BuzzMachine

One theme that came out loud in and clear, to me at least, from the panel on the internationalization of media brands that I ran at OPA this morning is this:

Top brands with international traffic should be banding together to sell that traffic and audience as a group. No one of them has successfully and fully exploited the value of this audience now and, as Martin Nisenholtz of the NY Times pointed out, each of those audiences is relatively small. But together, I say, they represent a powerful, smart readership. I’ve suggested this in the past to the UK brands: Guardian, Telegraph, Times, even the BBC outside the UK. At today’s panel, Chris Ahearn of Reuters — which just agreed to represent ad sales for the Guardian in the U.S. (full disclosure: a introduction I helped make) — said that all these brands are undersold. Of course, there’s self-interest there: Reuters would be happy to sell them. But I do think there’s potential there.

Later: From Jemima Kiss’ report (blogging from the front row):

The BBC’s sanction of advertising on its international website BBC.com was “enormous state-funded intervention in the international news advertising market”, the Guardian’s director of digital content warned today.

BBC.com was beginning to impact on international news sites as UK web publishers moved to monetise their overseas audiences, Guardian News & Media’s director of digital content, Emily Bell, told the Online Publishers Association conference in London.

“The BBC funds the biggest online news site in the world,” she said.

“It will be interesting to see how the New York Times and everyone else reacts. This is not our problem - it is everyone’s problem.

“The BBC is going to be an enormous state-funded intervention in the international new ad market.” . . .

Bell said today that advertising inventory on Comment is Free, the Guardian’s discussion site, was fully sold out because advertisers want to reach its audience of high-end, opinion formers.

Get that: ads sell out on a site with interactivity.

OpenX is building the start of a new, more open ad network infrastructure.

My Guardian column this week starts with a recast of my blog post about Google Ad Manager and then breaks a wee bit of news:

OpenX (nee OpenAds, nee phpAds) is putting together the elements of what I hope can become an open ad architecture that could compete with Google and create a more transparent marketplace that will support the creation of many more sites (I’ve been wishing for this for more than two years). OpenX is already serving about 200 billion ads over 30,000 sites each month with its free software. What I’ve been urging that they do is tie that together into a network that advertisers can pick and choose from for ad hoc networks of quality sites.

Today, I was told by OpenX founder and CTO Scott Switzer, they will have the first piece of that puzzle: an ID structure that will cookie users across any participating site.

Next, in the second quarter, they plan to deliver a bidding infrastructure so agencies and networks can buy ads on any of those sites. Thus an agency could put together an ad hoc network of great mommy blogs, or an existing network like Federated could augment its own sites with others sites that are using OpenX. And a site can take high-value ads from one network today and another agency tomorrow and backfill with ads from a remnant network — including, apparently, Google itself. So both the publisher and the site recognize higher value and that, I believe, is what can propel sites of any size to put together highly targeted and flexible networks that reach critical mass and offer greater quality than portals, which are merely collections of eyeballs.

And next will come a hosted ad serving service, which is now in beta; this would enable any site without benefit of a 16-year-old son and webmaster to serve ads from most anywhere.

What they’re really creating is an open ad call, since any other network or server can serve ads through OpenX. That, I believe, is the keystone to creating a new and more open ad architecture. That, I hope, is what will enable most any advertiser to place ads on most any site.

Switzer told me that they are being advised by a panel of sites, agencies, advertisers, and networks large and small.

Here’s where I hope this goes next, from my Guardian column:

Once we have an open ad network, we’ll also be able to expose data about sites and ad performance. We would establish the true value of our new medium, especially when we can track new metrics: behaviour, interest, influence, authority, the timing and spread of ideas, and so on. As an ad blogger once said: instead of measuring impressions, we’d measure the impressed. Or to twist another ad cliche: let’s stop reaching eyeballs and start reaching brains.

My hope is that an open infrastructure would encourage the creation of many new companies. Let’s start with a wealth of new content sites: niche interest blogs, hyperlocal blogs, innovative services, new, small-scale journalism. Next we’ll see new analytics companies that would help advertisers find their ideal buys. And we’d see a host of networks spring out of ad agencies and media companies to help us poor bloggers make a living.

