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Twitter Drops Other Shoe, Which You All Saw Coming, Right?

By - August 30, 2012

Way back in the spring of 2010, when Twitter was constantly under siege for “not having a business model,” I co-hosted “Chirp,” Twitter’s first (and I think only) developer conference. This was just two and half years ago, but it seems like a decade. But it was at that conference, in an interview with me, that then-COO (now CEO) Dick Costolo first laid out the vision for “the Interest Graph.” I wrote about this concept extensively (herehere, here), because I felt that understanding the interests of its users would be the core driver of Twitter’s long-term monetization strategy.

Fast forward to now. Twitter today announced its “promoted” suite of ad units may now be targeted by user interest, which to me is a long-expected move that should clarify to anyone confused by the company’s recent announcements (cue link to recent tempest). Twitter’s statements around its decision to sever ties with Instagram and Tumblr couldn’t be more clear:

We understand that there’s great value associated with Twitter’s follow graph data, and we can confirm that it is no longer available to (insert company here)…

In short, if you are a potential competitor, and have the resources, motivation, and potential to harvest the connections between Twitter users at scale, well, expect to get cut off. You’re a threat to Twitter’s revenue stream.

None of this should come as a surprise, if you’ve been paying attention. Back in 2010, the second autocomplete answer for the statement “I don’t get…” in Google was “I don’t get Twitter”:

Interestingly, today, the same search today shows Twitter has only managed to drop down to third, even though the company now sports 140 million active users:

And while one could argue that in 2010, it was consumers who didn’t “get” Twitter, perhaps the folks scratching their heads via Google now are developers, who of late have been concerned that building on top of Twitter’s APIs might be dangerous for their long-term livelihood.

Twitter’s announcement today clarifies things quite a bit. Twitter has already declared its distaste for any business that manages how people consume tweets. Today, the other shoe dropped: Don’t build your business leveraging Twitter if you plan to run interest-based advertising at scale. Of course, the entire traditional media business is driven by interest-based advertising, which means Twitter’s business development group has a lot of work ahead. Interesting times ahead, to be sure.

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The Future Is Cloudy

By - August 29, 2012

I’ve spent a lot of time thinking about data recently. It’s not just reading books like The Information or Mirror Worlds (or Super Sad True Love Story, a science fiction novel that is both compelling and scary), it’s my day to day work, both at FM (where we deal with literally 25 billion ad calls and associated data a month), and in reporting the book (I’ve been to MIT, Yale, Amazon, Microsoft, Facebook, Google, and many other places, and the one big theme everyone is talking about is data…).

We are, as a society and as individuals, in the process of becoming data, of describing and detailing and burnishing our dataselves. And yet, we haven’t really joined the conversation about what this all means, in the main because it’s so damn abstract. We talk about privacy and fear of big brother, or big corporations. We talk about Facebook and whether we’re sharing too much. But we aren’t really talking – in any scaled, framed way – about what this means to being humans connected in a shared society, to be in relationships, to be citizens and consumers and lovers and haters….

There are so many wonderful micro conversations going on about this topic, spread out all over the place. I’m hoping that when my book appears, it might be a small step in joining some of these conversations into a larger framework. That’s the dream anyway.

Meanwhile, this report caught my eye (hat tip to the ever interesting newsletter guru Dave Pell and his NextDraft): Can’t Define “The Cloud”? Who Cares? It quotes a study that found:

….most people have no idea what the cloud is, have pretended to know what it means on first dates, and yet effectively all respondents are active cloud computing users.

It continues:

And that’s the way this stuff should work.

I get the point, but in a sense, I utterly disagree. If we as as society do not understand “the cloud,” in all its aspects – what data it holds, how it works, what the bargains are we make as we engage with it, we’ll all be the poorer for it, I believe. (For one aspect of this see my post on the Cloud Commit Conundrum). More on this as the Fall approaches, and I settle into a regular habit of writing out loud for the book.

 

A Show Of Hands Please…

By - August 28, 2012

…from those of you in the marketing business out there. How many of you would love to promote your product on the home page of Google, in this fashion?

It’s arguably the web’s most valuable ad placement, it’s not for sale, and no one knows how much traffic or conversion it drives save Google itself.

Just one more sign that the Internet Big Five are girding for a massive fight to be the platform for your life. And if you’re shocked, don’t be. Remember when Amazon launched Kindle? The first thing you saw when you went to amazon.com was….what again? But then again, the Kindle was just another product Amazon was selling, right? At least, it seemed that way.

Now, when Facebook does a home page takeover with its own hardware device, then the battle will truly be engaged. Though I’m not convinced the young company has that move in it….Regardless, here we go….

Musings On “Streams” and the Future of Magazines

By - August 17, 2012

I’ve run into a number of folks these past few days who read my piece last week: The State of Digital Media: Passion, Goat Rodeos, and Unicorn Exits…. Some of you have asked me to explain a bit more on the economic issues regarding media startups. I didn’t really go too deep into them, but as I was answering one fellow in email, I realized I didn’t really explain how complicated they really are, particularly if you want to make new forms of publications. I’ll get into that in the second part of this post, but first, I wanted to address a few articles that have touched on a portion of the issue, in particular The Pretty New Web and the Future of “Native” Advertising (by Choire Sicha) and What happens to advertising in a world of streams? (by Matthew Ingram).

