The power of personal media

I had the good fortune of spending a few minutes today with Amy Wood, the social media pioneering TV News anchor from Spartanburg, South Carolina (WSPA-TV). Amy has an enormous following online and was a very early practitioner of personal branding. Far more people in the market follow Amy than the TV station she works for, which is the point of working social media as a single entity over a “brand.” Her father recently passed away, and the outpouring of love she experienced online was absolutely overwhelming. Enjoy the next 16 minutes and learn a few of Amy’s secrets to success.

Social Media’s Antisocial Behavior

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

Social Media’s Antisocial Behavior

My old friend David Johnson calls advertising on Facebook “antisocial,” and I have to agree with him. It’s part of a much bigger argument about the nature of advertising in general on the Web, but for social media companies, it’s even more acute, because, well, they’re supposed to be “social.” Most advertising assumes a mass audience, as if presenting from a stage. However, advertising in a social environment is more like being at a party, and it’s very tricky, because nobody’s there to see a show. On the other hand, Facebook is experimenting with forms of content that are really ads, and I think this has great downstream possibilities for all media online. One thing is certain, changes in online advertising are accelerating, and we all need to be aware.

The WalMart reality: what Silicon Valley doesn’t want (or get)

There’s a certain arrogant but humorous P.T. Barnum flair that accompanies a core Silicon Valley notion that a company’s value is higher if it doesn’t have a growing revenue model. Fortunes have been made via this slight-of-hand, slipping beneath the cracks of common sense and traditional business logic. Money has that effect on people, I suppose. It reminds me of the head-scratcher in the mortgage loan portfolio foolishness that led to our economic collapse five years ago — that you could make a TON of money by selling bad loans. Huh?

The essential lure of technology and technology investments is big money fast, so the core approach of 99.99% of venture capital initiated start-ups is — and must be — top-down. It uses the global reach of the Web to dazzle everyone with numbers so astronomical as to set aside common sense. The trick is to build the scale rapidly to initiate dynamic value, regardless of whether the economics make sense. I got caught up in this game with my own Web start-up and lost. Our investors-cum-“advisors” took a perfectly sound, albeit bottom-up concept and destroyed it by switching it to top-down.

A fascinating CNET article alludes to the same problem with Facebook, and those of us especially in local media need to pay very close attention. Opportunity is knocking. More on that below.

Traditionally — at least in the U.S. — business growth has come through expansion: create something that works somewhere, and expand it elsewhere to grow the company. In this way, systems and processes are put into place that cater to the people who bring in the revenue. In some cases, it’s consumers; in other cases, it’s other businesses. Regardless, the interaction between the company and revenue is the tried and true method of up close and personal.

Walmart logos over the yearsWalmart is a great example of this. According to the Forbes Global 2000 list, Walmart is the world’s 18th largest public corporation and the largest public corporation when ranked by revenue. Wikipedia notes the company is also the biggest private employer in the world with over two million employees, and is the largest retailer in the world. It has 8,500 stores in 15 countries, under 55 different names.

Yet, it all started with Sam Walton opening Walton’s Five and Dime in Bentonville, Arkansas in 1951. Walton’s strategy for success was simple: make money by volume sales at slightly lower prices than competitors. Sounds familiar, right? He opened the first Walmart Discount City in Rogers, Arkansas in 1962 and began spreading outward.

In the modern start-up world, headquartered in Silicon Valley, businesses want nothing to do with 60 years for growth, and so everything is shortcutted in the name of scale. Scale without revenue, after all, provides only the illusion of business bigness, or the potential for bigness.

In the CNET article (Frustrated advertisers to Facebook: Take our money — please!), writer Paul Sloan says Facebook has become a victim of its own success. While Facebook users can interact and relate with anybody, Facebook itself ironically relates or interacts with very few.

It’s automating its process and using technology to increase efficiency. But that’s not the same as dealing with a human being; big advertisers are a needy bunch who want hand-holding. However, plenty say they can’t even find anyone at Facebook to take their calls — or their money.

Here, for instance, is Mike Parker, the co-president of U.S. operations of Tribal DDB, talking about his frustration with Facebook: “For the longest time, we’ve been trying to call Facebook to do business with them and there’s nobody to pick up the call,” said Parker. “They’re very focused on the consumer experience, and less focused on revenue and working with advertisers.”

