I attended the January 14 Digital Breakfast: Media Forecast 2010, moderated by Lisa Davis (LD), partner at Frankfurt Kurnit Klein & Selz, with participants Andrew Edgecliffe-Johnson (AE), media editor, Financial Times, Mike Germano (MG), president and creative director, Carrot Creative, Mike Hudak (MH), co-founder, president & CEO, blip.tv, Steven Pamon (SP), VP & head of new business development, NFL, and Reed Phillips (RP), managing partner, DeSilva + Phillips. My notes are below, with the caveats that they are my best rendition of the discussion, with no claim to accuracy; much of the discussion has been paraphrased, rather than being a direct quote of the participants; and that I bring my own viewpoint and perspective to this discussion, which influences my perception of the discussion. In other words, I am not contending that my writeup is “Fair & Balanced.”
The panel represented a variety of viewpoints about the media landscape, both as representatives of different facets of the media industry as well as some divergent points of view, as was revealed during the discussion.
LD asked each of the panelists for a quick comment.
• RP said that, while 2009 had been a very difficult year for mergers and acquisitions among media companies, he saw activity picking up as 2010 developed.
• SP pointed out that media was a growing business for the NFL, both with the NFL Network and with NFL.com.
• MH stated that blip.tv viewed itself as a next-generation television network, with 50,000 independent content producers, for whom blip.tv provides “services of scale” including distribution online and, increasingly, on television.
• MG described Carrot Creative as a new media marketing agency to whom PR and advertising agencies turn to provide new media and social networking expertise. MG said he had demonstrated the power of social media during a successful run for public office earlier this decade, powered largely by social networks.
• AE pointed out that, contrary to general trends, the Financial Times had been able to grow its circulation recently and charge for its content.
LD kicked off the discussion by asking each panel member to predict a major challenge or opportunity which they expected to materialize in 2010.
• RP said that the challenge for traditional media was in changing their business model. Traditional media players have too much staff and are mired in old processes. He predicted that they will be acquiring digital media companies in order to bring new media expertise in-house.
• SP felt that the focus of the NFL would shift from supporting advertisers to supporting consumers. Interestingly, the question of the right consumer approach would be a significant topic of discussion later this morning.
• MH argued that media is shaped by technology. He contended that CBS, for example, has not changed since it began broadcasting television in 1941. Unfortunately, and perhaps as demonstrated by that example, he felt that it has been difficult for organizations to re-orient themselves to new business models.
• MG addressed that issue by pointing out that the media needs advertisers. While traditional ad agencies have been reluctant to refocus their efforts on new media, he felt that the agencies and media will change when the advertisers demand change. The fact that advertisers are moving portions of their budgets from traditional to new media will reinforce that change.
• AE pointed out that there are many competitors for consumers’ time and attention, and therefore many opportunities for advertising. He also noted that the news is increasingly driven by social media, readers’ commentary, etc. He felt that the emerging tablet computing format was exciting, at least on a long-term basis. With a combination of an attractive device and attractive content, he felt that media companies could be able to charge consumers for their products.
LD next asked who would be the 2010 victim of a revenue decline, with print having suffered a 25% drop in 2009.
• MH felt that the near-term change would be limited. New media, while a beneficiary of a shift in ad budgets, was still a small part of the total ad budget, and would probably remain so since clients and agencies do not really know how to make best use of the new media platforms. He felt that the print business had been impacted primarily by the economy, rather than a shift of ad dollars to new media.
• SP was concerned about the NFL’s customers (advertisers) spending less due to a decline in consumer spending, i.e., reductions in total ad budgets regardless of shifting allocation among media formats. He did feel that print was suffering due to a potential long-term systemic issue that consumers do not value print content.
• MH also argued that the advent of new media causes unit prices to decline, e.g., Gutenberg’s invention of movable type probably generated greater quantities and consequently lower prices for books. He also felt that media consumption was increasing but that consumer attention is finite so that demand has some limits. The solution for content providers, he posited, was for them to bring down costs of goods sold in keeping with the lower revenue potential.
• AE returned to the issue of consumer value: are there media experiences that consumers value? He questioned whether Jay Leno was still funny or whether he was stuck in an earlier decade. He felt that the possible solution was that newspapers, for example, could be made to look better, and argued that a more competitive national market for newspapers in the United Kingdom fostered better products and consequently expanded the market for multiple newspapers. His ABCD assessment of the media landscape: Agencies are dissatisfied by the state of the advertising business; Books are caught in a struggle for allocating their value among the industry participants in an e-reader world, with Amazon seeking 70% of the revenue for its contribution to the value chain; Cable is having difficulty adapting due to its historical monopoly position having caused its competitive muscles to atrophy; and DVDs have found that the market has declined.
• SP also pointed out that movie and television studios are threatened by the decline of the DVD market, which had historically been a major driver for them. Unfortunately, much of that demand had been driven by consumers building their content libraries, and that need has now been largely fulfilled.
• RP agreed that content is under-valued and that producers have suffered as a result. He cited the example of Demand Media, which has helped devalue content by paying low prices to its content providers. He also cited technological influences, such as Eric Schmidt of Google discussing a function that would allow a consumer to upload a picture of a building and thereby receive information about that building – an example where technology would essentially replace content. He agreed that consumers have limited time resources, and felt that would drive consumers to demand quality content.
