Supply + Demand: Making the News Pay

[Today's post is by Diane Martin, Group Account Manager at R+K]

A recent article in Ad Age Media Works--entitled “Wanted: Online Payment Plan for Print”  by Michael Learmonth--is worthy of a quick read (here). There are a couple things to note, none of which have to do with media’s continued denial that the paradigm has permanently shifted.  

First of all, and much more interesting than the whining, is that this article points out how technology enables increasingly rapid paradigm shifts. For example, the online ad market went from $0 to its peak of $20 billion in about a decade.  

Next, the Arkansas Democrat-Gazette example is interesting.  Their attitude and approach resonate with me in that they seem very honest about where they can compete and what their audience wants.  They’ve made it palatable--or at least inoffensive--to pay for an online subscription  – an online subscription of $4.95/mo that is less than half the cost of full-service home delivery at $13/mo.  Perhaps more interesting is the AD-G’s CPM differential for display advertising:  $35 print vs $1 online.  

The paper’s owner and publisher, Walter Hussman has some choice quotes about where and how he’ll compete.  "I always ask people, 'When was the last time you bought something from looking at a banner ad?" he said.  

And he knows that online advertising is not a viable, long-term revenue source for his paper. The article quotes Mr. Hussman on the possibility of losing a few $1 CPMs to Yahoo. “So what? If we want the traffic, we can get it in an instant,” he said. “The traffic does not translate into revenue.” 

Finally, while I’m stunned by the notion of taxation to underwrite a model sorely in need of repair, I’d prefer to address the comments from  Jim Spanfeller of Forbes.com and Robert Thomson of The Wall Street Journal regarding editorial quality. Indeed their organizations put out fine news products. But it appears they believe news organizations such as theirs are the arbiters of journalistic quality, not the readers.  Obviously they need to drink a little of the kool-aid that Charlie Tillinghast, president of MSNBC.com, drinks.  "Consumers won't pay; it's just that simple." They'll read amateur blogs and everything else first before they pay for general news and information. Those are the physics of our business."  

But perhaps the fact that I’m sharing commentary on an article from Ad Age Media Works suggests that Mr. Tillinghast isn’t 100% right – I pay my annual online subscription for Ad Age.

177 million channels and nothin' on: Domain masters

Verisign, the domain registrar, reported (here) that the number of domains at the end of 2008 was 177 million. That's up 16% over the number in December 2007.

So What?

Consistent with one of our five 2009 marketing themes (here), the continued growth in online destinations (i.e., inventory) bodes ill for those who would hope for pricing power. Ad deflation would seem the inevitable outcome of an expansion in places for people to spend their time...for those who seek a place to invest their time, it's like having a TV with 177 million channels...on demand.

For those whose value is sold in cost per thousand impressions, 177 million is a big universe to target (of course they are not all ad sites, but you get the point).

For those who may appreciate the irony of a 57-channel TV overload lamentation (now 16 sweet years old), YourToob takes you back in time to...Bruce:

Selling shovels to prospectors: Social Media Marketing's epic fail

Ok, so the headline is probably a bit extreme. Sorry, I don't usually like to trade in sensationalism. But as I was discussing yet another pitch by a social media metrics company with a colleague, the metric of 'friend counts' came up.

The pitch goes something like this: "You know, our research shows that 80% of soc-net users have 0-100 friends and 20% have more than 100...the 80-20 rule. So we use this key metric to identify influencers for special marketing treatment...because if they have more than 100 friends and a bad experience, well, that's alot of risk".

It sounds logical. But counting friends is meaningless. Here's a few reasons:

• Are they really friends? It is a well known phenomenon—Trophy Friends--that some people collect and keep score with their friend counts (or linked in connections, or Twitter follows or friendfeeds, etc.)

• Are influencers always influential? Identifying influencers based on gross generalizations about individuals (e.g., friend counts) is something marketers have always tried to do…Is someone you friended after a 15 minute conversation really influenced by your opinion on detergent? There are literally millions of us, though, who get to be influential once in a while among small groups of people.