The Guardian started such a network gathering green blogs. The Washington Post put together networks for high-value content areas such as travel. And last week in 13 US markets, CBS TV launched a network that places widgets containing news and ads - with promotions for stations - on local blogs.

So now the battle is on. Will big media brands, Google’s ad network or an open network win more of the online ad market? The stakes are growing ever bigger: last week, General Motors announced that it will move half its $3bn ad budget online. I’m just hoping that one of these networks will bring a few of those dollars on to my humble blog.

It warms my cockles to see a local blog ad network start, especially from a company as big as CBS’ station group.

They just announced a new widget ad network in 13 of their local markets (the owned & operated stations with newsrooms). In a week and a half, they’ve put together 80 blogs in the network, many more to come. They are all local blogs around various content interests: news, politics, sports, real estate, entertainment. This is pretty much just an ad network rather than a curated ad-and-content network like Glam. CBS intends to send the blogs some traffic, but unlike Glam, it’s not aggregating and curating their content. They’re looking for decent blogs that are local and are updated regularly, but they’re not yet turning this into a contest where the best quality wins (that day will come, I hope). When I spoke with them, they did add that they’re delighted with the quality of the local blogs they’ve seen.

You can see an example of the ad unit here and here: a constant feed of content (video stills in most cases, text in others) over an ad unit. So far, they’ve sold AT&T, Liberty Mutual, and the Honda dealer group in Dallas. They will sell in both local and national ads; it’s too soon to know what that mix will be, but they anticipate about an even split.

This is a model I like and one I’ve been pushing with companies I know: You could look at this as an ad with content attached or as content with an ad attached. So the blogger gets an ad, revenue, a some small dollop of content, and an association with a major media brand (which some still value). The station gets to push its advertiser as well as its content and brand and gets an association with those cool bloggers and its gets new inventory and audience. The advertiser has a better idea of the environment because there’s content next to the ad and because the station picks the blogs. What’s not to love?

The CBS unit also carries the local station’s branding plus a link to a pitch to join the network. Here are examples of the units.

I spoke with Jonathan Leess, president and general manager of the CBS station digital group, and Aaron Radin, senior vp for their ad sales and biz dev. They understand that this is not just about driving traffic to CBS domains but about reaching audience they may not now serve in other places. That’s the attitude.

I had to pull numbers out of them like baby teeth. They’re telling the bloggers to expect an effective CPM of about 50 cents but they quickly acknowledge that they’re subsidizing and backfilling the network, which is brand new. That is, they’re not yet selling the high-value ads and they’re not selling out, so they are putting in lower-value advertising in some cases and throwing in a subsidy on top. So that’s the net-net bloggers can expect today. But that’s not the value they’re selling to advertisers. That, they said, is more like a $10 CPM (though all life is negotiable). Compare that with $8-20 CPMs on CBS domain banner ads and $16-25 on video inventory. If they can sell a CPM approaching a double digit for local blogs and sell through enough inventory, that could be healthy. In the end, I ask, what will the value of a network impression be relative to a CBS domain impression? Again, it’s too early to say, but Radin guesses one third to one half.

They hope to add 20 million incremental (that is, new) ad impressions per month per market, though they’re quick to add that their goal isn’t just ad impressions but also new audience. Amen. And note that they’re pushing not just web pages but also those high-value video views. Leess and Radin said they serve 20-25 million streams a month, about half of that from the stations’ sites and half from syndication to Yahoo.

By the way, Buzzmachine is not local so it won’t qualify. Drat. When will somebody start that media wonks’ network?

The biggest news of the week — well, besides the governor-erect (hat tip to the New York Post) — was not AOL’s purchase of Bebo or Yahoo’s embrace of the semantic web (about which I remain skeptical) or certainly Lacygate. No, the biggest, most game-changing news went by without a great deal of notice and that Google’s announcement of a free ad-serving platform.

Google Ad Manager is one critical piece in creating the open network of networks where any site can take any ad and any marketer can advertise on any site. When that day arrives, we all become atoms that can attract to one molecule or another, no longer locked into one network. We start to see a truer marketplace for online advertising. We also get to see small sites gather together in large, ad hoc networks to compete with big sites — and this, I believe, will encourage and support the creation of more small sites. God’s work. Or now Google’s.

The creation of a standard ad call — which any site can use and into which any advertiser can place an ad, which in essence is what Google is doing — is the foundation of what I envisioned when I called for an open-source ad infrastructure.

