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What Wikiasari Can Teach AT&T About Mobile Ads January 9, 2007

Posted by Bill in Google, mobile marketing, online marketing, Search Marketing, traditional advertising.
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On the heels of AT&T’s acquisition of BellSouth, the newly-ginormous AT&T announced last week that it would enter into mobile advertising. If all goes well, advertisers will purchase their first mobile ads through AT&T later this year; AT&T hopes to make several billion dollars in ad revenue (through sales of mobile, online, and TV spots) annually through 2012.

I, for one, think it could be a great idea for AT&T to serve as a mobile ad network. But if it wants to succeed, AT&T should start thinking about Wikiasari.

Wikiasari is an upstart search engine (still in development) from the people who brought you Wikipedia, the wildly-popular user-generated encyclopedia. Like Wikipedia, Wikiasari will rely almost entirely on its community–this time, to determine search results. (The initial sorting and ranking will be done by technology, but humans will determine the end product). Wikiasari, a culmination of sorts in user-generated content, is a real watershed in the history of media.

There are two ways that user-generated content has changed everything. First, it’s flipped the traditional platform/content dynamic on its head: in traditional media, content is king and platforms play a supporting role; in user-generated content, it’s not always clear which one is the star. Newspaper readers focus a lot more on the news than on the paper; moviegoers pay more attention to the movie than to the screen; but it’s the YouTube and MySpace interface–and not the bevy of amateur-produced clips of dancing beavers and shoddy personal pages–that really shine in the user-generated media.
A second change user-generated media has brought is a shift in the nature of the communications conversation. In the traditional world, mass-communication high priests (Hollywood, the press, Martha Stewart) talk to (or at) the media consumer. In consumer-generated media, users engage in a community-wide conversation, and the high priests are largely left out. “The one thing that I feel like I know how to do is build communities,” Jimmy Wales, co-founder of Wikia (Wikipedia and Wikiasari’s parent company), told Noam Cohen of The New York Times. “I mean people who know each other, who have discussions.”

User-generated content, in other words, is making the media world a lot less like the traditional mass media, and a lot more like the telephone–a medium for enabling consumer-generated conversation, in which the business ignores content entirely and instead focuses on building platforms that make peer content-sharing (i.e., phone calls) function a lot better.

Wikiasari is a major moment in this consumer-generated evolution. Consumer-generated search, even more than a consumer-generated encyclopedia, marks a shift towards consumers’ looking to a community for answers about their questions and needs, rather than looking to an all-knowing, ready-made information source. If Wikiasari takes off (and if it doesn’t, another wiki-based search engine surely will), it will mark a point at which the bulk of shared ideas comes from information-seekers turning towards their colleagues, rather than information being decreed from on high.

It would be well for AT&T to consider all this as it jumps into mobile advertising–at a time when mobile advertising is clearly failing to live up to its hype, and search is about to catapult consumer-generated media light years ahead. The two developments, after all, aren’t entirely disconnected. Users want their media to act like telephones; it’s clearly bothering them that mobile advertisers–who introduce unrequested, industry-produced content onto mobile screens–are trying to make telephones into the old media that everybody’s ditching. No wonder there’s a backlash, with 79% of online consumers bothered by the concept of mobile ads.

That’s not to say that mobile advertising has no future. For one thing, mobile ads can leverage the phone as a communication device, rather than trying to subvert it. That was the secret behind last summer’s “Snakes on a Plane” mobile campaign, in which mobile users sent friends a personalized message from an automated Samuel L. Jackson, demanding that the recipient see the action flick ASAP. The campaign clearly got the point that mobile is about peer communication–and 1.5 million “Snakes” calls were forwarded in the campaign’s first week.

A second way for AT&T to leverage mobile media is to provide phones that better enable the communication that the user-generated world craves. This could be as basic as improving mobile filesharing capabilities, or as sophisticated as helping two drivers in two different vehicles find one another via GPS. The bottom line is that the new-information consumers don’t just want to receive information; they want to communicate. And AT&T, which now owns Cingular and stands above a vastly huge telecom empire, is in a perfect position to offer that kind of capability.

If it’s thinking of going further into mobile content before the end of this year, AT&T should think seriously about the meaning of user-generated content now. And if it’s stuck for answers? I’d suggest it start its search at Wikiasari.