Bridging the Stream

Both these posts tackle the emerging world of “stream”-driven content, painting them as opposite to the format we’ve pretty much used for the past 20 years – “page”-based content (like this page, for example). An established, at-scale business model exists for page-driven content, and it’s called display advertising. And anyone who’s been reading this site knows that display advertising is under pressure from two sides: first, the rise of massive platforms that harvest web pages and monetize them in ways that don’t pay the creators (Facebook, Twitter, Pinterest) and secondly, the dramatic growth of programmatic buying platforms that do pay creators, but the payment amounts are too low to support great content (second generation ad networks called DSPs, backed by agencies and their marketing clients).

Sicha and Ingram note that “stream”-based models – the latest to get attention is Medium, from Twitter co-founders Biz Stone and Ev Williams – eschew display advertising. Platforms like Twitter and Facebook are focused on stream-based advertising (Facebook got to its initial billions in display, but is pivoting to Sponsored Stories, Twitter has always been about its Promoted Products). Everyone expects similar in-stream products from Pinterest and Tumblr. Stream-based advertising products are “native” in nature - which is to say, advertising that acts much like the content it supports.

But as I’ve advised in the past, those platforms simply don’t work as home bases for people who want to make a living from creating great publications. Nor, to my mind, are they particularly good media experiences – the way a great site or a great print publication can be. For now, the good old-fashioned page-driven web is where folks like The Awl and GigaOm execute their product and collect their money. Display is their model, and that model is under pressure. What to do? This is a question that matters, a lot, because there are literally millions of sites that currently run on the display model, like it or not.

Well, I don’t think it’s as hard as it might seem. While folks are pretty freaked out about the decline of display, I’m a bit more patient. We’re in the middle of a shift, and it’s not as radical as some might think. We need “native advertising” for the independent web – and it turns out, we’ve already got it in the form of new, integrated content units that fit into the flow of the page-driven web (see image of FMP’s “native conversationalist suite,” above), and, of course, content and conversational marketing, which we’ve been doing since 2006. The issue we now have to tackle is scale (the ability to buy native ads across the web efficiently and in large numbers) and data (the ability to buy these ads with excellent targeting, performance metrics, and application of first- and third-party data). That’s going to take time, but it’s already underway. The technology and efficiencies of programmatic buying will, over time, marry with “native” ads, driving higher value for great content.  (More on this in another post).

And by the way, “traditional” display isn’t going to go away. It’s just going to get far more efficient and valuable as the data gets better and better, programmatic begins to climb up the value curve, and the units evolve to better complement new approaches to content presentation across all instances of the web (including apps and big platforms).

So far, I’ve been talking only about publishing on the “traditional web,” for lack of a better phrase. Nearly all web publications are driven by the display model, which is in turn driven by page views. But we all know the web is shifting, thanks to mobile devices and the walled gardens they erect. The new landscape of the web is far more complicated, and new products must emerge. To wit….

It’s A Tough Time To Launch A Magazine, Which Is Why It’s A Great Time…

Quick: Name me a digital-only publication that’s blown you away, the way the paper-based Wired did in 1992 (well, at least for some of you), or maybe Boing Boing did when you first found it online. I don’t mean a cool new website (there’s been a ton of those), but a magazine in sense of a branded package of curated, unique content, one that really speaks to you, one that is an event each time it comes out.*

As much as I love scores of wonderful sites across the web, most of them are driven by the daily grind of the display/pageview hamster wheel. They create 20, 30, 40 “content snacks” a day, and I miss far more than I consume.  My media habits when it comes to these sites are rather like a hummingbird. I can’t think of a single “publication” in the digital space that resonates the way magazines used to for me – where I stop time for a while, and really soak in the essence of the publication’s experience. (For purely selfish reasons, if you can think of one, please note it in the comments!)

I think there’s a reason there’s a paucity of digital magazines, and it has a lot to do with the current, fractured state of digital publishing. In short, if you want to create such a product, the curent ecosystem makes it nearly impossible to do so. I think this is changing, but so far, not fast enough.

Just for kicks, let’s say you want to start the equivalent of a “new publication” in the Internet space. Let’s further state that you want it to be relatively cutting edge, IE, you want it to be available everywhere your customer might be, and take advantage of the digital environment where it lives. That means  editions in the Apple iTunes store, Amazon’s Kindle/Android newsstand, and Google’s Play (Android) store, for all those Android smartphones and tablets storming the market. And of course, you want to exist on the web (with spiffy HTML5, natch). Oh, and it’d be nice if you could also have a great version of it exist on Facebook, no?

Naturally, you want to be able to give the consumer of your publication a consistent, platform-agnostic experience across all those environments. If your reader starts engaging with your publication on, say, an iPad, but moves to her work PC later in the day, your publication should be aware of what she’s been doing, the environment she’s now in, and then serves up the right content, ads, and such based on that data. Kind of the way NetFlix works (hey, they solved it for movies!), or Amazon’s Kindle readers (books!) across various platforms.**

Ready to get to work making this happen?!

OK. Well, let’s use the “old” model of magazine publishing as a starting point to model your costs.

In that model, you spent about 35% of your operating costs in “audience development” – paying for circulation and newsstand costs, as well as the costs of selling your product to advertisers (assuming you are going to both charge a sub fee, and include ads, which most “traditional” publications do).

Another 20-40% (depending on how much you care about your product) are spent on actually creating your content. You know, paying editors, designers, writers, videographers, etc.

Add in 25% of your cost to make and ship the physical product, and the remainder is “G&A” – paying for management staff.

As you can see, the variable cost here is in “creating your content,” and if you’re a passionate creator of media, you want to spend every dollar you can creating a great product, naturally.

The problem is, if you’re making digital media these days, the costs of packaging that content have skyrocketed. Imagine making a magazine that has to be natively integrated into half a dozen or more different newsstand formats. Instead of one consistent, beautiful page layout, you have to make six of them – one for each device and distributor, each native to the environment. You don’t have to pay six times over for the content, but you do have to pay a lot more for your design, production, tech, and distribution resources.  You want your content to shine everywhere it might be consumed, right?! Blam, your fixed costs of making the product just went uneconomic!