• MH argued instead that the market sets the value for content. He felt that the means of content production have been democratized via technology, and that small groups have been empowered to participate in the content marketplace. The additional supply should therefore help the market reach the appropriate price.
• SP foresaw continued disruption in the marketplace. His view was that the costs of distribution and those of marketing are inversely correlated, and that “the lines haven’t yet crossed” to provide equilibrium. In the meantime, he felt that a settled marketplace was unlikely in the near term as each sector of the industry seemed to feel free to enter other sectors, viewing such entry as “easier than it is.”
• MG took a somewhat contrary view, arguing that the value is not in the content. Instead, he felt that the user experience is key. Digital formats let people decide how they want to consume the content and how they want it to come to them. He cited MLB.com as the leader among the sports leagues an example of both providing content in new and different ways, and in standardizing the user experiences at the various team websites through centralized control.
• SP pointed out that media strategies depended on which audience each participant was trying to satisfy. Not everyone in the media food chain viewed themselves as being responsible for the consumer experience.
• MH cited the example of the NHL, which had originally allowed each team to manage its own website but eventually moved to the centralized model under the control of the league, presumably to improve the consumer experience and make it more consistent.
• SP argued that the NFL focused its efforts where it felt the core consumer experience was most critical. For example, he cited the NFL Sunday Ticket program as a successful consumer service and said that the NFL would develop additional products and services as they perceived the development of consumer interest and demand. In keeping with his theme of selective innovation, he also argued that “Just because you can, doesn’t mean you should.” He brought up the example of ESPN, which tried developing new consumer experiences, such as ESPN Mobile, not all of which have been successful.
• AE projected that media companies would have to decide whether they have or can develop the necessary expertise and make the necessary investments in new media. If they cannot, they probably need to find partners.
• MH pointed out a distinction between west coast and east coast startups. He felt that the former viewed technology as the intended end or objective of the business. He argued that New York companies generally consider the user experience and value to be the key. Citing blip.tv, he said the company thinks of itself as a media company that is using technology, not as a technology company per se.
• MG thinks that the future of media companies will be subject to a generational shift with a greater comfort and facility with new media exhibited by the new generation. In addition, lower capital and other barriers to entry will enable more innovation, with consumers investing their time and attention into the most innovative companies.
LD finished the discussion portion by asking each of the participants for 3 predictions.
• AE expected more business failures to come as numerous weakened companies succumb to economic and other pressures. He also did not expect the tablet to become a mass-market product this year.
• RP predicted more M&A activity. In addition to the acquisition of digital companies by mainstream media, which he had mentioned earlier, he also foresaw consolidation among digital companies themselves.
• MG expected more business partnerships. In addition, he said that there would be significant cultural changes in the workplace environment in order to address the needs and desires of new media employees and to foster additional innovation.
• SP felt that 2010 would be the last year of the PC as the dominant consumer computing device, supplanted by laptops, phones and other powerful and more portable form factors.
• MH agreed that the PC would diminish in importance. He also pointed to the rise of televisions as part of the online experience, with the top 5 television manufacturers having models with Ethernet connectivity. That would also foster “over-the-top” consumer viewing of video from online sources instead of from cable or satellite providers.
• SP pointed out that the shift in video sourcing from cable/satellite to online would depend primarily on the valuation proposition for the consumer.
• MH felt that, in keeping with previous industry developments, independent OTT boxes such as Roku and Boxee would have their functionality eventually incorporated into the cable/satellite set-top boxes, much as at happened with Tivo and DVRs.
A question was raised from the audience – in a world with so much content from so many sources, what will serve as quality filters?
• MG felt that one’s friends would serve that function via social intersections such as the social networking sites. To validate these user-generated filters, users could make their preferences and friends public.
• MH predicted a network of filters, such as Tumblr, which seems to have supplanted the New York Times and Drudge for his news consumption.
Another question was about the opportunity for the monetization of websites in a world of disaggregated audiences.
• MH said that blip.tv is able to host shows with small audiences since they have essentially unlimited video inventory. The company provides these shows with monetization of their audiences by bundling the shows and creating scale for advertisers, in addition to targeting, which increases the value of even small audiences. He cited such aggregation in other media areas, such as regional networks of publishers.
All in all, it was a lively, engaging discussion. 2010 will both prove and disprove many of these predictions, but the most interesting events will be those that no one foresaw.
Showing posts with label media. Show all posts
Showing posts with label media. Show all posts
Monday, January 18, 2010
Monday, August 10, 2009
Julie & Julia: It's Not About the Food, It's About the Media
"Julie & Julia" opened this weekend, a movie about Julia Child's rise as one of America's premier food mavens and a blogger's search for the meaning of life through the re-creation of each of the 540-some recipes in Julia's seminal tome, "Mastering the Art of French Cooking."
The two principals never meet, and the movie cuts back forth between their stories. Among the interesting contrasts between the two tales - in addition to period costumes and heavy (cigarette) smoking during Julia's time, especially during dinner time - is the stark difference in media and the opportunity for self-expression. For example, Julia and her co-conspirators set out to write the first cookbook explaining French cooking in English for the American housewife audience. That entails laboriously typing over 700 pages of manuscripts, with copies possible only through the use of carbon paper and onion-skin duplicates. The completed book must then be (snail) mailed to a publisher, who stands as the gatekeeper between the authors and their audience. The first prospective publisher rejects the book, but the second comes to the rescue. This gives Julia's book a much smoother ride to publication than that endured by many of today's most well-known authors, including J.K. Rowling and John Grisham, who apparently encountered double-digit rejections before reaching publication.