• What does 100 friends mean in creating a definition of influencer? Why not 50? Would a social media metrics company feel good about saying it’s discovered a new rule: 95-10, where 95% of users have less than 5 friends? Probably not...because it doesn't promise easy. If you really wanted to understand influence, versus the willingness to click ‘add’, then you’d want to track a recommendation or comment that made it’s way through the ‘friends’ network of a supposed influencer.

Here’s a somewhat relevant example of that using twitter. The list filters popular content against a list of Twitter users who were first to Tweet about it…it’s a proxy, but one could make the case that, at least in this example, some of the first movers are influencing those who follow (i.e., friend) them. The trouble is that once you get below the top 100, you have thousands of people who get to be first…once. Classic Long Tail statistics


So what?

This gets at the issue afflicting social network marketing…the point of social networks is NOT marketing…that’s why Facebook has millions of members and no revenue. (see here for a post on this point).

Finding ways to appeal to millions of people around shared interests will require thousands of approaches…none of which will make the marketers job easy…pitches referencing 80-20 rules or other hokum feel right because it conforms to the marketers pre-existing belief system (which, at least in the client data we’ve worked with, isn’t generally true--or useful).

So getting to the point of this post: If there’s a gold rush on, the real money is made is selling picks and shovels to the prospectors.

Facebook: Putting a value on the daze of our lives?

As an indirect consequence of the AP's investigation of a lawsuit, we discover that Facebook values itself (as of last summer) at $3.7B. (see here for a more detailed rundown of the circumstances and implications of this valuation including a special note on how NOT to use computers to redact information in a document).

So what?
Aside from the obvious question: "What happened to the $15Billion valuation frequently referenced just last year?" there is an interesting advertising message in the math. 

A little simplistic math looks like this:

$3.7Billion dollars / 30 million unique visitors per month (the active users) = $123 per user.

So the market value of the enterprise, assuming it's ALL in the user base, is based on a user value of $123.00 each.

If an impression online costs somewhere south of  one-half a cent (using $5 CPM as a basis), that means you would need to serve each Facebook user 24,600 impressions to justify the market value...if advertising is the revenue model. 

Assuming a generous 2 seconds of attention for each and every impression, that amounts to requiring each user to have 13.66 hours of their lives monetized by impression-based advertising on Facebook.

You can substitute 'virtual drinks' or 'hugs' or whatever you want to substitute for the impressions, but Facebook still has to find a way for it to total $123 per user over whatever the revenue horizon is. 

Of course this is oversimplified math to make an oversimplified point: Social Networks are not about marketing. 

In a deflationary environment (here for prior post), imbalances in the value we assign to things are corrected. Some things, like cars, houses and material goods will be valued less in monetary terms. Other things, like time spent with friends and family, might be valued more than they have been...in non monetary ways (see here for this and other marketing themes for 2009).

Expecting the monetary value of time spent with advertising to increase in such an environment seems an unlikely path to marketing success...especially as the word 'social' regresses to its meaning.

ePocrates: Having a doctor in the palm of your hand

ok, I'm not a doctor and I've never played one...on TV anyway. So I'm not really the target for ePocrates, a company that is developing electronic tools targetting real healthcare professionals (also known as doctors + nurses). But I have been playing with one of their mobile applications, ePocrates Essentials, for the last week and it matters...and not just to real healthcare professionals.

What does it do?

The (currently) free version I have on my Windows Mobile device (yes, there is a version for the iPhone, Palm and Blackberry devices) is an amazing collection of useful information in a usable form factor.

As a consumer (or healthcare professional), I can:

1. Look up any drug and see if it's covered under healthcare plans targetted to my geography, including generic programs like Target and others...see manufacturer's pricing...and alternatives.
   
