Saturday, January 31, 2009

I was looking at adage.com, and found the following article:
http://adage.com/digital/article?article_id=134209
ABC Says Web Viewers Will Tolerate Twice the Ads

Apparently research conducted by Nielsen shows that audience members viewing television shows online exhibit neither decreased recall or reduced ad attentiveness when showed more than one sponsor during ad break. It also suggests that the number of ads shown can be doubled without adverse effects... The article does acknowledge that there is a fine line between the right amount and too much-- which seems like a delicate balance to me!

So this is good news for the networks who distribute online-- but as someone who oftens streams shows, I have to say I am not so happy about these findings. Unlike a DVR, you cannot fast forward through the ad breaks-- but I do generally turn my computer on mute and get up during the breaks. It will be interesting to see if/which networks respond to this data.

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The End of Spam? Not Anytime Soon.

At the Information Security Best Practices Conference at the Wharton School of the University of Pennsylvania, Comcast's senior counsel and chief privacy officer, Gerald Lewis, echoed similar statements of Professor Kagan, noting that the Can-Spam act of 2003 "hasn't done anything to curb spam" despite being "a well intentioned law." He also stated that the biggest issue with regulations like the Can-Spam act is that they do not have jurisdiction overseas, where the majority of spam originates. Moreover, Chris Marsden, a professor at the University of Essex, stated that numerous anti-Spam regulation schemes were being drawn up in the UK and ISPs will likely see more regulation, although he further claimed that giving consumers more tools is not necessarily the answer, stating, "ISPs have made it clear that consumers will not implement filters."

Although the idea of mandatory filtering for spam and content on all PCs as a regulatory requirement was discussed, I believe the same issues found with current regulations would exist. Specifically, PCs outside of the jurisdiction of any regulation will remain unfiltered and contaminated. It seems that Spam isn't going anywhere, anytime soon.

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Bringing New York Times to the 21st Century

Silicon Alley Insider did a back of the envelope analysis on New York Times printing costs based on the company's 3Q08 results and came to the conclusion that they were twice as much as giving the paper's 830,000 subscribers a Kindle.

The article reminded me of a story in the New York Times about an eReader developed by Plastic Logic, which had the perfect dimensions for (8.5 x 11) for delivering newspapers. The company was supposed to announce partnerships at the CES conference, but nothing came of it. There's no news on Plastic Logic's website about partnerships with newspapers and it seems they are moving away from positioning the gadget as a newspaper reader to a business document reader.

That's too bad, given that the newspaper industry is losing ad revenues and readers are going online where the same content is free. Some may wonder who would want an eReader for periodicals when there's available access to the news on the computer, but there's a trade-off between accessibility and mobility. Sure laptops have shrunken over the years and netbooks are relatively light, but the clamshell design still makes them a pretty awkward replacement for holding and perusing a newspaper or magazine.

The Plastic Logic eReader is ideal for portability and ease-of-use and think of the printing costs saved and reduced carbon footprint (no more truck delivery, less trees cut) if the New York Times could get its users to convert to the gadget from newsprint. If the paper can offer an eReader with more reading area than the Kindle and integrate wireless technology, there's a real possibility it can maintain and grow its subscriber base by offering current news in a format that's easier to read than on the computer.


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OpenTable Files for IPO


A very interesting company from the last internet bubble, OpenTable, has filed to go public. The online restaurant reservation site that was founded in 1998, is hoping to raise as much as $40 million in an IPO, according to a filing with the SEC. OpenTable provided a new channel for restaurants to attract customers via the internet. The website benefits from a strong network effect: the more restaurants that use it, the more valuable it becomes to consumers, and thus the more potentially valuable it becomes to restaurants not yet using it.

Nevertheless, it will be interesting to see how this offering pans out in the current economy. Overall restaurant revenues have declined as US citizens have limited their discretionary spending, such as dining out. As such, one would expect OpenTable's bottom line to also be negatively impacted by the economic downturn.

The last U.S. IPO in the technology sector was Web hosting firm Rackspace (RAX), in August of 2008.

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A step forward in online shopping...

