The future is the network

From The Sipa Online Publishing and Marketing Summit. I had meant to blog live, but the sound of my keyboard was distrubing the delegates! Anyway the first post from the event tries to summarise the excellent David Cushmans powerful insight into why media companies are struggling.

The opening keynote is from David Cushman of the ninety10group.com which specialises in social technologies. Grounded in consumer publishing as a senior exec at Bauer he should be well placed to see the world of the new with a good understanding of the world of the old. His premise is that long tail demand may have been a disaster for traditional broad based media companies, but it creates exciting opportunities for specialists.

This is a structural change. There may be a bounce back but lets not forget this is the biggest structural change in media since the invention of the press. In the early days of the press, control of the means of production was the key to the power of information.

The future if digital is what people do together and how they self organise themelves. What used to be in the control of the publishers but is now in the control of us all.

Framentation means you can,target all the niches. but although the impact of the long tail is a disaster for traditional mass media models it is a huge opportunity for specialists. In a world where no one wants to pay for content and no one clicks on ads we have to think about media as a “social object” and this can reveal where the roi might come from. Cushman goes on to argue that everyone is apublisher now as the media world moves from the one to the many. With over 300m blogs and 50m twitter users peer to peer interaction is the most important behaviour change you can imagine.

He claims that 70% of pruchase recommendations are peer recommended which undermines the power of mass media to be influential in the purchase process. The user is the destination, not the media company. There is no point in waiting for users to come to us.

Buuilding lots of hits for the sake of it is a pointless strategy. Cushman argues that the majority is now made of people who don’t want the thing that the largest single group want – the power of the long tail. In a world where there is only “broadcast” or mass media, the audience for the broadcast is the largest group. In a social media world, the largest group is the world of one to one communciations. The implications of this are important. In the broadcast world the value was where the hits were. In the narrow cast world all the tiny niches are collectively bigger and more important and valuable than the largest of the lowest common denominator single group. Therefore, if you want to be a business of scale you must pursue the niches.

There are three key disruptions for media companies. Whow creates content? Any and everyone. Who gets to distribute the content? Any and everyone. Who controls the user experience? The user.

Cushman users a theatre analogy to make his point. In the old media world we were on the stage, broadcasting our message and the audience was looking quietly up at us and hanging on our every word. A big audience gave us scale and influence. If an adveriser wanted to speak tot he audience they would have to join us on the stage. The audience would not talk to each other. In the networked world the message from the stage doesn’t reach the audience. They are not even looking at the stage they are looking at each other and building there own networks of interest in niches and communities of purpose. They share messages anongst their groups – ther groups that they decide to belong to.

Media companies have to understand that we don’t own or contril these groups. Communication is not done to them but by them.

So what should media companies do?
Make it easy for users to connect and interact.
Encourage users to act – people who care act so find the social objects that they care about.
The actions of users attract more people by amplyfying and sustaining the converstion,.
Whatever your pay model is (eg click to buy) it has to be portable so users can take it with them into their own networks.

So finding the right social object is key. Get this right and users will care enought about it to tell their friends about it.

Cushman says we are just at the beginning of the disruption. By implication he is saying that the old broadcast model can never work in the long tail social netwrokoed world. Users aren’t look at the stage. No wonder ad click thrus are low! He concludes by reminding us that if the world outside is changing faster than the world inside, something is going to tear – and it won’t be the world outside! Almost everything you try as a mass media broadcast solution – or possibly naything you try at all will be disrupted by the network. The future isn’t digital – it is the network.

In questions, Cushman was asked what about thought about the rush to put content behind paywalls. His reply? Its insanity. Its a strategy designed to make as much money as you can from teh old model while you can. It si not a building block for the future

You can see the presentation here

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Wringing our Hands about paid content and advertising

I didn’t manage to get to the AOP Conference last week, but no surprise that it appears the discussion there was mostly much wringing of hands about how to make the paid content model work.  The Guardian reported;

“Digital consultant Bill Murray warned publishers that if they put a barrier in front of their users, it is likely that they will disappear. Instead he suggested, they need to rethink the concept of content. The most important factor in the success of iTunes success wasn’t the content, he argued, but the service”.