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The Bubble Bath December 28, 2006

Posted by Bill in Google, MSN Search, online marketing, Search Marketing, traditional advertising, Yahoo Search Marketing.
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For SEMs and online advertisers, 2006 was a bubble bath. The tone was set at the end of 2005, when Google paid $1 billion for a 5% stake in AOL. That put AOL’s total value at $20 billion, or $1,000 per subscriber. Later this year, Google paid $1.65 billion in its well-publicized acquisition of YouTube, a company with sixty-five employees, no profit model, and a bevy of illegally copied material (complete with litigious owners waiting in the wings). But perhaps the biggest of them all, the granddaddy of all bubbles, is Google’s stock price itself, which at press time was hovering at a 57.85 P/E ratio. Indeed, analysts are also finally starting to catch on to Google’s hugely overvalued stock. Into this mess splashed an acquisition that finally made business sense: the Publicis Groupe’s plan to buy Digitas.

True, Publicis did offer Digitas shareholders a 25% premium over the closing price when the deal was announced, but this reflects actual upside, rather than perceived upside. As search marketers we’ve seen firsthand for years how advertisers have shifted their spend from offline into search and other online media. As the general public has spent more time consuming media online, advertisers have realized that the accountability of an online campaign greatly surpasses that of a traditional campaign. Overall advertising is growing at 4-5% per year, while digital advertising is growing at 30%. That statistic alone justifies the 25% premium that Publicis paid for Digitas.

The next step for advertisers is applying the highly touted accountability of online media to their offline campaigns. This requires the keen analytics and robust technology typically found in digital agencies, and notably absent from traditional agencies. These capabilities include measuring spikes in search behavior and traffic in response to TV, print, and outdoor ads. An agency that specializes in all media, both online and off, will be able to execute on initiatives like boosting bids on keywords mentioned in TV commercials, and building microsites as landing pages where consumers can easily read more info and purchase the product they saw on TV. This integration poses another huge advantage for Publicis’ clients, as they will not have to coordinate between two separate agencies. These factors further justify the 25% premium.

It’s always risky to speculate on the future, but there are certain outcomes that almost certainly will occur in some form or other. “Convergence” has been a hot buzzword in the industry, the idea being that users will take control of their TVs in the same way that they’ve taken control of online content. This, in theory will enable advertisers to target video ads behaviorally, demographically, and by keyword. But this theory presumes that TV will still be the only device used to consume video. In reality, perhaps “divergence” is a better word, because media will be consumed not just on TV, but on computers, mobile phones, mobile e-mail devices, MP3 players, and in cars.

Keeping track of and optimizing each ad’s performance, across a diverse user base with a diverse media-consumption device base, all while deploying targeting options and other optimization techniques, will require an even more advanced technology and even sharper analytics. A digital advertising firm is far better positioned to deliver these assets to clients than an offline media firm. This is perhaps the most insightful element of Publicis’s move, and even further justifies that extra 25%.

Much has been made of Digitas’ client relationships having real value, but in reality, the Publicis Groupe and the other offline advertising giants don’t need to buy client relationships. They’ve had clients’ trust for years. What they need are the technology and analytics to deliver a full suite of advertising options to all of their clients, with greater accountability and the ability to scale as technology advances. That’s the real value that Digitas brings to the table.

Holding companies should not be focused on buying aQuantive or paying a premium for client relationships. Rather, they need to focus on acquiring smaller, privately held companies that have built leading-edge technology platforms, embraced a culture where the statistician is just as important as the creative director, and with whom they can bring their pre-existing customers to the digital upsell.

What a refreshing note to the end of 2006. Just when we all thought the bubbles were rising over the rim of the tub, here’s a move that will allow all parties to soak in real, not imagined, value.

Publicis acquired Digitas… Trends and the like… December 22, 2006

Posted by Bill in Search Marketing, traditional advertising.
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THE FACTS:

·        The digital advertising world, including search marketing, has brought a more detailed financial view of making media accountable to marketing departments.  Companies are embracing this.

·        Overall advertising is growing 4-5% in the US next year, digital advertising is growing over 30% annually (some have it as high as 50%)… Digital marketing is stealing share.

·        Clients are increasingly looking to integrate digital & offline advertising campaigns, and measure the interaction effects

·        Publicis recognized the ongoing shift of dollars towards digital marketing, and like all leaders… shot their arrow ahead of the target.

