Archives for May 2008

Big broadcast news summit next week

Edward R. MurrowI’ll be in Chicago (actually, Naperville) next week for a “news leadership summit” produced by the Radio and Television News Directors Foundation and sponsored by the McCormick Foundation. The title of the event is: “Wires and Lights in a Box: Murrow’s Legacy and the Future of Electronic News.” This year is the 50th anniversary of Murrow’s famous “wires and lights in a box” speech, which explains the title of the summit.

Participants are a Who’s Who of broadcast news managers and leaders at both the network and local level. Edward R. Murrow is the patron saint of broadcast news and a powerful figure in broadcasting history, so you can usually expect good attendance when asked to meet in his name.

There’s a session on Murrow’s legacy, one on entertainment versus news, another on ideology/partisanship in the press versus an impartial press, and my panel, “What is the business model of the future?”

Here are the questions we’ll be exploring with my panel:

  • What will financial success look like in the future? What is the business model of the future?
  • How does the industry address the ethical and credibility concerns raised by the intersection of news content and advertising? Even Murrow had sponsors.
  • Will news operations continue to put news and public service over profit? How do news operations serve the public’s right to know and still say in business? Can public service journalism survive?

We’re also going to break into small groups (what would a conference be without small groups?) with the goal, it appears, of coming up with journalistic principles and standards to preserve for the future.

In all, it’s a pretty heady event, and I’m honored to be a participant. This has been my life’s work, and I appreciate the chance to share my thoughts. Besides, I really like to hear myself talk.

I’m always a little nervous, though, when an institution that’s being disrupted gets together to talk about the future. Broadcasting isn’t casting broadly anymore (to borrow a cool phrase from Scott Collins of the LA Times), so there’s a niggling sense that we’re heading for mediasaurus land. It’s natural that we’d turn to each other to try and figure things out, but it might be better to talk with those who are actually doing the disrupting.

I like to use a whale oil industry metaphor. Let’s go back in history to the annual whale oil industry conference, with the industry in the midst of disruption from electricity. Rather than seeing that they’re in the home lighting business, the whale oilers can only see electrical power in ways that will help them either extend the whale oil business or do it more cost-effectively — for example, by creating an electrically-powered harpoon (it cuts the manpower costs significantly, you see). So rather than invest in electricity for home lighting, they press forward to protect the bottom line. Nice, huh?

I’ll blog as much as I can from Naperville, and if you’re going to be there, I look forward to saying hello.

Online ad revenue growth exploding

I don’t write much about web growth anymore. I even gave up on web advertising growth stories a couple of years ago, because it seemed kind of foolish to keep saying the same thing. Anybody even remotely interested in the Web could tell that everything about it was moving northward (still is).

But the Borrell report below and a new study from market research firm IDC are too much to resist. According to the IDC report, overall Internet advertising revenue in the U.S. will double from $25.5 billion in 2007 to $51.1 billion in 2012. That’s right: double! Borrell reveals that local online revenues are growing “at a phenomenal rate of 50 percent this year” and that double digit growth will continue for at least another 18 months. His prediction that 2008 will be a $13.1 billion year for local online spending is in line with the IDC numbers.

A little context is in order. Television advertising in the U.S. is a $70 billion industry. While there have been a lot of doomsday predictions about broadcast revenues, I think that number is going to be around for awhile. But at $51.1 billion in 2012, web advertising revenue will be pushing TV. IDG actually predicts that by 2012, internet advertising will displace TV and be second behind only direct marketing.

Think about that for a minute.

Meanwhile, the report offers promise for those who already live in the world of video (can you say TV?):

Video advertising will be the principal disruptor of Internet advertising over the next five years by attracting the most new marketing dollars. Its revenue will grow sevenfold from $0.5 billion in 2007 to $3.8 billion in 2012 at a compound annual growth rate (CAGR) of 49.4%. This growth will take place because brand advertisers will shift significant amounts of money into these video commercials, primarily from broadcast television and to a lesser extent from cable television.

And these kinds of predictions are always based on current models. What happens if the Web finally figures out how to advertise for real? It is a very long time (in web years) between now and 2012.

The point is the Web is where it’s at, and the size of those numbers mean disruptions will continue to relentlessly pound the status quo, even if that status quo was only created yesterday. We’re in an incredible season of change, and nobody really knows how its all going to play out, if it ever really does.

But you already knew that, right?

What's with Google and Memorial Day?

Yesterday was the anniversary of the conquering of Mount Everest, and Google was Johnny-on-the-spot with one of its usual customized front door logos.

Google celebrates the Everest anniversary

I’ve grown accustomed to these cute logo treatments and have written about them before. It’s one of the things that makes Google Google.

But in the nine years since they’ve been doing this, they’ve not once acknowledged Memorial Day (at least from what my research can tell). What’s that all about, huh? It’s so obvious that it has to be deliberate, and I would love to hear the rationale. Protest war by not honoring those who’ve died? Surely that can’t be it.

There’s a pretty large contingent of bloggers who take Google to task for this every year. Please add my voice to the group.

For those who’ve missed my squirrels

I moved awhile back, so my porch squirrels are history. But that doesn’t mean the little buggers aren’t still a part of my life. Here’s what happened this afternoon in my backyard. I apologize for the crappy camera work. I’m SUCH an amateur.

The key to my home.

Pureplays now get 57.3% of LOCAL online ad spend

New research just out from Borrell Associates shows the continuing growth and dominance of local online spending by internet pureplay companies (like Google, Yahoo, etc.).
pureplays now get 57% of local online ad dollars

I’ve not seen the report yet, but here are a few lines from the press release:

The Pac-Man affect continues, with Internet pure-plays continuing to gobble share at the expense of print media, particularly Yellow Pages and newspaper publishers.

Meanwhile, the growth in local online advertising continues to outpace even the most optimistic expectations. We are projecting 50 percent growth this year — phenomenal, considering the sharp decline in retail sales. The recession appears to be an economic prod that is motivating the smaller local advertisers to abandon long-time spending patterns and seek out the most economical methods of reaching potential customers.

The pureplay companies are the real enemy of local media, because it’s all about ad dollars. Most companies don’t see this as priority number one, and I only hope they can get there before it’s too late.

MORE from the executive summary:

We expect local online advertising to reach $13.1 billion in 2008, up slightly from our initial forecast last December.

Part of the growth is being driven by traditional local media companies selling advertising on their own sites. Most of it, however, comes from pure-play companies delivering lowercost advertising that intercepts consumers not as they are reading news online, but as they are using the Web to research products and prices. The recession is an economic prod that is motivating advertisers to abandon their long-time spending patterns and seek out more economical methods of reaching potential customers.

Borrell predicts the growth will slow after another 18-month period of double digit upside. Indeed.

The Cost of Interaction

Here is the latest in my series of essays Local Media in a Postmodern World, and it’s a topic I’ve kind of “written around” over the years.

The Cost of Interaction is a simple concept with complex aspects pertaining to web design and content management, but for local media companies to be relevant downstream, we’re going to have to take a serious look at this.

Just as there are costs in doing business, there are costs in being a consumer. Over the years, we’ve witnessed businesses shifting some of their costs to their customers — think self-service gas, fast food, self check-out at the grocery store or telephone answering systems — but online is a different matter, for consumers have choices here than they don’t have in the “real” world. Therefore, pushing customers in this manner online is a dangerous proposition. A high cost of interaction means less value to users and fewer reasons to return. Conversely, the lower the cost of interaction, the easier and more usable the application, and that means a reason to come back.