This seems to me to be the crux of the issue and is accidentally a key insight in to the reasons that publishers find the paid model challenging.  The natural instinct for a publisher is to put the content at the centre of the thinking.  Magazine publishers start their working day by thinking about how to make a better magazine and then work out wards from there.  When they ask what their readers want, the answer can only be something that can be squeezed into a magazine delivery format.

“Not me!” I hear the progressive publishers cry.  The honest truth is, it is almost all of us.  The paid content model requires a fundamental rewiring of how our media brains work.  Instead of putting the content at the centre of our strategy we need to put the user at the centre.

If I ran a chain of coffee shops I might consider that if I make the best coffee I can my business will thrive.  I invest in better beans, more reaosting technology, training my staff how to make the best coffee, serving the coffees in the finest china mugs money can buy.  I will fail every time until I realise I am not in the coffee business at all.  Not sure? Well think about this;

A famous case study of the demise of the Parker Pen company exposes the same mistake.  When Bic began eating into the share of the Parker Pen business by selling cheap biros the managment at Parker determined to compete.  They reworked their manufacturing process to produce cheaper pens.  They judged that to match the price of the new upstart they needed to cut their own price.  The result was disasterous and share conitnued to fall.  After a while the rate of decline accelerated to a faster rate than the growth of Bic.  What had gone wrong?  The inisght to fixing the problem was to recognise that Parker was not really in the pen business at all.  When a customer selected a Parker Pen it was most usually as a gift.  The substitues were not the Bic, but a rather a cigarette lighter or a letter opener.  A reduction in the quality of the Parker Pen had sidelined them in the gift market and continued to leave them at a competitive disadvantage to Bic on price.

What is there to learn from this for business media? The content we used to offer (mostly news) is now avaialable for free.  We have competed by offering our own news for free but have discovered that our users, instead of rewarding us with loyalty and praise, now simply take us for granted and use us as one of many sources of news on the Internet.

Other articles in this blog have said this before, and I make no apology for repeating it again.  Our business is not content.  Our business is helping users to make better decisions and helping vendors to sell more.  When David Gilbertson says that we over estimate the importance of business journalism he makes a fair point and if you read this blog and others you will find lots of clues about what to do about it.  But now for a heresy.  What would happen if we put the question differently?

Instead of

“Giving content away in an advertising supported model does not create enough user engagement (page views/session) or repeat visiting to justify a high CPM.  As a result we conclude that the ad model doesn’t work and we say, how can we create a paid content model?”

Lets try, “What would we need to do to persuade users to engage with our content in such a way that advertisers woudl agrees to pay a CPM sufficent to pay for the content creation costs and give us a profit?”

Let’s think about the scale of that task.  In the old model a typical B2B magazine with a 20000 circulation might have expected to sell ads at around £1500 a page.  That equates to a cost/000 of about £75.  Our current free content model is a long way short of that.  Our typical B2B companion website might get 100,000 page views a month. With a 70% bounce rate only 30% of that traffic is likely to be effctive for advertisers to reach.  Let us imagine that we can service three ad impressions on each page.  So if we sellout our usable inventory our total ad impressions will be 90000.  If you are selling your inventory at £30/000 cpm you are probably doing well.  So if we sell out, our monthly revenue will be not more than £2700 – less than two pages of advertsing in the old model.  My hypothesis could be wrong by a factor of ten and we still don’t have a great business!

We need to find a way to take this model and achieve at least £50000 revenue/month. Driving the number of user visits up is unlikely to work.  The universe of relevant people is limited by the scale of the niche.  In any event the task is daunting.

Consider this:

Where maximum monthly revenue = M

Monthly page impressions= T

Bounce rate (expressed as a decimal) =B

Number of Ad impressions/page =A

Average achieved CPM =C

Then M= T*(1-B)*A*C

Max Rev = 100*(1-0.7))*3*30= £2700

So. all other things being equal, by how much would any one variable have to move to achieve our £50k goal? The terrifying answer is we would need either 1.9m page impressions/month or 55 ad impressions on each page or a CPM of £555!

This seems to me to be so far removed from anything that could be remotely achievable that the drive to paid content is impossible to resist

Does this mean that we should give up on the ad model. If we could improve CPM by 50%, increase available traffic by 50% and halve the bounce rate would that help?  The answer is not much.  Our maximum revenue would still be just £13000 a month.

