 ADVERTISERS ARE DOING THEIR OWN THING (AT MEDIA COMPANY EXPENSE) (Terry)  The amount of money advertisers are spending on their own web applications has skyrocketed in the past year, offering a chilling clue as to where the disruptive nature of the Internet is taking media companies next. According to new data obtained from Borrell Associates, advertiser spending in the "online marketing and promotions" category jumped 130% between 2006 and 2007 to an estimated $8 billion nationwide. That's money that advertisers would likely have spent on conventional advertising before the Web."The meteoric rise of promotional spending on the Internet is changing the face of advertising 'sales' as we know it," Borrell Associates CEO Gordon Borrell told AR&D in an email. "Media companies are having to become far more creative and consultative, acting a lot like agencies, to help local businesses attain their marketing and sales goals. They can't get away with just taking orders anymore." Some of the specific categories within the whole show growth that can only be described as incredible. Every category in the medical profession, for example, is far above the average. Doctors, up 160%. Other medical professionals, up 236%. Pharmacies, up 245%. Hospitals, up 150%. Other medical facilities, up 225%. Political organizations have increased spending in this category a remarkable 1,021%. I'm sure television will still reap a windfall in political ad dollars, but this is an area that ought to concern everybody. It's important, again, to understand that this is brand new in our world. Never before have businesses been able to, in essence, become their own media companies, and that's clearly what's happening. "The Internet," said Borrell, "is far more utilitarian than, say, newspaper advertising or TV advertising. And it’s phenomenally measurable. So when Oil of Olay wants to spread the word about a new wrinkle lotion, instead of a mass-mailing of free samples and coupons, it can place an Internet campaign that collects names and addresses of people who actually want the free sample — and continue marketing to them." Promotional opportunities for (former) advertisers are something media companies have been slow to understand. In today's world, it's often far more important to help businesses with their web strategies than it is to simply provide brand message opportunities. Advertisers are willing to spend money without actually running ads, as long as the opportunity to obtain data is there. It's why Borrell's "green zone" performers (those who get 28%+ market share of online ad revenue) all use a consultative sales strategy in working with clients. This whole game is increasingly about their needs, not ours. If you follow the money in this strange new world, it'll lead you down paths you don't expect, and if you pay attention along the way, it'll also open doors to new opportunities. The ad-supported content revenue model is slipping slowly into the past, but if we're smart, we'll see that all of these new websites and web applications that the people formerly known as the advertisers are making offer a significant revenue growth opportunity for the company that can tie them all together. This is why one of our top recommendations is the creation of a local ad network for media companies, regardless of where local advertisers are in their level of web sophistication. The trend noted in the Borrell data is unmistakable and will impact every business downstream. In my book, the smart local media company will do whatever it can to accelerate the trend in its market. (NOTE: This report in today's Online Media Daily about American Airlines' Facebook widget is a textbook example of the above.) <Link> <<< >>>
JUICY CAMPUS: THIS WEEK'S "THE INTERNET WILL DESTROY OUR CHILDREN" SCANDAL (Steve) The scare du jour is Juicy Campus. It's a horrible little site, to be sure. People put up anonymous postings about other students in their colleges. The postings are exactly of the quality you would expect. They are vile. They are personal, insulting, racist — you name it. It's a digital bathroom wall. Juicy Campus promises anonymity for all posters, meaning there's no way for anyone who has been obviously libeled to sue the responsible party. And, I expect, Juicy Campus will be irrelevant in short order and gone shortly thereafter. It's already the target of a fraud investigation by the New Jersey Attorney General, which is simply a loophole maneuver around the law that pretty clearly protects sites that post what other people write. The state says the site may be in violation of its own terms of services which state that people can't upload material that's "defamatory, obscene, libelous or invasive of another's privacy." The Washington Post's Marc Fisher writes: "Using the fraud law to go after the site is clearly an attempt to do an end run around