There’s just one issue: It’s not open-source. And it’s Google’s.

Google’s benefits are clear: By offering free ad-serving to sites, it has an opening to be on many more sites, and when they don’t have ads of their own to serve, Google can serve AdSense and make some more money. Google also gathers incredible data about ad performance and pricing and about the sites themselves. One big problem with its program is that it doesn’t share that data with the publishers and let them use it to more efficiently serve its ads. It also doesn’t share it with advertisers and let them take advantage of a more transparent marketplace.

No, Google’s holding onto that information itself and, once again, becoming smarter than all of us. And I say that’s our own damned fault for not building our truly open ad marketplace. It’s not too late, but it soon will be.

The closest thing we have to an infrastructure for such an open marketplace is OpenX (nee Openads, nee phpAds), a free and open-source ad platform now serving ads on 30,000 sites. What’s needed — and I told CEO James Bilefeld this when I met him sometime ago — is that all those separate sites should be tied together into an open network so advertisers can pick and choose where to place their ads. The other thing it needs is standard metrics so advertisers can decide where to buy.

Now Google promises to build that cross-internet ad network with Ad Manager. And Google has the metrics — only, again, it’s not sharing. It lets sites target ads on the most basic of criteria: geography, bandwidth, browser, browser language, operating system, and domain. Whoop-dee-do. Each site can use its own information to target. But it’s the cross-site information that is exponentially richer and it’s Google that sits in the catbird seat where that is visible.

We should be able to target on so much richer information: the cross-site behavior of users (that’s the basis of Tacoda, just bought by AOL); their influence (that’s part of the sauce cooking up at 33 Across, where — full disclosure — I am an adviser and investor); their place in the timing of a conversation (meme starters, meme spreaders); their own characteristics (what do the demographics of authors tell us apart from the demographics of audience?); their authority (too bad Technorati never found a way to exploit that for bloggers’ benefit); and so on. This is about moving beyond eyeballs to brains.

But I wonder whether entrepreneurs will be able to start building some of this structure atop Google’s Ad Manager: analytics companies finding the ultimate network of soccer moms; ad agencies or media companies putting together ad hoc networks. This will create greater efficiency and thus greater value. And it will tie together a distributed community of interest into a critical mass advertisers will pay attention to: the mass of niches. And that, again, will support the creation of a new wealth of content and communication; that’s what I want to see.

On a less momentous scale, the Google move also reduces the cost of serving ads to zero and that will have benefit for sites of any size. When I worked on sites that were DoubleClick clients (which will still charge for serving as it becomes part of Google… for now) it was too expensive to serve even our own promotional ads because we had to pay DoubleClick to do it. Now sites can use their ad inventory in new and more creative ways. That, too, is a benefit of Ad Manager.

Altogether, Google is simply doing what Google does: creating a platform. That benefits all its users and it benefits Google by putting it at the center of the market. But the more closed that market is, the more it benefits Google over the users. And the more Google becomes the sole standard, the more it can successfully make it closed. So if we’re going to create an open ad marketplace, now’s the time. If it’s not already too late.

I’m at the Always-On OnMedia confab in New York (yes, another conference… life is a conference). I’ll not liveblog it; after DLD and Davos, I’m liveblogged-out. This one is focused on investment and that’s good; that is the mother’s milk of innovation. But I’m frustrated that the people on the stage — as innovative as they are — are still thinking in old media terms on the internet.

They think it’s content. “The perceived economic value of content is approaching zero,” said Drew Lipsher of Greycroft. The reason that people come on the internet is for the content, says Jim Spanfeller of Forbes.com The problem with that, I think, is that the internet is more about connections and relationships — that’s where the core value is and content is a vehicle for that. This is like measuring the value of a car based on how much we like the seat. We don’t value cars because we can sit in them but because they get us somewhere. We’re valuing and measuring the wrong things.