As with content strategy, using offline thinking in the online world is always going to disappoint.  If you think about it, the magazine ad model, where we could charge £70/ooo to perhapsps fifty advertiisers in the same issue is the equivalent of having 50 ad positions on every web page.  No wonder the offline ad model doesn’t work in the online world.

Is it possible to consrtuct an advertsing model for the b2b web that pays the bills? While I think about that keep cracking on with those hybrid strategies.

The End of B2B in Print or the Beginnning?

Emaps decision to make a dramatic change to the editorial structureof Local Government Chronicle is very significant.  For some time I have been telling anyone who is prepared to listen that part of the problem with the b2b print model is that it has barely changed in twenty years.  This despite the impact of the Internet and the effect on media consumption habits.

Many publishers are worrying that ad yields and volumes are under presssure but have not yet tackled the likely cause.  It is too simplistic to blame the recession.  The facts of the matter are that advertisers have sensed that business magazines are not read in the way they once were.  We should not be surprised.  Before the days fof the web every piece of research I conducted on magazine readership showed that readers wanted to know about news, jobs and products.  The problem in the internet age is all of this is readily avaialable from numerous sources on the web.

What is the value of news pages in a print mag published weekly? Emap have made what I think is welcome decision to abandon the old News, bridge, features structure, replacing the old content with a series of long analytical articles.  I haven’t  managed to get hold of copy so I can’t express any view about the execution, but the priniple seems sound.

Let’s look at some of the evidence.  Almost every paid title in b2b has seen copy sales and subscriptions fall. As this effect is universal we must conclude that something important is happening.  Readers don’t need mags in the way they used to.  They have been subsituted for the Web.

Oddly most CC titles continue to pump out the same number of copies as they ever did.  For many, a good part of that distribution propped up recruitment advertising response.  But with recruitment now being almost entirley a web only play, what is the value of that circulation toda?  Worse, a key motive for picking up the magazine, a browse through the jobs, has vanished.

As revenues have fallen, costs have been cut, impacting on the quality of features journalism.

So, pick up a typical business mag, tear out the news pages, whats left of the jobs section and the “ad get” feature and what are you left with? Not much.  No wonder engagement with magazines is falling away and advertisers are voting with their feet.

The answer is not to give up on print, but rather to create a new print model which offers the kind of content not readily available or easily consumed in a digital format.  I don’t know whether Emap have come up with the right answer, but on this issue at least, it appears they may be asking themselves the right question.

My own view is that there is a future for print in b2b, and I have some thoughts on what that future might look like.  I might yet get to put it into practice!

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Can we make a value add model for online recruitment

First, apologies to those who come her regularly for the lack of posts over the Summer.  I have spent most of the time honing a model for how b2b might look in the future and this blog has not been front of mind.  But the Summer is over and it is now business as usual.  There is still pain all around us.  Results from Centaur Media, where revenues have dropped by nearly a third in a year, will come as no surprise to anyone who works in this space.  More cost cutting has been announced at Emap and RBI.  The downturn in revenues is now affecting events as well as publishing and the online world remains challenging operationally commercially and strategically.

Nowhere is this more  important than in recruitment.  I went sailing last week with a recruiter in the finance sector.  He was telling me how tired he was of job board offerings.  Where is the innovation he pondered?  For publishers the price point on job boards is very challenging.  With the market thinking that £150 a job is a lot of money, it is hard to see how small publishers can compete with the mainstream job boards.  The volumes that are needed to create a viable business are very large.  You need to sell more than 500 postings a month to create a £1m business.

How can niche publishers add value both to compete with generic boards and to justify a higher price?  One answer comes from an interesting US business www.jobvite.com.  

This solution offers employers an application which plumbs vacancies into its employees social networks.  Vacancies are posted on employees Linked In or facebook pages creating a viral access to audiences of potential job applicants who may not be actively searching for a post.  This tackles one of the main weaknesses of the job board solutions.  Their model requires potential applicants to be active.  In our old print model we could push recruiters messages at possible applicants who had not considered themselves active. Reruiters will pay a premium to access these potential applicants.

Although I can see some real challenges for the jobvite model (getting employees to agree to using their personal networks for their employers interest is the obvious one), this represents a an innovative step forward.   So much of our old model profits came from recruitment, we ignore the challenge of innovating new solutions for the online world at our peril.  The question we should be asking ourselves is,  how can we add value to the recruitment offering?