By contrast, Julie Powell, the intrepid blogger, has no such third-party obstacles. She is online within minutes (at least in movie time) of conceiving the idea of her blog. Of course, finding an audience (other than her mother) takes a little longer, but at least the audience (and media attention) she attracts is presumably a function of the quality of her writing, not dependent on the judging panel of a publisher that makes the American Idol crew seem promiscuous.
The moral of the story seems to be that, in this web 2.0, interconnected, user-generated world, anyone can be a writer. As one would expect, in that event, anyone will. Even me.
The two principals never meet, and the movie cuts back forth between their stories. Among the interesting contrasts between the two tales - in addition to period costumes and heavy (cigarette) smoking during Julia's time, especially during dinner time - is the stark difference in media and the opportunity for self-expression. For example, Julia and her co-conspirators set out to write the first cookbook explaining French cooking in English for the American housewife audience. That entails laboriously typing over 700 pages of manuscripts, with copies possible only through the use of carbon paper and onion-skin duplicates. The completed book must then be (snail) mailed to a publisher, who stands as the gatekeeper between the authors and their audience. The first prospective publisher rejects the book, but the second comes to the rescue. This gives Julia's book a much smoother ride to publication than that endured by many of today's most well-known authors, including J.K. Rowling and John Grisham, who apparently encountered double-digit rejections before reaching publication.
By contrast, Julie Powell, the intrepid blogger, has no such third-party obstacles. She is online within minutes (at least in movie time) of conceiving the idea of her blog. Of course, finding an audience (other than her mother) takes a little longer, but at least the audience (and media attention) she attracts is presumably a function of the quality of her writing, not dependent on the judging panel of a publisher that makes the American Idol crew seem promiscuous.
The moral of the story seems to be that, in this web 2.0, interconnected, user-generated world, anyone can be a writer. As one would expect, in that event, anyone will. Even me.
Saturday, November 08, 2008
Peter Chernin, News Corp., on Innovation and Media
Peter Chernin, President and Chief Operating Officer of News Corp., was the keynote interviewee at TelevisionWeek’s Innovation 360: The Game Changers conference last week in Manhattan. These are MediaScrum’s notes of his comments:
Innovation, the topic of the conference, is critically important to the success of all businesses, a sentiment with which hardly anyone would disagree. Successful innovation, however, requires clear insight and discipline, which is often lacking.
First of all, innovation must to be pursued constantly, during both good times and bad. It may be tempting to scale back on innovation, either because things are going well – who needs it? – or things are going poorly – we can’t afford it. Either path, however, will leave companies critically short of necessary innovation when it is most needed during times of major business disruption, which leads to the other element of required discipline.
The second element is to recognize that legacy businesses may well be reaching the end of their lifespan. Old businesses should be maximized, not defended. Only by applying resources to new opportunities, despite the decline of old businesses, can innovation drive the business forward.
Innovation’s critical importance can be seen in three major areas impacting the media business: motion pictures, the ongoing SAG labor dispute, and digital media.
Movies:
For motion pictures, quantum leaps in high-tech innovation have historically had a corresponding impact on the level of viewer interest in movies. The phenomenal success of “Titanic,” the highest-grossing move of all time, was driven in large part by the astonishing quality of the special effects.
The technologies that have such an impact are those that benefit the story-telling of the movie and the sense of wonder and astonishment of the audience. Technologies whose purpose is cost-cutting or more efficient delivery, such as digital projection, whose impact is transparent to the viewer, are important but not transcendent in the same way.
The next innovation to have a giant impact on moviemaking will be the mainstreaming of 3-D. James Cameron, the director of “Titanic,” together with Fox, has spent the last ten years developing “Avatar,” his showcase 3-D motion picture. While the concept and early efforts at 3-D movies began at least fifty years ago, it is only now that the technologies underlying production, editing and viewing have reached the stage that 3-D can be fully integrated into the storytelling, rather than merely being a interesting gimmick. Not only has it taken Cameron ten years to bring his movie to fruition, but he filmed several 3-D documentaries along the way in order to help perfect the technology.
“Avatar” and its progeny are expected to have a significant impact on the motion picture industry. IMAX’s 3-D movie versions have demonstrated the audience appetite for 3-D. Movies that are produced in native 3-D, with the narrative and other elements developed for that format, will be the next giant leap in movie technology.
Labor:
The Screen Actors’ Guild (SAG) is the only creative guild that has not reached an agreement with the television and movie production community. To compound matters, internal disputes within SAG, particularly as expressed in a recent election for Guild board members, have been quite prominent in recent news reports.
Comments on this topic have been the most heavily reported in the news media since the conference, often in a much harsher light than viewed by this observer. Whether Chernin’s comments were of the “iron fist in a velvet glove” variety or simply that the news media likes a good fight, was not clear.
In any event, the producers are in quite a strong position, with the solid backing of the business community. Furthermore, the creative community has, in general, made an uneasy peace with the future uncertainty, at least for now, and is probably unwilling to have the last participants – SAG – benefit from their efforts at reaching a entente with the producers – much as drivers don’t appreciate someone who tries to take a shortcut to the exit by bypassing the cars that have been patiently waiting their turn in the exit lane.