The same problem applies to marketers – they have to make not one ad, but up to six, if they want their ad to travel everywhere the publisher’s content goes, and work in ways that take advantage of each platform. Trust me, they don’t want to deal with that. No to mention, not many advertisers want to buy ads inside “digital magazines” these days. It’s an unproven medium, so far. (However, as I argued in my 2006-7 series on Conversational Media, the best magazine ads are in fact truly native.)

Which begs the other side of the ledger: Revenues. As I said before, traditional publications have two sources of revenues, in the main: subscriptions (paid circulation) and advertising.

As we all know, the industry has historically punted on getting anyone to pay for content on the Internet, but that’s changing – people pay for Netflix, the Wall St. Journal, Spotify, various apps, etc. I think folks will pay for quality content if it’s truly valuable, so let’s pretend for the purposes of this example that your new publication plans to be in the “valuable” category.

If you want to sell your publication on the Big Guys’ platforms, you have to play by their rules, which means you turn over 30% of your circulation revenues. That’s a hefty chunk of revenue to lose before you even begin to pay for other costs! You can keep all the revenues from folks who buy your publication on the web,  but if they want to enjoy it on their iPad or Kindle via a native application, well, you have to deal with Apple and Amazon. Google’s Play store takes a smaller cut, but it takes a cut nonetheless.

Just for arguments’ sake, let’s say that you cancel out that 30% tax with what you used to call “audience development costs” for traditional publications. You’re pretty much even, right? Nope. You now have cross-platform inconsistencies to work out, and those are going to cost you money to manage. What if your customer has more than one device, or wants to engage with your app on Facebook? Sorry, you’re kind of screwed. There’s no easy way to rationalize your customer experience across all those platforms and devices in a way that makes business sense. So many gatekeepers, so many business rules, so many tech platforms….

You’ll have to account for the costs of managing a data platform that keeps track of all your customers (including your advertisers) and insures they have a consistent experience across platforms. And you’ll have to build that yourself, sorry. The only folks who’ve figured that out are Very Big (Amazon, NetFlix etc), and they’re not sharing how they do it. It’s doable, but it’s gonna be expensive if you want to roll it yourself. I’ve heard that some new publishing startups are trying to do just that, and I wish them godspeed.

To cope with this particular mess, some publishers, like The Daily, have decided to go with just one platform (Apple), and cross their fingers and hope it works out. Others, like the Times, have pushed themselves across several, and expended heroic resources trying to tie it all together (without totally succeeding, in the main). But remember, we’re talking about a new publishing startup here, not the New York Times or Newscorp. If those guys are struggling to make it work, well, what’s the chances a startup media company is going to succeed?

Then there’s the revenues associated with selling advertising. As I pointed out earlier, the traditional web display model is under transitionary pressure, and anyway, you want your content to work everywhere, not just the web. If you want your advertisers to be everywhere your content is, you’ll have to figure out a way to get their ads natively into all those half dozen or so platforms (oh, and you’ll need to report performance metrics too, sorry). So far, that’s also an unsolved problem (and one your advertisers won’t pay you to solve). That’s going to limit your ability to sell ads, and increase your costs of serving them.

OK, I’m going to stop, because if you’re an aspiring publisher, I may have given you a fit of the blues.

But cheer up. Because I really do believe these issues will be solved. So far, we’ve written off magazines as dying, because we can’t figure out how to replicate their core value proposition in the digital world. But I’ve got a strong sense this is changing. Crazy publishing entrepreneurs, and even the big players in media, will sooner rather than later drive solutions that resolve our current dilemma. We’ll develop ads that travel with content, content management systems that allow us to automatically and natively drive our creations into the big platforms, and sensible business rules with the Big Guys that allow independent, groundbreaking publications to flourish again.

It’s going to take time, patience, innovation, and pressure, but we’ll get there. In fact, getting there is going to be a great journey, one we’re already well into. So tell me – what’s your favorite digital “publication” and why? Do you read “traditional magazines” on your tablet or online? And what companies do you think are innovating in this area?

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*Some have argued that the era of a branded publication created by a dedicated team of content creators is over. I utterly disagree, but that’s another post. 

**The fact that these two “old media” formats have mostly solved their digital distribution issues, whilst magazines have not, is vexing. A movie is a movie, a book is a book – you can read it or watch it online in nearly the same way that you can offline.  Movies, TV shows, and books can easily flow, with very little new formatting, into any digital space. But a magazine clearly is a different beast. We don’t want to just flip through a PDF of our favorite magazine (or do we? Do you?). Something seems off, doesn’t it? We want more…clearly, the magazine holds some magic that so far, we’ve not unlocked. What a wonderful problem to think about….

The State of Digital Media: Passion, Goat Rodeos, and Unicorn Exits….

By - August 09, 2012

Earlier in the week I was interviewed by a sharp producer from an Internet-based media company. That company, a relatively well-known startup in industry circles, will be launching a new site soon, and is making a documentary about the process. Our conversation put a fine point on scores of similar meetings and calls I’ve head with major media company execs, content startup CEOs, and product and business leaders at well known online content destinations.

