Online video discontent — a rant

Eleven years after Microsoft established the standard for pre-roll video advertising at 7–12 seconds, the online video “industry” is still stuck on the idea that broadcast standards should prevail. This is a sickness, my friends, and it’s killing opportunities for legacy media companies who cannot or will not accept that the Web is a different animal entirely. I am so angry about this that I could spit, so I apologize ahead of time for the rant.

My dander is up over a piece on Digiday (great website, BTW) offering quotes from its publishing conference in Miami this week. The issue is pre-roll advertising, and the article is The biggest hurdles publishers face in monetizing digital video:

What’s your biggest challenge in monetizing video? In short, too many agencies are still trying to recycle their 30-second TV ads for the desktop and mobile. There are viewability requirements to be satisfied. What works for the advertiser often results in a bad user experience.

Why, oh why is this still an issue for us?

Let’s review. Legacy media did NOT invent the Web. Microsoft, a tech company, was ahead of the game back in 2004 when MSN created its “Video 2″ ad product and ventured forward in the field of online video. They may not have invented the pre-roll, but they studied it, pioneered it, and found in 2004 that 7–12 seconds was optimal length. Here’s the money quote from an article published in MediaDailyNews back then:

Hadley (Eric Hadley, director of marketing and advertising for MSN) said that ads on MSN Video 2 will appear “somewhat like TV ads,” except that only one 7–12-second video ad will appear for each piece of content. Hadley added that while consumers don’t necessarily need a broadband connection to view MSN video, the video capabilities are limited for narrowband users.

The day after I published my story on this, MediaDailyNews — at Microsoft’s request — altered the text of the article and changed that 7–12 seconds to 15–30 seconds. Why? Because that’s what Madison Avenue would go along with, and they controlled the money that would be spent via MSN Video 2. They wanted nothing to do with 7–12 seconds. I know this, because I investigated and spoke with Mr. Hadley and others, including those at MediaPost.

The point is that Madison Avenue is still calling the shots, while online legacy video companies are sinking fast, because people — as Microsoft knew 11 years ago — won’t sit still for anything beyond 7–12 seconds. Rather than accept reality, we chose to stick our fingers in the eyes of consumers, and now we’re upset because they’ve respond with ad blockers.

Here’s the thing. Corporations don’t have to change. They can do what they damned well please, including acting like fools in the face of compelling evidence of such behavior’s danger. If they do, however, they give up the right to whine — especially to the government — about matters that originate from this unwillingness to change, and that includes anything associated with the money tree they’re trying to protect.

I’ve begged people to open their eyes about this since even before 2004, but the industry would rather die than change, and that’s the truth!

End of rant.

Local Advertising Hits A Tipping Point

“(W)e’ve reached the end of the Golden Age of Advertising,” says pioneering media researcher Gordon Borrell in a new report that paints a very realistic picture of the state of local advertising. This report — Local Advertising Hits A Tipping Point — is a 5-year follow-up to a report published in 2010 and tracks the opinions of 7,228 small and mid-size advertisers (SMBs).

While there is a lot of between-the-lines conclusions to be drawn, here are just a few of the report’s findings. Remember, these are advertisers speaking, or it would be more appropriate to call them “the people formerly known as the advertisers.”