Although virtual shopping has a long way to go, more and more sites are trying to give you a taste of a real dressing room experience. One of the companies who is trying to give you more informatin about is Coach. Although handbags might seem to be an easy online buy (its not as if they won't "fit"", your size and height, relative to the bag's size is of concern to certain customers. So they have introduced the "try it on" feature that allows you to see your bag of choice on the arms of a customizable silhouette with 3 different heights. Also, the feature allows you to see how the bag looks over your shoulder, in your hand or even crossbody (with certain styles) on your custom sized-mannequin.

While not a ground breaking technology, the ability for customers to get a sense of size is crucial to purchases and is becoming more of an issue as online shopping beceomes increasingly poplular. 24 inches doesn't mean much till you realize in a picture that its the length of your entire arm!

Check it out at http://www.coach.com/content/product.aspx?product_no=12569&category_id=1951

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US online spendings during the holiday

ComScore lately released online spending data by category for the holiday shopping season in the US. In comparison to last years' data, this year the online spending outperformed the offline spending in the US in the following key product categories:
  • Sales of apparel & accessories - up 4% online, compared to a 19-21% decline in overall sales of the category.
  • Consumer electronics declined 5% online and home, garden and furniture declined 14% online, compared to a 26% decline in overall sales.
  • Jewelry & watches - declined 24% online, compared to a 34% decline in overall sales of luxury goods.

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Friday, January 30, 2009

Big pharma planning digital marketing push this year?

In terms of digital marketing, pharmaceutical companies have been historically inactive compared to companies in other industries. One of the reason is that the industry has unique strict regulations on promotion so that pharmaceutical companies are reluctant to adopt digital - especially web 2.0 - for fear of a poor risk/benefit ratio and a lack of documented success with these tools. However, according to a new survey from MarketBridge and Matt Kapko's iMedia news , the pharmaceutical industry is preparing to make a big push in the digital marketing space in 2009. At least 72 percent of all respondents said they would be investing more in 2009. Although there remain concerns about regulations, "digital" certainly attracts more and more interests among pharma companies.

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Thursday, January 29, 2009

A lead generation site: Mint.com


In class, Prof. Kagan talked about sites that help generate leads. I can't help but think of Mint.com.

Mint.com is a site that helps you monitor your finances (i.e. your bank account, credit cards, stocks, 401k). It will help you budget your spending, warn you when your credit card bills are due and most useful of all, it does all this automatically, even while you are sleeping. (Yes, you may think security issues...But with MS Money
and Quicken of the world getting more and more integrated with the internet, I would rather trust a website that specialize in handling accounts online.)

So how does Mint.com provide all this service for free? The key is to separate users from customers. Users of Mint.com are people that sign up on mint.com, importing their financial accounts. Mint.com provides the users with the ability to track and monitor their spending and net worth. Mint.com's customers are not the same as the users. Their customers are companies such as banks and credit card companies that would pay to gain access to potential customers. Armed with the knowledge of a user's spending habits, Mint.com, can in effect generate a comparison among bank accounts or credit card offers that would help users save money. If the user click through and sign up for an account, Mint.com will be able to collect CPA.

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Tracking Social Media, Word-of-Mouth

Despite all the buzz about social media, only 16% of marketing executives said their companies routinly monitor what people say online about them or their brands .

http://adage.com/cmostrategy/article?article_id=134085

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Wilfing, or What Was I Looking For Again?

I get lost in Wikipedia sometimes. It's great example of chaos in that way: a dive into a robust subject can spread to any of a million fourth- and fifth-order nodes with only the slightest difference in entry points. I like having the option to go anywhere. But what I'd like even more is for Wikipedia, like a good librarian, to understand at some level what I'm ultimately looking for and nudge me toward that goal.

To that end, I wondered the other night whether someone had considered ways to make that happen. This being the Internet age, of course someone was on top of it. A guy named Rob Lee (watch him speak about his ideas here) is doing cool research into how we can use socially authored content to generate new routes through data archives. The basic idea is similar to Google's original page rank algorithm: given a context, the more popular an idea is, the more likely it is to be relevant. As the Internet grows and wilfing becomes more common (if it's not already ubiquitous), these ideas are going to provide us the roadmap we are all looking for--even when we're just trying to get lost.