When I call a producer “sharp,” I mean that he asked interesting questions that crystalized some thoughts that have been bouncing around my head recently. The main focus of our discussion was the challenges of launching new media products in the current environment, and afterwards, it struck me I might write a few words on the subject, as it has been much on my mind, and given my history as both an entrepreneur and author in this space, I very much doubt it will ever stop being on my mind. So here are a couple highlights:

* We have a false economy of valuation driving many startups in the content business. Once a year or so, an Internet media site is sold for an extraordinary amount of money, relative to traditional metrics of valuation. Examples include The Huffington Post, which sold for a reported 10X annual revenues, and, just this past week, Bleacher Report, which sold for even more than that ($200million or so on revenues, from what I understand, that were less than $20mm a year).

Such lofty multiples (typical media businesses  - yes, even Internet media businesses – trade at 1.2 to 3X revenues) can make Internet media entrepreneurs starry-eyed. They may have unrealistic expectations of their company’s value, leading to poor decision making about both product and business issues. The truth is, truly passionate media creators don’t get into the media business to make huge gains from spectacular unicorn exits. When it happens, we certainly all cheer (and perhaps secretly hope it happens to us). But the fact is, we make media because we don’t know what else to do with ourselves. It’s how we’re wired, so to speak. (There is another type of media entrepreneur who is far more mercenary in nature, but I’m not speaking of those types now).

Let me explain why HuffPo and Bleacher Report were sold for so much money: They happened to be in the right media segment, at the right time, while growing at the right rate, just as a large media-driven entity was struggling with a strategic problem that threatened a core part of its business. And that particular site happened to solve for that particular problem at that particular time. These major “strategic buys” occur quite rarely (though smaller, less pivotal strategic buys happen all the time – just for far lower multiples).

Media companies don’t like to pay more than their spreadsheets normally dictate. But if word comes from Time Warner’s CEO or its board that “ESPN is kicking our ass in sports” and “do something about it, pronto,” well, that’s when lightening might just strike. As for the Huffington Post, let’s be clear: AOL was a huge media business that faced a massive problem with audience retention, thanks to its declining dial-up business. The HuffPo brought a large and growing audience, not to mention some serious social media and content-platform chops. Right place, right time, right product, right team.

Now, both these businesses were leaders in their fields, they redefined news and sports coverage. And that’s why the acquirer with the major strategic problem bought them – they were the best at what they did. They met a large media company that had lost its way, and magic ensued. I applaud them both.

But if you’re building a content business in the hopes the same lightening is going to strike you, well, I too salute you. But that’s not really a plan for building a lasting media brand. At some point, you’re going to have to come to grips with the reality that making media is what you do for a living.  Making media companies that you hope to sell is not a lot of fun for anyone who cares deeply about making media.

*The current distribution and production landscape for media companies is an utter goat rodeo. Speaking of no fun, man, let’s talk about what we in the media business call “distribution” – IE, how we get our product to you, the consumer of our work. To illustrate what a total mess digital distribution has become, allow me to create a simple chart, based on the medium in which you might choose to create your media product. Note that I whipped this up in the past half hour, so it won’t be complete. But I think it makes my point:

And my point is this: If you are starting a digital media business today, you face a fractured, shifting, messy, business-rule-landmine-laden horrorshow. Your fantasy is that you can make one perfect version of your media product, and deliver it across all those tablets, Kindles, smart phones, PCs, Macs, and so on. The truth is, harmonizing your product (and, even more importantly, your consumer’s experience and your monetization) across all those platforms is currently impossible. Compare that to starting a website in 2002, or launching a magazine in 1992 (that’s when we launched Wired). The business rules were established, and you could focus, in the main, on one thing: producing great content. (Speaking of Wired, it had a great exit, as historians may recall. But again, it was a exit driven by the strategic need of a bigger company: the media business went for a typical multiple, despite how “hot” the brand was. What got the unicorn valuation was Wired’s Hotwired business, specifically, its search share….)

We’re in a messy transition phase right now, where the focus can’t only be on content, it also has to be on the *how* of distribution, production, and business terms. And that’s retarding growth and innovation in media businesses.

But I have hope. There’s a massive business opportunity inside this mess, one that I’m investigating, and I know others are as well. More on that as it develops. Meanwhile, a maxim: Most media businesses fail, always have, and always will. And most folks who make media already know this, which means they are close to batshit crazy anyway. But over and over and over, we keep making content, regardless of how ridiculous the landscape might be. And that, I am sure, will never change.

Here We Go Again: The Gray Market in Twitter and Facebook

By - August 07, 2012

So, casually reading through this Fast Company story about sexy female Twitter bots, I come across this astounding, unsubstantiated claim:

My goal was to draw a straight line from a Twitter bot to the real, live person whose face the bot had stolen. In the daily bot wars–the one Twitter fights every day, causing constant fluctuations in follower counts even as brands’ followers remain up to 48% bot–these women are the most visible and yet least acknowledged victims…

There it was, tossed in casually, almost as if it was a simple cost of doing business – nearly half of the followers of major brands could well be “bots.”

The article focuses on finding a pretty woman whose image had been hijacked, sure, but what I found most interesting (but sadly unsurprising) was how it pointed to a site that promises to a thousand  followers to anyone who pays…wait for it…about $17. Yes, the site is real. And no, you shouldn’t be surprised, in the least, that such services exist.

It has always been so.

Back when I was reporting for The Search, I explored the gray market that had sprung up around Google (and still flourishes, despite Google’s disputed attempts to beat it back). Fact is, wherever there is money to be made, and ignorance or desperation exists in some measure, shysters will flourish. And a further fact is this: Marketers, faced with CMO-level directives to “increase my follower/friend counts,” will turn to the gray market. Just as they did back in the early 2000s, when the directive was “make me rank higher in search.”

