Jonathan Mendez's Blog

Display’s Matching Problem

Simply put, advertising is a matching problem.

It is a puzzle of people and needs, demand and awareness, creativity and messaging, and most of importantly, timing and context. It works best when the shape of the consumer fits perfectly with the shape of the advertiser. While conceptually this idea is not new  - advertisers have long been armed with reams of information on all these data points - matching in the legacy of advertising was at best a fishing excursion and at worst a waste of buckets of cash.

The web changed everything. All of a sudden we had the other piece of the puzzle. As the first medium that was actually controlled by the people consuming it, that very control became available to advertisers to match against. People were raising their hands and announcing what they were interested in doing and discovering. This of course made the matching pretty easy. Search grew the tool sets to take advantage of this. Amazingly, publishers with their loads of site analytic data did not.

The inevitable result when all media is accountable and the puzzle pieces fit together is that all the wasted dollars dwindle and the dollars not being wasted end up on a matching platform. And if the platform is free, real disruption occurs.

By 2003 with Craigslist available in 32 US cities publishers were feeling the first effects of easier matching. Classifieds are the original matching advertisements so in hindsight it was logical that they would be the first revenue to get disintermediated by better digital matching systems. In this era of realtime it sometimes gets forgotten that not only the immediacy of digital publishing caused old media’s demise. More than anything else the ability to efficiently facilitate consumer-to-advertiser matching killed old media.

Fast-forward and now it is display advertising that is old media.

The first thing to remember is that display was born as old media/old advertising’s solution. The idea was started by a print magazine and embraced as an easy way to lure ad dollars into an emergent channel. Not much has changed with display since that time. That’s because the way its technology has been built makes it incredibly difficult to match consumers with relevant ads. There are some verticals where appending data may be helpful but as mentioned earlier, timing and context are critical in shaping a match.

This gets to the root of display’s matching problem. The temporal value of data is fleeting and context is frequently not discernable. If we look to Search for matching guidance context is exactly what Google’s algos are trying to understand. It’s why they take in-session query history into account. It’s why they look at temporal factors from time-on-page to time-to-click. It’s why they take landing page bounce rates and copy into account. It’s why they’ve added social factors to SERPs. It’s why 25% of all SERPs (and growing) are being personalized. Context, the weaving together of interrelated conditions that brings meaning to why a person is doing something, is the key to delivering relevance.

Amazingly context is a word I rarely hear anymore in display. In fact I’ve read quite a few people dismiss its value. That’s bullshit. I understand, display was not built to deliver context but I’m afraid I see too few people working on solving this problem – a problem that fundamentally addresses the value of the media. The rise of audience buying is exacerbating this problem. It’s a red herring to get media dollars into the channel because no one is clicking the ads. Why, because they are not relevant. There is poor matching.

The lessons to be learned from the rise of Search extend far beyond the way media is priced, bought and sold. Without new methods and technology to deliver relevance all those buying & bidding platforms and exchanges will be short lived. Sure, there might be some nice exits as there has been in the past, but display ads will still suck, real value will not have been added to the medium and Search will only become more dominant.

This may be the final bell. As with the rise of Craigslist & Google the real losers in this matching game will not be the advertisers. The real losers with display’s matching problem will be publishers. The only thing of true value in a user-controlled medium is relevance. As all media is becoming searchable, time is running out to deliver it.

Previous Related Posts:

Lessons in Digital Content Creation & Technology from Search Advertising

Ads as Content – Content as Ads

Links vs. Cookies: A Tale of Two Web Economies

 

I credit Jonathan Strauss of link analytics company awe.sm with coining the phrase “the link as the cookie.” I’ve been borrowing that expression for the past year because it not only describes his service and the meta concept of linked data, but it also encapsulated what intelligent landing page optimizers had been doing for some time – taking parameters from URLs and using them as rules to dynamically deliver relevant and persuasive content.

Strangely though, the data revolution, at least as it relates to advertising, seems to have passed the link by. The cookie is where much of the excitement and focus around new data sources for targeting and optimization rests. “BlueKaing” data (a term I heard for the first time a couple of weeks ago) has now become a verb to describe the re-emergent cookie economy. This unbridled buzz caused Andy Monfried of Lotame to caution the display community last week to look beyond the cookie for targeting.

