@bmorrissey

Real-Time Cannes

A great part of my job at Adweek the last few years is the opportunity to go to the Cannes International Advertising Festival. It’s a lot of work but it’s in the South of France. This year I’m doubly excited about going because we’re trying something completely new.

In past years, we’ve covered the event in the traditional way: daily news stories and a magazine story.  Some years we’ve had a film crew with us to record interviews. (Here’s some we did in 2007.) Adweek would build a microsite, and we'd operate a separate blog. Not this year. We’re starting from scratch with a site called Real-Time Cannes. The idea is to take a page from Twitter, Facebook and blogs to create a site that gathers the news and flavor of the event in short bursts, while aggregating the content others create. It's meant to be the hub of what's happening that week. We’re Tweeting, blogging, shooting videos with Flip cams, posting photos to Flickr, etc. The whole thing is built on Typepad. Of course, we’ll also create some more traditional content, including a magazine story and straight news pieces. Check out the site.

What interested me was how it came about. Basically, my colleague Ellie Parpis and I got together on our own and hatched out how we’d want to cover Cannes. We thought of how so often in the past we’ve been forced to make material fit in containers of the past. A few interesting remarks at a seminar were either a 500-word news story or something that remained in our notebook. An hour and a half meeting would end up yielding a quote in the magazine story. So we figured out how to change that. We work for a big company with lots of resources, but the site was built and is managed by an editor, Tim Nudd. IT wasn’t involved. I’m not sure if it’ll work out – we’ll inevitably have snafus, particularly with the video content – but it showed me how news organizations need to let reporters and editors create stuff on their own without the layers of approvals and “help tickets” that are stifling innovation.

Shortcuts into the stream

It's pretty clear advertisers are hellbent on getting into the stream. No doubt, earned media will be important to get there, but that's a long-term play. There are shortcuts. Web publishing software company Squarespace found one with a new contest to give away 30 iPhones in 30 days. It's pretty simple: it'll pick a winner each day from all Tweets including the #squarespace hash tag. People will pretty much do anything for free stuff -- or even a shot at free stuff. Sure enough, the No. 1 trending topic on Twitter is squarespace. (Since I started writing, 600 mentions have been posted.) I've seen it pop up in my stream many times. Is this effective? I'm not sure. No matter what, it's pretty low cost -- the 30 phones will cost it under $10,000 with no media or creative costs to speak of. It's clear that Twitter will need to crack down on this kind of hashtag gaming (hello, #spymaster) for people to become trending topics. This kind of thing, to me, quickly becomes spam.

Today in instrusive advertising...

The advertising feedback loop

 
There are many reasons behind Google’s singular success in Internet advertising. One big reason: it developed an advertising feedback loop with AdWords. It figured out a way to take the clickstream data to improve ads. Get more clicks, pay less. Irrelevant ad that nobody clicks on? The system will spit it out. That’s the big improvement it made on the search ad system Overture pioneered. As the tech people say, it’s non-trivial.

For the most part, advertising doesn’t have that kind of feedback loop. Great ads and shitty ads are pretty much treated the same. This is a problem for Web publishers still stuck in the business of selling space for impressions. Digg is trying to take a page out of Google’s playbook with its new ad system that will let users vote up and down ads. Ads that are Dugg a lot will end up paying less on a cost per click basis than ads that get buried and draw fewer clicks. Jeff Jarvis is right that this is an experiment worth watching. Google will bring this to TV eventually. It’s already collecting clickstream data there in the form of viewers switching channels during commercial breaks. Engagement-based pricing systems like Videoegg’s optimize to show more popular ads.

The advertising feedback loop will probably have bias toward prom king brands and movie trailers. But then, those are the advertisers closest to truly creating ads that are viewed as content. It’s only fair they shouldn’t pay as much for attention.

A VC’s view of saving The New York Times

I’ve long enjoyed reading Fred Wilson’s blog. He’s amazingly open with his quest to figure things out in digital media as a venture capitalist with Union Square Ventures. It doesn’t hurt he’s had a nice track record in Web 2.0, backing companies like Delicious, ComScore, Tacoda and now Twitter. He gets this stuff.

After a Q&A he did yesterday with John Battelle, an audience member asked what he’d do to save The New York Times. What’s interesting, for me, is that it comes from an outsider to the publishing industry. I find too many distressing parallels between the publishing and auto industries. They both coasted for too long on artificial advantages, relied on insular leadership and are now paying the price with unsustainable business models and products not aligned with consumer demand. Here’s what I took down as Wilson’s first few steps, things that run completely counter to what anyone within the industry would suggest.