Digital:
MySpace has been key to News Corp.’s efforts in the digital arena, although not in the way that observers had expected. The conventional wisdom at the time of the MySpace purchase by News Corp. was that it would become “Fox-ified.” The true value of MySpace has been, however, to provide News Corp. a window into consumer needs and behavior in the online world.
In a world in which consumers have infinite choices for entertainment, media companies must provide vehicles that allow consumers to exercise that choice, rather than trying to restrict it, but in a profitable way.
Entertainment media is different from music, which has been devastated by the shift to digital distribution and is struggling to find a new business model. One of the underlying problems in the music business model is that it was predicated on the sale of entire albums, even when consumers only wanted to purchase certain songs – a restriction of consumer choice. Given the opportunity – legally or illegally – to obtain only the songs desired, consumers did so – record companies’ business model notwithstanding. Fortunately for movies, people tend to consume the entire product, not merely portions. Technological issues, such as bandwidth needs for bit-heavy video vs. audio and the length of movies vs. music, have prevented piracy from being as much of a problem for movie producers as it has been for the record companies, at least so far.
That being said, the advent of digital distribution of entertainment content has been challenging to other parts of the media business. Hulu, the video portal co-owned by NBC and Fox, for example, has been a reasonable success since its launch earlier this year. Online viewing of full-length episodes of broadcast television programming has apparently been used by consumers to replace viewing of reruns, but not of network first-run programming. Players in the media food chain dependent on rerun viewing, or even off-net syndication, may find themselves being squeezed by the new business model, just as record stores were collateral damage in the woes suffered by the record companies.
Advertising, however, has of course been under pressure from the changes in technology across the media landscape, and this has a direct impact on media companies such as News Corp. Experiments with new ad models for the digital world are still a work in progress.
Fortunately, News Corp. will continue to feed the public interest in consuming media, no matter the distribution channel. For example, News Corp. views MySpace and Hulu as social “media” outlets which encourage peer reviewing and sharing of content. Facebook is seen as more social “networking” with greater emphasis on interpersonal relationships.
Eventually, traditional media will develop the advertising models for digital platforms.
The interview can be seen at: http://www.tvweek.com/news/2008/10/video_chernin_on_the_challenge.php
Innovation, the topic of the conference, is critically important to the success of all businesses, a sentiment with which hardly anyone would disagree. Successful innovation, however, requires clear insight and discipline, which is often lacking.
First of all, innovation must to be pursued constantly, during both good times and bad. It may be tempting to scale back on innovation, either because things are going well – who needs it? – or things are going poorly – we can’t afford it. Either path, however, will leave companies critically short of necessary innovation when it is most needed during times of major business disruption, which leads to the other element of required discipline.
The second element is to recognize that legacy businesses may well be reaching the end of their lifespan. Old businesses should be maximized, not defended. Only by applying resources to new opportunities, despite the decline of old businesses, can innovation drive the business forward.
Innovation’s critical importance can be seen in three major areas impacting the media business: motion pictures, the ongoing SAG labor dispute, and digital media.
Movies:
For motion pictures, quantum leaps in high-tech innovation have historically had a corresponding impact on the level of viewer interest in movies. The phenomenal success of “Titanic,” the highest-grossing move of all time, was driven in large part by the astonishing quality of the special effects.
The technologies that have such an impact are those that benefit the story-telling of the movie and the sense of wonder and astonishment of the audience. Technologies whose purpose is cost-cutting or more efficient delivery, such as digital projection, whose impact is transparent to the viewer, are important but not transcendent in the same way.
The next innovation to have a giant impact on moviemaking will be the mainstreaming of 3-D. James Cameron, the director of “Titanic,” together with Fox, has spent the last ten years developing “Avatar,” his showcase 3-D motion picture. While the concept and early efforts at 3-D movies began at least fifty years ago, it is only now that the technologies underlying production, editing and viewing have reached the stage that 3-D can be fully integrated into the storytelling, rather than merely being a interesting gimmick. Not only has it taken Cameron ten years to bring his movie to fruition, but he filmed several 3-D documentaries along the way in order to help perfect the technology.
“Avatar” and its progeny are expected to have a significant impact on the motion picture industry. IMAX’s 3-D movie versions have demonstrated the audience appetite for 3-D. Movies that are produced in native 3-D, with the narrative and other elements developed for that format, will be the next giant leap in movie technology.
Labor:
The Screen Actors’ Guild (SAG) is the only creative guild that has not reached an agreement with the television and movie production community. To compound matters, internal disputes within SAG, particularly as expressed in a recent election for Guild board members, have been quite prominent in recent news reports.
Comments on this topic have been the most heavily reported in the news media since the conference, often in a much harsher light than viewed by this observer. Whether Chernin’s comments were of the “iron fist in a velvet glove” variety or simply that the news media likes a good fight, was not clear.
In any event, the producers are in quite a strong position, with the solid backing of the business community. Furthermore, the creative community has, in general, made an uneasy peace with the future uncertainty, at least for now, and is probably unwilling to have the last participants – SAG – benefit from their efforts at reaching a entente with the producers – much as drivers don’t appreciate someone who tries to take a shortcut to the exit by bypassing the cars that have been patiently waiting their turn in the exit lane.
