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Now That's Conversational Marketing

By - April 01, 2008

Silly. But I like it anyway.

We’re happy to announce the launch of AdSense for conversations, a new type of monetization solution that “puts the ‘context’ in contextual advertising”. Now, in just a few simple steps, you can begin displaying ads that are relevant to the topics you’re discussing — in an unobtrusive screen above your head.

The Rise of Independent Media Brands Online

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In my last overlong bout of thinking out loud, I pondered the role of the ad network in our online media ecosystem, and the apparent connection between the loss of brand-savvy executives at portals with the rise of the ad network/platform strategy as the apparent saving grace for those selfsame portals.

I left that post with these thoughts:

And I have to tell you, neither the publishers nor the brand marketers believe that a magical ad platform will somehow address their needs online. Sure, brand marketers will spend 5-15% of their budget on lower-CPM “pray and spray” DR and awareness campaigns. And sure, publishers are happy – thrilled! – to see algorithms drive up their backfill or remnant inventory CPMs. But none of them believe that ad networks provide the same kind of engagement and brand building opportunities that a simple two-page spread or 30-second spot does in the offline world.

So what *are* their needs? To address that, we need to step back, and think about media brands and marketing brands, and why there’s such a symbiotic relationship between the two. Clearly, brands have built what I’ve called “packaged goods media.” And in the past few years, I’ve come to the same conclusion about online media. In short, I think brands will also build the next batch of great online media companies. And up until recently, I thought Yahoo, AOL, and MSN were best positioned to be those companies. Now, I’m not so sure.

Interestingly, quite an anti-ad network meme has arisen since that post, spurred in part by the news that ESPN is opting out of them entirely. More on that later.

The Brand

But for now…what’s my big fascination with brands? And why do I think brands are so important to the next step in the evolution of the web?

There are many definitions of what a brand is (here are a few), but here’s my version (bricollage, certainly): a brand is defined by what its potential consumer says to others about that brand.

I’m sure there’s a formal symbolic expression of that idea (ie, an algorithm), but I’m going to guess it doesn’t scale. And that’s pretty much the point.

Brands are, in essence, defined by the conversations your consumers have about your products or services (and yes, I am indebted to Cluetrain and Ogilvy and any number of other great thinkers, even Hopkins, who might justifiably be the bridge between direct response and brand advertising).

Brand advertising in traditional media has been about getting in between the ears of a target consumer in some way and “building brand equity” through media executions. In essence, brand advertising has been, up till now, an attempt to influence the conversation that potential consumers will have after experiencing the advertising.

With conversational media and marketing, that concept is time shifting. Now brand advertising can *join* and even *initiate and convene* those brand conversations. And that requires a different skill set, one media folks are just starting to explore. To date, we’ve just begun to figure out how to execute marketing in this new form of media in ways that work for all parties concerned – the content producer, the marketer, and the consumer. But that doesn’t mean we won’t. It just means we have very interesting work ahead of us.

It’s Early Yet, Folks

Close your eyes and imagine leafing through your favorite magazine – Vogue, perhaps*. A two-page spread halts your progress – the image of a beautiful, sophisticated woman standing in the doorway of a crumbling Havana doorway, with an elegant brand – “Lancome” – etched in the lower right corner. Or perhaps it’s a spread in Fortune, an arresting montage of imagery featuring a Jaguar automobile, a model you’ve never seen before.

Now, open your eyes, and imagine the same experience online.

Having a hard time? (You’re not alone.)

As marketers, we love scale, and we demand safety and quality. But we have yet to nail engagement.

Brand marketers are experts at using traditional media to build demand for their brands – over the past 50 years, we’ve perfected the art of the engaging spread, the irresistible 30-second spot. Online, however, we have yet to find our footing.

Instead, we’ve funded the first ten-plus years of the commercial Internet with direct response dollars, pouring “branded display” budgets into ad networks and CPC vehicles. We’ve tried just about everything, to be sure, and we do buy display units on our favorite sites. Yet we’re often disappointed with the performance they deliver.