THE MARKET RESPONSE/ AFTER-THOUGHTS:

·        The Publicis acquisition will NOT fuel an onslaught of copycat acquisitions

·        Other online advertising companies don’t measure up in terms of Digitas’ long-term relationships with large clients and synergies with a major traditional advertising group

·        Everyone has been focused on aQuantive when they comment on the above, which seemingly makes sense since they are now the sole publicly-traded digital advertising agency.

MY OPINIONS:

·        There is a reason why aQuantive is trading at a 43.9 P/E, where as the traditional ad agencies hover between 16 and 29 multiples.  That reason is two-fold: their technology foundation and their focus on digital advertising.

·        The focus on “Digitas’ long-term relationships with large clients and synergies with a major traditional advertising group” as an acquisition synergy for other acquisitions in the space is off.   A sound and scalable technology foundation is imperative to managing digital marketing and search marketing campaigns profitably.   The handful of major agency holding companies own the worldwide advertising spend and all the customer relationships.  They don’t need to buy customer relationships… they have them and the trust of them.  They need the digital assets to capitalize on the shift in spend.

·        My opinion:  the holding companies should not be focused on acquiring aQuantive or paying a premium for customer relationships, they need to be focused on acquiring smaller, privately-held companies that have build leading-edge technology platforms, have embraced a culture where the statistician is just as important as the creative director, and whom the large holding companies can bring their pre-existing customers to the digital upsell. 

Why Yahoo Likes Newspapers November 28, 2006

Posted by Bill in Behaviorial Marketing, online marketing, Search Marketing, traditional advertising, Yahoo Search Marketing.
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November ‘06 will go down as the month the search giants got serious about newspaper plays. Google has unveiled plans to enter ad management for newspaper classifieds across 50 papers; last week, Yahoo countered by entering strategic partnerships–starting with collaboration on job classifieds, but set to expand into Yahoo help with newspapers’ maps and search presences–for 176 newspapers’ online divisions.

When you think about it, the Yahoo move seems surprising. Newspaper moves make sense for Google, which has long expressed plans for expanding into traditional media; and which, besides, goes for over $500 a share and has money to burn on new initiatives. But Yahoo’s poor Q3 performance, probable eminent downsizing, and “Peanut Butter Manifesto” that looks to streamline Yahoo’s activities, rather than expand them, makes a sudden shift into newspapers seems odd. It’s especially odd in light of the tough times that newspapers currently face, making Yahoo’s move into newspapers a change of course right into an ailing industry.

So my question for this week is: What does a troubled Yahoo see in a beleaguered newspaper business? The answer to that question, of course, lies in local advertising.

It’s not surprising that Yahoo would feel itself lagging in local. From its roots, Yahoo has been a leader in the general online world, from search to e-mail to online content. But leadership in general online services is very different from leadership in the local markets. Consider search: while Google nearly doubles Yahoo’s share of overall search (Google has roughly 50% of all searches, to Yahoo’s 25%), Google leads Yahoo by only a slim lead in share of local searches  (according to an e-Marketer study from earlier this year, Google holds about 29.8% of all local searches to Yahoo’s 29.2%).

That general search/local search split makes a good deal of sense, as broader channels operate in nearly opposite ways from local media. Most of the Internet–including search–is used to bring a wide, unknown world a little bit closer to you. That includes finding the Web site you don’t know about through search; it also includes letting you e-mail a friend you can’t speak to because you’re not in front of her. Services for the general Web focus on building better, smarter communication pathways to make a big world smaller.

Local advertising is something entirely different. Local channels focus on enhancing audiences’ participation in a corner of the world that’s already, quite literally, very close to home. Local media isn’t about making a big world small; it’s about entrenching people’s relationships with a world that already is very small. And so while winning in most Internet services relies on excelling at bridge-building across different locations and types of information, winning in local channels relies on becoming an extension of your particular locale. Google’s a powerhouse in global information-bridging, allowing it to take the lead in general search; but it’s Yahoo, which offers rich local information on its portal, that becomes a portion of users’ local experience, thereby reaping the rewards in share of online searches.

Yahoo understands this. And it also seems to understand that, at the end of the day, it’s newspapers that have the infrastructure to make themselves a part of the local scene in a way that globally-focused online players–including Yahoo itself–simply can’t. Newspapers have what Dean Singleton, CEO of MediaNews Group (which is partnering with Yahoo), refers to as “a huge sales force involving thousands of sales professionals”; they also have lots of local reporters creating enormous amounts of online locally-focused content. By tapping into those thousands of ad salespeople, Yahoo is able to capture local advertising markets it’s not built to capture on its own; meanwhile, by helping with the search presence of newspapers’ online content, it’s able to enhance the local results on Yahoo search (where that local content is now more likely to appear), without needing to create its own small army of local beat reporters.

