Articles Index: Follow the Money
The digital privacy battles now brewing in the House of Representatives and at the Federal Trade Commission finally woke the industry up to its complacency over this issue, but I think many publishers and ad networks proceeded to get up on the wrong side of the bed. The principals in the behavioral targeting industry, which is attracting much of the scrutiny now, seem to recognize that they must better explain their policies to consumers and assure all of us that they indeed are not collecting personally identifiable information (PII) when they track our movements around the internet. Ultimately, though, I think they woke up to the wrong issue.
Sometimes we get ahead of ourselves in the digital dreams business. We fantasize so extravagantly about the future shape of a technology that we miss some of its more relevant and mundane uses here and now. Take virtual worlds. Environments such as Second Life promised online immersion where realistic avatars moved through 3D space and ultimately enhanced everything from the media viewing experience to shopping.
Another day, another vertical. Earlier this year the press release mill worked overtime announcing that every imaginable media brand and ad entrepreneur was launching some sort of vertical network—either of content, ads, or (usually) both.
Is anyone making money on web video?" The publisher of one of the most popular and long-running video shows online recently posed that question to one of his peers and me. The other publisher, who is responsible for hundreds of hours of video content on her suite of branded media sites, just shook her head. "And anyone who tells you he is making money on video is lying," she contended.
Cool gadgets alone do not change engrained media consumption habits. It took nearly 2 decades for PCs, broadband, and ease of use finally to converge to the point that Googling for the answer to anything became a reflex. Media change is a long, complex, and very unpredictable interplay of cultural, technological, and economic forces slowly transforming conventions over time. No single device is responsible for such shifts. They represent the accumulated energy of many confluent forces.
For the 15 years I have been writing about digital media, two media business models have been "about to break through any day now"
The Federal Trade Commission (FTC) gave the digital content industry a dubious present last Christmas. At the same time the FTC approved a merger of Google with ad network and services provider DoubleClick, it also lobbed the issue of privacy back over the net for the companies to solve. At issue for the first time in a very public way is a topic I have been writing about in these columns since 2002: behavioral targeting (aka BT).
I admit that I have been a longtime skeptical observer of the digital magazine format, although 6 or 7 years after its introduction the platform is getting some traction with readers and publishers. Generally designed as facsimiles of printed periodicals, the digi-mag always seemed to fill an unnecessary niche between old and new media, between physical magazines and websites. It has the interactivity and rich media potential of a digital product (hot links, embedded multimedia), but it retained the lush design sense of print. But was this a solution in search of a problem?
As most traditional publishers are painfully aware, digitization has a tendency to commodify everything in its reach. Just think how much of the content we paid for a decade ago—from newspapers to premium video and audio content—is available now at no cost online. From news to business information, phone calls to software applications, the new model is giving away the store in the hopes of making a profit in some other way. Most text and video content relies on advertising to pay its way now, while service-based products, like web applications and digital calling, put some limitations on the free offering in order to upsell a richer version.
Keeping with years of tradition, I always like to mark the EContent 100 issue with brash predictions about where publishers will start seeing some money or investment in the coming days. For 2007 my prognostications focused on the rising importance of content merchandising, the ad-supported mobile media model, increased emphasis on ad-targeting, and the possible (possible, mind you) revival of micro-payments. Boy, am I glad I hedged my bets.
Community is an organic phenomenon. You don't make it. You don't build it. At best, you cultivate it, and many publishers are finding it hard to break ground.
Vendors are coming out of the woodwork with all of these hosted and plug-in solutions that promise to build community on a site. Bosh. Community is not a commodity that can be manufactured, and it is not a technical issue in need of a solution.
The problem of video search has been waiting in the wings for a number of years now. True believers like Blinkx and Truveo (now part of AOL) were patiently experimenting with ways of indexing and tagging video assets long before the broadband penetration rates and usage curves supported it. During the last year, at YouTube, the dam has broken. People are starting to look for video in the same way they hunt for text.
Years ago, the CEO of a then-young video search firm insisted that some day soon everyone would need a query box to navigate the video records of their own lives. Video camera technology was becoming so cheap and light that many people would take to recording every moment and then dump it onto those equally cheap multi-terabyte hard drives at home. Facial recognition algorithms and speech-to-text operations would help you index everyday video so that you could query footage of grandma at your kid’s fourth birthday just as effectively as Googling a keyword to find articles.
You and I may conceive of the digi-verse as something we access but for my teenage daughter Sam, it is more of a presence. With her WiFi network and laptop, the IM window always open, her social network of scores of contacts are like constant companions. The creaking door sound effect on AIM tells her when people are coming and going. For her peers, being online or offline seems like a distinction that sounds too technical for what they experience. For them, you are either here or away.