Digital:
MySpace has been key to News Corp.’s efforts in the digital arena, although not in the way that observers had expected. The conventional wisdom at the time of the MySpace purchase by News Corp. was that it would become “Fox-ified.” The true value of MySpace has been, however, to provide News Corp. a window into consumer needs and behavior in the online world.
In a world in which consumers have infinite choices for entertainment, media companies must provide vehicles that allow consumers to exercise that choice, rather than trying to restrict it, but in a profitable way.
Entertainment media is different from music, which has been devastated by the shift to digital distribution and is struggling to find a new business model. One of the underlying problems in the music business model is that it was predicated on the sale of entire albums, even when consumers only wanted to purchase certain songs – a restriction of consumer choice. Given the opportunity – legally or illegally – to obtain only the songs desired, consumers did so – record companies’ business model notwithstanding. Fortunately for movies, people tend to consume the entire product, not merely portions. Technological issues, such as bandwidth needs for bit-heavy video vs. audio and the length of movies vs. music, have prevented piracy from being as much of a problem for movie producers as it has been for the record companies, at least so far.
That being said, the advent of digital distribution of entertainment content has been challenging to other parts of the media business. Hulu, the video portal co-owned by NBC and Fox, for example, has been a reasonable success since its launch earlier this year. Online viewing of full-length episodes of broadcast television programming has apparently been used by consumers to replace viewing of reruns, but not of network first-run programming. Players in the media food chain dependent on rerun viewing, or even off-net syndication, may find themselves being squeezed by the new business model, just as record stores were collateral damage in the woes suffered by the record companies.
Advertising, however, has of course been under pressure from the changes in technology across the media landscape, and this has a direct impact on media companies such as News Corp. Experiments with new ad models for the digital world are still a work in progress.
Fortunately, News Corp. will continue to feed the public interest in consuming media, no matter the distribution channel. For example, News Corp. views MySpace and Hulu as social “media” outlets which encourage peer reviewing and sharing of content. Facebook is seen as more social “networking” with greater emphasis on interpersonal relationships.
Eventually, traditional media will develop the advertising models for digital platforms.
The interview can be seen at: http://www.tvweek.com/news/2008/10/video_chernin_on_the_challenge.php
Tuesday, July 15, 2008
Re: Obama, The New Yorker Displays Its New Yorky-ness
Amid all the brouhaha over the New Yorker's latest cover, which depicts Barack and Michelle Obama as America-hating, flag-burning, big-haired, terrorist-loving armed black militants, the argument seems to boil down to whether the cover is offensive or it's let's-not-take-ourselves-so-seriously satire. The crux of the matter is that it boils down to context, audience and timing.
This being MediaScrum, this imbroglio is certainly a scrum and it's being played in, and about, the media. If this is indeed satire, the New Yorker is assuming everyone gets the joke - we all know that Barack is not a Muslim, loves our country, the fist bump is not a coded terrorist signal, etc. But let's face, this is New York, where some apocryphal dowager expressed disbelief in the election of Nixon (or Reagan, depending on who's telling the story) by exclaiming, "How could he have won? I don't know anyone who voted for him!" In other words, of course, everyone is in on the joke - or are they?
What percentage of the American voting public is not going to purchase the New Yorker but simply see the cover displayed on television and in the press and therefore have it confirm existing prejudices or raise lingering questions about Obama's patriotism, trustworthiness and so on? There was an excellent op-ed in the New York Times on June 27, "Your Brain Lies to You": http://www.nytimes.com/2008/06/27/opinion/27aamodt.html?_r=1&scp=1&sq=aamodt&st=nyt&oref=slogin. A pair of neuroscience experts points out that over time, you forget where you first learned about a false statement, and you may eventually forget that it is false. Therefore, the key is not refuting a false statement; it's preventing the false statement from being made in the first place. A quote attributed to Churchill summed this up nicely, "A lie can travel halfway around the world before the truth can put on its shoes." In six weeks, a substantial (and scary) percentage of the public will swear up and down that they saw a photo that proves Barack and Michelle are Muslim terrorists!
If the New Yorker wanted to satirize misperceptions about Obama, it should have done so AFTER the election. Then we could all have had a good laugh - we're so dumb we elected a Muslim terrorist as our president, ha, ha! Doing it now feeds the confusion of an electorate so misguided that voters are opposed to Obama both because he is Muslim AND because of his nut-job Christian minister! Talk about cognitive dissonance!
This being MediaScrum, this imbroglio is certainly a scrum and it's being played in, and about, the media. If this is indeed satire, the New Yorker is assuming everyone gets the joke - we all know that Barack is not a Muslim, loves our country, the fist bump is not a coded terrorist signal, etc. But let's face, this is New York, where some apocryphal dowager expressed disbelief in the election of Nixon (or Reagan, depending on who's telling the story) by exclaiming, "How could he have won? I don't know anyone who voted for him!" In other words, of course, everyone is in on the joke - or are they?
What percentage of the American voting public is not going to purchase the New Yorker but simply see the cover displayed on television and in the press and therefore have it confirm existing prejudices or raise lingering questions about Obama's patriotism, trustworthiness and so on? There was an excellent op-ed in the New York Times on June 27, "Your Brain Lies to You": http://www.nytimes.com/2008/06/27/opinion/27aamodt.html?_r=1&scp=1&sq=aamodt&st=nyt&oref=slogin. A pair of neuroscience experts points out that over time, you forget where you first learned about a false statement, and you may eventually forget that it is false. Therefore, the key is not refuting a false statement; it's preventing the false statement from being made in the first place. A quote attributed to Churchill summed this up nicely, "A lie can travel halfway around the world before the truth can put on its shoes." In six weeks, a substantial (and scary) percentage of the public will swear up and down that they saw a photo that proves Barack and Michelle are Muslim terrorists!