1.    Stop printing the Times immediately. This is absolute heresy. Can you imagine Arthur Sulzberger standing in the newsroom and explaining that his legacy will be the family member who killed the newspaper? Wouldn’t happen. No matter what is said, publications still view themselves through their distribution medium. Newspapers are newspapers, not news sources. Magazines are magazines. The Web, whether they admit it or not, isn’t where their thinking begins.
2.     Kill the sports and business sections. Wilson believes a company needs to double down on what it’s good at. For the Times, its business coverage can’t compete with The Wall Street Journal’s. Its sports coverage is inferior to The New York Post. Following the logic of Jeff Jarvis, Wilson sees a Times that shrinks to its core competencies and links to the rest.
3.    Concentrate on political and world affairs. Where is the NYT at its best? Wilson saw it in its coverage of the selection of Sonia Sotomayor as the next Supreme Court justice. The Times still sets the national news agenda.

I doubt these suggestions would be put into motion at the Times. For one thing, there’s less money in politics than in, say, the Sunday Styles section. The Times has to do the fluff stuff to support the serious journalism. What Wilson didn’t address is how big the Times would be. I wonder if to be thriving for-profit company it needs to go from 700 journalists to 200. Thomson Reuters CEO Tom Glocer made this very point recently. He went even further, saying “Why not 30 reporters with 30 apprentices?” Whatever the case, I have a feeling we’ll see the shrinking of media organizations to fit the new realities. It’s eerily similar to what the auto companies are doing, although I hope it won’t be done in bankruptcy.

Power of personal media networks

Networks used to require enormous infrastructure. Building out distribution was expensive and hard. Now it's just hard. That's meant we're seeing the development of business models based on access to their personal networks. To be clear, this is unattainable for 99 percent of people. I'm not referring to the networks that we all have, but media networks.

It's interesting when brands start to realize that a different kind of media buy is paying for access to personal networks. This is definitely a way advertisers will get into the stream. I have a story in Adweek about an interesting campaign run by Carl's Jr. to promote its new burger. It has nine YouTube creators with some of its most popular channels making videos about how to eat a burger. While these will live on a brand channel at YouTube and some ad units, the real power of this campaign is it's tapping the personal networks these creators have built -- and letting the creators talk in their own voices to their followers. These networks are substantial. NigaHiga has over 1 million subscribers to his channel. IJustine has 580,000 Twitter followers. These are different sort of networks, more personal and direct. They're more powerful than the old networks built off expensive infrastructure and scarce distribution. Brands will need to figure out ways to access the new personal media networks -- and, of course, it will involve giving up some measure of control by giving the stewards of the networks freedom.

This isn't just something for YouTube. Think of what AmEx is doing with Federated Media. It has some top bloggers creating content for an AmEx site, OPEN Forum. What someone like Guy Kawasaki brings to the OPEN site is only partly about content. He bring a readymade network, including 125,000 Twitter followers, which gets alerted to his AmEx work.

There's a risk that buying into their networks will backfire for brands. It will probably work so long as it's not done too often. Most understand that creators need to eat. So long as the brand give them leeway to create messages in their way, people probably won't mind much.

The end of the Web 2.0 advertising myth

For a long time, I was reminded of The Graduate whenever I met with an eager, undeniably smart and ambitious Silicon Valley founder. After he explained the consumer value the Web 2.0 service created, I’d ask the business model question. Instead of whispering “plastics,” it was “advertising.”

This unflinching belief in advertising as the catchall monetization tool came out of the strange Valley culture, which I’ve found just as inward-focused as the more-maligned East Coast media industry. The VCs, analysts and entrepreneurs all bought into this idea that if you build a large enough audience, you have a media business. Not quite. On one level, I understood this line of thought. Unless you have scale, you don’t have a business anyway, so focus on scale. But it led to a nearly comical belief that the process of actually making money was quite easy, like turning on a spigot. Dave Karnstedt, the Efficient Frontier CEO, spent six months as an executive in residence at Redpoint Ventures. He told me a disturbing number of companies he met with pointed to AdSense as their revenue model. What many companies are finding is even if they build to what they find what they think is scale, it’s not enough.

This is the great unraveling of this Web 2.0 advertising myth. As Wenda Harris Millard said, “There’s not enough advertising to go around.” The Times has a story about how iMeem and other music services have recognized the economics of ad-supported music aren’t there. News Corp's Jon Miller had some interesting things to say at All Things D about how even a behemoth like MySpace needs to diversify its revenues. On a much smaller scale, Om Malik rolled out a subscription service for his GigaOm network of content sites.

Like other unravellings (not a word), this is going to get messy. This is the year these venture-backed startups will have to figure out their business models, and it couldn’t come at a worse time. Web 2.0 companies will come to realize that building a media business is hard work, not just matter of amassing millions of eyeballs. Many services built are communications platforms that don’t perform well on a direct response basis. That means relying on scarce brand dollars. And the process of selling brand advertising is painful and requires a totally different skill set and culture than these tech companies possess. The upside is the next generation of startups will most likely focus on their business models earlier – and be a little more creative than using advertising as a cure-all.