Earlier this week I got an email from a fellow who has been using Facebook to market his products. He was utterly convinced that nearly all the clicks he’s received on his ad were fake – bots, he thought, that were programmed to make his campaigns look as if they were performing well. He was further convinced that Facebook was running a scam – running bot networks to drive performance metrics. I reminded him that Facebook was a public company run by people I believed were well intentioned, intelligent people who knew that such behavior, if discovered, would ruin both their reputation as well as that of the company.

Instead, I suggested, he might look to third parties he might be working with – or, hell, he might just be the victim of a drive-by shooting – poorly coded bots that just click on ad campaigns, regardless of whose they might be.

In short, I very much doubt Facebook (or Twitter) are actively driving fraudulent behavior on their networks. In fact, they have legions of folks devoted to foiling such efforts.Yet there is absolutely no doubt that an entire, vibrant ecosystem is very much engaged in gaming these services. And just like Google had at the dawn of search marketing, Twitter and Facebook have a very – er – complicated relationship with these fraudsters. On the one hand, the gray hats are undermining the true value of these social networks. But on the other, well, they seem to help important customers hit their Key Performance Indicators, driving very real money into company coffers, either directly or indirectly.

I distinctly recall a conversation with a top Google official in 2005, who – off the record – defended AdSense-splattered domain-squatters as “providing a service to folks who typed the wrong thing into the address bar.” Uh huh.

As long as marketers are obsessed with hollow metrics like follower counts, Likes, and unengaged “plays,” this ecosystem will thrive.

What truly matters, of course, is engagement that can be measured beyond the actions of bots. It is coming. But not before millions of dollars are siphoned off by the opportunists who have always lived on the Internet’s gray edge.

Who’s On First? (A Modest Proposal To Solve The Problem with First- and Third-Party Marketing)

By - July 26, 2012

Early last month I wrote a piece entitled Do Not Track Is An Opportunity, Not a Threat. In it I covered Microsoft’s controversial decision to incorporate a presumptive “opt out of tracking” flag in the next release of its browser, which many in the ad industry see as a major blow to the future of our business.

In the piece, I argued that Microsoft’s move may well force independent publishers (you know, like Searchblog, as well as larger sites like CNN or the New York Times) to engage in a years-overdue dialog with their readers about the value exchange between publisher, reader, and marketer. I laid out a scenario and proposed some language to kick that dialog off, but I gave short shrift to a problematic and critical framing concept. In this post, I hope to lay that concept out and offer, by way of example, a way forward. (Caveat: I am not an expert in policy or tech. I’ll probably get some things wrong, and hope readers will correct me if and when I do.)

The “concept” has to do with the idea of a first-party relationship – a difficult to define phrase that, for purposes of this post, means the direct relationship a publisher or a service has with its consumer.  This matters, a lot, because in the FTC’s recently released privacy framework, “first-party marketing” has been excluded from proposed future regulation around digital privacy and the use of data. However, “third-party” marketing, the framework suggests, will be subject to regulation that could require “consumer choice.”

OK, so in that last sentence alone are three terms, which I’ve put in quotes, that need definition if we are going to understand some pretty important issues. The most important is “first-party marketing,” and it’s damn hard to find a definition of that in the FTC document. But if you go back to the FTC’s *preliminary* report, issued in December of 2010, you can find this:

First-party marketing: Online retailers recommend products and services based upon consumers’ prior purchases on the website.

Later in the report, the term is further defined:

Staff proposes that first-party marketing include only the collection of data from a consumer with whom the company interacts directly for purposes of marketing to that consumer.

And in a footnote:

Staff also believes that online contextual advertising should fall within the “commonly accepted practices” category (Ed. note: Treated as OK, like first party marketing). Contextual advertising involves the delivery of advertisements based upon a consumer’s current visit to a web page or a single search query, without the collection and retention of data about the consumer’s online activities over time. As staff concluded in its 2009 online behavioral advertising report, contextual advertising is more transparent to consumers and presents minimal privacy intrusion as compared to other forms of online advertising. See OBA Report, supra note 37, at 26-27 (where a consumer has a direct interface with a particular company, the consumer is likely to understand, and to be in a position to control, the company’s practice of collecting and using the consumer’s data).

The key issue here for publishers, as far as I can tell, is this: “the delivery of advertisements based upon a consumer’s current visit to a web page or a single search query, without the collection and retention of data about the consumer’s online activities over time…where a consumer has a direct interface with a particular company, the consumer is likely to understand, and to be in a position to control, the company’s practice of collecting and using the consumer’s data.”

Whew. OK. We’re getting somewhere. Now, when that 2010 report came out, many in our industry freaked out, because of the next sentence, one which refers to – wait for it – third party marketing:

If a company shares data with a third party other than a service provider acting on the company’s behalf – including a business affiliate unless the affiliate relationship is clear to consumers through common branding or similar means – the company’s practices would not be considered first-party marketing and thus they would fall outside of “commonly accepted practices” … Similarly, if a website publisher allows a third party, other than a service provider, to collect data about consumers visiting the site, the practice would not be “commonly accepted.”

Now, this was a preliminary report, and the final report, which as I said earlier came out this past Spring, incorporates a lot of input from companies engaged in what the FTC described as “third party” marketing – companies like Google that were very concerned that the FTC was about to wipe out entire swathes of their business. And the fact is, it’s still not clear what’s going to be OK, and what isn’t. For now, my best summary is this: it’s OK for websites that have a “first party” relationship to use data collected on the site to market to consumers. If, however, those sites was to let “third parties” market to consumers, then, at some point soon, the sites need to figure out a way to give “consumers a choice” to opt out. If they don’t, they may be subject to regulation down the road.