Business in the virtual world got very serious, very quickly in 2006. There have been a lot of false starts over the years. The massively multi-player gaming worlds like EverQuest and the eight-million strong World of Warcraft were always fascinating phenomena for their niche audiences, but they only made money for Sony and Blizzard/Vivendi, respectively, not for anyone else. Several things changed last year, however.
Buying traffic is the easy part. Keeping those eyeballs is where things get dicey. However, in the past year, I watched several consumer and B2B content brands ratchet up their traffic by double digits on a monthly basis.
Behavioral targeting is the hot topic this year among publishers and advertisers, and for good reason. I have been covering this approach to online advertising since core providers like Revenue Science and Tacoda emerged several years ago. The dark art of behavioral ad targeting (“BT” in the trade) started out as a hard sell because it was the kind of web technology that was difficult for clients to see in action and it relied on following users with ads in a way that feels a little creepy. BT may actually represent the natural evolution of interactive marketing, because it takes information from a user (her recent browsing patterns) and feeds back to her ads that are more relevant to her immediate needs and interests.
Perilous as it may seem, I will once again mark the EC100 issue with a look ahead to next year’s emerging revenue models, which we may well be calling old hat this time next year.
Want to give yourself a rude wake-up call about the harsh reality of brand value on the modern web? Try this: Make a personalized web page at Google or MyYahoo! composed of all the major RSS feeds from your site along with the feeds from content brands you consider competition.
When Burger King was looking for an edgy way to promote itself among the coveted (nay, fetishized) young male demographic, it did the only thing a sensible old fart of a corporate entity can do when it struggles to be hip: it handed the camera to someone who really is, well, hip.
By the time you read this, Sprint Nextel customers will be getting their first taste of free mobile TV, and thus also tuning in to the real future of wireless content. The young male-oriented “Fast Lane” channel will have on-demand clips of tech reviews, poker tips, stand-up comedy, and all the other usual Spike TV/Maxim oafish male fare. It will also have ads, usually tucked as mid-roll breaks of 15 seconds or so. Yup, the free, ad-supported TV model is coming to mobile, and my guess is that it will proliferate quickly and accelerate the use of ad subsidies across all handset content.
All due respect to Wired editor Chris Sherman, but the currently hot topic of the internet’s “long tail” has been with us at least since I started writing about digital in 1995. To be sure, Sherman deserves the credit for bringing into focus for the post-bubble world the notion that the web makes viable niche markets and remnant inventories that could never find buyers in “real world” distribution and marketing systems, but this model has been part of the web equation since day one.
As our content divides, sub-divides, and disperses like so many amoeba into the new digital mediaverse, anxiety must be running high among media companies. Ad dollars visibly drained from network television and print this past year, and most media budgets are fully in play now. Advertising allegiances are fluid, as big-brand accounts flip daily from agency to agency, and chief marketing officers warn the whole ad business that they better start coming up with answers to this growing problem of how to focus the scattering eyeballs of a fragmented landscape and deliver measurable results. Many in the media and ad industries are predicting doom, gloom, or at least a long passage through chaos.
Until I heard that preacher fart, I was never much of a believer in user-generated media. I don’t mean garden variety user-generated content (UGC), which embraces blogs, a few digital photo postings, and the endless scrolls of reader comments. I’ve always believed that community interaction is a more important part of the online mix than most traditional publishers admit. I’m talking about the more ambitious amateur media making, that vox populi revolution the Internet was supposed to spark. I was here in 1998 to see the crash and burn of so many attempts to organize garage bands and personal Webcam shows into populist big media rivals. The eternal democratic fantasy was that accessible digital media and free distribution would at long last unleash the people’s (always, the people’s) creativity in personal media-making.
After so many lean years and post-bubble disgrace, it is hard to believe the gusher of ad dollars and profitability flowing to some segments online. A year ago I wrote about the industry’s need to wake up to the reality that the Web bounce back was for real. Now even I am a bit amazed at the sustained double-digit ad sales growth we are seeing. In fact, some sites are butting up against the limits of their own success with a problem most publishers would love to suffer—sold-out inventory
Sometime before the big Web bubble burst, a men’s media brand splashed itself online with an enormously ambitious content-rich portal. Prescient of the au courant mantra of “content, commerce, and community,” it innocently invited its beer-sodden, breast-gazing readership to participate in online forums. Well, within days all hell broke loose. The message base became a mosh pit as the readers extended the smirking, bawdy spirit of the host brand to misogynist extremes, making way-inappropriate comments about ex-girlfriends, models on the site, and women, generally. The site editors retreated quickly and simply shut the message boards down entirely within a few weeks.
Two words: video podcasting. Go ahead and snicker, because a couple of months ago I would have smirked right along with you. Then I got me a video iPod. From a revenue perspective, what is most interesting about portable video is that, unlike other trendy forms of recent years (audio podcasting, blogs, RSS feeds), it arrives with a built-in revenue model. The advertising is already here.
Column/Follow the Money - |