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The Rise of Independent Media Brands Online

By - April 01, 2008

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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.”

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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.

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27 thoughts on “The Rise of Independent Media Brands Online

  1. Working with clients on developing brand strategies, we are often confronted with the difficulty large corporations are having making the transition to these new realities (and opportunities).

    I think that one of the key challenges is that marketers are still relegated to a communications function. Their domain includes all the things a company says, and very little of what it actually does. Marketers generally interact with their product development counterparts only after the product is “baked” and ready to go to market. It is difficult to engage in genuine conversations with the marketplace when you can’t change the reality of how a company does business, what it sells, how it works with partners, etc.

    This is beginning to change in some organizations (usually as the result of mandates from the CEO or other senior managers), but the changes are coming very slowly.

  2. John,

    you are hitting all the right points here and agree with you. I do think engagement is a major driver in CPM rates, and I see consumer brands willing to pay hefty premiums (over standard formats) for campaigns that allow to reach more engaged users. That is not necessarily just down to sites that capture a more engaged user base, but also to campaigns structured in such a way to create deep engagement between the users and the advertiser. In such cases, users do tend to “talk about brands” even after the advertising experience. When you can package this on-line, you get big budgets at high premiums from consumer brand. Clearly, the IAB format is in many cases inadequate for this purposes, and new emerging formats are needed. A good research written by a Piper Jeffrey analysts elaborate more on this point with some interesting concepts.
    Kind regards

  3. John Wesley says:

    Great post. This is an exciting time to work in media and I look forward to the ride.

  4. peter caputa says:

    Great post, John. Agreed 100%. I work with mostly small and mid sized businesses, not huge megabrands like FM works with. But, these companies are getting it too. They realize they need to be part of the conversation. There’s so many niches and my clients flock to the leaders in their spaces. For example, I talk to a realtor today who rattled off the famous realtor blogs. There’s a TechCrunch for every niche out there and conversations are happening. And I can see from my clients, that it’s generating traffic and leads and it’s really attracting prospects to them.

  5. nmw says:

    There was also a great deal of confusion after the invention of the printing press (cf. e.g. E. Eisenstein’s monumental work in this field).

    Note, however, that whereas the printing press made PUBLISHED texts (such as Copernicus & Newton) widely available, the internet makes PUBLISHING texts widely available (and you refer to this as “conversational media”). However, branding such as “Vanity Fair” and “TechCrunch” is mostly old-school — akin to “Adidas” or “Nike”. The new school “brands” will be “houses”, “cars”, “hotels” — the SHARED language of BOTH marketers and marketees — and this language MUST be shared (and therefore it will be so-called “natural” language).

    Hardly anyone will “look up” a brand name like “Vanity Fair” — instead, they will look for “fashion”, or “design” or perhaps “clothing” or “accessories” or something like that. And natural language web sites will be tomorrow’s INDEX to the WWW.

    :) nmw

  6. Until the web there was little means to respond directly in other media forms. Certainly not comparable with the web. Still, DRTV and DR radio proved that you could not only build a a consumer and media brand (Nordic Track, QVC, et al) but that the ROI if executed well was astounding.

    The ad immortals, the people who built advertising would roll over in their graves if they saw the kind of “branding” going on today. They understood the answer to your own question, “how to measure that magic that occurs between a consumer’s ears when they first see the image of a beautiful woman?” This sums up the disconnect with online brand. It’s not about measuring what occurs when people first see the image, it’s about measuring the outcome. After all, advertising exists to sell things.

    The web can optimize how effective we are with our ad spends, our creative and our business. There is no more DR or Brand. There is just the answer to “how much did I spend” and “how much did I make.” Hallelujah for simplicity!

  7. kabin says:

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

  8. nmw says:

    LOL — just realized John trying to cover all the googlewhacks in “spot” searches on Google!

    :D nmw

  9. John Battelle says:

    Glad someone noticed!

  10. I failed the captcha test logic. I’ll write my response on my own blog.

  11. Lori Jones says:

    Hello John,

    As far as viewer engagement goes, the 30 sec spot for the web you are looking for can be found at Ultramercial.com. They have had over five years experience with their patented attention-as-payment ad format. Not only have they brought publishing companies out of the red, but their free ad-supported access to Wi-Fi has travelers at Denver International connecting up to 6,000 times a day instead of the pay platform that brought in about 500-600.
    They have also had great success with their expansion into mobile phones such as Virgin Mobile’s Sugar Mama program. Empirical proof that engagement works.

  12. Jeremy Greenfield says:

    Consumer brands should become media brands and own the attention of the audience instead of renting it from media sites. Every consumer brand (and media brand) has a personality, a story, and that story and personality is hard to convey through a display ad on a media site with its own story/personality. I think the web can be a great place to accomplish the goals of branding — but not through display advertising that borrows attention of an audience engaged with real content. Even as a direct response tool, display advertising on the web barely works, and is working less and less.

  13. Colonel Minnesota says:

    As I read your article I went to Boing Boing to check out the site. Good to know ad networks and FM are placing wannabe Zwinky ads next to a great brand like BMW on the Boing Boing homepage.