In other words, Yahoo understands that it’s got two choices for expanding its local reach. It can either deliver more of its own local offerings–which will mean defying the Peanut Butter Manifesto by building a workforce to create more local content–or it can outsource its local workforce to the local experts (the newspapers), while doing what it does best as a global online service: serving as the network that takes information from the world’s many locations, and delivers that information to its users. By opting for the second choice, Yahoo’s managing to expand its local reach, while working less. Which is why Yahoo’s move into newspapers may look like it’s taking on more; but it’s actually a way to become more efficient by honing in on its core competencies. Far from being a dangerous expansion, that’s smart business.

Will E-Media Make It? November 20, 2006

Posted by Bill in Broadcast, Google, MSN Search, Online Auction Tips, online marketing, Search Marketing, traditional advertising, Yahoo Search Marketing.
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Last week, advertisers got their first glimpse of the e-Media Exchange, the auction-based TV (and other traditional media) ad-buying exchange initiated by blue-chip advertisers like Wal-Mart, and powered by e-Bay. The Exchange is said to be ready to roll in Q2 ‘07; the advertisers involved got their first sneak preview last week. And as I’ve said many times before, the Exchange is a revolution whose time has clearly come.

But at the same time, it still isn’t clear whether the e-Media Exchange will actually thrive. That’a an open question; there are forces acting both against and in favor of the Exchange’s long-term survival.

Let’s start with the forces against. To begin with, the networks don’t like the Exchange very much; and if the networks themselves don’t go along, the Exchange won’t work (it’s the networks’ inventory that the Exchange is selling). The networks’ reaction isn’t surprising, as the Exchange was created out of advertiser suspicion of network double-dealing when it comes to ad pricing: auctions, the Exchange members feel, are a more accountable and transparent way to buy media. Meanwhile, something else the networks have a strong reason to dislike is the fact that an auction would wrest pricing controls out of the hands of the networks, placing it in the hands of advertisers.

Then there’s institutional culture. The Exchange is an attempt to replace the traditional networks’ culture of lavish upfronts and martini lunches during ad buys. But while martini lunches might not foster transparent pricing, they’re an important aspect of networks’ tradition and corporate culture–and old traditions die hard. That’s especially true amongst large corporations, and the traditional networks happen to be large corporations (or pieces of large corporations).

Of course, martini lunches really do serve a valuable purpose. Television advertisers are spending enormous sums of money; and there’s a strong argument that large purchases are best done face-to-face. Even in the search world, the engines have reps who handle ad spend for larger clients, despite the fact that the actual ad purchases are made via online auction. And if there’s a need for a human interaction in the online auction of search, there’s no reason the same wouldn’t be true of online TV ad buys.

Finally, those behind the Exchange may have made a tactical mistake in declaring that they’ll start the Exchange as a place to buy remnant inventory. That makes sense politically, as the networks would never have agreed to let the Exchange start out by managing anything bigger that remnant. But the move also ignores a basic principle of how auctions work, and that’s a problem. To paraphrase what I’ve said many times, auctions are competitions over specific items–and to create a viable arena for those competitions, you have to offer something that people are interested in fighting over. But remnant inventory is definitionally the inventory that nobody wants; that’s not the kind of stuff that creates bidding wars, and so it’s not the stuff that makes for viable auction marketplaces.

OK, now why should the e-Media Exchange work? Because the auction networks have a record of creating clear and fair pricing. That kind of environment for buying TV spots would be an attractive change for advertisers who crave greater transparency in their ad buys. And if the advertisers are willing to fight hard enough for it, there’s definitely a chance that the networks will go along with the advertisers’ wish.

Meanwhile, the Exchange has made a smart move in deciding to start the program on cable TV. Cable TV is subscriber-based, which means that cable networks have demographic, geographic, and/or psychographic information that the standard networks don’t. That kind of data creates opportunities for the networks to slice and dice ad inventory in ways that clearly showcase each slot’s value. That, in turn, allows networks to charge more for the given slot, which is good for them; and it will also be able to drive more bidding wars over any given slot, which is good for the longevity of the Exchange, which is good for the advertisers. And initial success in a cable TV run will make the Exchange an easier sell to the larger networks, too.