To paraphrase Wenda Harris Millard, Chair of the IAB, we must not trade our brands like pork bellies. Brands are not commodities, so why are we judging our online marketing by the standards of direct response? Is it, perhaps, because we can? Or, perhaps, is it because we don’t know how to measure that magic that occurs between a consumer’s ears when they first see the image of a beautiful woman standing in a crumbling doorway?

To keep building our brands, we have to go where the audience has gone. And every month, according to Comscore, 600 million people visit conversational media sites – foreign lands when it comes to brand marketing. Or ….are they?

Comscore Cm

Clearly, I’m going to argue that it’s more than possible to build brands in conversational media. In fact, I believe it’s already happening. We’re still poking around, trying to find our “thirty second spot for the Web,” a standard format that scales and performs. We have our print and television standards. And we have our IAB units online. But clearly, IAB units are not there yet when it comes to building brands.

And that’s OK. The commercial web is now a teenager – it’s been fifteen short years since Marc Andreessen released the Mosaic browser. To put this in perspective, television as a commercial medium reached its fifteenth birthday in 1956 – the year Elvis Presley made his first appearance on national TV. National news broadcasts were still in their infancy, As The World Turns debuted as America’s first half-hour soap opera, and The Price Is Right began its dominance of the game show genre. Commercial grade videotape recorders emerged, portable black and white television sets were introduced, and the first local color broadcast aired in Chicago. The thirty second spot had not yet reached scale. In fact, the dominant model was sponsorship and integration. (Remember Hairspray?)

Consumer Brands Love Media Brands, and Media Brands are Changing

Regardless of all the flux in how brand marketing might work online, here’s one thing of which I am certain: Consumer brands love media brands. Why? Because the best media brands represent a passionate community who are deeply engaged around a subject of shared interest. Think of some of the best loved media brands – American Idol, Wired, Oprah, The New York Times. All places with a distinctly engaged audience. Consumer brands are drawn to these winners because they want to be associated with quality, sure, but also because they know that if they can just get their executions right, something magical can happen, and they can influence that space between our ears, and in the right context.

And as I’ve argued in the past, what constitutes a “media brand” online is changing, and dramatically. In the first version of the web, a small handful of Very Big Brands dominated the online media landscape: Yahoo, Excite, MSN, AOL. There was a second tier – Lycos, Netscape (not originally a media brand), etc. – but the big four dominated not only reach, but also overall ad spending. The delta between the major online media brands and the secondary ones was massive, the drop off from there to others (Hotwired, Salon, etc.) was even larger. In short, it was damn near impossible to create a successful, stand alone media brand on the web that had the same scale as, say, a middling cable show or a decent consumer magazine – anywhere from 250,000 to 2 million uniques.

The reason? Brand advertisers did not see the value, and it was way too hard to scale a media buy. To reach, say, millions of business leaders, advertisers could buy six business magazines or six cable shows and run the same creative. They could then see results – lift in brand awareness, perception, and sales. But online, it was hard to find six similar places to run the same creative, and even if they could, the results were not there. Those tiny IAB units were simply not doing what a two-page spread or 30-second spot could do. To get results, they needed massive scale – and they would not pay massive CPMs to get there.

This economic reality drove CPMs down, and the measurability of IAB units added another wrinkle – now marketers could see results directly, and compare them to their spend in direct response type campaigns. It was a race to the lowest common denominator. Portals, with massive traffic, began selling tonnage instead of brand engagement, and the cycle reinforced itself.

So Where Are We Today?

As has been reported widely, more than 80 percent of the advertising inventory on the Web today is sold for less than a $1 CPM. Compare that to the average sold CPM in the magazine business or on television – reports vary, but it’s anywhere from six to 40 times higher. That delta, to my mind, has everything to do with engagement.