“The holy grail is not just cookie targeting, but to see the linkage between the top of the funnel and the bottom.”

Yet the cookie is being used by every color of advertiser including (or especially) Google to target campaigns to “audiences” or to “in-market” rather than to specific sites. Some of the excitement around cookie data is justified but it is also fraught with a host of challenges to publishers and advertisers, almost none of which protect the best interests of either.

In contrast, the link economy is immune to the issues swarming around the cookie economy, even furthering my consternation about why the link economy is so grossly undervalued and under-hyped. The reality is using the link as a set of rules for content/ad delivery has implications much more far reaching than landing pages and URL shorteners. As anyone who has made money on the web through transactions can attest, since the inception of the commercial web, the link is its most valuable currency.

The first thing to realize about the size and value of the link economy is that the engines of it are the three of the largest web properties in the world - Google, Facebook and Twitter. The second important point about the link economy is that it is natively cross platform - search, email, mobile, social - links can get distributed and can work anywhere. The third important point about the link economy is that it provides an immediate trigger for any media object - video, audio or text. The last and maybe most important value of the link economy is that it is both realtime and lasting. One link can get you a million visitors in a day – it can also get you million visitors over three years.

Contrast the link’s value to cookies that are driven by a small percentage of online media spend, are not cross platform, have no native trigger mechanism to launch media and whose value decreases quickly until it is zero. This is why it blows my mind that BlueKai can raise $20M when in the scale of these two web economies a company like bit.ly commandingly leveraging the link economy should be seen as creating incredibly more long-term value. Somewhere there is a huge disconnect happening. Maybe it's just happening in my mind, though I doubt it.

I doubt it because we have already witnessed the link build three of the largest and most effective media channels on the web; PPC, email & affiliate. Links also serve as the core logic function for facilitating every major transactional site from Amazon, to eBay, to Craigslist. I have no doubt that the value and economic impact of the link will continue to increase exponentially over the coming years far outpacing any media value cookies are creating. In fact, as many of you may already be thinking, it is really not a fair comparison. But as a marketer who has built a career off the link, I often find myself wondering where is the buzz, where is the appreciation, where is the strategy, where is the technology* for the most simple, native and valuable web attribute of all, the link?

* VigLink and their competitor Skimlinks are two new and cool technologies I've seen recently.

What Social Check-Ins Forgot: The Value of Landing Pages

I have yet to become a fan or user of social/location based check-in services though I am a fan of the beaconing strategy they employ. As I’ve written before, value creation on the web involves more than a one-to-one exchange of value. A trifecta of goal fulfillment between your product or service, your audience and a third party (advertiser, restaurant, etc.) is required to create value. This is where these services fall short for me and thanks to recent tweets from my friend and SEO guru Natasha Robinson I’ve finally realized why.

As Natasha says, the check-in links syndicated through social media verge on unclickable. The reason is rather simple. The landing pages provide no value to the referrer. Yet, the landing page is the spot where the triangulation of goals must align. The whole value chain for this product converges at the landing page.

While we can clearly see the potential of these services to provide tangible value to the establishment where check-ins occur and some (for now less tangible) value to the Mayor McCheeses and people doing the check-in, I would argue that the service only works if there is strong value being created in the stream. Without this newfangled linkbait, the fish ain’t gonna bite.

Let’s take a look at each of the content areas on Foursquare’s landing page and see what is and isn’t working for a referrer and the value triumvirate as a whole.

  

1) As a referrer I already know from my stream the name of the establishment. I already know that the person that has checked in here. There is huge immediately actionable value for the establishment though. Many locations would benefit from an announcement categorizing everyone who entered it. Of course that can provide parallel value to the person checking in.

2) The amount of check-ins and visitors does not really tell me much, especially for a new service that is building scale -- it’s very difficult for a naïve user to asses this value. Again, most of this value rests for the establishment.

3) The images of the Mayorship and the people who’ve been here have negligible transactional value to anyone.

4) Maybe most interesting for a location based service the map has very little value. In most cases the address above is sufficient information for a referrer at the moment of landing. The establishment and check-in already know where they are.