Which brings us back to “Do Not Track,” or DNT. Now DNT has been held up as the easiest way to give consumer a choice about this issue – if a consumer has DNT enabled on their browser, then that consumer has very clearly made a choice – they don’t want third-party advertisements or data collection, thank you very much. See how easy that was?

Wrong, wrong, wrong!!! As implemented by Microsoft in IE 10, DNT is an extremely blunt instrument, one that, in fact, does *not* constitute a choice. It’s defaulted to “on,” which means that a consumer is not ever given a choice one way or the other. And once it’s on, it’s the same for every single site – which means you can’t say that you’re fine with third-party ads on a site you love (say, Searchblog, naturally), but not fine with a site you don’t like so much (say, I dunno,  You Got Rick Rolled).

That’s pretty lame. Shouldn’t we, as consumers, be able to chose which sites we trust, and which we don’t? That’s pretty much the point of my post on DNT last month.

Fact is, we don’t really have a way to demonstrate that trust. Many in the industry – including the IAB, where I am a board member – are working to clarify all this with the FTC. The working assumption is that it’s far too much to ask of most publishing sites to give consumers a choice, much less give them access to the data used to “target” them.

Well, I’m not so sure about that.

Check out this screen shot from independent site GigaOm (yes, FM works with GigaOm):

A few other sites are starting to do similar notices – and I applaud them (this is already becoming standard practice in the UK, due to strict regulations around cookies). GigOm is saying, in essence, that by simply continuing to read the site, you agree to their privacy policies. Now, take a look at what GigaOm’s policy has to say about “third party advertising:”

GigaOM may allow third party advertising serving companies, including ad networks (“Advertisers”), to display advertisements or provide other advertising services on GigaOM. These third party Advertisers may use techniques other than HTTP cookies to recognize your computer or device and/or to collect and record demographic and other Information about you, including your activities on or off GigaOM. These techniques may be used directly on GigaOM….Advertisers may use the information collected to display advertisements that are tailored to your interests or background and/or associate such information with your subsequent visits, purchases or other activities on other websites. Advertisers may also share this information with their clients or other third parties.

GigaOM has no responsibility for the technologies, tools or practices of the Advertisers that provide advertising and related services on GigaOM. This Privacy Policy does not cover any collection, use or disclosure of Information by Advertisers who provide advertising and related services on GigaOM. These Advertisers’ information gathering practices, including their policies regarding the use of cookies and other tracking technologies, are governed entirely by their own privacy policies, not this one.

To summarize: By reading GigaOm, you’ve made a choice, and that choice is to let GigaOm use third-party advertising. It’s a nifty move, and one I applaud: GigaOm has just established you as a first party to its content and services just like….

….Facebook, which just announced revenue of more than a billion dollars last quarter. Facebook, of course, has a first-party relationship with 955 million or so of us – we’ve already “opted in” to its service, through the Terms of Service we’ve all agreed to (and probably not read.) We’ve made a choice as consumers, and we’ve chosen to be marketed to on Facebook’s terms.

The same is true of Apple, Amazon, eBay, Yahoo, and any number of other large services which require registration and acceptance of Terms of Service in order for us to gain any value from their platforms. Google and Microsoft have been frantically catching up, getting as many of us as they can to register our identity and agree to a unified TOS in some way.

But what about independent publishers? You know, the rest of the web? Well, save folks like GigaOm (and AllThingsD, which warns its audience about cookies), we’ve never really paid attention to this issue. In the past, publishers have avoided doing anything that might get in the way of an audience consuming their content – it’s a death sentence if you’re engaged in the high holy art of Increasing Page Views. And bigger publishers like Time or Conde Nast don’t want to rock the boat, they’ll wait till a consensus forms, and then follow it.

But I like what GigaOm has done. It’s a very clear notice, it goes away after the first visit, and it reappears only if you’ve cleared your cookies (which happens a lot if you run an anti-virus program).

I think it’s time the “rest of the web” follows their lead. We rely on third-party advertising services (like FM) to power our sites. We live in uncertain times as it relates to regulation. And certainly we have direct relationships of trust with our audiences – or you wouldn’t be reading this far down the page. It’s time the independent web declares the value of our first-party relationships with audiences, and show the government – and our readers – that we have nothing to hide.

I plan to look into ways we might make easily available the code and language necessary to enact these policies. I’ll be back with more as I have it….

*Now, the other two terms bear some definition as well. I think it’s fair to say “consumer choice” means “give the consumer the ability to decide if they want their data used, and for what purposes,” and “third party marketing” means the use of data and display of commercial messages on a first party site by third-party companies – companies that are not the owner of the site or service you are using.

On Mayer, Yahoo!, and The (Other) Customer

By - July 18, 2012

Mayer at the Web 2 Summit, San Francisco

(image James Duncan Davidson)

I try to let big news percolate for a few days before weighing in, and it seems even more appropriate to follow that playbook when it came to the scrum around Marissa Mayer joining Yahoo.

Yes, I’ve known both Marissa Mayer (and Ross Levinsohn) professionally, for more than a decade, but so do many other folks, and it seems nearly all of them – Steven Levy and Kara Swisher intelligently among them – have weighed in, multiple times, on what this all means. If you want a rundown, just search for “Marissa Mayer” in Google News.

The coverage has taken its usual course from “Holy Shit!” to “What Will Happen to Ross?” to “Wait, Is Mayer Right for the Job” to “Here’s Our Advice/The Things That Need  to Be Fixed/What Mayer’s Focus Should Be” types of pieces.

This won’t really be any of those. Instead, I find myself thinking about the things I’ve not really seen much coverage of, at least in depth. And true to what I’ve spent a fair amount of time thinking about, they all come down to the intersection of media and technology, and the role marketing plays in that landscape.