They think it has to be big. Eric Hippeau said that critical mass for advertisers to pay attention is growing from 1 million to 3-5 million users. Jonathan Miller is waiting for a blockbuster hit on the internet that spawns sequels and t-shirt sales. That’s still treating us like a mass. That’s still about lazy advertisers who want to buy upfront and don’t want to converse with us as individuals or at least communities. We need advertisers’ money; that will be the primary support of online media. But we need to both retrain them and give them the infrastructure and data to enable them to market smarter and create meaningful relationships — and, in the process, support small instead of big. Part of that infrastructure is technology to enable better measurement and sales. And part of it is putting together curated networks that do make buying advertising easier.

They think life is neat. We’re still hearing this red herring about advertisers not wanting to be associated with bad things online. Name a brand that has been truly ruined because a banner ad appeared on a porn site. Name one. Oh, yes, there’ve been teapot-tempests — boiled by media — about a banner that ends up on a neonazi page but, c’mon, no consumer is going to assume that the brand is Nazified. The answers to this are first to recognize that life is messy and second to use networks that curate content. The draw of being included in that network and getting its money will be the thing that keeps the content safe. But, hey, advertisers, life is not neat. Shit happens. (Oops. I said shit. I guess the ads on the right will be disappearing.)

They think this is about selling. We’re still hearing about standard ad models and measurements. But someone on the panel pointed to Nike, which is moving away from CPMs and GRPs and heading to providing the infrastructure for communities to do what they want to do. Nike is turning from a manufacturer and marketer of products into a platform.

I don’t mean to say that everyone’s in the past and issue a they-don’t-get-it rant. Indeed, these people get it more than most. I’m just saying that the online life is — pardon me — differenter than we yet realize. The very model of media is only starting to come into focus. We think. We hope.

I heard vindication for my advocacy of the network model of media online in today’s DLD panel on ad exchanges (aka networks) with Samir Arora of Glam, Christoph Schuh of Burda, Magid Abraham of Comscore, and others. Randy Rothenberg was moderator.

One of the most controversial posts I’ve ever written — politics and Dell aside — was about Glam and its network model of media, arguing that in the connected internet, this will be a major factor. Some agree. Some disagree. The ones who disagree are generally from big, old media and it seems they find the network model threatening. They sell their premium on being brands and destinations and they fear — but shouldn’t, I say — this opening up of their space. See my spat with the Times’ Martin Nissenholtz at the Online Publishers’ Association in which I argued media should be asking “what would Google do?” — WWGD? — and thinking distributed while Martin argued this his brand is worth our trip to it. Those folks argued with me that only they could sell quality because they owned their content; Glam owns little of its. One wonders, then, why the Times is now selling Freakonomics.

In today’s discussion, networks are critical to the future, Comscore argued, because without them, even the biggest online brands don’t reach that much of the audience that much of the time. The top four sites, the search monsters, have only 5% share of page views on the internet and 7% share of their users’ page views. So networks extend them. That is why AOL, Microsoft, Google, and Yahoo have been buying big ad networks.

But Glam is different. It is a content and ad network that curates blogs and sites for women and sells ads and shares revenue on them. Some say that because it isn’t produced by big media, its quality is low. But I heard today that Arora insists on no automated, Googly ads; they only deal with agencies. Networks online are often remnant space filled with dancing monkees. So he wanted to avoid that. When he took over Glam, he asked, “What would it take for advertisers to act on the internet as they act in traditional print?” He also asked: “What is the definition of media going forward?” His next frontier, he says, is to define prime time and prime placement on sites.

OK, so that’s his pitch. That’s just one network. My problem is that there aren’t more of them and that big, old media don’t sell them. Oh, they get involved in networks like Tacoda. But they don’t curate and enable and encourage outside distributed networks. That’s what I want to be a part of.

I’m at the Guardian Media Group’s offsite. Not planning to blog it. But I can’t help this: David Muir, CEO of WPP’s The Channel, gives the agency’s ad share projections for the UK. Online is now at 25% (far ahead of the U.S., by the way) and they predict it will surpass TV — and all other media — next year. But he cautioned that 79% of that online advertising goes to search. Google is God.

CORRECTION: I missed a step in the math. Muir says that search takes 79 percent of online advertising and that Google, in turn, takes an estimated 75 percent of that, three-quarters of three-quarters.

A story in today’s New York Post exposes the silliness, stupidity, the strategic blindness of advertisers, who insist on creating scarcity — and higher prices — where it does not exist (probably because that’s how their agencies get paid):

It’s a conundrum for advertisers: even as ratings fall, ad prices on network TV are soaring.