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Wednesday, January 28, 2009

The Future of Television Commercials

How common is it for someone to watch a TV show from start to finish and watch the commercials included at the breaks? When people choose to watch TV, I think most people record shows and watch them later where they can fast-forward and bypass the commercials. If not watching via a physical television, people can watch shows and movies online either via a specific network channel or by finding it free online at another site.

My question is, how are the prices advertisers are paying affected by this technology-enabled change? Furthermore, is the current economic condition affecting the amount advertisers are willing to pay in this environment? Another thought to consider is to change the venue of advertising; are companies shifting from commercials on TV to online advertisements that can be more targeted? In this last scenario, advertisers can have better monitoring and data gathering methods.

Researching on the web I have come across a few interesting references:
“Viewers are flocking to Hulu. Since its May launch, Hulu has become one of the top online destinations for videos, drawing more than 22 million unique viewers in November, who spent an average of two hours on the site over the course of the month.” (http://www.businessweek.com/technology/content/jan2009/tc20090119_442155_page_2.htm)

“Fan Pages: Fancast, Comcast's Hulu competitor, offers fan groups for TV shows that let users obsess over plot points and share favorite episodes. Powered by social networking site Plaxo, the feature is in beta.” (http://blog.wired.com/underwire/2008/11/tvs-killer-app.html) With groups like these, companies can be very targeted in their advertisements,

One last idea: I have seen that in other countries a show is broadcasted in its entirety with no breaks and then commercials are reserved for the last few minutes before a new show begins. I realize networks cannot demand as much money this way but with the decline in patience of viewers, is this a possible trend that may arise?

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Would You Spend $1.65 billion Dollars for $54 million/Year in Revenue?

YouTube was purchased by Google for 1.65 billion dollars.

Much has been made of number of users, and videos viewed on the site. On December 11th, 2008, the New York Times even reported that YouTube content creators are making six figure salaries by posting videos on the site.

However, very little is known about how much money YouTube actually makes.

My theory is, not very much at all. Here is my logic.

ASSUMPTIONS FOR US REVENUES:

3% of all videos on YouTube carry ads (from NYT article)
5 billion videos are streamed on YouTube every month (estimate pulled off of website)

Therefore:

150 million videos per month carry ads. With this assumption, here are some different revenue scenarios based off of a range of CPMs:

CPM Rev/Month Rev/Year
Low 5 750,000 9,000,000
Mid 10 1,500,000 18,000,000
High 20 3,000,000 36,000,000
Very High 30 4,500,000 54,000,000

So let’s just say that YouTube gets a pie-in-the-sky $30 CMP from the 3% of videos that carry ads. That means 54 mm in revenue, out of which must come all YouTube expenses and revenue split with content creators (as per the NYT article, it looks like YouTube isn’t taking the typical conglomerate v independent producer stance and "strong arming" -- aka f@?!ing -- its content creators). Assume they have pie-in-the-sky 40% margins, this leaves them with a $21.6 million profit/year.

So in a wildly optimistic, best case scenario:

21.6 million/year = 1.65 billion purchase price…? Possible, but that leads to a discount rate of .0144%.

In October of this past year, Google announced it would start selling search ads on YouTube. So maybe in the long run, Google just looks at YouTube as another place to sell text ads. Short of that, it seems highly unlikely that a site with mostly user-generated content will ever come close to generating enough revenue to justify the billion-dollar plus price tag. Even if text ads were the plan all along, you have to wonder why Google couldn't have just contracted to be the search ad provider for YouTube, and not plunked down 1.65 billion of shareholder money for something they could have done for free.

It will be interesting to see in the coming quarters if Google follows EBay’s lead in the Skype purchase and writes down this purchase.

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Leveraging Old Media with New

Often we focus more on how digital is supplanting traditional media and less on how a nicely integrated campaign can leverage the best (or worst) of each. One area of TV advertising that has to-date remained more or less sacrosanct is the good old Super Bowl spot. While no longer breaking price records year-over-year, in an era of fading revenue the spots seem to be holding their own. But these costs create a new demand: in this austere media environment, how to maximize and measure the productivity of these budget-busting ads?

