What is a digital media company’s “inventory?”

Sorry, but I can’t resist.

In a press release this morning from IB (Internet Broadcasting Systems Inc.) announcing a new deal with the Journal Broadcast Group, IB CEO Elmer Baldwin said, among other things:

We’re helping them to discover new ways to monetize their growing digital inventory.”

This statement represents the group delusion under which legacy media companies operate, that an advertising “slot” on a website is inventory to be sold. The problem is that media companies don’t sell “inventory,” per se; they sell audiences, or more specifically, the eyeballs that might view that “inventory.” Many will accuse me of playing semantics, but it’s actually much more basic to business. The price for which this inventory is sold is based on CPM or “cost per thousand.” Thousand what? Thousand pairs of eyeballs. If, for example, the price the advertiser pays is “$10 per thousand,” then the media company gets 10-bucks when a thousand people view that ad as demonstrated by its logs. But the CPM model was created in the mass marketing days and works well when we’re dealing with significant numbers of eyeballs AT THE SAME TIME! It is a terribly inefficient and ineffective formula when applied to what is really a one-to-one environment as opposed to one-to-many.

I have stated ad nauseum that the only winner in these kinds of scenarios is the software serving the ads, because it captures and uses all of the data gathered while serving the ads. Eyeballs in the network increase in value in direct proportion to the data that’s attached to them. And so media companies play this “digital inventory” game as though it was the same game they play with their legacy properties. It’s understandable, of course, but that doesn’t change the reality.

Moreover, what this deal is primarily about is banner advertising. That’s the “inventory” — availabilities or “open slots” for banner ads on a media company website. The format has been dying for years, but if you’re a media company, it’s what you have, and so you make deals like the above and hope for the best. In addition, there’s the assumption that this “inventory” is growing, and that’s an important concept for mass marketers. We’ve never met a number that we didn’t think we could manage our way into making bigger. This is what leads media thinkers to ignore the invasive user experience in favor of tactics that produce more of that “inventory,” tactics like splitting web documents into multiple documents that challenge even the most patient consumer. The user experience MUST be number one, or the eyeballs that we think we can count on will go elsewhere.

The Web is NOT a mass marketing tool, despite what certain “experts” would lead us to believe. It certainly can mimic the properties of mass media, but the truths of everything important to business models lie hidden within the code that makes up the back end of what we offer. Silicon Valley knows this and is happy to play along with the “digital inventory” game, while picking our pockets at every opportunity.

IAB “Guidelines” Serve, well, the IAB

And behold, NYU professor & guru Clay Shirky pronounced that “Institutions will always try to preserve the problem to which they are the solution.” In that spirit, let us take a brief glimpse at the IAB’s new guidelines for <drumroll>Native Advertising</drumroll>. Native advertising  - a.k.a. “content marketing” — is an advertising disruptor. It is so, because its essential purpose is to, um, replace advertising by delivering content, real content that was paid for by somebody, presumably someone featured in the content. The IAB is the Internet Advertising Bureau, as in its middle name is spelled a-d-v-e-r-t-i-s-i-n-g.” They offer six guidelines, only one of them remotely content-related. The rest are, of course, advertising in a different suit.

The IAB laid out six core interactive ad formats that are currently being used within the native advertising landscape:

  • In-feed units
  • Paid search units
  • Recommendation widgets
  • Promoted listings
  • IAB standard ads with “native” element units
  • Custom

I won’t go into details about these. I simply wish to point out that only “In-feed units” smacks of content, but please, must we call them “units?” To qualify as content marketing, which is what “native advertising is,” it must present content, not an ad. But in order to really produce a useful set of guidelines, the IAB would have to sell against itself, which it’s not about to do. And so we get things like guideline number 5: IAB standard ads with “native” element units. Right. In other words, define it any way you wish, just as long as “IAB standard ads” are included. I just thought I’d point that out.

Should we really fear native advertising? Really?

We're not all dummies that need protectionThe principal reason that innovation in the media space is so problematic today is that we’re in the midst of a cultural change at the same time. It appears that technology is causing the changes, but the reality is that these are due to people using technology, not technology itself. If it was simply technology, whole industries wouldn’t be influenced as they are, because we could adapt to those new technologies. This is the false assumption that drives the status quo in the West.

The brilliant Farhad Manjoo, for example — a technology columnist for the Wall St. Journal and one of the most astute observers of the technology world — got it wrong recently in a piece about native advertising, because he didn’t or couldn’t connect the dots to the cultural shift. He makes a strong argument that native advertising is inherently evil, because eventually, web surfers (a.k.a. “users” a.k.a. “people”) won’t be able to tell the difference between what’s content and what’s advertising.

When ads appear as part of content (as in product placement), they sneak past our defenses; they don’t look like ads, so we aren’t as skeptical of them.