When I spoke to Mayer after she was named CEO, I asked the question, almost as a joke – “So is Yahoo! a media or a technology company?” She was quick to respond that she just does not get the debate – of course it’s both. What matters, she pressed, is creating great products that surprise and delight Yahoo! customers.

I couldn’t agree more, yet there is an important nuance here – just who *are* Yahoo’s customers?

Let me step back here and posit something that might upset more than a few of you: Yahoo has two sets of customers, and of course the “end user” is one of them. But the other is the marketer.  And media companies – or “tech companies driven by media revenues,” or however else one might want to phrase it – sometimes ignore this fact at their peril.

I’ll let those of you who find such a statement anathema go ahead and click away – here’s a nice unicorn chaser if you’d like – or you can flame me in the comments (I do respond to most, as long as they’re in English and don’t employ more than the occasional insult).

But those of you who’ve continued to read probably know that I believe, deeply, that commercial publishing is a conversation between three key parties: The reader (or viewer), the publisher/content creator, and the marketer. And while it’s generally been true that this conversation has been all kinds of broken during much of the web’s history, the truth is, it needn’t be that way. Six years ago (!) I wrote a series of posts describing the rise of conversational media and imploring that marketers learn to join the conversation. I think it’s fair to say that this is happening, at scale.

Beyond the contributions of pioneers like Federated Media (yes, I had to plug us), the rise of “native” advertising formats is proof of this. Twitter’s promoted suite is one growing example, as is Facebook’s Sponsored Stories (and its attendant focus on getting brands to be true publishers on the Facebook platform). Pinterest, WordPress (in partnership with FM), and Tumblr are hard at work on “native” solutions for their services as well. All of these advertising solutions pale, however, in comparison to the original “native” advertising format of the Web: Google AdWords.

Many have pointed out that Mayer’s principle weakness, when compared to Levinsohn, is her lack of traditional media and marketing chops. I can say from very deep experience that the marketing business is very much a relationship business – CMOs and agency leaders live in a world driven by ideas, creative and content – and they want to know the people who they do business with, and trust them in a way that is difficult to model algorithmically. Mayer’s detractors point out that she’s not spent much time wooing Madison Avenue, or dealing with the inevitable headaches born of the complex, people-driven businesses that are agencies, marketing clients, and content partners.

While there is some truth in this criticism, I think it overlooks a few things. First and foremost, Mayer is a very fast study, and she already knows how important the traditional media business is to Yahoo. Hell, a quick overview of the company’s financials bears this out, as does a visit to any of its properties, which are dominated by advertising. Yahoo may have a lot of technology behind the covers, but its products are nearly all media products – content intended to gather an audience and provide a place for marketers to message to that audience. More than half of Yahoo’s revenues come from “display” advertising, most of the rest comes from search, which is also marketer driven.

Secondly, Mayer will be a big draw of talent, and not just engineering talent. She understands that if she can’t retain Levinsohn and/or his recent CRO Michael Barrett (I certainly hope she can), she’ll need to attract top tier media minds to the business. And I think she’ll succeed at doing just that.

But to me, the thing many are missing is that Mayer will bring her fanatical product focus to more than just Yahoo’s consumer-facing media offerings. She’ll also be staring at the company’s advertising products, and asking this simple question: How can we do better?

To answer that question, Mayer will need to do more than study the data (though of course, that will be important). She’ll need to sit down with a wide swath of Yahoo’s marketing customers and ask them what they want from their investment in her platform. She’ll hear an awful lot of conflicting advice, but it’s in the bricollage from all the feedback that the best ideas come out. Mayer can’t afford to immediately tack away from all those boxes and rectangles cluttering up the Yahoo! experience, nor should she – it turns out that display advertising does indeed work for marketers. But the larger question remains: Can we do better?

The answer lies in executing the subtle and ongoing iterative work of true digital publisher – improving the core product experience both sets of customers – consumers of the media experience, as well as marketers looking to be part of that experience in a more native fashion. And again, from a quick study of Yahoo’s products, there’s plenty of improvements to be made.

An important and related part of the work ahead for Mayer and her team will be deciding what role ad tech and search will play in Yahoo’s future. Despite purchasing Right Media back in 2007, Yahoo has never been seen as a leader in ad tech, and word on the street in the weeks prior to Mayer’s ascension was that Yahoo was about to outsource its ad technology platform to market leader Google. Of course, such a move is fraught with regulatory and business implications. And Mayer may well decide it’s in Yahoo’s best interest to invest in own its own destiny when it comes to the machine-driven world of ad serving and programmatic audience buying. But trust me, what Yahoo does here will be an extremely important directional indicator.

Which brings us to search. It’s been widely reported that Yahoo’s 2009 deal to outsource core search to Microsoft hasn’t worked out as well as either party wished it would. Given how important search is to Yahoo overall, and how deeply knowledgeable Mayer is in this particular field, I’d expect big changes in Yahoo Search. The company recently unveiled a new search product called “Axis,” which seems like a neat idea but feels a bit too complicated for most consumers to really grok. Mayer will likely take Occam’s Razor to search, and I expect the results will be quite positive.

But it’s the other side of Yahoo’s revenue equation – the branded display market – where Mayer will face her greatest challenges, and find her biggest opportunities. Yahoo isn’t a startup like Pinterest, Tumblr,  or even Twitter, where founders can leverage massive user growth to raise enough capital to “figure out how best to implement appropriate native marketing solutions.” Yahoo is nearly 20 years old, and it’s got a very deep, tangled, and somewhat tarnished brand in the minds of its best advertising customers. It’s true that creating world-beating consumer-facing products will go a long way toward fixing that brand. But those products must be informed by – and even created for – both sets of customers – the consumers of content, as well as those who pay for them to be created in the first place.