Although it seems counterintuitive, it’s the law of supply and demand. As the TV audience shrinks, advertisers have to buy more ads to reach their target number of viewers. But that increased demand for ad slots creates scarcity, which in turn leads to rate hikes.

This year, a number of factors conspired to drive up ad prices, in particular for advertisers that waited until the last minute to shop for ad time on the open “scatter” market rather than buying spots in advance.

In the fourth quarter, advertisers on average paid 18 percent more for primetime “scatter,” or spots purchased on the open market, compared with the year-earlier period, according to SQAD Inc., a media research firm that tracks TV ad costs.

At the same time, the average rating sold in the fourth quarter, when retailers are eager to reach holiday shoppers, was down 14 percent from a year ago, the figures show.

Of course, there are no end of new ways to reach that audience — and reach a more targeted audience. But that would require advertisers — and their agencies — to work a little harder and move past the one-stop-shopping of TV and upfront to putting together networks online. Actual work? Heaven forbid.

I screeched about this two years ago when advertisers complained about a shortage of inventory on Yahoo’s home page — when most people ignore home pages today. And the other day, I complained about newspapers still insisting on selling to big advertisers instead of creating an infrastructure to sell to a mass of small advertisers.

It’s their own damned fault, paying higher prices or missing new revenue. They keep assuming that the essential structure of media economics is unchanged. Silly advertisers. Stupid media. Nothing’s the same.

Zenith Optimedia came out with its regular report on ad spending (coverage at AdAge, PaidContent, and MediaGuardian). Online will hit many milestones:

We predict internet advertising to pass three milestones over the next three years. We expect it to overtake radio advertising in 2008; to attain a double-digit share of global advertising in 2009; and to overtake magazine advertising in 2010, with 11.5% of total ad spend.

That will put online third behind TV (37.5% share) and newspapers(25.4%). Nothing surprising there.

What strikes me again is how behind the US is versus the UK and Europe. Says PaidContent: “Britain, Denmark, Norway and Sweden are the only four places where online ads account for 15 percent or more of total spend, according to the TimesOnline. But Zenith’s projections say that will change by 2010, when the internet will comprise more than 20 percent in each of the same four markets and more than 15 per cent of the ad spend in ten other countries.” Adds MediaGuardian: “Internet ad spend is currently ranked behind radio globally but will surpass the medium’s share next year. In the more developed UK market digital ad spend passed radio last year.” Note that this occurs even though UK radio is better than US radio.

Why is the US behind? Is it that the national media markets in those countries are more competitive and thus, perhaps, innovative? Is it something about the culture of American agencies or advertisers — and if so, what? Is it the nicotine habit of TV upfront here? Is online just more of a pain to buy than upfront? The audience is shifting online faster than the advertisers. Online is more efficient and measurable and more competitive, thus less expensive. So tell me: why are we behind?

Your theories or, better yet, experience?

Now this is targeted advertising: I was looking at Platial — the site that lets you push pins into Google Maps — for something I’m writing and I found an ad there for the Sony GPS add-on to cameras, which lets you record your location with your photo, a cool device I saw in action at the Guardian. It’s perfect targeting — and, I’m sure, not expensive marketing — and it struck me that no Google algorithm would have made that placement. In fact, Platial would know best what plays with its audience. This reminds me of the discussion of sell-side advertising, the idea of the publisher picking the ads because it’s the publisher who best understands the audience and the context, and the advertiser pays on performance. It still makes sense; we just need the infrastructure to enable it.

The click-through will soon be dead or at least seriously wounded. Here’s a case in point:

In this morning’s NY Times, Stuart Elliott writes with unquestioning, even breathless acceptance (yet again) about another advertiser’s idiotic idea: a social site based around a cookie.

Now why the hell would anyone with half a life go to a site from a cookie company telling her how to make friends? Why, once there, would such a person tolerate such drivel as this:

10 tips for connecting…. 3 Practice random acts of connecting. Make an acquaintance more of a friend by inviting someone you want to know better for tea and cookies… 4 Make a friendship file. Just as you might for travel or shopping, clip and save items that remind you of a friend or activity ideas for future friend dates, and then refer to it when plan time comes…. 7 Have a laugh. After an ear and a shoulder to cry on, the gift of comic relief is one of the best you can give a friend in need. If humor’s not your forte, just commit one silly joke to memory to break out on these occasions. (Here’s one: Question: What do you call a boomerang that doesn’t come back to you? Answer: A stick.)

