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Signal:Chicago Is Back, And It’s All About The Data…

By - August 22, 2012

I’ve written up an overview of the lineup at FMP’s second annual Signal:Chicago conference over on the FMP site. Highly recommended, it’s a very good event.

Speakers include Andrew Mason, CEO of Groupon, Scott Howe, CEO of Acxiom, Laura Desmond, CEO of Starcom Mediavest Group, and Carolyn Everson,  VP of Global Advertising for Facebook.

If you’re anywhere near Chicago in September, or even if you’re not, this is one that’ll be worth attending. We’re exploring the role of data in marketing, as well as  my favorite topics of mobile, real time, local, and social, of course. Check it out.

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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.

The Power of Being There

By - August 06, 2012

It’s been building for weeks – Friday marks the first day of the fifth annual Outside Lands festival here in San Francisco. Despite the demands of work and family, I try to get to as many festivals as I can – so far, I’ve managed to see Bonnaroo a few times, Coachella once (I’ll be back!), Austin City Limits, and a few others. Outside Lands is local to San Francisco and therefore much easier to attend – this will be my third. Compared to your average festival goer (who tends to be single and about half my age) I’m a punter, but I’ll take it.

Why do I go? In two words, serendipity and joy. When you gather with tens of thousands of like minded, smiling people, unexpected connections are made, and bouts of pure happiness break out all over the place. Who wouldn’t want to soak in some of that?

I bring this all up because I’ve noticed a trend, highlighted by this story: YouTube streaming Lollapalooza music festival for free this weekend. Outside Lands was one of the first festivals to stream for free (back in 2009, if I recall), and many others have followed apace.

Why?

Well, I think the truth is obvious, but worth restating: it’s one thing to be there, and quite another to watch everyone else being there. The value of gathering together only increases as the virtual channel becomes ubiquitous. And that is a good sign for humanity, to my mind.

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.

If Google Were Really Evil…

By -

My morning routine was interrupted today in a big way – because Twitter was down. I hadn’t realized how much I depend on the service for any number of things, from tossing out the headline or two that I find interesting as I read my feeds, to checking the status of the conversation around stuff I’ve written the day before, to logging into other services I use through my Twitter account. In short, this morning when Twitter went down, much of my Internet experience did as well.

Huh.  Anyway, I wanted to see if this was a local thing, or if a lot of folks were experiencing it, so I went to Google+ and asked. Within a minute, I had ten responses, nine people said Twitter was down for them as well. In five minutes, it was 21 of 22. That’s a lot of engagement.

So I got to thinking….if Google was really evil, it’d do something like this when Twitter goes down:

 

 

 

 

 

 

 

 

 

 

I’m kidding, of course, but there are a heckuva lot of Chrome users who are getting this message from Chrome right now….and do every so often.  If Google really wanted to make a stir….

My, How the CMO Has Changed

By - July 25, 2012

A posting (and responses) on GM’s Facebook Wall, July 2012

When you visit Joel Ewanick, CMO of GM, in his offices in Detroit, the first thing you notice is that unlike most C-suite executives, he’s not on the 39th floor of GM’s Renaissance Center headquarters (the highest floor). Instead, you exit the elevators on the 24th floor, less than two thirds up the building.

The second thing that strikes you is the floor itself – it’s bright with natural light, sports an open plan bustling with energy, and features a central video wall sporting constantly updated feeds reflecting consumer sentiment about GM and its brands – Facebook wall postings, Tweets, news stories, and the like.

Before meeting Ewanick, I stopped in front of the wall and read the updates as they streamed by. It only took a few seconds to realize that the feeds were unfiltered: a complaint from a new SUV owner expressing severe buyer’s regret was was prominently featured.

I mentioned that post to Ewanick when we met, and he confidently responded that  someone would answer the complaint by the time our meeting was over, if not before. (I didn’t check, as our meeting went long, but a quick study of GM’s Facebook page bears this out quite dramatically – see image at upper left).

As someone who has spent many years visiting CMOs in tall buildings, I can tell you, this is nothing short of a revolution, and it’s happened in what amounts to an eyeblink in our business. And while Ewanick has made a point of illustrating this shift in a visual way on his 24th floor, I can tell you what he’s doing under the surface is not an isolated case.

In the normal course of business over the past two weeks, I’ve met with half a dozen Fortune 500 CMOs – men and women running massive marketing businesses for some of the best known brands in the world.  Every single one of them now takes the idea of “conversing with customers at scale, leveraging technology” as a north star. It’s an extraordinary shift.

I recall meetings just two or three years ago where senior marketing executives told me they couldn’t possibly allow engagement with customers – it was too dangerous, and far too costly. And yes, there are still holdouts that have yet to convert their approach to the market or who are still far too tentative in their embrace of what I call “conversational marketing” (I’m looking at you, United Airlines).

If you’ve been reading this site for a while, you might recall that I’ve been on about “the conversation economy” since 2006. It was going to be the name of my next book, till I decided to go all meta and take the ideas behind it and blow it up into a much bigger tome, one I’ve yet to finish. Since 2007, “The Conversation Economy” has been one of the most populated categories in my site, along with “Joints After Midnight” and “The Web as Platform.” And it’s at the heart of the company I started in 2005, which gave voice to and popularized the idea of “conversational media,” a platform that empowers consumers and would, I predicted, force brands to “have conversations with customers at scale.”

So here we are, just six years later, and the idea has taken root and is now at the heart of a spectacular string of successes in our industry – from the sale of Buddy to Salesforce, or Virtue to Oracle, to the rise of Sponsored Stories on Facebook or Promoted Tweets on Twitter. Companies are thirsty to understand how best to converse with their customers, and I’m thrilled this shift is occuring. When major enterprise software companies see “social” and “consumer engagement platforms” as the next big thing, you know something’s in the air.