The online-ad marketplace is ferociously competitive, and given the wild scramble for ad dollars among Google, Facebook, and Twitter, not to mention smaller media sites, advertisers are in a position to keep asking sites for more. If they begin to notice that ads marked “sponsored” aren’t doing as well as they used to, they’ll demand fainter disclosure, and they’ll get it.

Note that Twitter calls its ads “promoted” messages, which is hardly clear. BuzzFeed calls advertisers “featured partners,” which sounds more like an award than a paid relationship.

I can’t solve this problem. I think native ads are sure to get blurrier about their provenance. It’s too late to stop that now. But I sure hope advertisers, publishers and ad networks will be extra careful about how these ads are implemented.

This reasoning sounds familiar, and, well, reasonable. It’s logical. It makes sense. But hidden within its thinking is a leftover remnant from an archaic cultural bias — that “the masses” are incapable of self care, including the ability to avoid hucksters and con artists without help from those with superior minds and positions. This view is straight out of the dominant social construct of the industrial age and before, colonialism (I reference it as “modernism” in my work). Wikipedia defines it thusly:

Colonialism is the establishment, exploitation, maintenance, acquisition and expansion of colonies in one territory by people from another territory. It is a set of unequal relationships between the colonial power and the colony and between the colonists and the indigenous population.

Colonialism is a hierarchical culture wherein the haves justify their position via the false claim that the have-nots actually need them, and this is what’s absolutely gutted by the horizontal activity of the network and the immediate access to knowledge via a touch. So Manjoo sees danger, because the poor masses are too ignorant not to be taken in, and therefore, require a system — naturally run by the elites — to protect them. The whole idea of objectivity, where journalists swear some internally-governed oath to “be” unbiased in their reporting, is, in fact, a farce, created by the social engineering geniuses of the Creel Committee to provide a sterile environment in which to sell advertising, including their own views of society.

This is a central theme of two of my books, Reinventing Local Media, Ideas for Thriving in a Postmodern World volumes I & II. I just slipped in a native ad, right? Who cares?

And don’t you think we all know or suspect the truth about which I wrote earlier this year, that We’re All Shilling For Something? When the camera zooms in on the Chevrolet logo on the grill of Hawaii 5–0’s hot Camero, do you honestly believe that it isn’t seen for exactly what it is? Again, who cares (except that it makes for crappy TV)? And in the same show, when scenic shots reveal Diamond Head in all its glory, is that not to compensate Hawaii for the state’s help in filming the program? Who cares? When Buzzfeed mixes a “featured partner” in with its list content, why does Farhad Manjoo care? Nobody cares, and where’s the evidence that caring matters one whit anyway? Again, arguments suggesting that this is a serious problem don’t hold water, if advancing the horizontal culture is the aim.

We could go on and on, and the question “who cares?” would remain. It’s time we began giving credit to the masses for lessons learned and lessons passed along. The gossip magazines at the grocery store checkout tease us and titillate us. Do they honestly believe we don’t know it? The underestimation of everyday people is the greatest sin of contemporary hierarchies, and it will not be tolerated for long.

The reason this is so important for all of us is that this colonialist cultural view will never produce new forms of value, which can then be exploited for the bottom lines of media and beyond. It has its established values (cash) and must, by its nature, reject attempts to alter its basic tenets. Doc Searls’ Project VRM is not of the status quo, and therefore its core competency and value propositions are completely different. It turns advertising upside-down by bringing ad messages from consumers into an arena within which there is bidding for commerce. This fits the post-colonial culture, because its energy is disbursed sideways, not top-down.

The 21st Century will be known as the century when major laws and rulings will more clearly define the disruptive nature of knowledge and information in the hands of the masses. Right now, we’re just guessing, but I’ll take even a guess over insistence that everything’s fine.

We must not and cannot look at 21st Century doings through 20th Century eyes. The world has changed and everything in it. And it’s only just begun.

The problem with RSS

RSS logoGoogle shuts down its RSS reader soon, and this has the usual suspects talking about what’s “wrong” with RSS. I’ve written much about the technology, and I’ve always been an enormous fan. Dave Winer basically invented the concept of moving content around the Web sans formatting, and it’s always “worked” for me. I built aggregators in Nashville that were enormously popular among the web crowd, and I’ve supported Dave at every turn. Dave likes news rivers, and I do, too, but I don’t believe that’s the best use of RSS. One of the interesting things about RSS is its versatility, as Dave explains:

…people who believe in mailbox-style RSS readers are in a RDF. If I say “I like a river style of news” they almost explode in passion and sometimes rage. They tell you what they need. At length, in great detail. I never understood why they do this. But I have found the solution. Just say ‘Hey I can have a river and you can have a mailbox and the earth will still revolve around the sun, birds will sing in the morning, people will fall in love and have babies, etc etc.’ My getting what I want won’t effect you getting what you want.”