This short article (non-subscribers) in the Wall Street Journal discusses a number of innovative means of creating stickiness and/or measurability being tested by several of this year's advertisers. New (to me) is a product in the Canadian market that allows consumers to use their digital cable remote to watch a longer version of an ad or bookmark that longer version for later viewing; the revenue model is decidedly new media: cost-per-click. A simpler tactic among several being used by Castrol is the purchase of keywords related to their ad to assure primacy in post-ad search. Doritos is likely going to take the prize for a second year with their viral ad contest:

“…offering $1million to anyone who can create a Super Bowl commercial for its Doritos tortilla chips that scores No. 1 in USA Today’s …ad competition.”

And, finally, what marketing opportunity would be complete without yet another brand attempting to create an online community, (this one is about Pedigree dog food under guise of pet adoption) which lets you download a barking dog ringtone for your iPhone....

My bets? Simplicity wins. Harnessing true consumer passion for your product wins. Forced community, maybe not so much.


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Capital scarcity - good for online marketing?

Recently, we have been swamped by articles and comments on how the growth in online marketing decreasing, CPM prices falling and ads network's inventory exploding. What can be good about it?

Well, think about it this way. We had an enormous amount of capital flowing in the system. Corporate America had unlimited marketing budgets, VCs threw capital on non-viable start ups who in turn paid high for non-sustainable online marketing efforts to drive traffic. Everybody participated in the online marketing party. Who suffered? Viable, potentially successful, startups and companies that saw their marketing efforts flooded with so much spam. The ventures that could actually create value for the long run had to first win in the "spam war", which consumed many resources.

Online marketing resembled securitization in many aspects. It became too complicated, nobody could follow its results and traditional metrics like ROI were completely forgotten in the WEB 2.0 rush. Luckily, it was not leveraged (at least that)...

Like everywhere else in the business eco-system, the current dislocation (relocation?) of resources is a vital process that will eventually differentiate the winners from the losers, the dogs from the stars. Capital and cash are not kings any more - good ideas and real value creation are.

And by the way -- talking about good ideas and value creation. To my opinion, YouTube is by far the next thing in online marketing. They are doing absolutely amazing staff and I do believe that Google made a good investment (in the long run). Watch how YouTube is falling a part right in front of you here.


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'' Alive'' advertisement



Just want to share an online advertisement done by ING Direct Belgium that shows a smart use of digital media. Here is the entertainment.

I shouldn't reveal too much before you actually see it. Hope you'll feel amused. We could discuss whether it's effective or what you think of it. 



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What Works in Online Video Advertising?

I was given the heads on this article through IABSmartBrief. The source is BusinessWeek. It gives an interesting look at how standardizing video ads impacts online marketing. It speaks to the hesitance firms have about utilizing videos ads due to the costs required by the necessary customization of various formats. Notes All States Media Director:” ‘With so many different formats for video online, we incur incremental production costs every time we enter a new format’. As a result, some companies are avoiding online video advertising altogether”.

That’s changing now. A Pool has been formed -- a collaborative effort between firms and web publishers – to identify and standardize effective video ad practices and formats. The mutual benefits are clear – firms can produce video ads that better reach their audiences, more cheaply, while web publishers drive more video advertisers to their services. “Proponents of a common standard liken their quest to the search four decades ago that made the 30-second spot the gold standard for television advertising. In terms of advertising spending, television didn't take off until it got a 30-second unit," says Tracey Scheppach, senior vice-president of video innovations at Starcom MediaVest, whoe spearheaded the Pool late last year by asking Microsoft, Yahoo! (YHOO), Hulu, CBS Interactive (CBS), Discovery Communications (DISCK), AOL (TWX), and online video ad network Broadband Enterprises to propose a total of 30 different types of ads…participants hope their efforts will single out an ad format that has the strongest likelihood of attracting eyeballs and interest”.

http://www.businessweek.com/technology/content/jan2009/tc20090126_341533.htm?chan=top+news_top+news+index+-+temp_technology

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Tuesday, January 27, 2009

Display ads are falling, Performance ads increasing

There will probably be a lot of coverage of Yahoo's earnings call (http://www.paidcontent.org/entry/419-yahoo-earnings-display-slips-2-percent-ceo-bartz-we-will-benefit-from-c/), particularly with new CEO Carol Bartz, but one thing that they noted is that advertisers are starting to shift away from online Display ads to more performance-based advertising.