5) Tips can be helpful but their value is tied to a small segment of temporal traffic (the moment or prior to check-in). While this value is highly dynamic tips have the most shared value among troika of user, establishment and audience.

6) Tags are fairly generic. They likely provide the most value to Foursquare to provide classifications however it doesn’t appear that many users are adding tags. Also it appears there are some negative aspects to user tagging that can affect the value chain.

So the question remains, and of course has become heightened with Yelp adding a location based feature to its service last week and others soon to enter the fray, what improvements can Foursquare and other services make to encourage CTR on their linkbait and then create value from all from those visitors. That’s a rather big question so I’ll just tackle it form the referrer perspective.

As a landing page the primary success metric needs to be converting visitors to register for the service. As the product grows there are many more success metrics that can add value for optimization (e.g. new visitors to location pages that eventually check-in). For existing users there are also important metrics to optimize on against bounce rate/use. What good is a notification service if those notified don't take action?

As mentioned in the dissection above there is nothing on this page that is persuasive and inexplicably there is not a call to action. Is this a game? Then tell me what makes it fun or challenging. Is this a place to make plans? Then what are the tools that make that helpful and easy. Why do I want to use this service? What are the benefits to me? Until the answers to those questions are obvious landing on this page has no value for a referrer and products like this are missing a golden opportunity that may be as temporal as the very content they distribute.

Digital Spaces That Excite Me for 2010

Last year I was very fortunate to meet some incredible people involved in shaping the future of digital media. I enjoyed learning about what interests them, hearing their points of view and discovering what problems they were working on solving. Needless to say, digital media evolves at an astounding velocity so I thought this was a good moment to take a personal snapshot and share it with you. In no particular order, the areas of digital media & advertising that I’m most excited and interested in right now.

NWA – Numbers with Answers: There was incredible amount of M&A consolidation in the world of web analytics from 2003-2006. The result over the past few years has been a dark period with little innovation. The basic data retrieval systems, log-files, .js and packet sniffing have been in place a very long time yet the reporting output of these systems has not progressed much. Making matters worse many C-level execs, creative agencies and digital verticals do not trust analytics (newspaper sites reported not believing Omniture/Google Analytics data in the 9/09 ITZ Publishing survey). The bottom line is this: insights and actions are just too hard to cull. Presenting the data in more interesting ways has become vogue but this is not the answer. Legacy analytics solutions are asking (in the best case) old questions and (in the worst case) wrong questions. I sense that not only the questions but more importantly the answers will begin to change in 2010.

China - The Supernova Market: The Search and Display advertising opportunity in China has never been better. It will continue to gain velocity over the entire decade. There are 350 million Chinese on the Internet (vs. 200mm US).  Half of them are under the age of 25. Almost all of them (94%) are on broadband. That colossal user number...it is only a 25% penetration rate (vs. 72% US). Commercial web transactions are now starting to shoot through the roof.  There are some incredibly exciting web companies emerging from China and some really interesting US start-ups that are co-located in China. In 2010 I plan on being much more active in understanding this market and looking for opportunities in it. In fact, I’ve started already. It is simply shortsighted strategy not to.

Testing Reaches Critical Mass:  In the two years since I left Offermatica/Omniture I’ve been approached by about twenty start-ups in the testing and targeting space. Some of those companies have launched already and a good number more will emerge over the next year. This makes sense because two things have happened in the market. 1) Similar to Analytics, almost all the major players have been acquired leaving a void of innovation; 2) More marketers (especially mid-sized) understand the need to focus on post-click optimization. It seems pretty clear that this space will undergo a renaissance beginning in 2010 with a focus on lighter, faster and more simple solutions. I’m excited to continue having a role in the evolution of the testing & optimization space both on this blog and in my advisory capacity with a couple of emergent players including Performable.

Local Zooms In: This could just as easily been a blurb about the Facebook-Google war that has been going on now for over a year. Clearly Google has stepped up its game – its local pages have never been better and the UGC continues to increase in volume and curatical efficiency. I see this battle as critical to Facebook’s future. Yes I know how big they are and their growth rate, but their RPV (revenue-per-visitor) is incredibly low. They can’t sustain their business as a voyeuristic photo site for many more years. The key to their success is tied in developing local business pages attached to social graphs with the requisite search advertising capability. One of these two companies will crack this nut to the tune of $20B of incremental revenue over the next few years and $100B by the end of the decade. We’ve always known local is the Holy Grail. My bet is on Google because at the core all this local stuff is search, but it will be fascinating to watch this play out over the year.