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The Tend to Zero Risk

One of the reasons so many media companies are in trouble is the simultaneous crisis in all revenue streams.  It seems to many, that whatever strategy is deployed, the size of the potential revenue pot keeps falling. 

Back in the sixities, almost all business to business titles were paid for.  News about your industry was valuable and that value could be measured with money.  Today nobody charges for news.  In print, yields have been under pressure for some years.  Online display advertising with it’s transparent measurability has given advertisers a legitimate stick with which to beat media owners.   Where there has been success in selling online display the achieved CPM has been falling.  Too much traffic, too little of it useful or enaged, consequent poor click through rates mean that much inventory remains unsold – a growing proportion for many – and what does get sold is at rates that are falling.  Where once the choice advertisers had was limited by the number of titles in a market, today they are confused by so much choice.

We lost our way with recruitment.  Where we used to charge thousands of pounds for a page of advertising, the job board model now offers an ad £100.  In the recession prices here too are falling.

However we solve the current strategic conundrum, it seems pretty clear that unless we can push back the tide of prices tending to zero we don’t have a business.    The truth is, whilst there are things we can do to make a difference the price of a transaction in the new world is unlikely to reach the heady heights of the old world.  There are  four steps that all media companies must take:

1) Set the fixed cost base at a  level which is supportable by the new model.  This means attacking some sacred cows and stripping away layers of management costs.

2) Improve the value of your advertising proposition.  Seth Godin says,

“As long as your site is about something else and the ads are a distraction, you’ll see CPM rates drop. As soon as you (or the advertisers) figure out that creating online communities aligned with the advertising, where attendance is a choice by the consumer, then you’re creating genuine value.” 

In B2B that means making ads relevant and targeted.  Don’t give up on vertical search solutions.  Keep experimenting – there are riches ahead for the media company that gets it right.

3) Audit every activity that leaves the building and assess it for value.  Use that value audit to establish the prices that could be achieved.

4) Give up on the idea that you are going to survive by doing the stuff you used to do.  News products supported by advertising are going to be very small businesses.  Plan and implement a series of new product developments that will help you scale your business.  Buy some expertise to help you do it.

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The Future for B2B May Not Be In Content

A study by Outsell (only available to subscribers) surfaces one of the underlying systemic issues affecting business media companies.  They asked business to business marketeers in the USA what they were doing with the money they were no longer spending on trade press advertising.  In summary the money went;

• 29% will be spent on the company’s own web site
• 21% will be spent on paid search and search engine advertising
• 17% will be spent on events
• 15% will be spent on other online community or special interest sites

Back in the days of Web 1.0 we used to talk a lot about the opportunities that arose from disintermediation.  Now it appears that it is the business media companies  themselves that are being disintermediated by their own customers. 

One of the biggest costs of trading as a magazine publisher is distribution.  Building a circualtion and then providing access to it for advertisers was the essence of the profit model.  In the digital world, distribution is pretty cheap and marketeers are discovering that they can build traffic on their sites directly without relying on business media publishers.

The implications of this are clear.  If we take the Outsell numbers at face value, even if we succeed with our online content models we might only expect to win back 15% of the money we are losing from print.  That won’t support the costs of a comprehensive content model.  If we are to win our full share of the digital cake we are going to have to think differently about the business we are in. 

Last week I spoke on a panel at the E Publishing Innovation Conference and I reminded the delegates of Michael Wolffs book from the early days of the Internet, Burn Rate.  In this highly entertaining book Wolff describes his adventures in raising money for start up companie in the febrile world of Silicon Valley.  At the end of the book, he declares a worry.  What, he postulates, if it turns out that the Internet revolution is not about media at all?

It turns out that he may have been right.  Although content and media may be part of the solution for business media companies it should not be at the centre of strategy development.  What we need to do is examine closely what our customers (the companies we used to call advertisers) are doing with their spend and help them to do it better.  As I have argued before, nobody wants to buy advertising next to content, what marketeers really want is tools that help them sell more stuff.  That certainly means we are in the lead  generation business.  We might also need  to be in the business of providing widgets and applications  and marketing services that improve the effciency of marketeers own websites.  Of course content is part of what we do, but if we think it is the purpose of what we do, our revenues from “advertisers” are going to be modest.