Yahoo reports that Display ads have fallen 2%, with a shift towards performance marketing, an area that Yahoo have traditionally been weak in. As the online advertising market continues to mature, there will probably be a continued shift towards stronger metrics-based and more transparency in the advertising chain from click, through to conversion and sale.

Does this suggest another nail in the coffin for Yahoo?

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Internet killed the TV star

It seems that content from TV is finding its way on the internet. Personally, I rely on the internet for TV. We have a 46” flat screen TV that we connect to a laptop to watch TV from. There is no need to invest in DVR technology when content is readily available and FREE on the internet. Some sites I use are: hulu.com (which I use to watch House) and Joost.com (which I use to watch How I Met Your Mom).

Since many sites feature similar content, if not the exact same, sites have to battle for users. In order to differentiate themselves from each other, sites seem to default to offering social networking features. They are even relying on the facebook connect platform in order to allow users to connect to friends.

Interestingly, TV content websites are having similar struggles as Pandora (as Arlyn blogged) in monetizing their ventures. However, they are including social networking aspects in the websites and creating communities with hopes of generating “consumer loyalty”.

In the long run they hope “consumer loyalty” will provide a reliable medium by which advertisers can reach a targeted audience based on the data mined through these websites. I agree with the article above that the data will be more accurate than what Neilson’s provides since we can leverage existing networking data (i.e. age, gender, interest, etc. data).

I feel like this is just goes to show how powerful the internet is becoming in that it is slowly replacing all other forms of media (in this case, TV). Especially with corporations taking their content online, they are essentially approving and buying into this concept. They may have to for their own survival and to reach their user base more efficiently.

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Google goes medieval on Hotmail's...

If you go to Google and search for "hotmail," the first entry that comes up is for Hotmail. Great. But what is odd, and maybe just downright mean, is that the black text below that describes the link says:
"Free web-based e-mail. 2MB e-mail storage, signatures, stationery, HTML compatible."

Wait...2MB?!?!? That has to be from about 2002. I'm pretty sure Google updates its indexing, and crawlers more often than every 7 years.

Do you think Google is doing this intentionally? My guess is this could be a mean trick, in the spirit of Google bombs like how searching for "miserable failure" brought up George W. Bush until recently.

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Wikkis & Blogs lead to emergence of "Reputation Management" servicess

A restaurant website called BooRah, recently launched a new service that allows restaurateurs to track e
Publish Post
verything written about their establishments online. This will prove an invaluable tool, as every comment can be used to evaluate and improve operations, including those posts that may have never come up in online searches or were buried to far down in the results. I expect similar services to pop up soon

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From "The last days of the moguls" , thedeal.com (http://www.thedeal.com/newsweekly/features/the-last-days-of-the-moguls.php)

"Before today's media moguls join the fallen, however, let's understand why. ... It will be you and me and our increasing participation in digital diversions. "It used to be 'Let me entertain you,'" says Blake Warner, a managing director in software, media and telecom investment banking at Thomas Weisel Partners Group Inc. "But now it's 'Let me provide you the tools to customize your entertainment consumption.' "


Hollywood has never been very strategic or adaptive to new technology and new consumer trends. First, they ferociously fought television because they were affraid that it would kill their movie theater business. To the contrary it turned out. The same was true for VHS. But everytime they succeded in maintaining their now 100 year old dominance of the entertainment world because content was king and ultimately whatever new distribution channel or method was used, the content producers were necessary. This time however, Hollywood studios might have a tougher time to prevail. Content takes a new form as user generated, interactive, two way and as wiki. The studios are only one element in this mix, but not THE most important element anymore. And once again, they don't really have a great plan it seems.

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Monday, January 26, 2009

A New Ad Strategy From Pandora

As a Pandora loyalist, I was excited to hear the company announce a new strategy to make money from advertising.