New Display Formats: Without a doubt display advertising performance suffers from standardized sizes. The IAB has eighteen standard sizes for display ads yet 90% of ads are created in three of those sizes. The effect of this compounded with standardized placements of those sizes creates an insurmountable challenge for the attention of users. Part of the onus of solving this problem is on publishers. As masters of their domain they have the ability to innovate. Two start-ups I’m involved with are working in this area and seeing incredible results matching a data layer with breakthrough creative formats. The challenge of course is getting this to scale but the performance (we’re talking CTR of 10-20% in some verticals) warrants tremendous excitement as these companies go from bootstrap to chinstrap in 2010.

POS Closes the Loop: Two of the most mind-blowing conversations for me this past year were speaking with companies actively involved in using offline POS (Point-of-Sale) data in the digital marketing loop. This is “first-party” data at its finest. After learning about how they are working I have no doubt that the future of targeting, re-targeting, eCRM and increasing LCV (Lifetime Customer Value) rests in this area. The verticals where this data can be effective are limitless. The platforms where it can be used are ubiquitous. That is one giant market that can’t be ignored. This is but one space where I think we’ll see dollars shift from soft metrics to hard metrics around retention and increased customer value. The über competitive nature of 2010 and beyond demands it.

 

2009 Recap: My Faves, Posts & Presos

"A friend is one before whom I may think aloud." - Emerson

2009 was an amazing year of discovery for me and I tried to share as much of that here as I could. This year also presented a sea change in my writing because I started using a new communications platform, Twitter (you can follow me here). Many ideas that in the past would have become full-blown posts got tweeted into the stream (or is it an abyss). As a result my pieces tended to be more thought out, longer and less frequent. Also, my subject matter took a distinct turn. Last year I mainly blogged about challenges facing advertising while this year my focus was on the challenges facing publishers. So in case you missed something the first time or want a refresher I have curated a years worth of posts and shared my favorites below.

The Publisher's "Penta-tech":

Transcendence: The Power of Publishing is Marketing

Reaping The Ads You Sow

People & Performance NOT Pages & Prices

Pubs Need to Get the Performance $ignal

Read All About It: Online News Has No Clue About Optimization

Other Stuff:

API Battle Plans: Fighting for Next

Data is Easy. Optimization is Hard.

A Study of Value Creation in Real-Time Search

The Market Forces Killing Display Advertising

Audience: Display Advertising’s Cat in the Hat?

Presentations:

Advanced Landing Pages - SMX West

Interviews:

Interviewed by Aaron Wall at SEO Book

Interviewed by AdExchanger

Lastly, happy and healthy holidays to all my readers, commenters and subscribers both old an new. I truly appreciate and value your interest in what I have to say. See you in 2010.

Read All About It: Online News Has No Clue About Optimization

I’ve been reluctant to write more about publishers issues with monetization having recently written pieces here, here, here and here but the recent spotlight cast by Rupurt Murdoch on Google’s traffic and sympathetic follow up pieces by respected writers like Tom Foremski and Michael Arrington have now boiled me over.

Having spent the better part of a decade optimizing and monetizing both natural and paid search traffic on a daily basis I want to directly address the two memes now gaining velocity. One is that search traffic is “low quality.”  The other is that publishers should leave Google and form a Bing “collective.” Both concepts are ludicrous.

The Quality of Search Traffic:

Search traffic is inarguably the best traffic that exists on the web for monetization because of the recovery or discovery goals that are expressed in the query. The referring URL passes along rich data sets with it that can be further parsed for optimization. Search traffic also trends in remarkably predictable temporal patterns as do the event driven behaviors associated with it.