2. Create and manage custom formulary information sets.
   
3. Discern indications, dosing, adverse reactions and all-important interaction warnings for thousands of drugs.
   
4. Calculate conversions and values for a multitude of measures and data associated with treatment and monitoring (e.g., Body-Mass Index to Osmotic Gaps to Transtubular K gradients)
5. View and complete Continuing Education Medical units
   

All of these features and other, subscription-based modules--like symptom assessment, disease reference, lab diagnostic and infectious disease treatment--are available in automatically updated form on my mobile device: anytime, anywhere.

So What?

As one presenter discussed at the healthcare strategists' forum (here), the quality of healthcare service delivery is the marketing. And that's why ePocrates matters to marketers. Healthcare is, afterall, a knowledge industry.

As in other knowledge industries, control has been shifting to consumers because of the availability of knowledge beyond once-restricted walls of various professional priesthoods. As the information becomes widely available, the expectations and definitions of exceptional service delivery are being redefined on the consumer's terms...ePocrates further deploys knowledge to everyone with a stake in effective, efficient healthcare delivery.

Consistent with one of our marketing themes for 2009--Time as a Risk to Manage (here)--ePocrates anytime, anywhere approach goes one step beyond existing web-based services. It allows patients and their advocates to ask more specific, directed questions of providers--on their schedule. And it provides a source of reference to providers that reflects the always-on world of the healthcare professional...including the time outside the healthcare facility's walls.

ePocrates would appear to appeal to both the healthcare professional AND their customers...healthcare marketers--in both human and animal health domains--may be seeing the immediate future of service delivery improvements from the customer's view--its all right there in the palm of their hand.

The only bad PR is no PR? Journalists and Company websites

I'm not a journalist...though I did do time in journalism class decades ago.  Back then, there were no company websites.  Now, of course, what company can be without one? 

When we develop a company's online presence, we always discuss the value of a creating a special place just for journalists and what it should entail. 

If you expect journalists to cover your company, afterall, what is it that they need from your company website? We have a PR staff at R+K that includes former journalists and their insight into the utility and usability needs of a site is a key element of our efforts. And what do they have to say? 

Unsurprisingly, journalists want the same types of things customers want from a company website: what they are looking for, not necessarily what you want them to hear. 

In fact, usability guru Jakob Neilsen's organization recently summarized the results of their more formal research into 'PR on Websites' (here). According to JK, here's what journalists said they need-specifically- on a company's website:

• Locate a PR contact (name and telephone number)
• Find basic facts about the company (spelling of an executive's name, his/her age, headquarters location, and so on)
• Discern the company's spin on events
• Check financial information
• Download images to use as illustrations in stories

That's it. No mission statement. No virtual tour. Not that they won't use these things, but they don't come to the site for them. 

And what do they do if they can't find what they need? Just like customers and prospects...They go elsewhere...or write about something else. 

If a company wants coverage by journalists (in all their emerging forms) then the company website must provide the users with what they want. To find out what someone wants, of course, you have to ask the question "What do you need?"

 

Death by format: Movies move to enter the ether

Long ago and far away, we wondered aloud whether theaters and DVD's had much of a future. And now the future seems to be arriving quickly, riding the greased wheels of macroeconomic deflation and the cheap revolution.

DVD purveyors + the studios that count on physical media sales are suffering (here). Shipments of physical DVD media in 4Q08 were down 37%.

"Home-video sales and rentals, mostly reflecting DVDs, accounted for 68 percent of the $88.9 billion global filmed- entertainment market in 2008, according to estimates by New York-based PricewaterhouseCoopers LLP. The figures include $3.89 billion in online rental fees and digital streaming revenue."

It would be too easy to chalk it up as just another victim of recessionary pressures.  In fact, the streamers, as they will be henceforth known, are up...significantly. Netflix 4Q08 revenues were up 19%.

And Netflix is evolving. I've been using their streaming service--available through my existing Xbox and computer--free. Well, ok, I had to have the unlimited rental plan, but it doesn't cost any extra. And though the selection is limited to a subset of the total NetFlix rental catalog, it's still an impressive breadth.

So What? 