One final note here: There’s no reason to assume that the Exchange is a guaranteed home run, just because it provides auctioned ad buys. Google and Yahoo have clearly shown that auction-based advertising can be a highly viable ad model; but there are plenty of auction media outlets that you haven’t heard of, simply because they died along the way. And whether the Exchange will become TV’s Google, or the next cutting-edge idea that lost because it was too ahead of its time, remains to be seen.

Why Yahoo Won’t Face Google In Traditional Media November 13, 2006

Posted by Bill in Google, Search Marketing, traditional advertising, Yahoo Search Marketing.
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With Google announcing that it’s launching both a newspaper advertising program and contextual radio ads, I’m left wondering if Yahoo will ever follow suit, rolling out a traditional media arm of its own.
For now, obviously, Yahoo in traditional media is out of the question. Yahoo’s facing tough times after poor Q3 performance, and it’s not in a position to extend its reach as dramatically as Google has. But that doesn’t mean traditional will be out of the question forever, and it’s a worthwhile question to ask.
I’ll save you the anticipation and get to the answer right away: the answer is no, absolutely not, Yahoo will never enter the traditional advertising space. I’ll explain why that’s so, but I’ll need to take a detour through the very non-traditional channel of the mobile Internet.
Along with Google’s new traditional ventures, recently both Google and Yahoo made advancements in mobile. Through Gmail Mobile, Google launched its e-mail service into the mobilesphere. Google also joined forces with Samsung and wireless provider Helio; together, the three now provide a satellite-powered Google Maps that helps you locate people. Meanwhile, Yahoo was pushing mobile ahead in a different direction: you can now deliver display advertisements via Yahoo Mobile.
These are very different paths to making mobile better. Yahoo’s mobile display ads will help mobile directly, immediately making it more valuable for advertisers and for Yahoo itself. Google’s mobile advancements, on the other hand, are more indirect; they’re focused on using mobile to get more value out of other channels-specifically, e-mail and social networking technology.
That distinction is consistent with the overall Google and Yahoo mobile strategies. A visit to google.mobile.com shows that Google Mobile services are essentially Google’s core online offerings (Google Search, Gmail, Google SMS, Google News and Google Maps) served up to your mobile device. That’s very different from mobile.yahoo.com, through which Yahoo Mobile provides online standards like e-mail and search, but also offers very mobile-specific items like mobile screensavers and ringtones. Again, Google’s using the mobile medium to get more use out of preexisting non-mobile channels; Yahoo, meanwhile, is embracing the mobile channel directly.
That’s a difference that reaches far beyond mobile. Actually, it’s a difference that runs as deep as each company’s mission statements. Google says it exists to “organize the world’s information and make it universally accessible and useful.” What that means in practice becomes clear when you look to Google’s oldest and most popular product: Google Search. Search organizes information and makes it accessible; more important, though, it creates that accessibility and organization by using a new channel (search) to improve the accessibility of an older one (the Internet). Which is the same strategy that we see Google using in Google Mobile.
Yahoo’s stated goal is different from Google’s. Yahoo aims “to be the most essential global Internet service for consumers and businesses”; it’s looking to be the world’s most powerful new-media empire. That goal makes each new media channel valuable in its own right, as it’s one more potential piece of the empire that Yahoo is trying to build. That emphasis on the channel itself is why Yahoo’s mobile strategy focuses directly on the mobile sphere by offering ringtones, and why Yahoo has built its own enormous publisher network–while Google’s publisher-related activities are limited to searching publisher sites and advertising on them.
And it’s this difference in goals that explains why Google’s a natural fit for the newspaper business, and why Yahoo isn’t. Running newspaper ads might be a divergence from Google’s stated goals of organizing information, but Google-managed print media is very much in keeping with using newer media models to enhance older ones. There’s really not much of a leap from using search engines to make the Internet work better, to using search thinking to make traditional advertising work better. Both tactics are about using one channel to improve the next.
But Yahoo isn’t interested in improving older media. Yahoo is focused on dominating in newer media. Which is why Yahoo would really have no interest in traditional advertising, even if the option were open to it. And it’s why Yahoo won’t enter the traditional space, even after it gets its house back in order. And finally, it’s why the underlying differences between Yahoo and Google are starting to cause the old online rivals to drift further and further apart–and why Google and Yahoo might not be rivals anymore in Web 3.0.