230,000 recipes, which they plan to position alongside their brand, FoodNetwork.com. This is a good move for everyone involved. Everyone wins. Recipezaar gets to bask in the halo of media notables such as Food Network and HGTV, plus the chance to gain access to content. Scripps Networks gets 2.3 million unique users focused on cooking, plus 230,000 recipes.

Scripps gets something else: roots into online media that have not been grafted onto offline media. Recipezaar is authentic online content started from scratch about something. Scripps seems to understand the significance of those authentic roots based on the announcement posted at their web site: 'The acquisition is part of Scripps Networks’ strategy to aggressively move its online business beyond extensions of its TV networks to become multi-branded, user-centric applications, creating communities of online consumers with shared passions.'

Passion has always defined the media value proposition of online content. If Special Interest magazines and Cable TV are about 'interests,' the sharply focused, niche content available online is about passion, especially the passion of the talented web publishers and the deeply loyal following they have built. Online is the tip of the media spear as we know it today. Thoughtful companies such as Scripps Networks are starting to align themselves with that point, recognizing that they can use the power of their brands to draw the independent web sites’ audiences into vertical content communities. Everyone wins: New media entrepreneurs benefit from the brand awareness of established media brands, and established media players sharpen the tip of their spear.

The Reed Partner Network (RPN) is another, particularly ambitious example of such vertical brand networks. Announced this year, RPN (a Burst Media customer) is a community of niche business-to-business web sites invited to sit alongside Reed Business Information’s leading business-to-business magazine brands online. No strings attached. Reed contributes its strong brand awareness and deep customer relationships; the independent business-to-business web publishers contribute their passion and commitment, plus their loyal, exceptionally well-defined audiences.

This is how you build a network in a truly networked age.

It’s no surprise that Scripps Networks and Reed Business would emerge as a couple of early adopters in the business of embracing original online content. Food Network and HGTV and the DIY Network, all owned by Scripps, are Cable TV babies, born not long before the Internet. Think of them as Net Generation media types — tech savvy, self-aware and already anti-establishment. They believe in the power of new media having been there once themselves. Reed Business understands vertical niche content. It has a portfolio of over 80 business-to-business magazine titles with names such as 'California Builder & Engineer' and 'Test & Measurement World' and 'Supply Chain Management'. And, in the world of business-to-business publishing there are no Glamour 'dos and don'ts'. It’s business. Give the reader what s/he needs and wants to know. This is a key attribute of online publishing that gets you, in the same way, Recipezaar.com and 1,200 ways to make meatloaf.

We are going to see more vertical brand networks as companies abandon the 'theme park' design of portals. As we do, advertisers will start to reap the same benefits of online media that audiences do, finding relevancy and environments not packed with long lines and flashing neon signs. Advertisers get their audience. Publishers recognize the monetary value of their audience. Everyone wins.   <Permalink>

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BORRELL: CABLE POSITIONED TO WIN BIG IN ONLINE VIDEO ADVERTISING (Terry)
New eMarketer data reported by Online Media Daily reveals strong growth for online video advertising, including a whopping 89% increase this year. The report projects growth rates near or above 40% through 2011 and notes that next year should provide the watershed moment for online video, when over half of all web users in this country will be watching it.

This shouldn't surprise anybody watching this space, but the report’s author, David Hallermam, has two concerns that make future estimates problematic:

One concern, he said, is uncertainty about what the audience will accept in terms of video ad content, placement and length. The other concern is the difficulty in gathering enough video ad inventory, with questions about ad placement and how to monetize the billions of user-generated video streams.
"Video ad inventory" is one of those mass marketing statements that presupposes static systems. That may be a concern to traditional marketers, but it misses one of the key points about online video: it doesn't have to be "attached" to somebody else’s content (e.g. "The Smart Show" by Holiday Inn Express). Video classifieds are going to explode, and all of this bodes well for local media companies.

Gordon BorrellAnd nobody knows local media online revenue like Gordon Borrell of Borrell Associates. Borrell agrees with the eMarketer numbers, but he tells me that they will be boosting their own projections later this year.

The eMarketer consensus estimates are pretty much on target with what we're seeing at the ground level for online video advertising — which is only to say that everybody tracking the actual numbers are coming up with similar estimates. However, our numbers — part of the eMarketer estimates — are going to be adjusted upward significantly this fall. We're seeing a great deal of growth at the local level as smaller advertisers buy online video commercials, but we're seeing some incredible growth at the national level that no one seems to be tracking accurately at the moment. Automotive, packaged goods, telecommunications and job-recruitment are the key categories. Real estate has begun to explode as the agents try to market themselves and find snazzier ways to move higher-priced homes.
There was a time when many media company executives scoffed at the Borrell projections, but Gordon’s wisdom is being validated every day. One thing he’s always pointed me to has been the online ad significance of local cable franchises, and he says they are the ones to watch as online video advertising grows.
The sleeper in all of this is local cable operators. Their lower-priced TV commercials have sold nicely, but the "on demand" aspect of online video seems to be capturing advertisers’ attention more. Cable operators already have the systems in place to reach the type of advertiser eager to buy video. They know how to produce the video at low cost. The Internet has given them an extra weapon in their arsenal: Not only will they air the commercial spots, but they'll also put it online where people can view it 24 hours a day. And they own three very powerful marketing vehicles: their own cable avails, a gateway page for their broadband subscribers, and the envelope that contains the monthly bill. In short, local cable operators are likely to seize the online video advertising opportunity faster and more successfully than their broadcast competitors in the market.
As I've said before, it’s hard to convince broadcast sales people to accept commission on lower-priced sales when they view their time as better spent chasing big ticket advertisers. I'm not sure that will continue to be a valid argument for long, but it does underscore the need for local media companies to dedicate sales people to work the web exclusively.

I agree with Gordon that the local cable operators are ideally positioned to score big hits in an online, on-demand world. The only question is are they smart enough to see that?   <Permalink>

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WHAT LOCAL TV CAN LEARN FROM STAR WARS (Steve)
Star Wars logoYour entire empire can be brought down by a smaller, more efficient force.

Running every idea past the emperor works poorly.

Only when he took off his mask did Darth Vader see the light.

Build your own robots; they're more reliable.

Don't underestimate the rebels.

Partner with the local Ewoks; they understand the lay of the land better than you do.

All of your efforts can be brought down by one well-placed shot.

It's not the shiniest ship that wins - it's the one that's best for the job.

Don't keep building Death Stars; build lots of small ships.

Cultivate young Jedi from within your ranks.

You can get a lot done with the right droids.

It's good to have a plan. But sometimes you just have to use The Force and go with your instincts.   <Permalink>