Another new essay: the collapsing mass market

Here’s the latest in my ongoing series of essays, Local Media in a Postmodern World.

The Slow but Certain Collapse of the Mass Market

Television is all agog over “programmatic,” a web advertising method where advertisers bid — the ideal being in real time — on inventory for their ads. This usually results in higher rates, and everybody wins. But programmatic on TV is really just another form of mass marketing, so I have little faith in its future unless and until TV becomes a one-to-one medium like the Web. Then, of course, it will no longer be “broadcasting.”

It’s Time To Revisit Our Mobile Strategy

Here is the latest in my series of essays, Local Media in a Postmodern World.

Time to Revisit Our Mobile Strategy

While local media companies focus their attention on the creation of apps, the way most people are accessing their content is through the open Web. We simply must pay attention to how we are being viewed and apply creative efforts to monetize that. Most TV stations use content management systems (CMS) that serve complex web pages to users who click on links they like on Facebook, Twitter, Tumblr or any other of the major mobile apps people use. This is a self-destructive strategy, for not only do our monetization efforts go unnoticed; it puts unnecessary hurdles in user paths before they can read or watch the links.

Local” is Losing to Outsiders

cofc2Long ago, my friend Bob Papper, he of the RTDNA/Hofstra University Annual Survey on the state of local radio and television news, said something in a meeting I attended long ago that really struck home. “Television,” he said, “didn’t hurt radio by taking away their listeners; TV hurt radio by taking away their money.” He was talking, of course, about advertising and how radio “money” was shifted to TV, which had a dramatic impact on the industry. This wise observation is something we all should be considering today, as digital innovative disruptions are similarly now impacting even television.

Local television stations are currently meeting bottom line needs largely through cable fees that may not last forever. Cable is under attack from many areas, most notably the ability of customers now to go directly to the studios, the networks, and others, for example, via services like Netflix, YouTube, Vimeo and Hulu. They can get their programming through digital technology in what is called OTT (over the top), and it threatens to hurt cable by taking away its money, too. This is the sort Darwinian evolution of human advancement, where nothing seems to last forever.

But it goes way beyond that. I’m reminded of the wonderful question asked many years ago by John Hagel of the Deloitte Center for the Edge in a most interesting essay. “What if there is no equilibrium?” He was speaking of a business environment in constant flux due to disruptions that come left and right. I like Hagel’s thinking on this, and the uncertainty within the West’s entire advertising hegemony is evidence that we really don’t know what to do.

So once again, one model is being shredded by another, and the real issue is money. And we’re talking LOTS of it. Chambers of Commerce need to be very concerned about this, for the revolution in advertising impacts local communities in ways that are insidious and potentially very damaging. Advertising dollars being spent by people in your communities are leaving those communities today in record numbers, and all the signs suggest it will continue rising. According to Borrell Associates, a company that studies LOCAL dollars spent online, the lion’s share of money spent by local advertisers online today goes to outside companies, many based in Silicon Valley. Most of that is money used that to be spent with local media companies.

Digital advertising at the local level will grow, by our estimate, 42% this year. At that rate it would account for $2 out of every $5 spent by local advertisers. It’s grown to the level of dominance that newspapers enjoyed for years, until the late 1990s.”

But those dollars are not being taken in by local companies, as they were in the late 90s. Online “pure-plays,” and Borrell notes that there are “thousands of them,” are scooping up bigger and bigger shares of local dollars.

In 2015, these independent companies will account for nearly three-fourths of all digital advertising, elbowing out local-media competitors who have tried for two decades to use their existing sales forces to also sell digital advertising.”

These outsiders pay no taxes. They employ no local residents. They do not contribute to the local community chest. They don’t go to churches, shop at local businesses, or send their kids to local schools. They don’t buy Girl Scout cookies or contribute to any club, service organization, fundraising or charitable effort. They don’t support the local ball clubs or go to the State Fair. They are outsiders threatening the parochial nature of most communities, big or small, across America.

The reason I use the term “insidious” in describing this is because the local businesses spending their money with Google, Amazon, Facebook or whomever are actually contributing to their own downfall. It’s the ultimate shell game. Look here, move there. These businesses can’t help it, because Google works, and it’s cheap. They make everything SO easy. But what good is that ad on Facebook, if it eventually leads to a broken economy where you live? One day, we will wake up and discover that everybody has gone, because the money drain on our communities will force them elsewhere. Think I’m exaggerating?

To paraphrase Ross Perot, “That sucking sound you hear is the lifeblood of your community being drawn by vampires a thousand miles away.”

Local media companies are really at fault here. As Borrell correctly notes, they are all playing in the wrong stadium when it comes to online advertising. It is highly sophisticated, elegant, and oh so complicated. They don’t understand it, think it’s the “same game” that they’ve always played, and insist that their brands will protect them. These are all insidious lies that now threaten the status quo in Anywhere, USA.

As the people at Block say, “Wake up America! It’s time to get your billions back!”

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.