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User Engagement The Economist Way. It’s Good for Your Elf.

I had itended to keep blogging live from the Publishing Innovation conference, but my battery died!  There were a couple of other presentations on the first day which are worthy of note.  Ben Edwards from The Economist gave a really interesting insight into the thinking about how to make money online.  He started by declaring the scale of the ambition – for The Economist to be ten times as big as it is now in ten years time.   Thats what my old boss John Battelle used to call a BHAG – a big hairy arsed goal (or audacious if you a little queezy).

For the Economist the answer is not exclusively in the advertising model.  Edwards argued that part of the challenge of the paid content model is how you think about it.  Indeed he said,

“Stop thinking about charging for content online and start thinking about online paying experiences.” 

This is a subtle but significant distinction.  He explains what he means by demonstrating the usual user experience.  The user makes a search, finds a result, looks at the result and then probably goes away again.  This, he argues, “the search, click, result model” is not very engaging.  He goes as far as to say, that publishers are useless at building enagaging expereinces in the on line world.

Edwards uses a fascinating example from the world of online gaming, The World of Warcraft game.  Players can do four important things, they can manage their identity; they have a means to progress in a heirarchy; they can interact and network with one another; they can acquire “atrefacts” which validate their self worth.

This approach, Edwards argues is symbiotic with Maslows heriarchy of needs in that these four steps give the players a way enjoying self actualisation.  His evidence for the power of this approach to engagement is in the stats.  He shows a graph which compares typical time spent on a site which publishes news (a few minutes or o) with time spent per week by enthusiasts of elves and witches (world of Warcraft) at 26 hours.

So Edwards says, to build engagement in media, we should use the same approach.  Of course we must give away lots of content (the freemium model) in order to persaude perhaps 1-3% of users to pay for something.  Edwards points out that in the online world, distribution is cheap, so have a wide funnel and put lots of content and users into it to get a small  percentage to pay.

I really like this approach and The Economist is making a start in bringing it to life.  Edwards shows a screen crab of an online debates page with a chair, lead speakers for both sides of the argument and a vote.  This is an example of herairchy (the lead speaker), networking and communications, identity management etc.

The power of Edwards excellent presentation only slightly spoiled by the admission during questions that the Economist hasn’t built most of this apporach yet.  Still, I like it.  Like it a lot.

Tackling the B2B Ad Sales Problem

I have spent the last couple of weeks reviewing some investment opportunities some early stage businesses.  In thinking about whether to proceed I began to wonder about the next developments that will be needed to leverage the business media model into a workable and scaleable  advertising based solution.

Most publishers complain that they have more inventory than they can sell.  This, it is argued demonstrates how hard it is sell digital advertising to b2b companies.  The volume of unsold inventory leads to price weakness and an overdependence on ad networks and backfill.  When clients are persuaded to buy advertising too often the ROI is poor and click through rates are alarmingly tiny.

I think the analysis is flawed.  It seems perverse to complain that there is too much inventory in the same way as it would be perverse to complain that we had too much circulation.  The truth of the matter is that we do not have too much inventory, but rather we have too much of the wrong kind. We have discussed before that a key challenge for web sites is to build user engagement.  A visitor to a site who arrives from natural search is unlikely to hang around for more than a page or three, and this is too little engagement to develop a high propensity to engage with advertising.  (First challenge – increase user enagement)

The second problem is that the nature of our ad inventory is of little use for brand advertising.  Brand advertsing requires a build of opportunities to see, reach and frequency.  Standard skys, leaderboards and banners are not good at delivering that.  To compound the problem we struggle to serve the right ad at the right time to the right user in the right context.  So the next two challenges are to create inventory sets that enable our customers to develop brand as well as clicks and then to find tools which enable us to put the right ad in front of the right user at the optimal time.

The fourth challenge is arguably the easiest.  We have to teach our sales people how to sell the digital opportunity.  Most sales people in b2b come from a pedigree of selling “space”.  Digital sales is much closer to the agency model, with every proposal bespoked against a clients objectives.  Sales people are often frightened to admit they don’t know what they are talking about but this is easily fixed. (I am working with BEC Development in offering a primer course for anybody who wants to develop their digital sales skills-To get on a programme just go the Bec Development website and the fine folk there will help you).