Over the past few months, I’ve cringed at the company’s failed attempts to monetize its enormous user base (21 million registered users and 2 million users/day) with banner ads and rich media. Why would a site selling ‘sound’ ever think that visual display ads were its best path to advertising revenue?? But I digress.

The new advertising model which leverages Pandora’s aural content by interjecting 15-second commercials every hour or two will likely prove a more effective means to deliver an advertiser’s message to a mass audience. However, the company will likely face challenges in quantifying the value of these impressions for its established advertisers because 1. Customers listening to Pandora are not likely to ‘click through’ and 2. The site won’t be able to drive enough traffic/new users to an established brand in order for the brand to see the direct effect of the campaign.

In the press releases announcing this audio ad launch, Pandora lists core advertisers as McDonald’s, Bose and American Idol. These mass market brands are going to be the toughest to prove an ROI to. However, new brands looking to generate mass awareness, may be an easier target as newer brands will feel (and thus track) the effects of a small traffic increase more so than a well established brand. So even if consumers aren’t clicking through directly from Pandora, an increase in search traffic following the ad could provide a measure of the ad’s effectiveness.

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Can we get the J. Crew model to sashay?

[...] the number of online shoppers who watch retail videos grew 40% in a year."

Would you be more likely to buy a product if you could see it in video? I could see that working for apparel. eMarketer has a new report out (only $695!) analyzing how product videos reduce abandoned shopping carts and return rates and just generally improve sales. Customers can even upload videos themselves, which could be fun for all those aspiring models out there!

Then again, I could see some downside. We all know the iPhone 3G doesn't work as fast as they pretend it does in the TV ads. What if I uploaded a video showing how slowly the surfing was on my iPhone? Then again people have already been posting such assumedly unsanctioned product reviews online, like this professional one for the iPhone on CNET, or this slightly more amateurish review for my Dell laptop on YouTube.

There's no question in my mind that video capabilities will enhance etailers' ability to sell over the internet. Yes the zoom function on the Kenneth Cole website is useful when shopping for men's dress shoes. And ultimately, I probably want to try them on before I buy, a perennial issue with selling shoes on the internet. But if I could see someone walk in them, maybe I'd be that much more inclined to close the sale.


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Mark Cuban says old media is necessary for pro sports -- who woulda thought?

Mark Cuban--owner of the NBA's Dallas Mavericks, serial entrepreneur, Internet bubble timing genius and fellow blogger--describes in his blog why he believes that local newspapers, not team websites, rumor sites or fan blogs, are key to the successful marketing of pro sports teams.

I was surprised to see this opinion from one of the experts on and proponents of new media. But his reasoning is logical. Basically, it's a numbers game. As a marketer, you need to send your message to as many relevant eyeballs as possible as efficiently as possible. Local newspapers stil function as that medium in the sports world.

The Yahoo & Rivals.com and Fox Interactive & Scout.com acquisitions make sense for marketing to the hardcore fan; but for communicating to the masses to try to get those needed ticket and concessions dollars from families or corporate accounts (which are incredibly important to sports teams), old school newspapers are still the most effective forum.

Bottom line is that despite the huge volume of sports coverage, the local coverage of teams for the most part sucks. There is little depth and certainly not the consistent coverage of a newspaper with a team beatwriter or 2. Thats a bad scenario for sports leagues. Teams in every league need as much local coverage as we can get. The more stories that are written by sportswriters and columnists, the more opportunities for fans to connect and stay connected to our teams.
...those fans that go to the national sports sites, the local team website and blogs are our customers and hard core fans. While we will do everything possible to keep them happy, they are easy to reach. The newspapers reach our hardest to connect to customers, the casual fan.
The problem of course is that newspapers are pushing themselves to the point of irrelevancy. They have cost structures that dont support they business they think they are in. They don’t have a vision on what a profitable future might look like. They are getting crushed by disappearing advertising revenues . They are doing what anyone in their position would do, they are cutting every penny they can and praying for divine intervention. Professional Sports Leagues and teams, if we want to continue to connect to our local casual sports fan, needs to work with our local papers to try to keep them alive as long as possible.

