Mantic Media

Great post today from John Battelle. This part gets me excited:

I believe we are at the beginning of an explosion in online media brands, akin to the explosion of consumer magazine brands in the 1940s and 50s, or the explosion of cable TV brands in the 1980s and 90s. With magazines and cable, we saw a move from a handful of major brands to hundreds of choices, all supported by major consumer marketers. With the Web, I think we can take that an order of magnitude further, or even more - from a handful (AOL, Yahoo, MSN) to thousands, or perhaps even tens of thousands.

Go read the full post.

A big shot at Viacom is echoing the sentiment of my earlier post about portals losing traffic and ad dollars to niche sites:

The Web is fragmenting in a big way. People are using search to find what they are looking for, and they want to go deep into what their passions are.

Depending on the surveys you see … over 50% [of Web surfers] are using search as their electronic program guide. They’re typing into a search box for what they want and they go in deep. That tends to bypass the portal model.

So instead of being told what to look at, people are using search to find it for themselves. Makes sense because more high quality niche content sites are popping up to service those queries.

In addition to Google and Yahoo, people are also using human driven aggregators like Twitter (follow me), Delicious, Digg, StumbleUpon, et al, to find recommendations.

Reminds me of the day I discovered social media. Browsing Digg and Del.icio.us introduced me to great content I never would have found otherwise. More people make the same discovery every day.

This is the entrepreneurial marketer’s dream. Create something great, throw it out there, and the users will spread it for you.

The portals have 2 choices: devote themselves to search and the network business (Google) or move into the niche content business (Yahoo). As Calacanis astutely points out, the second option directly under cuts the first.

The margins are much higher for search, but Yahoo is getting crushed there. Competing with potential partners (eg niche content sites) will only exacerbate that problem.

Things are not looking good for Yahoo, but they are for the little guys who want to build a business around a passion, for users as passionate as they are.

Convenient that I wrote a bit about conversational marketing the other day, as Starbucks just launched a major interactive marketing campaign.

They’ve created a site where users can contribute ideas for improving Starbucks and vote on the ideas of others. It’s very well executed and seems to be getting good participation.

This isn’t a place for Starbucks to push their message. It’s a way for them to listen and draw customers into a community centered around the Starbucks experience. There is a lot of dialogue going on and a feeling of inclusion.

This is a site users could browse for an extended period, just because they’re interested in the content. It feels more like a conversation than an ad.

I’d say that’s a bit more effective than a banner or a 30 second TV spot.

Lots of interesting reading today, and a lot of big news to consider. In case you’ve been away, the financial markets are ablaze (not literally but close) with the collapse of Bear Stearns. I won’t pretend to know where this is going (if anyone does) but this not your average cyclical downturn. Until this plays out, I’ll hope for the best and hang on the words of those who know better.

But in online ads (non-search), people are starting to ask the tough questions, namely, do they work? And does anyone with a brain click on them?

The money quote comes from Jakon Nielson (via AdAge).

The basic point about the web is that it is not an advertising medium. The web is not a selling medium; it is a buying medium. It is user controlled, so the user controls, the user experiences.

Couldn’t agree more. But something’s missing. Nielson is right when it comes to the first generation of web ads (banners) and he also recognizes the effectiveness of search ads. But what about brands?

Battelle sees brands as the next revelation in online ads (as opposed to the mass networks like AdSense) and discusses value creation in the media business. His 3 part series on conversational vs. packaged goods media is a gem. He says the big brands are yet to fully embrace and utilize the web (as the direct marketers have). They are afraid, and justifiably so, of the horrors user generated content could inflict on their pristine creations.

This is a dilemma. How to protect brands, yet allow the interaction that embodies the web? Not possible, at least in the way we think of brands today. The web strips away image and reflects reality (or at least public perception).

But I think the NEXT BIG THING is the socialization of the transaction. Instead of going to someone else’s house buy goods, buyers go to a neutral site (similar to a real life market place) where they can interact with other buyers and gather information to make the purchasing decision.

People who want to buy, being shown the offers they want to see, with sellers competing for their dollars. And the parties engage in continuous dialogue.

Not only does Google want advertisers to upload their entire budget to the Google system, they now want publishers to do the same with their ad inventory.

*Apologies for yet another GOOG post, but it seems like every big development in media involves them, Apple, or both.

SAI posts a summary of the Q&A between Google execs (Tim Armstrong and David Eun) and the bankers at Bear Stearns. The most notable bit:

Usually careful to downplay any competitive threat to traditional media, Armstrong dispensed with that notion in a talk Monday at Bear Stearns’ media conference in Palm Beach, Fla. Over time, he said, Google’s strategy is to have advertisers load their entire ad budgets into Google’s system, which would allocate spending across media whether online or offline.

Other important mentions include Google’s intention to ramp up monetization on YouTube and to quickly leverage the acquisition of DoubleClick to grab a large share of the display advertising market.

I wouldn’t bet against them on display ads, and as I said before, they are well positioned to become the dominant player in TV/digital video advertising as it converges.

All this, and the stock is threatening to drop below $400, nearly split in half in a few short months. Can’t wait to buy back into that on the other side of this recession.