If the New Yorker wanted to satirize misperceptions about Obama, it should have done so AFTER the election. Then we could all have had a good laugh - we're so dumb we elected a Muslim terrorist as our president, ha, ha! Doing it now feeds the confusion of an electorate so misguided that voters are opposed to Obama both because he is Muslim AND because of his nut-job Christian minister! Talk about cognitive dissonance!
Sunday, July 13, 2008
“How Publishers Are Taking Back Control of Their Brands with Scalable and Profitable Online Advertising Strategies”
On Thursday, July 9, I had the opportunity to listen to a panel assembled by ContextWeb, the primary ad network for our StoneHorse online publishing sites. The event was:
“How Publishers Are Taking Back Control of Their Brands with Scalable and Profitable Online Advertising Strategies,” with Wenda Harris Millard co-CEO and President of Media, Martha Stewart Living Omnimedia; Sean Muzzy Senior Partner, Media Director;
Ari Brandt General Manager - Digital Media, Conde Nast Business Media Group; and
William Morrison Partner, Sr. Internet Analyst, ThinkPanmure; with Randall Rothenberg President, IAB, as moderator.
With the disclaimer that my notes should not be considered a full, or even particularly accurate, record of the opinions, facts, fables and other thoughts expressed by the participants, let’s begin!
Anand Subramanian, CEO of ContextWeb, opened the event. He tried to reconcile the seemingly contradictory situations of advertisers complaining that there is not enough available online ad inventory while publishers complain that they cannot fill their inventory. The conclusion Anand reached was that there is not enough of the right inventory and there is, unfortunately, too much of the inventory that no advertisers want. Closing this gap was the main theme of the discussion that followed.
Randall Rothenberg, CEO of the IAB, viewed the macro problem as a conflict between advertisers’ desire for scale, most likely a habit ingrained from many years of reliance on television, and their desire for the targeted relevance of the ad placements made especially possible by online advertising.
The question he posed to the panel: Are online ad networks the solution? If so, how should we deal with the struggle between branded online publications and online ad networks?
Wenda Harris Millard, the chair of the IAB along with being the co-CEO of Martha Stewart Omnimedia, characterized the conflict as being between “pork bellies and diamonds.” In her view, the ad networks started as the equivalent of retail outlet centers, dealing in commoditized distressed and remnant inventory and based primarily on price – “pork bellies” – as opposed to the “diamonds” of premium branded online content. She felt, however, that ad networks are evolving into the online equivalent of luxury shopping centers – essentially multi-branded upscale retail destinations. So to her, the question is how far along the path have they come?
[Note: Ms. Millard’s discussion on topics covered at this seminar and other issues can be viewed in an interview with Kara Swisher of D: All Things Digital on the ContextWeb site: http://blog.contextweb.com/contextual/wenda-harris-millard-featured-on-allthingsdcom.]
Bill Morrison, an analyst at the Think Panmure boutique investment bank, attributed the growth of ad networks to the fragmentation of media, particularly online. His research showed that there are 160 million websites, of which 50 to 60 million are active, and approximately 1% are being monetized. Even at those low levels of activity, that still leaves 1.6 million websites contending for dollars, largely advertising.
The ad networks, in Bill’s view, grew in response to publishers’ need for revenue and advertisers’ inability to deal directly with the plethora of websites. The number of ad networks has grown in response to this marketplace need: there are now over 300 ad networks, compared to only 100 in 2003.
As the market has grown, networks have begun specializing beyond simple commodity sales. Bill felt, however, that there is yet no effective market for what he calls "premium secondary" inventory.
Multiple vertical ad networks aggregate sites with similar content. Through such aggregation, these networks are challenging the content leaders who seek to garner premium rates for their inventory on the strength of their brand and depth of their content.
ContextWeb, the host of the morning’s event, has a slightly different model, having constructed what are in effect “synthetic networks” of pages of related content, regardless of the editorial direction of the underlying sites.
Bill argued that the networks addressed other challenges faced by publishers beyond simply a means to garner advertising which they might not otherwise have the resources to reach. Another issue could be what Bill referred to as “inventory bursting,” i.e., volatility of traffic that is hard to predict and could prevent the matching of inventory to traffic.
Wenda raised what seems to be the key issue among branded publishers – that ad networks can create the commodization of online ad inventory: it's all about price, like TV. I was a little surprised at that last comment, as it had always seemed to me that television inventory, at least at the network level, avoided commodization by differentiating itself by quality of programming, demographic targeting, and buzz in general, such as premium pricing for events like the Super Bowl and the Oscars. Furthermore, if television is unable to avoid commoditized pricing, online probably stands even less of a chance, unless targeting or other techniques can demonstrate superior ROI to TV.
Ari Brandt, the general manager of Portfolio.com, took a different tack. He contended that his property is not competing on scale. It wasn’t clear whether this was an actual strategy or simply making a virtue out of necessity, with properties such as CNN/Money being clear leaders in the financial news and analysis categories. Ari viewed the mission of Portfolio.com to be that of empowering business leaders with online tools, although he did not go into much detail. He also said that Portfolio.com took a lighter approach to news, which would seem to be similar to that of the magazine itself.