    If this is the next big thing in media shouldn’t they be selling out their homepage and/or controlling the ad inventory that appears on the homepage next to mine?

    FM’s CPM’s are not cheap…and if they are selling units to Tribal Fusion for pennies on the dollar while I pay a $10-$20 CPM for my branded impressions there will be problems.

  14. Evan Siegel says:

    Great stuff. Engagement is indeed the way to a brand advertiser’s heart. The internet is where the people are and where they’re being engaged. Wouldn’t it be great if Nielsen took a look in the mirror and asked itself the really hard questions. So let’s get up off the couch and push ourselves to do better.

  15. Chris Kilkes says:

    While I agree with the overall point that yes, there is an evolutionary development in online media (i.e. the explosion of new content sites coming), from my own personal experience marketing on “conversational properties” – what I think this piece misses is a discussion of performance. I’ve deployed a range of media/creative tactics from standard banners to highly customized UGC initiatives, but found that just because a medium is new (or more likely evolutionary) doesn’t mean readers are any more likely to respond to marketing on CM sites than they are checking their Yahoo email.

    Yes, this is a new direction that offers lots of possibilities; and yes, there may be an explosion of new places for marketers to “engage” consumers but that fundamental question remains: do consumers want to engage back?

    Hoping that comes next in the series!

  16. Anthony Perez says:

    @Jeremy Greenfield

    “I think the web can be a great place to accomplish the goals of branding — but not through display advertising that borrows attention of an audience engaged with real content. Even as a direct response tool, display advertising on the web barely works, and is working less and less.”

    But do we also realize the hypocrisies in believing that print and broadcast are the advertising havens they once were? People who consume media today have ADD. A lot of people are multitasking or skipping conventional ad messages – maybe not an alarming rate especially with the older generation, but still more than in the past. People channel surf, surf the web while they have the TV on, fast forward commercials through DVR, talk to others in the room when commercials come on, and flip through magazines. Essentially, you’re fighting for people attention everywhere including passive media like television.

    The use of the web is rising year over year as more people add it to their overall media mix. Television, radio, web, and mobile are all apart of this. People aren’t coming to the message, but rather it’s up to the marketer to meet them on their terms.

    And it boggles my mind why some marketers are so dead set on measuring display ads by their click through rates and other direct response metrics. That’s like measuring the effectiveness of magazine or TV ads by the number of people who disrupt those experiences to run to the store to buy something.

  17. I agree somewhat with nmw, in that “natural-language” search should be the main focus of the major brands. Where he, ad agencies and their major brands are missing the boat is the failure to realize that one can make their brand synonymous with natural-language queries by using the public perception that highly ranking organic results are somehow actually more relevant. With all the talk about magazine ads, IAB Units and CPM’s, organic search seems to get lost.

    Organic search is not just about click-throughs and ROI. If branding is about getting your demographic thinking or talking about your brand after the experience, what better way to brand is there than to show up consistently in organic search results.

    Take Wal-Mart, a brand that sells just about everything. They should show up anytime I search for anything, constantly reminding me they sell it. Yet they don’t.

    There is no reason the Wal-Marts, Nordstroms and even GM’s of the world shouldn’t be able to rank organically, and inexpensively, by the way, for thousands of search terms. It’s simply that they, and their agencies, just don’t bother.

    The missed branding opportunity presented by organic search is staggering.

  18. Well, I opened my eyes and imagined the same experience online. It didnt take me to long to find it. I was searching for real estate on 2newportbeach.com and a Rolls Royce drove across the screen. I clicked on it and it expanded over the screen into an engageable presentation for a convertable Phantom. It may not have beem a Jaguar, but it was pretty close to what you were talking about!

  19. nmw says:

    >> There is no reason the Wal-Marts, Nordstroms and even GM’s of the world shouldn’t be able to rank organically, and inexpensively, by the way, for thousands of search terms. It’s simply that they, and their agencies, just don’t bother.

    Brian,

    great post — and I think we are in TOTAL AGREEMENT.

    And the “traditional” 30 second spot needs to be put in context: I think TV programming is about 2/3 “content” and about 1/3 “advertising” (note, however, that I have alot of difficulty distinguishing those 2 data types — some of the first widely distributed “newspapers” were in fact close to 100% “advertisements” [IMHO] ;P ).

    I feel that perhaps the greatest misconception arises from the view that a computer is simply a “media” technology — i.e., simply transferring data en masse. As people become more and more aware that computers actually process incoming as well as outgoing data, they will probably begin to focus more and more on the reading data off of the lips of card-carrying consumers (instead of indiscriminately trying to “load” their “data sets” into each and every CPU, regardless of “hardware configuration”).

    Perhaps Esther Dyson is most well known for this view / analysis of how computers are an “interactive” technology unlike traditional “publishing” media — but I do also believe that number (and “language”) crunching was not just “discovered” yesterday (perhaps it “started” a little over a century ago with Gottlob Frege, or perhaps it started several millenia ago when farmers counted the stones they carried which represented the livestock which they owned)…

    I feel the least far-fetched analogy for such popular information retrieval systems are the telephone directories referred to as “yellow pages” (or “business listings”). However: not that such directories use a vocabulary that is “controlled” — each directory’s publisher decides on which terms to use, and the “user” can only choose the terms (and directory configuration / supplier) they find suit their purpose best.