This story caught my interest because it brushed against me personally.

Last year, when PickTheBrain was about 6 months old, I was contacted by a company called GeoSign. I spoke with their business development manager, Timothy Royston. They were interested in investing or acquiring the site. I told them my story and shared some traffic stats. They never got back to me with a proposal.

It was thrilling because GeoSign had just received $160 million in venture capital. One the largest sums ever for a VC deal. I scoured the web for info on the company but found surprisingly little. The properties listed in their media kit seemed middling at best.

Well evidently there was something fishy going on behind all that mysteriousness. GeoSign’s income was coming almost exclusively from Google AdSense through keyword arbitrage. They were buying cheap keywords from Google and Yahoo and directing visitors to pages filled entirely with higher paying ads.

And then Google pulled the plug. A $100 million a year in revenue evaporates. But there was never a business there. It was an exploitation of the system.

If you look at the web with a certain mindset there are numerous opportunities for exploitation and profit. Loopholes in the system that lead to easy money.

The lesson here is don’t waste your time. Don’t build up ways to exploit the system. These detract from the web and are eventually eliminated. They’re all take and no give.

The only business worth building is one that creates value.

Update: TechCrunch finally covers the story, getting GeoSign some of the infamy it deserves.

Good news for small and medium sized publishers. Web users are moving away from the portals and spending more time on niche sites. Accordingly, advertisers are spending more money on these sites, which offer superior audience targeting.

This makes a lot of sense. The portals are generic. They’re good for general mainstream news (sports, finance, etc.) but not much else. When you want content about the stuff that means a lot to you (but not a billion other people) you go somewhere more specific.

As the average internet user becomes more savvy, they’ll feel increasingly comfortable on smaller sites and be more willing to branch out. More people will understand that Yahoo/Google/MSN is not the internet. Social media sites like Digg make discovering niche sites increasingly easy.

The advantage the portals have always had is scale. How does your company reach a massive audience? But as the online ad industry matures and inventory from niche sites is consolidated, ad buyers will have more (and better) options.

This is vital to what we’re building at PeopleJam.

I’ve recently read some fascinating stuff about the future of the ad industry. If you have an interest in the future of ads or media, this post in a must read. The money quote [excerpted from The Coming Ad Revolution]:

Each user determines who will get into his own garden, whether friends or vendors. Look at Dopplr (where I plan to become an investor), a site for travelers. I list my trips, and see how they intersect with my friends’ itineraries. “Oh, we’ll both be in London April 4? Let’s get together!” Or, “Juan and Alice will be in town next Tuesday. Let’s hold a dinner!” You can imagine or visit equivalent approaches for books (a hypothetical Amazon 2.0, new and more personalized), clothes (Glam.com and Stardoll.com), and even money management.

So what’s the business model? I’ll “friend” British Airways, which will say, “We see you’re going to Moscow next month. Why not fly through London and we’ll give you 10,000 extra miles?” I’m no longer in a bucket of frequent travelers, my privacy protected. I’m an individual with specific travel plans, which I intentionally make visible to preferred vendors. British Airways, of course, will pay Dopplr a handsome sponsorship fee to be eligible to be my “friend” (just as a Nike rep might pay to sponsor a basketball game and be part of the community). Someday NetJets may show up, offering to ferry me and my friends to a conference we’ll be attending together.

I’m far more likely to respond to BA or NetJets within a trusted site, and for a specific offer, than I am to heed their ad while reading a newspaper article on the troubles in Russia. (As for Orbitz, my old standby: After five years, it still doesn’t acknowledge my preferred airlines.)

The new model creates a more trusted environment for reaching high-value, frequent purchasers, whether of airline tickets, electronics, clothes or other items. Where does that leave the less-frequent purchasers? Probably looking to their friends rather than to advertising for advice. I’m an expert on travel; my friends may look to me for hotel choices. When I’m in the mood to buy a book or a new computer, I’ll check out what my friends on Facebook are doing.

This got me thinking and generated a fantastic startup idea that I’m surprised has not been done yet (if you are a VC contact me :)). The concept of marketing through interests and social ties is so intuitive that it should be farther along. The interesting part will be to see how the generic social nets (Facebook, MySpace, etc.) are able to monetize the phenomenon. My guess is apps created by the niche networks layered on top.

The example cites a network focused around travel, but if you think about for a few minutes it’s easy to spin off a number of areas where communities like this would be extremely useful for users as well as marketers.

This is all well and good for web media, but what about the traditional channels, specifically television? The ad game is changing there to, especially with the prominence of Tivo and DVR. Not surprisingly, users want free (ad supported) content and the ability to fast forward through those very advertisements.

So what gives? How do marketers hold users’ attention as TV becomes a more personalized and user-controlled environment?

The answer is Advertainment. Ads that are made to look and feel like content and are hooked onto the beginning, end, or directly within content so that users experience them as programming rather than ads. If you pay attention you can see this happening already.

And I don’t think it’s a bad thing. People like to buy things and they like to learn and talk about the cool things that they buy. So if your company makes a fun and interesting product you will be in great shape. If not, you’ll need to get creative and build entertainment around your product.