There is one final piece of development you should get your teams to think about.  The mobile device of choice for business people is the Blackberry.  Mobile browsers are not great, but b2b websites are none the less missing out on an opporutnity.  View your website through a mobile browser and you will discover that it is slow to load, the ad experience is awful and the rendering of the content is almost unreadable.  There is much to do to build user engagement, but you should add to your list of tasks mobile apps and optimisation of what you do for mobile browsers.

 

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A Green Field Opportunity for Business Media

Paul Conley has a wise take on the current health of business media.  He was also one of the first to argue that the old model is in trouble.  Although he remains concerned that the debt laden media companies are unlikely to survive in their current form, he is begining to feel more optimisitc about the future.

What is clear to me is that there are no signs yet of a recovery in print advertsing.  For most of the traditional media companies the ugly truth is that any growth in online revenues is dwarfed by the deterioration of offline revenues.  Recruitment advertising markets will remain weak until GDP grwoth reaches 2% – and that is at least 18 months away.  Display advertising is never going to return to pre recession levels.  Online advertising remains a small business for most publishers.  The challenge remains to develop new model strategies for growth. 

The start point for this is to restate the purpose of the business.  We have to stop thinking like magazine publishers or conference organisers or trade show managers or even web site publishers.  Business media is about three things;

- Helping business decision makers to take better decisions

- Helping vendors to sell products and services to business decision makers

- Facilitating liquidity in recruitment.

That’s it.  There isn’t anything else.  If you started with a green field and wanted to build a business that delivered against these aims the reuslting enterprise would look very different from the traditional model.  We would develop a range of products that enable some or all of six deliverables;

1) Right information at right time for users

2) Advertising and marketing solutions

3) Research and discovery

4) Networking

5) Product demonstration and marketing

6) Learning and professional development

Although magazines and community websites and trade shows could be part of the mix, they would not be what drove us.  I plan to come back to these six themes and discuss what product options could be open to the new age business media company.

Personalisation of Content as a Route to Revenue

Image via CrunchBase

In earlier discussions on this blog we have summarised the two big challenges facing business media in the online world as being user engagement and the development of an effective advertising model.   I recently had the pleasure of being introduced to Cognitive Match which goes some way to addressing both these issues.

Imagine that the publisher has a set of content parcels, each of which may be of interest to different parts of the community.  Let’s create a real example by pretending that we are the owners of a food and wine web site for for the catering trade.  Let’s imagine that we have written a series of wine reviews.  To keep it simple let’s assume we have written just four.  One is a review of fine champagne that sells at £50 a bottle.  The second is a good quality Merlot that sells for £25 a bottle.  The third is a dessert wine, a muscat perhaps and the fourth is a blended £5 a bottle Sauvignon.   Let us further imagine that we have cleverly sold relevant advertising against each of these wine types.

We are so excited by these wine reviews and our potential revenue (which has all been sold on a CTR basis) that we devote  a third of the site page area above the fold to it on every page of our site.  All we have to do is to decide which wine review to show at any given time to which user.   Now this where Cognitive Match gets clever.  Using some mathematics which I am not going to try to explain, the Cognitive Match engine collects annonymous informaion about each user and shows, on the fly, the content most likely to be of interest to that user.   A user looking at dessert ingredients content might be shown the Muscat, whilst someone who had looked at a job advertisement for sommelier in a Michelin star restaurant might be shown the Champagne.  As with all search solutions this is about probability mathematics.  If the probability that the content is relevant and personal to the individual user is increased the value of that engagement with the user is enhanced.

For retailers, Cognitive Match claim that the basket attrition rate will fall dramatically.  For business media companies, the ability to match content to user interests increases the chances of an ad click and is likely to encourage the user to spend some more time on the site.  It provides a key to unlocking profitable  CPA deals too.  We have all done CPA deals, but how many have exceeded our expectations?  Matching the right offer to the right user is clearly a useful approach.

Matching content to users is a famously hard trick to pull off.  Ask my team who built foundography (a vertical search engine) or anyone who has experimented with vertical semantic or intelligent search.  The Cognitive Match team appear to be close to a model which is easy to deploy for their clients.  It has an impressive academic team developing the application and an interesting pipeline of blue chip prosepective clients. I am promised a live demo in the near future.  I’ll keep you posted and let you know if it does what it says on the tin.