So the issue is not that the traffic quality is low but that sites like the Wall Street Journal and many others do little or no site side optimization for it. The referrer data is robust enough for the WSJ to deliver an amazingly relevant, compelling and dynamic experience. The technology is there to do a myriad of things with this search traffic especially reducing bounce rates, increase subscriptions, collecting leads and funneling visitors into higher value areas of the content. If publishers treated every page like a landing page and thought of themselves as much marketers as publishers they would be generating much more revenue. After all, user intent is generated on the publishers domain. It only gets fulfilled on Google.

How inept are newspapers? Let’s take the data that they themselves provided in the recent American Press Institute Revenue Initiative Report (09/14/09).

• Net monthly visitor rates have not increased since 2003
• Percentage of 2009 total online revenue from SEO (large sites like WSJ): 0%
• Percentage of 2009 total online revenue from SEM (large sites like WSJ): 1%
• Only 23% of publishers are monetizing registration
• Only 11% of unique visitors are registered
• Only 25% use registration data for ad targeting

Publishers should be disgusted with these efforts and should take a long look in the mirror before they start blaming others for their demise.

Publishers Leaving Google:

Let’s get one thing straight. Google is the number one brand in the world and a more trusted and valued brand to the general public than your newspaper. Google has been getting better and better helping people for a long time now and keeps extending its useful reach. At the same time news has become more and more commoditized and less and less trusted. The Google habit is real. People are not going to stop using Google because your content is not included in their index. It is this exact arrogance about content that has lead to the demise of traditional media – at first devaluing the web as a medium, then devaluing search and now devaluing the users of the medium (see above).

One more data point from the API revenue report that is relevant here:

• Preserving print revenue is a primary driver to paid online access models [71%]

Search fractures the content hierarchies and information architectures publishers created to assist them in deriving revenue from their media. As someone that has worked with a number of the most well know publishers I sympathize with their being held accountable to many old media bosses and their legacy goals. There are a number of really smart people in this space especially at places like CNET and WPNI. Still, I cry no tears for their demise. Digital bits move at the speed of light. Digital strategy and execution must move along side it.

Interviewed by AdExchanger

If you are at all involved in display advertising AdExchanger.com is a daily must read. So I was really psyched when they wanted to interview me and that interview was published today. It covers what we are doing at RAMP Digital and my POV on the state and future of the digital ad industry.  

Read Jonathan's interview on AdExchanger.com

People & Performance NOT Pages & Prices

The following post was originally published as a guest post for the AdMonsters blog in advance of my speaking at their Leadership Forum. For more reading on the ideas contained here I also recommend this post and this post on Chris Dixon's blog.

Fragmentation = Problems & Opportunities

No one will argue that the Display marketplace is an incredibly fragmented and inefficient system. Try as they might this advertiser driven ecosystem has created a few problems long hidden by overinflated CPMs. First are the serious issues in the market’s ability to scale. Second, is the arbitrage and optimization often occurring in conflict and silos. Third and worst of all, the ads suck.

In contrast to Display, Search over a shorter period and having grown-up as a publisher side solution has 2 million active advertisers - all participating in a realtime auction based systems based on a single criterion, ad performance. The contrast is startling as are the results – Search spend will double that of display this year.

Enter the Network Paradigm

Just like Wall Street, Madison Avenue also has that New York City reality – if you’re losing money then someone else is making money. Once spend hits the street it is a zero sum game. Into this fragmented world of media buyers, planners, ad serving and publishers came the ad networks - ostensibly filling a huge need for publishers. Yet it now seems ad networks are the collateralized mortgages of the online world. Just the other day Tim Armstrong declared the AOL want to be the digital equivalent of Goldman Sachs, so the analogy has some credence.

This has allowed two things to happen. On the sell side as inventory increases and prices drop, the media ROI for performance marketers continues to increase. So too does their spending. 57% of display advertising was performance last year (IAB/PWC). This year the number will increase for fifth consecutive year at the expense of branded CPM. First half 2009 online display ad spending continues shifting to pay for performance with greater velocity: (TNS +6.5% (CPM +CPC/CPA); Nielsen -1% (CPM only).

On the buy side what’s happening is that while Premium CPMs keep dropping those rising performance spends are being kept at huge margins by networks. For every remnant media dollar roughly a quarter of that is kept by the agencies, a quarter goes to the pubs and half or more of it goes to networks. It’s a damn fine business. No wonder VC’s have funded it up the wazoo to the tune of 2 billion over the past few years.The problem is all of this is cannibalizing the channel. Better tools have produced lower yield for publishers and higher ROI for performance advertisers.