First Amendment protections and the federal law that dramatically limits the liability of web site publishers for reader-generated material on their sites. But just because the New Jersey investigation involves a novel legal approach doesn't necessarily make it wrongheaded or dishonest." But really, even this much is unneeded. Students themselves are speaking out against this nonsense. Students papers are writing editorials against the site. They are urging their classmates to stay away from the site. The only way something takes off online is if "everyone" is doing it and if you "have to do it." If it's not cool, it fails, fast. Local media sites point to open comment boards as a tremendous source of fear for them. And, I worry, they will take this Juicy Campus story too seriously. (Judging from the news coverage I've seen, the fear is warranted.) A site that invites dirt will get dirt. Garbage in, garbage out. Juicy Campus has nothing to do with journalism and should not disturb our online mission in the slightest. Looking at it and saying "This is why we can't have online comments" is like looking at a third grade class writing project and saying "this is why we shouldn't have a newspaper." I am a strong believer in the ability of communities to self-police. I have seen it time and again. When you build sites around great communities of interest, you hear from fascinating people. You hear from the jerks, too. But that's how life is. If you demand Juicy Campus be taken down, then you open the door to laws that suddenly allow bulletin boards to be taken down, blog comments to be outlawed, newspapers and television stations to be sued because of something one anonymous person wrote on their site, and the web becomes a lonely place. Juicy Campus is the school bully. You don't let bullies stop you from going to school. You ignore them and study harder. <Link> <<< >>>
MEDIAWEEK: IS A PUBLISHER REVOLT COMING? (Terry) The advertising industry has bet the ranch on the assumption that websites are just dying for any advertising they can get their hands on. Big ad networks have grown up around that assumption, as the industry has tried to create a consistent system of metrics based on simple things like page views and visitors that will keep everybody happy (everybody, including the machine known as ad agencies). But the mega-sports division of Disney has decided that its page views are far too valuable to sell them off this way, and this is just the tip of the iceberg. Mediaweek reports that this could be the start of a publisher revolt: "We're heading down a path where it no longer suits our business needs to work with ad networks," said Eric Johnson, executive vp, multimedia sales, ESPN Customer Marketing and Sales. Sources say that ESPN would like to rally support from other publishers behind this move and ultimately tamp down ad networks' growth. According to Mediaweek, Turner is said to be considering a similar move. Several publishers, in conversations with Mediaweek, privately applauded ESPN and hoped that others would follow suit. However, in this accountability-driven, quarter-by-quarter climate, it's hard for any publisher to walk away from revenue, even if it's not huge. This is a very big deal for all media companies for two reasons. One, a publisher revolt will be necessary to seize control of inventory and establish rates publishers can live with. As long as websites are slaves to ad networks, the full value of each will never be realized. And as long as we're slaves to the metrics of these networks, the longer we'll wrongly believe that more content equals more revenue. The Mediaweek story notes that "most large sites are swimming in avails they can't sell." It's estimated that a range between 20 percent and as much as 70 percent of inventory can go unsold at a given time. "Thus, ad networks offer a monetization alternative." Of course, a lot of that inventory is of questionable value, for nobody ever asked users if all that extra content was really something they wanted in the first place. The result is overbuilt, bloated gobs of mostly useless "content" that is, however, very suitable inventory for these ad networks, who don't really give a crap about what's on the page. It's the eyeballs, man. ESPN is saying it doesn't want to be a part of going down that road anymore. But the second issue is an even bigger matter. ESPN is noting that ad networks gain valuable data from them, insight on ESPN's users that the networks then sell as a part of behavioral targeting models. An ad network "tags" each ESPN user with information on what sections of the site each user visits, and that data is stored in user profiles based on IP addresses. The ad network can then serve those people sports or male-related ads, regardless of where they are on the network. ESPN is saying, that value belongs to us, not you, and