    The really successful marketers will focus on the terms that “regular people” use — their so-called “ordinary language” approach to the world (cf. http://en.wikipedia.org/wiki/Ordinary_language_philosophy ). And this is a world in which brand-names (such as “Google”) mean virtually nothing.

  20. Tom O'Brien says:

    Hi John:

    Now THAT is a blog post!

    (Successful) Conversational marketing is hard for brands – because it requires human interaction and a commitment to a relationship over time – it is not a campaign.

    But this is where the gold is – and brands that figure out how be participate and be relevant and helpful in a conversational world will take over.

    TO’B
    MotiveQuest LLC

  21. Instead of just putting DIGG buttons below each post, you might want to consider the other Bookmarking sites as well.

    http://www.mixx.com/users/google

    So many of the Diggs or non existent for these posts

    Back in the old days of Digg, this quality, detailed post would have gotten dozens of Diggs – but now everything has to be extremely simple and gimmicky OR submitted and voted on by many Top members to get to the homepage.

    Submitted your post to Mixx – lets see how that does; they seem to have a more intelligent readership.

    Maybe othes will help get this good post noticed.

  22. As a creative I find it interesting how much conversation is about formats and repetition. I know that’s how business works and money gets made, but I also think it’s the root of the problem. People keep approaching marketing from the mindset of “how can we convince customers”. The mindset should be “how can we make customers believe in us.” And one answer, at least, is do something worthy of your customers’ faith. That doesn’t mean you have to greenwash (which everyone is doing anyway). It just means get your customers involved. Respect them. Why on earth don’t car companies pay any real attention to you after you buy a car? Why when Chevy introduces a genuinely new product like the regrettably named Malibu, do they sell it with old-school saturation marketing, rather than engaging people in the story behind a car that actually is as good as a Camry. How did that happen? (No, I don’t own one, but I would love to do a site or a short film about the people who made the car, and then run the film wherever car buyers–and film buffs–are.)

    One property that deftly turns the advertising model on its head is honeyshed.com. Rather than cloaking the sale in entertainment, Honeyshed turns the sale itself into entertainment. (I don’t work on that, either, alas.)

    So I wait with enthusiasm for Part 3, John.

  23. nmw says:

    Why don’t we help John along and make some suggestions?

    Here’s one: maybe the web needs a different KIND of engagement than print or tv — and I for one think indeed it’s comparatively strong on “pull” rather than “push”.

    And (as I mentioned above) there is the “specter of interactive”… :D

    I think the main thing is that this fundamental shift (from “one-way” media) to completely distributed media is really a HUGE thing (like I said above — I feel it is as big as the printing press itself) — and maybe it’s simply that “old habits die hard”.

    When the media landscape is so flattened out, how will it become possible to create community engagement? I think the old media model was “engage EVERYONE” — but somehow I think that model doesn’t fit today. This is (btw) also a problem I have with the “Cluetrain Manifesto” — it is simply not possible to be “connected to everything” (being “connected” to everything would result in the term “connected” becoming meaningless).

    So perhaps TARGETING (selecting an “appropriate” community from the global population) is the way to go. In earlier decades and centuries there were more / less crude approaches to this (e.g. demographics). One thing the web adds to this is a way to select community by topic….

  24. nmw says:

    Sorry to self-follow, but I kept thinking about how such topically focused communities might crystallize — and indeed I do believe they are in fact crystallizing as we speak whether we like it of not.

    And I’ve been thinking about the comment by Search Engines Web above:

    >> Submitted your post to Mixx – lets see how that does; they seem to have a more intelligent readership.

    Perhaps the community of mixx.com is not actually more intelligent than the digg.com community — maybe they are differently intelligent… — and maybe it is such differences that will lead some people to engage at mixx.com vs. at digg.com or at buzz.yahoo.com or at youtube.com or at viddler.com or at twitter.com or at jaiku.com or at facebook.com or at openspace.com or at hotels.com or at movies.com or at baby.com or ….

  25. nmw says:

    ACK — meant to compare openforum.com w/ facebook.com (sorry about that ;)

  26. turkce forum says:

    great post — and I think we are in TOTAL AGREEMENT.

  27. John Wesley says:

    Everyone is starting to realize that the IAB units don’t do anything. I can’t remember the last time I clicked on one. And I buy online all the time.

    To create engagement, the advertisers need to get into the content, the same way TV commercials get into the middle of a show and 2 page spreads get into a magazine. The problem is that web users won’t stand for that.

    I think the next step is ads as content. Giving users something do and think about. The recent Starbucks campaign is great example. So is the car campaign John just linked to. It will be interesting to see how many of those user generated ideas become real. I’ll be interested to see the next experiment that FM tries. They are clearly the cutting edge ad network.