  • 82% of SMBs have established their own media channel in the form of a website or social media page.
  • Since 2007, spending has skyrocketed to the point at which businesses last year spent 72% more on marketing services and promotions than they had spent 10 years earlier. Meanwhile, the annual expenditure on local advertising was 22% less than it was a decade ago.
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  • 72% of those are purchasing digital services to support those channels, spending far more on those efforts than on basic advertising.
  • By examining IRS tax records, Borrell concludes that “if businesses were devoting the same percentage of this year’s gross revenues to advertising as they were 10 years ago, the advertising economy would be $56 billion richer.”
  • Online media appeals to the largest percentage of local advertisers and takes the largest share of ad budgets of any other media. This is a pedestal newspapers have occupied for over 300 years! “Over the next 12 months, the gap will almost certainly widen to the point that all traditional advertising channels — print, broadcast, outdoor and mail — begin to look like niche support mechanisms to a local businesses’ digital marketing plan.”Screen Shot 2015-06-10 at 12.33.49 PM
  • Traditional media has devolved into an option, selected by habit or by preference but certainly not by necessity.
  • Online is so strong that by 2020, Borrell projects that all traditional media will scramble to maintain a small set of advertisers who will spend small shares of their budgets with them.
  • Local businesses, on average, get 20% of their sales from online, versus 13% by the old standby, the telephone.
  • These businesses have just begun to become digitally savvy, according to a new metric from Borrell. 85% of SMBs fell short of a line considered “very active” in digital activity. What this means is that they are novices that somebody can teach and that the more savvy they become, the more disruptive they’ll likely be.
  • 82% of respondents maintain a social media page with an average of 2,123 followers, though 61% have fewer than 1,000. The report notes that growing their own audience base equates to real customers for SMBs, which is radically different than buying ads based on somebody else’s reach.
  • Native advertising (a.k.a. Content Marketing) is another area of satisfaction for SMBs, although its use is low. This equates to a growth opportunity for those providing a service.
  • Mobile is another BIG area of interest, although not in any traditional advertising sense. The projected spending categories for mobile relate almost entirely to SMBs own web franchises and include things like Responsive Design (mobile-friendly), search, SMS, proximity, apps and video.

With all Borrell research, it’s useful to take a step back and try to get a 30,000 foot view. What this report doesn’t say directly is that the levers of commerce in our world are shifting to the hands of businesses themselves due to the growth and development of a networked culture. The beauty (or evil, depending on your perspective) of the network is that it is a 3-way communications medium, which allows human beings to by-pass filters that the network deems inefficient and, frankly, now useless. This includes our entire cultural infrastructure of expertise divided into silos, the first of which is how we communicate. There will be others.

This Borrell report tracks empirically the shifts relating to the way money changes hands in the levers that grease of the skids used by businesses to reach customers and sell their wares. Those businesses are loudly telling us now — along with their customers — exactly how THEY want things done, and clearly that doesn’t include traditional forms of getting the word out. It’s too expensive. It’s too haphazard. It’s out of control in ways that we tend to disregard in the name of profit.

While I certainly respect the crisis that journalism may face in all of this, we’ve been our own worst enemies in the assumption that we could simply shift our model to the Web. It’s too late to effect any significant change in that strategic blunder, but it’s not too late to shift our focus to what we’re being given and away from what we want. That, I’m afraid, is the only logical path for the days, weeks, months and years ahead.

Meanwhile, Gordon Borrell will continue to apply his fascinating research to helping us understanding not only what’s going on today but also where that’s all headed.

The lesson of Bill Simmons and ESPN

bs_report_300The always astute James Andrew Miller, writing for Vanity Fair, makes an important observation for all media in his “Inside the Shocking, Abrupt Divorce of Bill Simmons and ESPN.”

In the end, one could say with minimal originality, but considerable accuracy, that Bill Simmons simply flew too close to the sun. He miscalculated how much value ESPN put on him and on his unique abilities and talents. He might also have forgotten a cardinal company rule that remains sacred whether it’s ESPN’s Old Guard talking or its new one: Nobody, but nobody, can be bigger than those four initials.

On the other hand, it could be said that Bristol forgot a kind of cardinal rule itself: In an era where fans can get not just scores but highlights, and a ton more, on their smart phones, distinctive and original content is the way to engage and hold onto an audience plopped in front of big 99-inch screens. That content often comes with a big price tag—and with a requirement that the people with unique abilities and talent who create it be treated like the stars you’ve paid for.

In a world of mass media, the single brand of the company rides atop every other marketing concern. This is a core Madison Avenue concept and the truth behind Miller’s statement that “nobody can be bigger than those four initials (ESPN).” In the next paragraph, however, he describes the truth of Jay Rosen’s The Great Horizontal, which is the newer and greater reality of today and, especially, tomorrow.