Guardian Breaks Free From Old Model Publishing

Image via Wikipedia

The Guardian is up to something very interesting.  The have released a beta of an api that allows developers access to their open platform.  The only condition that if used, then developers must take ads from the Guardian.  The premise of this intiative is captured in a lovely quote that the lead executive on the project, Matt Macallister, uses in his presentation.  I re-quote it here because as a mantra for modern media times it takes some beating,

“When all that is solid is melting into air it is important that we try to imagine how we would like the future to turn out and set our sites on that, not just struggle to keep the past alive for a few more years.”

The Guardian, as Matt explains, is trying not to worry about its website but rather to embrace the whole internet.  They judge that allowing developers to play with Guardian content will encourage the development of new ways to to distribute it.  What they are tapping into is not a network, but rather a distribution eco system.  They argue that the money – the ads – will follow the users and users will access content in many ways – not just through the publishers own livery.

Matt is a clever guy.  I had the privelege of working with him at The Industry Standard and he is one of the few who is brave enough not just to think something but also to try it.

At Nexus we did well from licensing content from the travel site to third party users.  How much more interesting could that model be using the approach that the Guardian has taken?  In business media we are desperate to find new ways to develop reader engagement and the open platform approach is something to watch as a possible solution. 

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Making Online Advertising More Effective

Image via CrunchBase

The controversy around the privacy issues that arise from behavioural advertising targetting keeps rearing its head.  According to a report in the Guardian, many Internet companies are considering a boycott of the solution being offered by Phorm, including Google.  Some might say that Google has a vested interest in the failure of Phorm as it butts straight into their own revenue model and approach to improving advertising effectiveness.

Let’s think for a moment about what this might mean for business media.  First, can we agree that there is something wrong with the existing online advertising model? Put to one side how successful or otherwise we are in selling our inventory, a quick look at your results from Google Adsense will tell you all you need to know.  Back in the late nineties, the dot com bubble burst, not least because the extravagent valuations of Internet start ups could not be sustained by the slow rate of growth in revenues – much of it advertising revenues.  Click through rates were horribly low.  Google changed all that.  The ability to deliver ads which were relevant to the content of the page suddenly created a whole new business.

For a while we deluded ourselves that all was solved.  But things are beginning to look like 1999 all over again.  Three years ago, oneof the websites I ran was achieving an ecpm from Google of around $10.  That same site today is struggling to achieve $2.  I have no way of knowing whether this is typical, but we also observe that average ctr for all kinds of online display advertising is falling.  When we were developing our vertical search engine, we learned from the technology market advertisers what the average CTR was, across all their online campaigns.  In the interests of commercial sensitivity I can’t tell you the numbers, but let’s just say they are not large.

The implications of this are serious, and we have touched on them before.  To achieve advertising breakthrough clients are resorting to buying networks.  If the CTR is low, then you need to buy a lot of traffic.  As a result the rates are low.  It is an empirical fact that none of us can make a living from the rates achieved from backfill and ad networks.

 

So what to do about it?  Behavioural targeting is certainly part of the answer and I suspect the privacy issues are less sginificant in b2b than they are in b2c.  The key to the success of this will be the ability to make the advertising experience relevant to the user and that requires a taxonomy which allows the ad server to understand the relevance of the document.  Key words won’t do it.  The approach has to be smarter than that.  The next generation of advertising will be closer to the holy grail of semantic search than the last.  It will require an understanding of the meaning of the content, the ability to understand related concepts and facets.  

Understanding the meaning of documents is at the heart of what the enterprise search companies try to do – most notably Fast and Autonomy.  But there are real issues for these technologies in the kind of applications we are talking about.  In the enterprise search world, most documents are fixed, with only documents at the edges changing.  In web sites, most of the current accessed pages change all the time.  What is more, each business vertical requires a unique taxonomy otherwise users experience too many false positive results.

So let’s imagine we can solve these issues.  If we could understand the meaning of a document, and the possible related concepts and then uses this data to call the ads, is it possible that our customers will see a meaningful improvement in their CTR.  Could we meld with that the click stream information from the session and parse both data sets through the ad server?  Wouldn’t that be cool?

Apart from Google, there is a growing band of specialists thinking about this problem.  Think Wunderloop or Grapeshot as just two interesting examples.

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