The question is how do we do this? Cuban's solution is for sports teams to "pay for placement" similar to how consumer products companies pay for shelf space in grocery stores. He says that sports teams could sponsor 1-2 sports writers (based on market size and goals of the team) to cover the team and provide original, in-depth, daily content to put in the local newspaper. Financially this makes sense because this would place the writer's salary on the sports team's books (who is essentially paying co-op advertising dollars--a staple in the consumer packaged good world), cut costs at the newspaper and allow newspapers to do what they do best--distribute information and sell ads.

What do you think? How should sports teams spend their marketing dollars to promote their financial success? Is there any point advertising even more for sports on a hardcore fan forum like CarolinaBlue? Would this "sponsored writer" structure make sense for newspapers? How can media companies best integrate their offline and online sports coverage?

More here on Cuban's blog entry.

Hope you enjoy my first post. Can I still be in this class if my first post touts the benefits of old media versus new?

Change happens, but over time.

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Sunday, January 25, 2009

The Future of Music from South Korea?


South Korean music entrepreneur JY Park was recently interviewed at MIDEM, the music trade show at Cannes. In addition to being a musicmaker in his own right, Park has a model for the music industry that just may be its future. Interestingly, it's based on the assumption that digital downloads will continue to dominate the music business and that CDs will disappear within 5 years.

Park was very open when he told a packed conference that he aims to make 50 percent of his artists' earnings from advertising endorsements and another 50 percent from films, TV and music downloads.

Inspired by Motown Records and Berry Gordy's pioneering approach to nurturing and molding talented musicians, Park also doesn't believe a star can be born overnight. He can spend up to seven years preparing his multi-talented youngsters for their artistic debuts.

"It's weird, because Motown is American, and American companies aren't doing it," he said at MIDEM during his first trip to Europe.


While the premise may be provocotive, the most important elements here are very compelling. Park is an extremely successful musician himself as well as a music entrepreneur; he's neither a disgruntled musician nor a hidebound music exec. He's making a lot of money now, with his model perfectly targeted at the where the music market is going, not preserving where it used to be. And, perhaps most ironic, his model is the American Berry Gordy's Motown label. The bottom line: digital media may destroy the old way of doing business (physical CDs) but it's salvation may be even older: develop good music that people want to hear, and they'll pay to see it performed.

More here. [cross-posted from DigitalEastAsia.com]

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Saturday, January 24, 2009

Online Publishers Association Concludes Ads Are Most Effective On Content Sites

Recent research from the Online Publishers Association (OPA) uses brand metric data to conclude that ads placed on content sites (OPA members) get better results than those on portals or sold through ad networks. The conclusion is clearly self-serving and eMarketer suggests that it is common sense that content sites will deliver superior results to portals and ad networks because of content quality.

Online Advertising's Effect on Brand Metrics in the US, by Site Category, January 2009 vs. August 2008 (% change in delta*)

According to the eMarketer analysis, content sites deliver better results to advertisers because viewers are more likely to be engaged with what they are reading/watching. In comparison, visitors to a portal are more likely to be searching quickly through a variety of choices (e.g. - weather, email, headlines) and therefore less likely to become fully engaged with the content and the associated ads. eMarketer refers to this experience as a "fast-food" mentality.

While I agree with the above analysis, I think there's a fundamental issue that the OPA and eMarketer fail to address. While ads on content sites may be comparatively more effective in their impact (ie. - improved awareness, messaging, purchase intent) , what is really important is each medium's comparative ROI. To assess that, one needs to include price data and campaign objective data.

So while placing an ad on an OPA member site may result in greater impact for an advertiser, it will also be more expensive than comparable portal or ad network purchases. While purchasing ads on leading content sites may be a good idea for driving traffic to a targeted, high-value product, it may not be as appropriate for driving broad awareness of a mainstream dvd release.

Marketers know that there are many tools in the toolbelt when balancing their channel mix. There are pros and cons for choosing display vs. search vs. email vs. microsites. Likewise, there are pros and cons for the myriad of choices available within each channel.

For the OPA to issue its report about the benefits of advertising on content sites is no surprise. It's just necessary to put it within perspective. Successful marketers have to balance their campaign goals and budget with the available channel options.

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