Oh, beat me with it.

But the ad agency made a fortune convincing the advertiser that they needed to get social. And the advertiser spent a fortune — $2-3 million, says Elliott — licensing this claptrap content and making this stupid site and advertising their advertising. And their PR company made a fortune writing press releases about it. And Elliott made, if not a fortune, then probably too much money yesterday rewriting that press release.

But it only shows the absurdity of such social brand advertising. Of course, this goes back to advertisers saying that they want their brands to be associated with certain attributes (cookies=connections) and so they advertise next to certain content; that is the brand advertising that makes the magazine and TV businesses churn. God bless it. Then advertisers wanted more control over content and so God the devil created advertorials. Then came the internet, where advertisers believed they could avoid all that damned media and expense by creating their own content: cookie sites and alleged underwear humor and chicken soup Goldfish for the soul, all linked today in Elliott’s story. And then came social: another buzzword, another revenue stream. Says Elliott:

Ad spending on Web sites like Bebo, Buzznet, Facebook and MySpace — by companies like Blockbuster, Circuit City, Coca-Cola, Microsoft and Sony — is expected to total $1.2 billion this year, according to eMarketer, a research company, and climb to $1.9 billion in 2008.

But think about it: You’re on one of those social sites, already being social with your friends, and so why are you going to follow a link and click to a cookie site to tell you how to be social? You’re not. And so the cookie company is, I predict, going to flop at its cookie site (once today’s rush of Times traffic subsides) and then it will declare that social doesn’t work and isn’t worth anything and it will return to buying upfront TV.

But, of course, they are doing this the wrong way — trying to make us come to them, and for a stupid reason — and they’re measuring the wrong thing — the act of coming to them: the clickthrough. Yes, that’s how all advertisers measure their the performance, the return on investment, the value of their marketing (whether or not they pay on clicks, they measure the value on clicks).

But now we move past the internet-as-a-bunch-of-sites to the internet as a place where people connect. Sorry, cookie company, but the people do this just fine without you and your silly advice. In fact, the internet always has been a place where people connect, only we — and I include me — in media and marketing were to egotistical to see that. So rather than trying to make people come to you and rather than trying to make them go to media sites where your brand is associated with the content there, you now need to go to where your customers are and not to irritate them with advertising but to help them with service, not to barge in but to be invited in. That’s what makes Facebook’s new recommendation advertising engine so intriguing: once you see your friends like something, what better advertising than that? Why click through; that’s already ad nirvana, right?

So the story about the cookie connection site is not that another clever advertiser has discovered social. The story about the cookie connection site is that it is the last absurd gasp of a dying media model, the idea that you can create advertising so compelling that people will want to click to come to you. Come now.

My Guardian column this week expands on a conclusion of mine about media from my Dell reporting. Snippet:

As the media become more dependent on advertising, so advertising becomes less dependent on the media. With the recent death of the New York Times’ pay service, TimesSelect, and the rumoured razing of the Wall Street Journal’s pay wall, any final hopes of readers paying for content are fading. We prophets of free content are being proven right - whether we like it or not. Advertising is all we’ll have to support content and media. . . .

But the real threat to the advertising gravy train comes not from any change in media, but from a fundamental shift in the relationship between companies and customers that has been made possible by the internet. This hit me like a fist in the face when I went to Texas to interview Michael Dell for Business Week magazine, and to write the coda to my very public blog battle with the company. . . .

Dell’s executives say their new problem is managing and spreading all this knowledge from customers. Its chief marketer said his new opportunity is to rely on customer-advocates to sell computers. And Michael Dell predicted a future of “co-creation of products and services” with customers.

There it is: the fist. Dell and its customers are collaborating on the creation of content, media and marketing - without content, media or marketing companies. Advertising is no one’s first choice as the basis of a relationship. For marketers, it’s expensive and inefficient. For customers, it’s invasive and annoying. And targeted advertising is only slightly more efficient and slightly less annoying. Clearly, the direct relationship between a customer and a company is preferable. But that direct connection cuts out the middlemen - that is the media.

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