C Swerd

5 AM Rant: Microsoft, The State of Online Advertising, and AdBlock Plus

It is before 5 AM and my mind is slowly waking up.  Has it really been since April when I last posted here?  Henry was born in May, so that makes sense.  Finally losing sleep over work, and not because of the baby.  Progress!

"Microsoft wants to kill the online advertising business".  This was my favorite quote at the Right Media Open last week in Half Moon Bay, CA.  The person I was speaking with is a very well respected industry insider.  His point was that of Microsoft, Google, Time Warner, Yahoo, News Corp., IAC, etc., Microsoft has the most to lose from the success of online advertising, and the most to gain from its failure. 

Steve Ballmer does not seem to agree.  The week before I heard him say at Web 2.0 that Microsoft wants their online advertising business to represent 25% of their total revenue, or roughly $13 billion.  A few days later they invested $240 million in Facebook for a 2% stake.  Ballmer also said we could expect them to gobble up 20 or so online advertising companies a year.  Here's to hoping I own a piece of one of them.

Yet according to Michael Estrin writing in today's iMedia Connection, the bigger threat to the online display advertising marketplace comes from Mozilla's new add-on, AdBlock Plus.  Apparently it is capable of blocking out all display advertising on the web.   You can filter based on the advertiser, ad network, etc.  Kind of reminds me of the "Do Not Email Me" list (thanks CAN SPAM </sarcasm>).  To all of my friends still in the online display advertising business, welcome to my world.

Does anyone know the current market share of Firefox?  After years of successful pop-up bockers and other ad blocking software, could this potentially be the plug-in that hurts display advertising?  Comments welcome.

Video Advertising

A 15 or 30 second pre-roll is too much interference.  Post-roll ads are highly ineffective.  Here are my suggestions for making video advertising successful:

• Pay video producers a share of the advertising revenue in exchange for introducing the advertiser to their viewers.  I met with Metacafe yesterday which is doing just that.  Their Producer Rewards model is a great first step.  Revver's model is more straightforward; they split revenue 50/50.

• Couple ads with relevant content; let the producer of the video choose and introduce the appropriate ad.  Every video sharing site tries to play the part of matchmaker.  Let producers have control, with certain restrictions to avoid the misuse.  Ads should look something like:

              "Video bandwidth provided by XYZ Advertiser"
                    Stay tuned after the video to hear more
                           about their really cool product.

If content producers are invested in the success of the ads, and have the power to choose which ads their audience sees, you have a winning formula for video advertising.

Disagree?  Know of an existing model similar to my suggestion?  Do share.

DoubleClick Auction

News of DoubleClick's intention to setup an auction exchange for display advertising is sweeping the market.  With Google and Microsoft set to launch a bidding war to acquire the company, timing of the news is critical.  No doubt this will escalate the competitiveness of the bidding between Google and Microsoft, and could have the beneficial side effect of pulling in others including Fox and IAC.  Fox may have its hands full with their recent acquisition of SDC, the inventory optimization technology provider, leaving IAC as the only legitimate 3rd contender. 

One thing is certain, Yahoo's investment in the display advertising exchange company Right Media is going to seem like a steal after this war is over.   Whichever company loses will likely take a closer look at the exchange operated by former DoubleClick employees Michael Walrath and Bill Wise.

Salesgenie Superbust

To launch their new lead generation service for small business owners and sales professionals, InfoUSA CEO Vin Gupta wanted to "employ a bold and creative strategy".  So with several million dollars in hand Gupta purchased a 30 second Superbowl spot and sponsored the pre-game broadcast: THE SUPER BOWL TODAY PRESENTED BY SALESGENIE.COM. 

According to D.J. Thayer, president of Omaha, NE-based infoUSA’s business group the expectation was to generate 700 new subscribers.  At the special rate of $150 per month, and assuming the average subscriber stays on for one year, that adds up to $1.26MM in revenue.  Not a lofty goal for an estimated $2.6MM for the 30 second spot, plus the pre-game sponsorship, simultaneous SEM campaign, and of course creative production costs. 

One can only dream that success was measured by InfoUSA standards.

Forget the 30 Second, Push Advertising is Dead

Joe Marchese, author of Online Spin,

"Advertising is changing from the buying and selling of people's attention with only implied consent, to a system requiring explicit consent of the people."

I would argue that consent for advertising was never implied. Rather it was ASSumed that consumers of content understood the value of such content and would tolerate advertising in exchange for it remaining free. In today's world there is a growing abundance of free, original content and consumers are less willing to participate in the exchange. A great example of this is YouTube, who has yet to figure out how to package pre-roll advertising around video content without causing a mass exodus of consumers.