So allow me to restate what I believe is obvious. Media is increasingly about personal brands, because those are what’s permitted in the revolutionary conversation taking place among the people formerly known as the audience (another Rosen witticism). Even where brands are able to “act” like people, they are not, and this is the harsh reality of doing commerce in the age of the consumer. Harvard’s brilliant Umair Haque noted long ago that companies should be spending money on products instead of marketing, and his justification was this very thing.

This is why I encourage students and people already in the media industries to expend the energy necessary to create and maintain their personal brands. In the end, it’s the only thing that really matters in a networked world, where exchanges of knowledge and information occur at the personal level. The age of slick marketing is drawing to a close. You won’t be able to buy your way into anything downstream, because the process for doing such is slowly disintegrating. In 15 years of trying, Madison Avenue has returned to an old stand-by — one that empowered consumers have already dismissed — the pop-up ad. It’s truly amazing that, just like The Odd Couple, this tired old irritant is back with a vengeance. How true is the old saw that if your only tool is a hammer, every problem looks like a nail.

Commerce in the Great Horizontal will require great products and services and people willing and able to pass them around. There’s already the idea that “influencers” at the personal level are what product manufacturers need to buy, but that’s merely wishful thinking from the hammer known as Madison Avenue. I don’t have a map with the route from here to there charted, but the laws of attraction will be more useful than the laws of promotion.

The Fallacy of Reach in the Network

Mark CubanMark Cuban understands broadcasting, more specifically the value proposition of one-to-many. While he has his hands in many things, his fortune came through the sale of to Yahoo in 1999. He sold the company for $5.7 billion and the rest, they say, is history. So it’s really no surprise that Mr. Cuban is miffed that Facebook wants him to pay for the privilege of spamming sending messages to the many fans of his Dallas Mavericks. He told ReadWrite’s Dan Lyons that unless Facebook changes its current form, he’s moving his fandom to another form of social media: Twitter, Tumblr or even MySpace.

“We are moving far more aggressively into Twitter and reducing any and all emphasis on Facebook,” Cuban says, via email. “We won’t abandon Facebook, we will still use it, but our priority is to add followers that our brands can reach on non-Facebook platforms first.”

Cuban and other corporate Facebook members are howling because new rules on the social network make it harder for brands to reach people without spending big money on sponsored posts.

That’s because in September Facebook changed the algorithm that controls which messages get through to which members. The result is that some brands a sharp drop off in the reach of their posts — as much as 50% in some cases.(Emphasis added)

His problem is with the word “reach,” a one-to-many marketing term that describes the size of one’s audience. It also conveniently dehumanizes that audience by turning them into numbers for the serving of oneself. This is highly problematic in the 21st Century, because our culture is now a network, not a potential audience.

The value of one-to-many is the origin of marketing, so its roots run deep in the soil of hierarchical economics. If you can make your pitch to enough people at the same time, all sorts of wonderful things can happen for you. P. T. Barnum knew this, and so does Mark Cuban. The trick, of course, is to buy your way — or manipulate your way — in front of enough people so that other economic laws can work on your behalf. As I’ve noted previously, a stage is the earliest version of this, whether that was a big rock; higher ground occupied by the toughest and meanest; or a fancy theater where elegant plays were presented. The contemporary list includes newspapers, radio and the ultimate, television.

A great many people view the Web as the latest version of one-to-many innovation, including Mr. Cuban, and this is the kind of naïveté that is causing many to question his smarts (Hey Mark Cuban: Of course Facebook is charging you — what did you expect?). This belief completely misses the point of the Web, however, and leads its believers into very unstable ground in terms of creating value via the network. I’ve been writing for years that the Web can be seen as a form of one-to-many — especially in times of crisis — but at its essence, the Web is a 3-way communications tool, the first of its kind in the history of humankind. It’s a network, not a playground for one-to-many manipulation.