So now what? What’s next? Well, I’m going to wager we’re entering an era of confusion and information overload. It’s great to respond to customers, to drive learnings from those interactions back into your enterprise, and to try to be “more social” in your marketing efforts. But the infrastructure to execute at scale in conversational media is still being built, and both consumers and marketers are uncertain as to how they might best converse – witness the ongoing questions about whether Facebook is an advertising medium, for example. What’s happening in marketing at the moment isn’t merely a technological shift. It’s a deep, organizational rewiring of How Things Get Done, a response to the platform power that consumers have harnessed through the Internet.

Just as like the music industry still wishes for the days when it controlled its own production and distribution, the media and marketing world still yearns for the silver bullet of the thirty-second spot on Seinfeld, even as it knows those days are over. Someday soon, we’ll realize that we’ve figured out a new kind of bullet, but not before enterprises reorganize how they operate – on every level, from product design to management to marketing. If Ewanick’s 24th floor is any indication, the work is certainly underway. Just 38 floors to go….

What We Lose When We Glorify “Cashless”

By - July 24, 2012

Look, I’m not exactly a huge fan of grimy greenbacks, but I do feel a need to point out something that most coverage of current Valley darling Square seems to miss: The “Death of Cash” also means the “death of anonymous transactions” – and no matter your view of the role of  government and corporations in our life, the very idea that we might lose the ability to transact without the creation of a record merits serious discussion. Unfortunately, this otherwise worthy cover story in Fortune about Square utterly ignores the issue.

And that’s too bad. A recent book called “The End of Money” does get into some of these issues – it’s on my list to read – but in general, I’ve noticed a lack of attention to the anonymity issue in coverage of hot payment startups. In fact, in interviews I’ve read, the author of “The End of Money” makes the point that cash is pretty much a blight on our society – in that it’s the currency of criminals and a millstone around the necks of the poor.

Call it a hunch, but I sense that many of us are not entirely comfortable with a world in which every single thing we buy creates a cloud of data. I’d like to have an option to not have a record of how much I tipped, or what I bought at 1:08 am at a corner market in New York City. Despite protections of law, technology, and custom, that data will remain forever, and sometimes, we simply don’t want it to.

What do you think?  (And yes, I am aware of bitcoin…)

BTW, this mini-rant is very related to my last post: First, Software Eats the World, Then, The Mirror World Emerges.

First, Software Eats the World, Then, The Mirror World Emerges

By - July 18, 2012

David Gelernter of Yale

(image Edge.org) A month or so ago I had the pleasure of sitting down with Valley legend Marc Andreessen, in the main for the purpose of an interview for my slowly-developing-but-still-moving-forward book. At that point, I had not begun re-reading David Gelernter’s 1991 classic Mirror Worlds: or the Day Software Puts the Universe in a Shoebox…How It Will Happen and What It Will Mean.

Man, I wish I had, because I could have asked Marc if it was his life-goal to turn David’s predictions into reality. Marc is well known for many things, but his recent mantra that “Software Is Eating the World” (Wall St. Journal paid link, more recent overview here) has become nearly everyone’s favorite Go-To Big Valley Trend. And for good reason – the idea seductively resonates on many different levels, and forms the backbone of not just Andreessen’s investment thesis, but of much of the current foment in our startup-driven industry.

A bit of background: Andreessen’s core argument is that nearly every industry in the world is being driven by or turned into software in one way or another. In some places, this process is deeply underway: The entertainment business is almost all software now, for example, and the attendant disruption has created extraordinary value for savvy investors in companies like Amazon, Netflix, and Apple. Further, Marc points out that the largest company in direct marketing these days is a software company: Google. His  thesis extends to transportation (think Uber but also FedEx, which runs on software), retail (besides Amazon, Walmart is a data machine),  healthcare (huge data opportunity, as yet unrealized), energy (same), and even defense. From his Journal article:

The modern combat soldier is embedded in a web of software that provides intelligence, communications, logistics and weapons guidance. Software-powered drones launch airstrikes without putting human pilots at risk. Intelligence agencies do large-scale data mining with software to uncover and track potential terrorist plots.

That quote reminds me of Wired’s first cover story, in 1993, about the future of war. But in 1991, two years before even that watershed moment (well, for me anyway), Yale scholar Gelernter published Mirror Worlds, and in it he predicted that we’d be putting the entire “universe in a shoebox” via software.  Early in the book, Gelernter posits the concept of the Mirror World, which might best be described as a more benign version of The Matrix, specific to any given task, place, or institution. He lays out how such worlds will come to be, and declares that the technology already exists for such worlds to be created. “The software revolution hasn’t begun yet; but it will soon,” he promises.

As we become infinite shadows of data, I sense Gelernter is right, and VCs like Andreessen and the entrepreneurs they are backing are leading the charge. I’ll be reviewing Mirror Worlds later in the summer – I’m spending time with Gelernter at this home in New Haven next month – but for now, I wanted to just note how far we’ve come, and invite all of you, if you are fans of his work, to help me ask Gelernter intelligent questions about how his original thesis has morphed in two decades.

It seems to me that if true “mirror worlds” are going to emerge, the first step will have to be “software eating the world” – IE, we’ll have to infect our entire physical realities with software, such that those realities emanate with real time and useful data. That seems to be happening apace. And the implications of how we go about architecting such systems are massive.

One of my favorite passages from Mirror Worlds, for what it’s worth:

The intellectual content, the social implications of these software gizmos make them far too important to be left in the hands of the computer sciencearchy…..Public policy will be forced to come to grips with the implications. So will every thinking person: A software revolution will change the way society’s business is conducted, and it will change the intellectual landscape.

Indeed!