Consequences of Alternate Realities

If there is too much weight on one side it sinks the ship. Publishers can’t survive with this inequity much longer. They own the audience and the content. The value is being created in their environment. They deserve more.

The media reality is that publishers are getting $7k in revenue from inventory being monetized at $48k (I know, I’ve run these RON performance campaigns). The content reality is that in digital power shifts away from the content and towards the distribution of it. The same way Search has done this with content so too have the ad networks done it on the ad side. It’s time for pubs to take the power back.

It’s beginning to happen. A number of publishers are turning into marketing agencies themselves. Meredith has just hired Martin Riedy CEO of Publicis Modem to lead its 400 employee integrated marketing unit. Publishers are now building microsites and custom ads for advertisers in order to get their spend. Are we that far away from NYTimes going to Ford and delivering 500,000 leads over a year for $25M? I don’t think so. Disintermediation anyone?

The Final Frontier

But this change doesn’t happen in display unless there is a fundamental shift in the mindset and technology. Like search, visitor and advertiser value can only be delivered and game-changing revenues can only be achieved for publishers if we start optimizing for people and performance, not pages and prices.

For example, we know from Search that content consumption and temporal trends provide amazing intelligence to deliver relevance. Most large publishers are privy to these interest trends but they do not have the data capture systems to quantify it or the targeting systems to leverage it or the advertising systems to monetize it.

Just like Search the forces that drive monetization are everything from personal needs to macroeconomic or geographic issues. By studying content consumption patterns publishers can understand even earlier than Search the opportunities to match the information and services needs of their audience. Intent is not generated in Search. Intent is generated in publishers content and then moved to Search by the user.

These huge changes require new platforms and tools. For publishers the revenue generation tools available to them have not kept pace with the investment and innovation on the ad side.  The irony is that while agencies are not staffed to leverage most of the more analytic and technical tools publishers sit on a goldmine of optimization mindshare in with their ad ops teams. If it’s ever going to happen, now is the time. Nothing less than the future of the Display market is at stake.

Reaping The Ads You Sow

Trends in search provide amazing intelligence. So much so that Google has provided a destination site with information even non-data junkies will find interesting. You can look at this data and understand two things about online marketing.

1. TV drives a great deal of search inventory/demand/price/scale
2. Getting media channels to work together can reap huge rewards

Different media channels serve different purposes for marketers and as Search has known for years demand generated by TV, Print, Radio, comes online and ends up as people searching for more information from publishers.

Most of the forces that drive intent occur offline. These vary from personal needs to macroeconomic and/or geographic issues. By studying content consumption patterns the way Google studies queries publishers can understand (even earlier than Google in many cases) what opportunities exist to match the information goals of their visitors with helpful and useful offers.

That’s all that Google is doing, helping people complete their goals. Being relevant to the needs of their visitors in a way that adds value to their experience, the marketer and their own bottom line. Their challenge is looking at the web in its entirety. For pubs the challenge becomes much easier looking within a single domain - especially a vertical one.

If we’ve learned anything 15 years in and with only 7% of brand spend it’s that Digital is not a medium you can use to get people to pay more for a product or service than a lower cost alternative - the essence of brand marketing. Digital actually facilitates the opposite. So where do all those publishers go that have been waiting with bated breath for brand demand to drive their CPMs higher and higher? There is only one option. Get in the demand capture game.

While publishers are privy to the same interest trends as Google they do not have the data systems to capture it, the targeting systems to leverage it or the advertising systems to monetize it (many pubs do have their own internal search applications capturing this data but they do jack shit with it). Also it’s not just the historical data that they can leverage -- as big an opportunity might be in real-time data.

It's time to move away from old media strategies like forecasting, allocation and planning. They never fit on a web where attention unpredictably ebbs & flows across it. The very idea of a campaign is antiquated when there is demand to be captured 365/24. How many more times will publishers fail to leverage events like Michael Jackson’s death or getting 9M impressions over 2 hours after a link is posted? How many more pubs will I speak with that have no idea how much traffic they get from Search each month, let alone daily by vertical.