The idea of “audience” assumes a choice to get up and leave, but the reality is that most don’t. Another assumption is that even those who do leave can be wooed back, because while the audience has choices, they are limited. None of this is true with the Web. Choices aren’t limited. The audience can talk back. And most importantly, they can talk to each other. This is “the Great Horizontal,” as described by Jay Rosen and others.

People who only function from a one-to-many mindset disrespect these attributes when they treat fans or followers as an audience. And it’s inevitable that marketers will do so. Inevitable.

I’m a pizza fan, and one of the earliest Pizza companies to explore the Web for “customer service” was Papa John’s. I love their pizza and was a willing participant in a Monday email that offered a special. Then, it became several days a week, and now it’s daily. The problem is that marketers can’t resist the opportunity to use ANY connection to sell their wares or increase those sales. What this does is destroy the specialness of that Monday coupon and turn Papa John’s correspondence into spam.

Like millions of others, I donated $10 to the Red Cross in the wake of Hurricane Sandy. This involved a text message to a universal code (90999). In addition to my receipt, I received a separate pitch for “Red Cross news,” up to 4 messages per month. Even charities can’t resist the science that for every X amount of requests, X number will say “yes.” This may be smart business, but again, it’s exploitive, manipulative and dehumanizing.

When I agree to “follow” someone via social media, the presumption is that I wish them to engage with me, big brand or otherwise. I’m also hoping to engage with them, although I’m not naïve. What I’m not doing is signing up for spam. The problem is that when this social engagement is granted, the one receiving this permission (e.g. “the brand”) can’t resist the broadcast axiom that power belongs to the one with the reach. “Once you agree to follow me,” this approach reasons, “I can send you whatever and how much ever I wish.” This then moves the brand’s messages into the category of spam.

Is there a form of “reach” at play in the network? Probably yes, but it’s certainly different than old school one-to-many. How should a brand like The Dallas Mavericks use social media for business purposes? I think we’re still writing the book on this one, but you’re safe actually engaging with people rather than throwing things at them.

Look, Mark Cuban is a good guy, and the Mavericks are my favorite pro sports team. He’s used social media to give tickets away, which is great, but it’s really no different than a radio promotion. If you want to use the Web that way, you know what? You should pay for it.

The times they are a-changing have changed

Steve Denning's newest bookHere are a couple of great lines from a Forbes article by Steve Denning, “Resolving The Identity Crisis Of American Capitalism:”

Once making money becomes the goal of a firm, companies and their executives start to do things that not only lose money for the firm but cause problems for the economy…

…Customer capitalism involves a shift (of) the focus of companies to delighting the customer and away from shareholder value, which is the result of delighting the customer.

The shift to customer capitalism doesn’t involve sacrifices for the shareholders, the organizations or the economy. That’s because customer capitalism is not just profitable: it’s hugely profitable.

The shift to customer capitalism does however require fundamental changes in management. The command-and-control management of hierarchical bureaucracy is inherently unable to delight anyone—it was never intended to. To delight customers, a radically different kind of management needs to be in place, with a different role for the managers, a different way of coördinating work, a different set of values and a different way of communicating.

The shift to customer capitalism also involves a major power shift within the organization. Instead of the company being dominated by traders and salesmen who can pump up the numbers and the accountants who can come up with cuts needed to make the quarterly targets, those who add genuine value to the customer have to re-occupy their rightful place.

What I love most about Denning’s approach is the use of the word “customer,” when many others would use the term “consumer.”

Burn this into your mind and into the minds of those around you: We have entered a new era. Period. It’s not on the horizon; we’re already there. Those who take a leadership position and beat their competitors to the punch are GUARANTEED the top spot in this new era’s business infrastructure. It’s all about the customer today. Making money is the end, not the means anymore. It has to be that way. The beancounters and manipulators are lesser players in the new status quo, because, as Steven Covey wrote many years ago, “You can’t talk your way out of something you behaved your way into.”