And here’s David Smith, the CEO of digital agency Mediasmith: “Facebook just doesn’t seem to care. They’re still trying to grow this thing. The question is, do they want the big bucks?”

This inability to make contact in order to do business isn’t limited to Facebook either, especially from a local perspective. Have you ever tried to reach someone at Google to discuss business? I’ve actually spoken with someone at Twitter about local business, but the prices were so outrageous as to evoke only an odd form of belly laugh.

You see, when you build a business from the bottom-up, you have no choice but to immediately cater to the needs of the people who are paying you. Since venture capital supports Silicon Valley, companies are able to sidestep the issue in the name of generating scale, because revenue isn’t really the mission. Local media companies sit back and watch this happen without seeing the opportunity to seize the revenue while others are building the scale. I remember one media company owner who asked, after I proposed creating a local search portal, “Do you honestly think we can compete with Google?” In scale, glitz and tools? Of course not, but most definitely in market revenue, especially with a television station at its disposal to promote the site. Advertising at the local level, after all, is sold, not bought. I don’t care how sweet the social media application is, the opportunity for revenue is local, because the preponderence of the app’s use is local. Self-service ad software, no matter how simple it may seem, is no substitute for listening, interacting, and the occasional hand shake.

Advantage local media.

This bubble stuff feels eerily familiar

Celebrating after the AOL Time Warner mergerI was sitting in a conference room at the hi-tech incubator BizTech in Huntsville, Alabama with hopeful eyes fixed on the TV. It was January 10, 2000, and on the screen was the press conference during which the AOL and Time Warner merger was announced. I remember it like it was yesterday. Here I was trying to raise a million dollars for my own start-up, ANSIR (A New Style In Relating), and these guys were talking about a merger valued at $350 billion. AOL itself was valued for the deal at $165 billion. It was then and remains the biggest merger in business history.

I remember the excitement and the wonder of it all. Little did we know it was all just part of a big market bubble, and I remember especially this provocative line from Time Warner CEO Gerald Levin, a very sane, important and knowledgeable businessman at the time.

I accept that something profound is happening in the Internet space; I believe that. The new media stock-market valuations are real — not in every case, of course. But what AOL has done is get first position in this new world. Its valuation is real, and I am attesting to that.”

Levin’s attestation would later be proven wrong, and he would be forced out as the merged company shriveled under the blended brand. It is now a case study in why what Levin said is a bad reason to take such an enormous gamble. Walt Disney built his empire with what he called “the plausible impossible,” and I suspect that was at work here. Logic is great, the old saying goes, unless you begin at the wrong spot. Believing the valuations was what grew the bubble. Turns out that if it seems unbelievable, it probably is.

I’m recalling this today, because I’m feeling the same vibe as Facebook is about to approach Wall Street with an IPO valued at $100 billion, a valuation that’s roughly 100 times its earnings from last year. It sounds and feels oh so familiar.

So are we in a bubble? The always astute Mathew Ingram has a nice overview of the subject today that’s worth a read, although his conclusion tends to support those who feel we’re not.

So while some venture funds may be doing their best to inflate expectations and cash in on high valuations, that appears to be causing problems only at the small end of the startup pool — for now. Without any obvious signs of a public-stock mania that puts individual shareholders at risk, it’s hard to argue that we are in a 1990s-style bubble yet (although some critics fear that the new crowdfunding bill could accelerate the problem). Whether Facebook’s IPO triggers a broader inflationary atmosphere remains to be seen.

Dave Winer says we’re “definitely” in a bubble, and I believe him. I mean, look at the evidence. AOL’s model was based on a pre-Internet business model, one we know of as mass marketing. They could make tons of money, if they could just keep people inside their walls, a “walled garden” as many would later call it. When the fickle public disagreed, a new garden called MySpace sprang up. This social network could make money the same way, and for awhile, things looked good, until a young guy named Mark Zuckerberg took over with his Facebook. So here we are again, and the whole thing still hinges on the same value proposition, that Facebook can somehow keep those people within its walls. Old school media value, after all, is about controlling the infrastructure for content, whether its made by the New York Times, Zuckerberg or Joe Blow.