All in all, he professed to be very satisfied with success of Portfolio.com, having 3 million unique visitors and 8 million page views monthly 15 months after launch, with a heavily male and affluent audience.
After the brief comments by each of the panelists, Randy Rothenberg asked: why are people replicating television metrics in their efforts to assess online advertising, such as reach and frequency?
Wenda agreed with the underlying premise of Randy’s question and said that her efforts at IAB included resisting the wholesale transfer of metrics from other media to online. Furthermore, as scale will continue to be a key objective of advertisers, she felt that television is becoming less important every year. She argued that digital media will eventually replace television, as magazines, which previously might have been a contender, can not provide the scale advertisers require.
For online, leveraging its unique strengths such as behavioral targeting combined with contextual relevance is key. She compared the online advantages to the mass “spray and pray” approach of television.
Bill Morrison commented that audience composition is as important as scale, another factor that would seem to favor online, particularly with regard to upscale audiences.
I asked the publishers on the panel about the importance of integrated marketing, particularly as a way to avoid the commoditization of online advertising through the creation of custom and multimedia packages not easily sold via a network. Wenda contended that advertisers were looking for true value creation in partnership with the publishers and that pricing was often the last concern, not the first. She also indicated that it was an advantage to have multiple media distribution channels, such as print, TV, radio, and the others available to MSO, as opposed to the online-only limitations at Yahoo!, her previous employer.
Randy next asked whether branded networks are an ad play or a content play. Wenda said that her objective is to serve her customers, particularly with regard to the branded network created under the Martha Stewart brand. She pointed out that MSO alone can not provide all of the content that their customers want, and that the Martha network enables them to extend their content reach. She cautioned the audience, however, that it is important to properly "curate" one’s network sites to guarantee the quality, both for advertisers and customers, and that not all networks do so.
When Randy asked about the relative values of new versus old branded networks, Bill seemed to indicate that it was not a critical distinction. He cited the example of Glam, which built a vertical ad network first, then built an owned-and-operated content site. In other words, it did the exact reverse of the MSO strategy.
Along the lines of extending content reach to provide quality inventory to advertisers, Randy cited the recent purchase by CBS of CNET which was done to expand its group of sites and build out its network of content, not just for ads.
Bill indicated that having such qualified content under a publisher’s umbrella was important in that IAB publishers, generally the largest publishers, accounted for 80% to 90% of total online ad revenue. The ad networks, on the other hand, while holding a market share of 10% to 15%, are growing much faster than the publishers, at a 30% annual clip.
A member of the audience asked about the widgetizing of content as a distribution channel, with or without ads. Ari seemed to view that as a likely further development, and cited Google Gadgets – a business travel widget – that has been syndicated across the Google platform.
Randy summed up the morning by saying that the keys to maintaining price include having trusted brands, providing a good consumer experience, and generating big ideas that create results. Hard to argue with that.
“How Publishers Are Taking Back Control of Their Brands with Scalable and Profitable Online Advertising Strategies,” with Wenda Harris Millard co-CEO and President of Media, Martha Stewart Living Omnimedia; Sean Muzzy Senior Partner, Media Director;
Ari Brandt General Manager - Digital Media, Conde Nast Business Media Group; and
William Morrison Partner, Sr. Internet Analyst, ThinkPanmure; with Randall Rothenberg President, IAB, as moderator.
With the disclaimer that my notes should not be considered a full, or even particularly accurate, record of the opinions, facts, fables and other thoughts expressed by the participants, let’s begin!
Anand Subramanian, CEO of ContextWeb, opened the event. He tried to reconcile the seemingly contradictory situations of advertisers complaining that there is not enough available online ad inventory while publishers complain that they cannot fill their inventory. The conclusion Anand reached was that there is not enough of the right inventory and there is, unfortunately, too much of the inventory that no advertisers want. Closing this gap was the main theme of the discussion that followed.
Randall Rothenberg, CEO of the IAB, viewed the macro problem as a conflict between advertisers’ desire for scale, most likely a habit ingrained from many years of reliance on television, and their desire for the targeted relevance of the ad placements made especially possible by online advertising.
The question he posed to the panel: Are online ad networks the solution? If so, how should we deal with the struggle between branded online publications and online ad networks?
Wenda Harris Millard, the chair of the IAB along with being the co-CEO of Martha Stewart Omnimedia, characterized the conflict as being between “pork bellies and diamonds.” In her view, the ad networks started as the equivalent of retail outlet centers, dealing in commoditized distressed and remnant inventory and based primarily on price – “pork bellies” – as opposed to the “diamonds” of premium branded online content. She felt, however, that ad networks are evolving into the online equivalent of luxury shopping centers – essentially multi-branded upscale retail destinations. So to her, the question is how far along the path have they come?
[Note: Ms. Millard’s discussion on topics covered at this seminar and other issues can be viewed in an interview with Kara Swisher of D: All Things Digital on the ContextWeb site: http://blog.contextweb.com/contextual/wenda-harris-millard-featured-on-allthingsdcom.]