Explicit consent is the future of all advertising. As blocking technology continues to evolve and free content continues to get better, only offers that are relevant, valuable, and not disruptive will be accepted.

Non-disruptive delivery is critical. No one I know (media professionals aside) wants to see an ad before or during their interaction with content, regardless of how relevant or valuable the ad is. Yet everyone I know wants great offers on products and services that are relevant. Google has become one of the biggest companies in the world because it meets the three criteria detailed above; relevance, value, and appropriate delivery. Google will fail because greed drives them to deliver advertising in mediums that do not meet all three criteria.

There are several mediums which I believe hold promise for appropriate advertising delivery. Four of them are Mobile, Search, RSS, and Email. All four allow for consumer consent, can be made highly relevant, and are not disruptive. Search companies have clearly capitalized on the opportunity. RSS has technical issues to work through around relevance, but I believe in the companies working on the problem. Mobile is the future, as more consumers manage their interaction with content on the go. Email is the dark horse in this race.

The email industry (my company included) has largely failed to capitalize on the opportunity. Consumers plead for our email (see Postmaster customer service for examples), yet many can not find the email when it arrives. Clutter, spam, phishing, and other noxious terms dominate the discussion boards and blog world. So here is my challenge to co-workers, partners, and competitors; fix these problems and the next Google will appear from within.

Fun Ad Campaign From CareerBuilder.com

Want to know what you will look like in fifty years if you stay at that dead end job of yours?  It will probably look something like this.  If that doesn't motivate you to get off your butt and find a better job, not sure what will.  While you are looking, check out Return Path's Career site for an opportunity to join this great company.

Google: Breaking down the ad network

The biggest challenge facing media buyers when buying inventory across a network of sites is context; will my ad appear side-by-side with hateful content, pornography, or perhaps even a user generated content piece written negatively about my brand?  All are situations to be avoided, yet every media buyer buying ad networks has faced them.  With the continued devolution of content from mainstream media to each of us, this problem grows more difficult for the networks to manage.

Several weeks ago I heard Tim Armstrong from Google tell attendees of the IAB Annual Meeting that Google is working on a solution.  Specifically Google intends to give media buyers the ability to sponsor specific authors of content categorized by past areas of focus (or perhaps keywords).  If successful, Google will take a big bite out of the risk associated with ad networks. 

This is good news for media buyers who can leverage the high performance of a network media buy, while limiting risk.  It is even better news for the thousands of bloggers looking to make a few bucks for their efforts.  Both of which support the continued devolution of content, which is great news for those of us who enjoy reading all of this free, valuable content. 

Google a threat to agencies?

In Dave Morgan's article today in MediaPost, he thoroughly discusses the threat that Google poses to traditional media agencies.  His points are valid, agencies should be very concerned that Google intends to enter their domain; offering creative and strategic services alongside media buying.  However, they can not ignore Google but rather should work closely with and innovate alongside Google. 

What is consipcuously missing from Dave's post, is the obvious threat that Google poses to Tacoda and other similar companies including my own, Postmaster.  We create marketplaces to connect advertisers with audience through technology and analytics.  No one does that better than Google today.  With the amount of resources available to it, Google will absolutely attempt to own behavioral data and will likely enter the email space in the future.  Advertisers, publishers, and audience all win as offers perform better, are more relevant, and less intrusive. 

Dave's message to agencies about working along side and innovating with Google are lessons for all of us to consider.

Big-Media Breakup

Big-Media Breakup: Social Media and the recent Clear Channel acquisition may signal the end of media consolidation. 

Give media back to the people, or at least sell it to them for $37.60 a share.  I have personally been somewhat distressed about the roll-up of media outlets over the years.  Local radio plays fewer unknown bands, television finds something “appealing” and repeats it ad nausea, newspaper editors seem to limit reporter’s freedom of expression.  All of a sudden, Social Media appears and everyone has a voice (even me with this blog). 

Social Media is changing the landscape, and Big Media is beginning to pay attention.  A “traditional” reporter can reach their audience through blogs, bands get found by the public without record labels and without support of radio, and anyone with a video camera (or phone) can make entertaining video content.  Clear Channel is smart to sell now, ahead of diminishing audience and ratings.  They are already beginning to compete for ad dollars with Google, MSN, and Yahoo.  In another five years I bet you could add another ten companies to the list. 

Social Media is just getting started and the public is listening.  The adoption is amazing, even more so when you look at teen and tween audiences.  This is not a trend I expect to see reverse over the next ten years.  If I were an investor in Clear Channel, I would gladly take my 10% premium and reinvest in stocks poised to take advantage of the new media fragmentation.