And for the last few weeks, we’ve been treated to justification and rationalization that Facebook is somehow different than its predecessors. The company paid a billion dollars for Instagram in what most (myself included) feel was an overpriced grab at real estate Facebook needed to be inside its wall instead of outside. But is Facebook substantially different that previous walled-garden approaches? Get real. It may have a few more bells and whistles and connections, but the core competency is the same. Web research and consulting firm BIA/Kelsey is hosting a webinar on the topic this week to probe this specific issue:

…questions continue to swirl about its (Facebook’s) actual worth and whether any company can justify becoming public at such a high value. The prevailing question: How will Facebook support this valuation…?

I don’t believe it can be justified, although lots of smart people who’ve doubtless done their homework will try to explain that it is entirely justified.

I’m sure Mr. Levin had done his homework when he made that infamous statement back in January of 2000, but at some point in a gamble, you must consider that you could be wrong, partly or as the AOL Time Warner deal proved, utterly and completely. So in addition to homework, what say we also consider common sense. We could also ask a few teenagers.

Everybody’s switching to Twitter,” a 17-year old family member told me. She used to be a pretty regular user of social media, but her activity has been shrinking for the last year or so. She doesn’t need Facebook anymore, and besides, “it’s pretty lame.” Think about that for a minute. It’s AOL all over again.

To everything is a season,” we’re taught. I wouldn’t bet on Facebook’s future if you gave me the money with which to do it.

Whither Apple: It’s the infrastructure, stupid!

Apple LogoIf you’ve not been following the work of Dave Winer recently, I encourage you to do so. He’s on an impassioned quest, to keep the Web itself open for future developers, and I think he’s onto something terribly important. As Silcon Valley companies like Google, Apple and Facebook continue to develop their business models, they’re doing so by trying to keep us within the confines of their own infrastructures.

That’s because infrastructure is where the money is in a world where we — you and me — are the product being served to a hungry hoard of people with deep pockets: advertisers.

This is a concept that Dave is pounding away at, because when we’re inside someone else’s infrastructure, we’re playing by their rules, and we’re trapped in a universe that will always default to the best interests of the owners. The Web, on the other hand, isn’t owned by a corporation, and it must remain as such, complete with its own infrastructure.

Apple’s odd introduction of OS X “Mountain Lion” to its biggest fanboy writer, John Gruber, yesterday is an example. Apple’s future is built onpushing everybody and everything to iCloud, which it will own and operate. Sounds okay for now, but we’ll see.

Facebook wants you on its servers and inside its infrastructure. Same thing with Google, although Google  is a different iteration of the same theme, because it gives the appearance of growing an independent Web — with Google’s “help.”

I think this is a big story that’s not going away, because Madison Avenue lives in the pipes and stitchery of media infrastructures. Mass marketing’s infrastructures are on the way out, but those offered by Facebook, Apple and Google are alive and well.

I still remember AOL and the remarkable statements made when it was purchased by Time Warner. AOL’s entire value was based on its infrastructure, a captive audience that still needed the Internet training wheels the site provided. As a result, I’m not convinced that anybody has the wherewithal to pull this off completely, because the more the cinch is tightened, the more it will feel like AOL, and the goodies will seem beyond its reach.

Let’s be careful not to give away tomorrow for the sake of today’s convenient experience.

 

An open letter to television managers

Dear Television Manager,

This letter is offered in good faith and asks some fundamental strategic questions that have probably already been on your mind. If not, this might be eye-opening. Either way, it’s my hope you will act on what’s stated here.

When I first began consulting nearly ten years ago, I was known for little sayings about news that people dubbed “Heatonisms.” Here’s the very first: “Revenue isn’t the problem; audience is the problem. Fix the problem.” What television did back then is the same thing we’re doing today, we’re trying to fix a secondary revenue problem while the real problem just keeps getting worse.

Television news just isn’t what it used to be, and it never will be again. We look at research proving we’re still the best advertising bang for the buck and completely miss the point that it won’t matter soon, because the trend lines are unmistakable. Viewing has been dropping for many years, and nothing is going to change that, absent some totally different way of presenting some local product.