Bill Morrison, an analyst at the Think Panmure boutique investment bank, attributed the growth of ad networks to the fragmentation of media, particularly online. His research showed that there are 160 million websites, of which 50 to 60 million are active, and approximately 1% are being monetized. Even at those low levels of activity, that still leaves 1.6 million websites contending for dollars, largely advertising.
The ad networks, in Bill’s view, grew in response to publishers’ need for revenue and advertisers’ inability to deal directly with the plethora of websites. The number of ad networks has grown in response to this marketplace need: there are now over 300 ad networks, compared to only 100 in 2003.
As the market has grown, networks have begun specializing beyond simple commodity sales. Bill felt, however, that there is yet no effective market for what he calls "premium secondary" inventory.
Multiple vertical ad networks aggregate sites with similar content. Through such aggregation, these networks are challenging the content leaders who seek to garner premium rates for their inventory on the strength of their brand and depth of their content.
ContextWeb, the host of the morning’s event, has a slightly different model, having constructed what are in effect “synthetic networks” of pages of related content, regardless of the editorial direction of the underlying sites.
Bill argued that the networks addressed other challenges faced by publishers beyond simply a means to garner advertising which they might not otherwise have the resources to reach. Another issue could be what Bill referred to as “inventory bursting,” i.e., volatility of traffic that is hard to predict and could prevent the matching of inventory to traffic.
Wenda raised what seems to be the key issue among branded publishers – that ad networks can create the commodization of online ad inventory: it's all about price, like TV. I was a little surprised at that last comment, as it had always seemed to me that television inventory, at least at the network level, avoided commodization by differentiating itself by quality of programming, demographic targeting, and buzz in general, such as premium pricing for events like the Super Bowl and the Oscars. Furthermore, if television is unable to avoid commoditized pricing, online probably stands even less of a chance, unless targeting or other techniques can demonstrate superior ROI to TV.
Ari Brandt, the general manager of Portfolio.com, took a different tack. He contended that his property is not competing on scale. It wasn’t clear whether this was an actual strategy or simply making a virtue out of necessity, with properties such as CNN/Money being clear leaders in the financial news and analysis categories. Ari viewed the mission of Portfolio.com to be that of empowering business leaders with online tools, although he did not go into much detail. He also said that Portfolio.com took a lighter approach to news, which would seem to be similar to that of the magazine itself.
All in all, he professed to be very satisfied with success of Portfolio.com, having 3 million unique visitors and 8 million page views monthly 15 months after launch, with a heavily male and affluent audience.
After the brief comments by each of the panelists, Randy Rothenberg asked: why are people replicating television metrics in their efforts to assess online advertising, such as reach and frequency?
Wenda agreed with the underlying premise of Randy’s question and said that her efforts at IAB included resisting the wholesale transfer of metrics from other media to online. Furthermore, as scale will continue to be a key objective of advertisers, she felt that television is becoming less important every year. She argued that digital media will eventually replace television, as magazines, which previously might have been a contender, can not provide the scale advertisers require.
For online, leveraging its unique strengths such as behavioral targeting combined with contextual relevance is key. She compared the online advantages to the mass “spray and pray” approach of television.
Bill Morrison commented that audience composition is as important as scale, another factor that would seem to favor online, particularly with regard to upscale audiences.
I asked the publishers on the panel about the importance of integrated marketing, particularly as a way to avoid the commoditization of online advertising through the creation of custom and multimedia packages not easily sold via a network. Wenda contended that advertisers were looking for true value creation in partnership with the publishers and that pricing was often the last concern, not the first. She also indicated that it was an advantage to have multiple media distribution channels, such as print, TV, radio, and the others available to MSO, as opposed to the online-only limitations at Yahoo!, her previous employer.
Randy next asked whether branded networks are an ad play or a content play. Wenda said that her objective is to serve her customers, particularly with regard to the branded network created under the Martha Stewart brand. She pointed out that MSO alone can not provide all of the content that their customers want, and that the Martha network enables them to extend their content reach. She cautioned the audience, however, that it is important to properly "curate" one’s network sites to guarantee the quality, both for advertisers and customers, and that not all networks do so.
When Randy asked about the relative values of new versus old branded networks, Bill seemed to indicate that it was not a critical distinction. He cited the example of Glam, which built a vertical ad network first, then built an owned-and-operated content site. In other words, it did the exact reverse of the MSO strategy.
Along the lines of extending content reach to provide quality inventory to advertisers, Randy cited the recent purchase by CBS of CNET which was done to expand its group of sites and build out its network of content, not just for ads.
Bill indicated that having such qualified content under a publisher’s umbrella was important in that IAB publishers, generally the largest publishers, accounted for 80% to 90% of total online ad revenue. The ad networks, on the other hand, while holding a market share of 10% to 15%, are growing much faster than the publishers, at a 30% annual clip.
A member of the audience asked about the widgetizing of content as a distribution channel, with or without ads. Ari seemed to view that as a likely further development, and cited Google Gadgets – a business travel widget – that has been syndicated across the Google platform.
Randy summed up the morning by saying that the keys to maintaining price include having trusted brands, providing a good consumer experience, and generating big ideas that create results. Hard to argue with that.
Friday, July 11, 2008
Nielsen Releases Report on 3-Screen Usage
Nielsen has released its latest report on media consumption: "Television, Internet and Mobile Usage in the U.S." The 4-page report can be found at: http://www.nielsen.com/pdf/3_Screen_Report_May08_FINAL.pdf
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