In my view, RSS is an XML software that stands alone in the distribution of unbundled media. The reason it hasn’t blossomed into what it could be is that the people who make the content that we presumably want to read/watch make their money via THEIR infrastructures, not the content directly. Therefore, they are disincentivized to participate in anything that lessens the need for that infrastructure. This has led to media companies using the “headline and couple sentence” format in their RSS distribution.

Imagine Twitter being handled this way. Instead of 140 characters, everybody sent just 40 characters, with the requirement that the user had to click on the Twitter item in order to read the remaining 100 characters. Obviously, that would be a pain-in-the-ass, and Twitter would soon cease to exist. This is different than tweets that contain links. In my example, access to the link would be beyond the first 40 characters. To me, this has been the misuse of this great piece of technology. I profoundly believe in full-feed RSS. To me, that’s its most powerful product, and until we find a way to play in that environment, RSS will never reach its full potential.

The dawn of so-called “Native Advertising” could bring with it a market for distributing this kind of content via RSS, and that might open the flood gates of revenue for entrepreneurs and those who make the content.

I’m keeping my fingers crossed.

Borrell: BIG spike in promotions spending

New data to be released later this week by Borrell Associates reveals a skyrocketing spike in advertiser spending in the “Promotions” category as compared with advertising. Another eight percent increase this year will put promotions spending at $630 billion, over twice that of advertising spending. Borrell’s promotions category has long been a barometer of advertiser spending related to the Web, and this dramatic increase includes the raging hot category of content marketing.

Promotions' spending skyrocketing

To be fair, Borrell’s promotions category is very broad and includes a great deal of different types of spending, including coupons and discounts. Borrell research guru Kip Cassino likes to refer to a discount deal on a can of peas. The money spent to tell people about the discount would be advertising, but the price difference between the can of peas before the discount and after comes from promotions. However, the category also includes efforts by companies to recruit customers online.

Now that business and industry are able to function as media companies themselves, their spending habits are shifting. The Content Marketing Institute reveals the kinds of tactics that businesses are using with consumers. The graph below shows that social media, articles on their websites, eNewsletters, videos and blogs are the top ways businesses are using to reach customers.

CMI tactics 2013

The Borrell report shows a flattening of advertising, which ought to speak to those in the pure advertising business. Advertising is not going away, but the growth is clearly in promotions. Looking ahead to 2017, the report projects that digital promotions will begin to close the gap on digital advertising, growing at a rate of 150% compared to 90% growth in online advertising.

Borrell has always been ahead of everybody else in projecting what’s happening with businesses away from advertising, and this report is no exception. The company hosts its annual Local Online Advertising Conference March 4–5 in New York.

Brands need to emulate people

Stowe Boyd

Stowe Boyd

The brilliant mind of Stowe Boyd has come up with a concept that really fits something I’ve been struggling with over the last few months. The question is how do businesses function best in the network? Here’s Stowe from a GigaOm piece yesterday called “We’re at the customer support stage of social business:”

I believe that brands will try to look and feel as much like people as possible, online. For example, brands have their own Facebook pages and Tumblr accounts. A winning strategy of the near future might be to get Tumblrers to follow your brand’s Tumblr blog, and to make the posts look and feel as much as possible the way your prospective customers’ posts do. This is what is going to replace ads: following.

This is one of the most profoundly insightful paragraphs that I’ve read in years. Those of you helming media companies, for example, need to begin having blue sky sessions to define your company’s personal brand, and then you need to execute that brand across all forms of social media. Local media companies need to become experts at this, so that they can then lead businesses in the community in doing likewise.

At WLEX-TV in Lexington, KY, news director Bruce Carter handles Facebook duties throughout the day. It is experienced newsguy Bruce and his personality that speaks on behalf of his station and his newsroom on LEX18’s most important social media venue. I’ve long thought that this was a terribly smart tactic, because who knows the station’s wants and needs AND the news better than the news director? (Bruce was a client of mine when I worked with AR&D).

I’ve long said that all any business is in the network is a single node, just like everybody else. The network doesn’t “see” any company as bigger than any other node, for all are equal according to the Web. People follow people, or as Stowe is suggesting, people follow brands that appear as people. Here’s more from Stowe:

So the ‘answer’ to the issue of the future of advertising is already starting. Stop trying to advertise on mobile, and instead participate in the streams that people want to use on mobile, and people will follow your brands if you contribute to whatever it is the people are up to. I think this will have profound societal impact. And maybe less billboards.

I really have to applaud Stowe for this wonderful piece of thinking. And to you, dear reader, whether you represent media or any other business, please tune into this vibe. Your future is at stake.