it threatens to blow a hole in the whole behavioral ad network concept. So you see, folks: this is not just a little spat over CPM rates offered by ad networks or fears about the commodification of online advertising. The dispute strikes at the heart of the Madison Avenue model of dealing with the Web. Steve and I have been saying for a long time that local media companies need to slip away from the tit of mother ad network and establish our own values for the ads on our sites. As long as we let agencies or networks dictate what they will pay and what kind of inventory they want, we'll always have the cart before the horse and never reach our potential. This is especially important at the local level. It's more work to run things for ourselves, but the payoff is much, much bigger. <Link> <<< >>>
DTV TRANSITION: USE YOUR WEBSITES AND BUILD AN AD OPPORTUNITY (Steve) Now that's a good sales pitch. Heck, it caught my eye, and my TV will work after February 17, 2009. The sign also has me wondering why I don't see more of this in-your-face kind of message from TV stations. I have yet to see a DTV promo on television. (Maybe because I'm skipping through the ads). The DTV promo that is put out by the NAB is weak, because it doesn't have the same great lead as that Best Buy sign. Rather than saying "Dudes - your TV ain't gonna work," it starts with "Notice how digital's made pretty much everything better?" What? Then, you have to wait 15 seconds into a 30-second spot to find out the point. (Your TV ain't gonna work.) And even then, it couched in a message of "Hey - it's the law. Don't blame us." Which, as we all know, the consumer cares a lot about. And the FCC's official DTV website is just, well, awful. It looks like it was designed when they made the transition from Black and White to Color. Best Buy is trying to sell televisions. Here, we need to aid and abet. Without the right TVs, we lose our audience and our ad revenue. Maybe it turns out the marketplace will be a better delivery mechanism for the message about the change in our industry than we are. If so - shame on us. It would be shortsighted to decide that running promotions on TV for DTV would cut from station inventory too deeply. (Although, given the quality of the ad, the decision could be understood.) But there is one place you shouldn't overlook in spreading this vitally important message:
Now, don't go crazy with clutter and don't crowd out the news. But make sure you're taking advantage of the site you have to get out the DTV transition message. Want to make some money? Have a section on "DTV Questions" and then sell the advertising space to a local store that sells digital televisions. Best Buy is already doing this - they have a whole section on their site complete with a number to call where you can "Talk to a DTV Expert" on the phone. Terry and I talk about how online needs to work hand in hand with local advertisers. Here's a really good reason to start. <Link> <<< >>>
AR&D PUBLISHES "REINVENTING LOCAL MEDIA" BY TERRY HEATON (Terry) The book is a compilation of the essays I've written over the past five years, during a time of epochal change in the world of communications. It's over 500 pages long and fully indexed, and it's my hope that it will be one day be used as course material in colleges and universities everywhere. The book will be available via Amazon and other online distributors within a month. The price is $24.95. I'll have copies next week that I'd be happy to autograph and sell to readers of the Media 2.0 Intel newsletter. It'll take a couple of weeks to process everything, but feel free to drop me a note with a check to AR&D for $30 (to cover shipping and handling), and I'll personally take care of the rest. Send it to:
Terry Heaton We're also hoping the book will be available at the bookstores at the RTNDA/NAB conference next month in Las Vegas. Steve and I will both be at the conference, so drop us a note, if you'd like to say "hi." <Link>
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So much for MySpace being the pet of the month when it comes to Internet fearmongering.
In a move that must have sent a deep chill down the collective spine of Madison Avenue, ESPN.com has announced that it will stop taking ads from ad networks. Despite some initial skeptical reaction from industry observers, this has staggering implications for any business model based on ad-supported content. Many local media companies, for example, believe that operating as a centralized network is the best model for revenue, because big ad networks will pay for their reach. But concerns about the commodification of internet advertising are causing ESPN (and others) to ask important questions.
Your website.
AR&D announced this week that we are publishing a new book: Reinventing Local Media, Ideas for Thriving in a Postmodern World, by yours truly. 