Umair Haque wrote in 2004 that in a networked world, the emphasis must be on the product, not marketing. Jay Rosen says basically the same thing in his brilliant thoughts about “The Great Horizontal” and “Audience Atomization Overcome.”

Dylan’s classic song noted that “The Times They Are A-Changin’,” but I’m much more inclined today to say that they’ve already changed. When the brightest business minds of the day — and I certainly include Steve Denning in that group (John Hagel, too) — shift their thinking from hard core making money to hard core customer service, it’s time to give up on an agenda that only defends the past.

Dissing Harvey Levin (and entirely missing the point)

TMZ logoOccasionally, the comments posted in response to an online article are more revealing of media that anything in the story itself. Take the case of Paul Farhi’s Washington Post piece, TMZ founder Harvey Levin’s unsolicited advice to mainstream media: Adapt or die.

Mr. Levin addressed the National Press Club with a dire warning for the institution it represents:

Your business model is broken. Your future is in jeopardy. Adapt or die.

It is clinging to this broken business model that’s the problem, Levin said, because media is afraid to mess with it.

Newspapers and magazines should get out of the print business, he added, if they want to survive. And if the upheaval of the Internet over the past decade hasn’t been enough, just wait: The next five years will be even more tumultuous for the hidebound and hoary.

But rather than investigate what Mr. Levin told them, Farhi chose to insert the content of TMZ into his article, which was done with just a hint of snark. Calling him a “gossipmonger” and dismissing him according to his appearance (“pint-sized, tanned and California cool in a blazer, open-necked shirt, jeans and slip-on sneakers”), Farhi shifts the article from what Mr. Levin said to the content of his product, TMZ. The article questions tactics like paying for information and raises the matter that Levin’s TMZ has gotten some things wrong, all designed to invalidate anything offered in the way of advice. After all, cough-cough, we can’t trust, cough-cough, anybody who would do, cough-cough, something like THAT!

This opened the door for comments supportive of Farhi’s distaste. “God help us…sensationalist trype…appeal to the lowest common denominator…Internet version of yellow journalism…character assassination…his “newsroom” of stoner kids…new media for a dumb nation…TMZ is the real life idiocracy…tabloid pornography…you can’t take his news seriously,” and so forth. Some readers noted that the Post should be paying attention, but for the most part, everything that Levin brought in his message was overwhelmed by criticism of the content of his enterprise and how it’s presented. This is the big — and, frankly, pathetic — mistake that most journalists make in analyzing the success of TMZ. This is because, by training, tradition and instincts, journalists believe it is the news content or its subjective “quality” that matters, so the content is what gets the attention. TMZ, however, is so much more than content, and that’s what Levin was trying to say.

TMZ was created of, by and for the Web. It’s TV show grew out of that base and functions in a secondary role. The stories are presented in blog format, with the latest on top. It has never wavered from this, not for a moment. The stories are all unbundled and can be distributed elsewhere. The language is conversational and assumes a live audience. Its franchises and gimmickry all serve a content point (e.g. “What do they look like today?”); it isn’t there simply to be there or to justify hokey marketing. It lives within the continuous stream that is news in the 21st Century. It satisfies a niche that, like it or not, is important in people’s lives. You can’t join the watercooler discussion about the Jackson trial unless you know about it, and that discussion changes throughout the day. Just as ESPN dominates the world of sports (“If it happened today, you’ll see it on ESPN”), so TMZ dominates its niche in the entertaining world of make believe. We can all take a lesson from that.

Levin’s business model is still advertising, but he’s able to emphasize dayparts. He also delivers a very sellable audience for advertisers, while the Big-J types are content with the +55 crowd. What the journalists miss is that its not all about the content of; it’s at least as much about its definition of the story, how that’s presented and distributed, talking with people instead of at them, its ownership of a popular information niche, and the pure passion evident in everything the company does.

Harvey Levin does have an important message for media, and it isn’t simply “gossip sells.” We need to get off our high horses and listen.