The Project for Excellence in Journalism’s annual “State of the News Media” report earlier this year was straightforward about this:

The most basic problem facing local television news is that its traditional audience is shrinking. In 2010, audiences continued to decline in all three key time slots: morning, early evening and late night.

…A pattern noticed a year ago continued in 2010. Our analysis found that ratings dropped more sharply than share (emphasis mine) for all key time slots in most sweeps periods. Ratings measure the percentage of households with TVs that are tuned to a particular program. Share measures the percentage of people who actually have their TVs on at a particular time and who are tuned to a specific program. A ratings decline, while share holds steady, means a program has fewer total viewers but the same percentage of the available audience. To put it another way, one reason local TV news in the traditional time slots is losing viewers is because people are turning off their sets when the news is on (emphasis mine).

Why are they turning TV sets off during news time? Because “the news” is already known by the people formerly known as the audience. So we fiddle with managing revenue in an environment that needs — but doesn’t get — attention. Well, Terry, it is what it is. What would you have us do?

We are promoting a decaying strategy, so the first thing we need to do is to stop that, and nowhere is this worse than on the Web. We have websites. We use Twitter. We use Facebook. But our essential purpose in so doing is to be a better TV station online. Make no mistake about it, this is a dreadful error, for AR&D’s own research shows that up to 90% of a TV station website’s traffic is comprised of the station’s own viewers. We’re talking to a closed and shrinking universe. We brag when we beat our competition online with absolutely no sense of who that competition really is. We’re still competing with the other TV stations online, and how foolish is that? This is the same strategic flaw that produces convergence sales. The brand of a TV station is today both a blessing and a curse.

So, Mr. and Ms. Managers, lead the local TV cheers for your sales departments, because they won’t be inspired to sell otherwise, but let’s work on fixing what’s really broken: the loss of audience. Let’s begin with four simple acknowledgements.

  1. Television news as it’s currently presented is a dying beast. We can do lots of things to be top dog in our markets, but even the top dog is the equivalent of the last buggy whip maker. At AR&D, we’re working on some prototype program concepts, because we know that nobody’s going to come back for that from which they fled. Those people turning their sets off will never reverse themselves for the same old good-looking people with boxes over their shoulders. Online is the future (I consider mobile to be “online”), so let’s look there.
  2. Our online competition is not the other TV stations; it’s all the pureplay revenue grabs that aren’t bound by the rules of being a TV station online. The most important current and future use of our TV stations is to use them to promote our online offerings, and that’s smart strategy. That and feet-on-the-street are the only competitive advantages we have over those pureplays. Doing news online is a smart thing, but it needs to be in real-time across-the-board and not just Twitter and Facebook. News also needs to be aggregated and curated, and that means acknowledging the other news producers in the market. That’s what the pureplays do. They’re not encumbered by a local brand.
  3. We need to embrace the reality that content isn’t our “business;” advertising is our business, and we need to be immersed in the latest from the revolution in advertising. The biggest, most fruitful shift in advertising today is the sharing of risk. Google pioneered it (pay only for clicks); Groupon raised it to an art level (split revenue; no customers, no deal). However, I think the greatest innovations in this area are still ahead. Advertisers are the new media companies, and the idea of money for simple placement alone is slowly dying, unless you’re the Superbowl. Results are what the new advertising world wants, provable results, and unless we’re in there with those who are offering such, we’re simply going to be left behind. But this is an advertising problem, not a content problem, so content solutions won’t do much. If you believe that advertisements adjacent to content is the best business model for the Web, I feel sorry for you.
  4. Our content will be aggregated, and this is where we will compete with traditional and other forms of local media. We resist this at our own peril, and so the smart thing to do is develop strategies that make it profitable to completely unbundle our content from our owned infrastructure. We want our content aggregated. We want ours to shine among the rest. We want users to take our content with them and to interact with that at their convenience. We want to find new advertising opportunities within an aggregated environment.

The paradox of working in media today is that it’s both brutal and exciting at the same time, kind of like being at sea during a storm. The advice there is to keep your focus on the horizon dead ahead, for attention to the waves is will make you sick. Here, that focus must be on the truths made apparent by acceptance of certain big trends. Follow those and hang on for the bumpy ride.

There is a future, and it is bright.

Thanks for reading,

Terry