Netflix' integration with Xbox is impressive enough that a million XBox users have signed on to try it in the first three months. A nice example of distribution networks (NetFlix and Microsoft) collaborating to expand the use of their offerings without requiring additional purchases...classic share-gain strategy in a technology-enabled world!

I'll look forward to seeing what Blockbuster, Amazon and iTunes do next with their pay-to-rent download services...either way, the business of physically distributing media would seem to be evolving toward extinction. 

I got nothin'

Zero percent interest for the bill of goods received. Zero credit earned. Zero balance in the trust bank. No more payments past due...all converted to future dues to be paid...by children.

No belief in what is real...because downtimes make for inconvenient political truths. Envy's green back turns on the gangrenous disease of consumption. Too filled to work, too barren to know need, the failure of imagination is that others hopes and dreams are no substitute for one's own reality.

When all the fiscal holes that can be dug by those who don't produce are filled only with our heirs, the truth and consequences of consumption will be told by empty bellies and vacant stares.

Drinking, Driving and Cash for Gold: Super Bowl 2009

America's current champion of sporting spectacles delivered the goods: Close game, 4th quarter drama, the underdogs looking like they could...go...all...the...way...if only for a few minutes...and then there were the ads...

In the lead up, much buzz began (here and here for examples on the RKDNA blog). And now that the ad deal is done, time for the assessment. I've' asked a few of R+K's ad experts to share their informed opinion. Here's the post-game analysis:


Robert Landa:
There can be only one answer to the wasted money, time and effort to write, produce and air the batch of Super Bowl ads for XLIII – it must be a Blackwater contract!

With very few exceptions the ads weren’t even entertaining – the price of entry for this legendary event. Maybe it’s the ad industry that’s bankrupt. Of smart, clever, unexpected ideas. Maybe there is just too much pressure on agencies to over deliver that they simply take to paths well worn. Haven’t we really seen all these ads before?

Kudos to Miller High Life for doing it different. Shame on you Pedigree for taking one of the most poignant campaigns in the last ten years and turning into a joke – and a bad one at that. Budweiser could not be more mean spirited, and I have always admired the teams who can do beer humor well – this category can be amazing. The also-rans are too numerous to mention.

Being that I didn’t have an entry in the game, I will humbly congratulate all who had the chance to participate. Maybe next year you will show the world what great minds and hearts exist in this industry, and how we are actually contributing to the world of entertainment and commerce.

Jim Myers:
As I sit here at a Super Bowl party, squinting through my cardboard 3D glasses and trying to will the SoBe critters to appear even remotely 3D, a truth reveals itself. Just as good is the enemy of great, complicated is the enemy of the Super Bowl spot at a Super Bowl party.

Dialogue? Lost. Storylines? Wasted. Character development? Please.

When a spot's playing at a big party, the recipe for success is different: Be fast and funny. Rise above the fray. Earn your moment away from the chips and beer. And for crying out loud, don't make us think.

Take a look at the crowd reactions:

Man getting hit in groin by crystal ball: Rousing approval.
Budweiser yet again flogging its Clydesdales: So totally over.
Chairbound office worker flying from window: All good.
Danika Patrick's dirty little firesuit: All sad.

The reality is stark and a bit defeating, but if you want to succeed among the party chaos, be visual, be hilarious, and don't require too many neurons to fire.

Wes Meador:
I was thoroughly underwhelmed by the ads last night. In fact, I was horrified when the first spot after the National Anthem was an Avon spot urging viewers to start their own businesses. I’m not sure if this was a national or local ad (I’m thinking local, but I have no idea). It’s such a terrible spot I don’t know why anyone would have wasted money to air it in the Super Bowl. (Not to mention the same ad has been airing for weeks during reruns of Will & Grace on Lifetime.)

The inclusion of an ad targeting women confirms that ads in the big game shouldn’t just be geared toward men. But this one, really? And, from a placement standpoint, having it appear right after Jennifer Hudson’s appearance seemed appropriate if we assume that viewership by women and gay men (potentially the target of the Avon ads) spiked or peaked with Ms. Hudson’s performance. That was the most interesting ad moment of the game…and it happened before kick-off.