The differentiation imperative

Everyone fears being commoditized. Once you’re in a commodity business, margins plunge and the going gets tougher. That's where Internet ads are. Dave Karnstedt, CEO of Efficient Frontier and formerly Yahoo’s top ad sales exec, told me today the dynamics of search will kick in with display media now that it’s so fragmented. That means more inventory moving to exchanges and advertisers buying audiences, not pages, with strict performance metrics. It is inevitable.

t can’t noted enough that the plunging prices for banners aren’t a short-term blip because of the sucky economy. Simulmedia CEO and Tacoda founder Dave Morgan wrote a sobering post recently that warned display ad prices aren’t rebounding -- ever. There’s a complete imbalance in supply and demand. Thanks to the social media and ever more spent online, there’s a glut of ad inventory. The shift of ad bugets online hasn’t kept up the demand part of the equilibrium. That’s driving down prices. Publishers like Forbes and The New York Times find themselves in that unhappy place where they’re trading offline dollars for digital pennies.

There's a need to differentiate. The undifferentiated ad networks will perish. So too will undifferentiated publishers offering advertisers undifferentiated banners. (Undifferentiated journalists won't fare well, either.) A Pepsi marketing director told me the last thing she needs is a new place to run banner ads. Too many publishers think their job is done once they’ve gathered an audience, she said. Not even close. Advertisers are demanding more. They want new ways to capture attention than the passive impression or carpet bombing for clicks. Otherwise the exchanges will work just fine. That’s going to lead to some interesting experiments with new attention-based models online. I predict it will push more publishers into the fuzzy area of advertorial/sponsored conversation/custom content. The mini-hullabaloo over Gawker’s mix of advertising content with editorial shows how tricky this is. HBO didn’t want to simply buy banners, so Gawker took over production of the “True Blood” blog and syndicated its posts throughout its network of sites. Could the execution have been better? Probably. More ad-supported sites will need to find ways to differentiate with programs like this that link advertisers more directly to their audiences than keeping them off in the fringes. There are just too many options.

Can augmented reality save microsites?

Nowadays, everyone is hating on microsites, particularly the overdone Flash monstrosities that have defined the early days of digital media. Now simple and shareable trumps the "immersive brand experience." David Armano sums up the sentiment in his "Kill your Website" post. But not always, it seems. Brands might talk the talk about being sociable, but they'll often fall back on luring consumers into some kind of brand immersion. That means finding new technology to play with, most recently augmented reality. In a way, this is a step forward. It's using Webcams that many people have now to blur the physical with the digital. But is it just a tech crutch? GE won lots of kudos for its Smart Grid, created by Goodby Silverstein & Partners and North Kingdom. Verizon and Nokia teamed up for a Star Trek augmented reality promo built by Moxie. These efforts typically involve visitors printing out a PDF, then holding it up to their Web cam to create a new way to interact with some kind of experience. Papa John's and the Postal Service have gotten into the act, enough for the WSJ to run a trend story and Advertising Lab to deem augmented reality "the new Second Life."  I'm interested to see if this type of stuff gets lots of industry awards. The smart social stuff might be the best answer for clients, but the use of new technology inevitably gets the most attention.

In the arena

It bears repeating: the ad industry can be very conservative. Even though it is filled with creative people, those that try new things are inevitably smacked down under a storm of knee-jerk criticism, whether it’s what Droga5 and Smuggler tried with Honeyshed or the Agency.com's radical Skittles Web site. Add Agency Nil to the mix.

Hank Leber is a 28-year-old VCU Brandcenter grad who has the same frustrating problem of many of his peers: he can’t get work. Instead of groveling for yet another internship, Leber is taking the initiative. He started Agency Nil by taking a page out of Chris Anderson’s book. He’ll let clients set the price for the work. As someone without a long track record, Leber needs to do this to take on risk.

The reaction has been mixed. Over on my Adfreak post, there are 19 comments, nearly split down the middle of positive and negative. The positive ones praise Leber for trying to forge a new model, while critics carp he’s devaluing the work. What struck me, though, is that Leber is giving it a try on his own, rather than sit around and wait for agencies to cut the management fat to hire hungry, young, digital-savvy people like himself. More, not less, of this is needed in advertising and other industries, including media. It will be interesting to see if the downturn causes people to retreat to the safe or take bolder action. In a way, Chris Kahle did this with his successful Twitter campaign to get a coveted job at Crispin Porter + Bogusky. He’s taking a risk. In the words of Alex Bogusky, he’s showing “hustle.” Even Lawson Clarke is showing hustle by bearing his fursuit in his quest for a job. It's easy to dismiss these things as "desperate" or "uncool," but they're gutsy. They're in the arena. It reminded me of my favorite TR speech.

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.