The Nexus 7 and The Cloud Commit Conundrum: Google Wins (For Now)

By - July 13, 2012

Google was kind enough to send me a Nexus 7 tablet to play with last month, and over the past week or so I’ve had the chance to actually put it to use. Even though I own an iPad, I have serious reservations about the constraints of Apple’s iOS ecosystem (more on that below), so I was eager to see how Google’s alternative performed.

Now, before I get into details, I want to state what I think really matters here: The Nexus device – and others like it – represent a play for something extremely valuable: a hard-wired digital portal to our hearts, minds, and wallets. As I’ve written elsewhere, there are five major companies deeply engaged in this play – Amazon, Google, Facebook, Microsoft, and Apple. All of these companies want us to commit to their services as the basis of our digital lives – how we consume media and entertainment, how we manage our work and personal lives, where we store our most important information (including our money), and of course, how we declare who we are and what we believe (our identity). The more these companies can get us to upload our music, videos, photos, identities, purchases, browsing behaviors, etc. etc. etc. into their nebulae, the more they’ve locked us into a lifetime relationship of revenue and profit.

Put in that frame, your choice of tablet or phone is about much more than feeds and speeds or features and prices (for all that, see this Engadget review). It becomes a choice about what kind of a company you want as a partner in your digital life. Will the company let you export your data easily to other services? Will it be transparent about how your data is used? Will it have the guts to stand up to bad actors, whether they be governments or other corporations? Will the company create dashboards where you can see, edit, delete, and contest how your data is displayed?

In short, will the company be a good partner in your digital life? If you’re going to upload your digital doppelganger into this company’s servers, can you trust it? I call this choice the “Cloud Commit Conundrum,” and I’ll be writing about it more in the coming months.

For now, I’ll just say this: while Google is far from perfect on any number of fronts, it comes far closer than any other in embracing a philosophy that I feel I can trust when it comes to the cloud commitment conundrum. To wit: The Google Transparency Report. Further: The Data Liberation Front. And further, the open (and yes, messy) nature of Android. Lastly, I believe Google’s founding DNA is as a product of the open web, and its founders have a deep commitment to that idea, even as we enter a rather cloudy era of closed, non-generative systems and walled gardens.

But up till now, Google hadn’t really “wowed” me with a product that I felt I could really get behind.

No more. I’m not a hardcore tablet user, but I might become one thanks to this device. I found the iPad to be too large and heavy to use comfortably in casual situations (like reading in bed, for example), and too limited to use as a replacement for my laptop. By comparison, the Nexus 7 is just the right size for use anywhere – it’s very similar in size to my daughter’s Kindle Fire, but lighter.

But what I like about the Nexus is how good it is for all those lightweight web-connected tasks I want to execute on the run. I find web browsing, checking multiple email accounts, and Google mapping rather tiresome on an iPhone – the iPhone’s native interface, for all its supposed perfection, has all kinds of wrong baked in – and the screen is just far too small. The Nexus 7 is about the same size as a Moleskin notebook, and  it just *feels* like the right form factor for doing all those things you want to do on a smart phone, but can’t quite do in the right way.  It’s not too big, and not too small – just right.

It’s also very responsive, and has plentiful access to apps and content (Google is a bit aggressive in how it promotes its Play store – but it’s very easy to remove the Play clutter and customize your own experience). So far, it doesn’t have cellular service, but I expect that will come soon. The wifi works great, and I barely missed a beat this week in New York – seems there was open wifi just about anywhere I went.

I think Google has a winner on its hands here – and the $200 price point makes the Nexus a clear competitor to not only Amazon’s more limited $200 Fire, but to the more expensive and clunkier iPad.

I’m going to go out on a limb here and predict Apple will ship a 7-inch version of its iPad soon, at a similar price point. If it does, I’m sure it’ll be a strong competitor to the Nexus 7. But for me, the tiebreaker comes down to the cloud commit conundrum. And the winner there, so far anyway, is clearly Google.

Anyone in the market for a slightly used iPad 2?

(cloud image via Shutterstock)

Google’s “Mute” Button: Why Didn’t I Think Of That? Oh, Wait…

By - June 30, 2012

One of my pet peeves about our industry is how slowly we change – I understand it takes a long time to gather consensus (it took three years to get AdChoices rolled out, for example) – but man, why don’t the big players, like Google, innovate a bit more when it comes to display advertising?

Well, yesterday Google did just that, announcing a “mute this ad” feature that it will roll out across its network over the next few months. The feature does what you might expect it to do – it stops a particular ad from “following” you around the web. It will look like this:

 

As you can see, the “mute this ad” is right next to the AdChoice icon, adding a bit more clutter to the creative, but also, more control for consumers, in particular those who find the practice of “retargeting” irritating.

All I can say is, it’s about time. Back in August of 2010, I wrote about my own experience: On Retargeting: Fix The Conversation. In the post, I suggested:

…as I’ve said a million times, marketing is a conversation. And retargeted ads are part of that conversation. I’d like to suggest that retargeted ads acknowledge, with a simple graphic in a consistent place, that they are in fact a retargeted ad, and offer the consumer a chance to tell the advertiser “Thanks, but for now I’m not interested.” Then the ad goes away, and a new one would show up.

Well, it looks like Google has gotten with the program. Of course, Facebook already has that “X” on all of its display ads, but so far, retargeting hasn’t come to Facebook – yet. Watch that space, because I gotta believe it will soon.