If there is a wrinkle in the simplicity of the strategy (though I acknowledge the execution is fraught with challenges to norms) it is the number (25%) of search queries that are new everyday – never before seen. This "intention market" dynamic only serves to exemplify further of the nature and importance of the  real-time web.

There’s no “death by Google” going on here as many publishers would like to claim. Furthermore, this is not all about “bottom of the funnel” as many marketers would have you believe. All through the funnel there is plenty of valuable intent. However, if publishers don’t invest in harvesters and reap what they are sowing with their content they will simply starve themselves to death. 

It’s taken well over a decade for these ideas to get any traction at all and there are still plenty of holdouts, especially those who feel their business is publishing, not marketing. But the inevitable fact is online is not a branding/awareness/demand gen tool. It never was. Online is a demand capture tool – and serendipitously the greatest medium ever created for it. Let’s rejoice in that fact and get to work. Fall is the time to harvest.

 

Pubs Need to Get the Performance $ignal

 

There is growing debate about the future of journalism and to a greater extent publishing in the digital age. The axis of the conversation is revenue generation or lack thereof. The problem in this space is one that frustrates me enormously because the answers are there. We know how to make money on the web but old mindsets continue to impede progress and have consistently over the past decade allowed upstarts to control both the delivery and revenue generation associated with digital publishing of news and information.

One core issue I continue to witness is the fundamental misalignment between the advertising publishers want and the advertising that works in a news and information medium, be it digital or analog. To this end the OPA (Online Publishers Association) and the IAB have been vehement that it is lack of creativity preventing brand money bags from flowing into the space. I couldn’t disagree more.

The fact of the matter is that when prime-time television CPM is $12, your audience is 12 million and your ad runs for 30 seconds this offers more ad value (and will continue to) for demand gen than online. Also, despite grasping at straws for excuses (clicks don't matter, we're not using the right attribution metrics, etc. etc.) branded display ads don’t work. The facts are:

1. Unit performance sucks for everyone
2. Any demand gen created goes right to Google

Look at AM Radio - maybe the most comparative medium in user behavior to web publishing. Commercial AM is primarily focused on news, information, gossip & opinion. It is programmed for shorter bursts of attention due to the nature of how people interact with the medium (weather on the 1’s, Traffic on the 8’s, etc.). The web is quick twitch just like AM. Our click behavior online closely mirrors our switching radio stations trying to get the information we desire.

AM is not an immersive medium like its high fidelity sister FM. Rather, AM tailors its content and it’s advertising to audience behavior. As any listener of AM radio knows, direct response (DR) dominates the medium. DR radio ads often play off the trust factor with the station and/or host – both great ways to leverage ad performance non-existent in display advertising (but interestingly present it social media and search).

Direct response radio is a huge business and one dominated with much the same offers that people on the web respond to. The optimization methodologies also closely mirror each other. Interestingly direct response ads are also the ones growing to dominate online. More interesting is this growth is based on performance. Publishers ignore this audience response at their own peril.

This begs the question will there be two webs -- The AM web and the FM web? The answer is yes and it already exists. The FM web is where we go to for rich media experiences - videos, gaming – where we go to have fun. Because these experiences immerse us, the type of marketing should be different. The AM consumption behavior to ‘get what we need and move on’ lends itself much better to DR where in more immersive digital experiences brand messages should wash over so we recall them as we walk through the supermarket.

This brings us back to the misalignment. Revenue starved publishers and budget hungry advertisers have been infatuated with demand gen dollars for display and have gone so far as to rip DR a new one (while gladly taking their ad network backed money). This desire for more media budget has also manifested a false and unaccountable sense that DR ads diminish the publishers own brand value. It’s all a bunch of crap both from a user sentiment perspective and performance perspective.

The lesson is that understanding the way people consume media is paramount to optimizing it for revenue generation both with your original content and your advertiser content. There is much we can learn from Amplitude Modulation.

The solution is a major paradigm shift. DR needs to be embraced, it needs to be “legitimized” and the revenue captured with the publisher’s audience, content and data needs to be distributed in a more equitable manner. The problem is not one of revenue generation. The dollars are there, they just need to be shifted.