Or put another way, why is it that a brand marketer looking to reach college educated women, 18-34, is willing to pay $40 CPMs in Vanity Fair, but just $3 in an ad network?

The first and most important reason is engagement – the reader of Vanity Fair is engaged in the magazine, and when she comes across that Lancome ad, the chances that the “between the ears magic” will occur is far greater than at a random site run by an ad network. The second and related reason is creative – a two-page spread is simply a far more effective media vehicle for the brand’s message than the IAB unit.

So how do we solve for these two problems on the web?

Well, with Conversational Media, I believe the Web already begun to solve for the first issue. Thousands of great sites have popped up in the past decade, driven by a search, a critical mass of online users, and the confluence of cheap or free platforms (LAMP technology, free publishing tools, and tons of other Web 2 services). Sites like Boing Boing, ProTrade, Graffiti Wall, Dooce, Left Lane News, TechCrunch – these are deeply engaging media brands. Thanks to the new economics of the web, these sites don’t need millions of dollars to get to scale, and they don’t need millions of dollars to run. And thanks to new approaches to the economics of the media business (yes, I believe FM is such an approach), they have a decent chance of breaking even and even making good profits.

What’s very interesting about these new sites is that they are not, in the main, owned and operated by traditional online powerhouses. And that’s showing in the numbers: all the hyper growth in the top 20 sites on the Web is with conversational platform and tools – the very sites which spawn new conversational media brands. “Old School” portals and media sites are growing far less fast (see chart below). According to JP Morgan: “While portals were once dominant, Yahoo!, AOL, and Microsoft only accounted for ~ 29% of minutes spent online in August 2007, down from 42% in August 2002. Meanwhile, blogs, online gaming, and social networking websites have experienced double to triple digit Y/Y growth rates in page views.”


I believe we are at the beginning of an explosion in online media brands, akin to the explosion of consumer magazine brands in the 1940s and 50s, or the explosion of cable TV brands in the 1980s and 90s. With magazines and cable, we saw a move from a handful of major brands to hundreds of choices, all supported by major consumer marketers. With the Web, I think we can take that an order of magnitude further, or even more – from a handful (AOL, Yahoo, MSN) to thousands, or perhaps even tens of thousands.

But to do so, we need to solve the second issue – which is creative. And that’s where I think conversational marketing comes in.

In my third post in this three part series (yes, this is the end of the second, congratulations, you made it!), I’ll update my earlier post of a year ago, in which I outlined what CM is, with examples from the past 12 months. There are plenty of great new approaches out there, and they’re well worth reviewing in one place. I’ll also posit a few new ideas, and as always, hope to learn from your critiques and comments.


*This portion adapted from writing I did for the theme of FM’s CM Summit, to be held in NYC in June, and the Web 2 Summit, to be held in SF in November.

Lots of Reach in Ads…

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This post on Google’s reach in ads is getting a lot of pick up today. The most interesting factoid is that Google has 71% of the long tail, and Doubleclick has nearly 50% of the Big Head. Hmmmm.

Googleclick Share

News: Google Opens Search Index

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Google today announced that it is opening its search index to all comers, essentially taking a page from Amazon’s anemic Alexa approach, but moving the chess pieces well past that initial strategy: partners who take advantage of the new Google Search APIs will have the chance to finally meet the man behind Google’s curtain, shake hands, and then take over the controls.

As part of the move, Google announced it would be creating a new foundation to manage an open source version of its secret sauce. Details are still unclear, but it seems Google has realized that to win in the next phase of search, you must be open. I certainly applaud the sentiment, but until Google announces its Terms of Service, I’ll reserve judgement (after all, that’s where the money will be made, and the data rights determined).

Google’s move is certain to confuse Wall St, as of this writing, the company’s stock was mostly unchanged. However, it will take weeks, if not months, to sort through the true implications of this historic move. For now, the announcement timing feels a bit …. April’s Fool-ish….