Other than that, I thought NBC severely missed the boat with their promos. And the remaining ads (with the exception of the Pedigree ads – which I found amusing) were not entertaining to me. I did, however, notice several movies I’ll be avoiding in the coming months.

Maybe I’m jaded? Or, maybe the game was interesting enough that the ads paled by comparison for a change?

Deron Johnson:
Is it just me, or is the pressure to watch and pass judgment on Super Bowl ads more intense than ever? (Thank God the past two games – including last night’s – were good. Otherwise, we’d all be tuning in to the Super Outrageous Ad Bowl, with the game on the field serving as a great opportunity to go get more queso.)

But this whole spectacle got me thinking – who are we (and by we, I mean the general public, not those of us in marketing communications) to judge a great commercial anyway? Marketers spend infinite amounts of time and bags of money researching and considering their target audience. Every ad we see is not supposed to personally resonate with us – or make us log on to GoDaddy.com to see the rest of the “unrated” Danica Patrick train wreck.

Do the Dorito’s “crystal ball” ad and the Audi “progress” ad speak to the same target? Unless frat guys have suddenly become 38, upwardly mobile and flush with cash, I doubt it. But these spots and dozens of others are all thrown into the same big goofy pot (i.e., the three hours or so between pre-kickoff and post-show) and we’re asked to judge them on supposedly equal merits. All of which forces a conversation not about whether an ad succeeded on its real merits (does it inspire its target to do something) but on a much more superficial one (“Damn, aren’t those monkeys funny?”).

So, when Bruce finished his half-time show, somebody at my house asked why we’ve suddenly been subjected to all the old white guy rockers the past few years. I reminded him to think about the target audience. And then I went to the kitchen for more queso.

Eric Painter:
My impressions of the night mostly lie with who I think got a lot for their money.

Of the commercials I saw (missed quite a few) were Dennys for being so right for the times. Interesting commercial with a nice twist (mafia bosses talking and getting interrupted as the waitress spritzed whipped cream on pancakes) and the kicker of offering a free breakfast to America seemed to hit on a number of smart angles:

• Entertaining creative plot
• Free breakfast-who can think ill of a company doing this-this year -Re-introduced Dennys to anyone who has forgotten about their low prices.
• When is the last time you even thought of Denny's???

Second was Pepsi's Bob Dylan and Will I Am generational spot. Interesting to watch the then and now photos, nice to listen to, and the take away, ties into a long standing theme of Pepsi's...Taste of a new generation. It was their way of trying to position Coke as a has-been years ago. So all the equity they have built through the years is referenced. Spots like this have to be able to be watched over and over without becoming obnoxious. Solid advertising for my money.

The 3D commercials-
I was so busy trying to find my glasses and get the 3D illusion to work (it didn't), I forgot to listen or remember who paid for them...there may be something building here though?

And my own assessment based on commentary among the 20+ folks in the room....

Good: The ridiculous Pepsi take on the SNL MacGruber take on the 80s show Macguyver...featuring Macguyver...near the end of the game. Runnerups: The Doritos Crystal Ball ad where a snow globe is used to break into a vending machine; the humorous parody of the Mean Joe Greene Coke ads from the 70s.

Bad: The Sobe water 3d glasses...noone in our group of 20 even remembered to get the glasses out...the advertisers made the mistake of thinking we would care enough to remember to keep them handy. Runnersup: GE's old Ecomagination ads showing smart grids and windmills....someone in our group asked where they could buy one of those...maybe good for Sunday morning talk shows, but for the Super Bowl?

Odd: Two bankrupt C-lebrities hawking GoldForCash.com. Ed McMahon and MC Hammer promoting a virtual pawn shop were a frightening look at Super Bowl advertising in a tough economy. The plethora of beer ads, career ads, and the lack of ads from the not-so-big-3 automakers speak volumes about the state of the ad economy.

What did you think?