Does "don't be evil" apply to content marketing?

A consumer group just asked the FTC to investigate the YouTube Kids app. Their claim is fairly straightforward - Google came out with the app as a "safer" place for kids. Parents and kids searching for episodes of Barney or clips of Disney songs could all too easily stumble on disturbingly mature content. The consumer group claims, however, that the app is actually stuffed with ads and product placements, and that this medium should be subject to the same restrictions as TV with respect to marketing to children.

On one hand, the consumer group has an easy case; why should content produced for consumption online not have the same protections for kids as content produced for TV? On the other hand, regulating internet content itself would be a massive precedent for a legal and regulatory system that has shied away from it. The middle ground that the FTC could carve out is that the app itself is a concrete product that, while it uses the internet, is not a public place like a website; rather, the youtube kids app is a product specifically aimed at children, and therefore it could be regulated differently than youtube itself.

In the next few decades, we will see a number of intriguing legal and regulatory questions like this, and the rulings all put together will have a significant impact on what kind of internet we have.

The Cutting Edge of the Mundane

Accenture has been buying up companies recently, quite a few of them in the digital marketing space. A cynical interpretation is that this is merely an example of a big fat company trying to use M&A to show that it is keeping up with the times, like an old guy on a scooter. But we know that the major players in corporate IT all watch each other's moves closely. If IBM, Cognizant, and Oracle see Accenture adding digital marketing capability, they are not going to ignore that.

The big IT consultancies always try to offer a complete service package, so that their clients never have to call another company to order something. That is a very big deal to them. The next obvious step for digital marketing at the capability level is to integrate it with corporate technology systems, so that DM becomes an organic blend of marketing, product development, and operations. For a large company with an existing corporate IT vendor, the ability to integrate marketing systems into their existing (complex) technological structure would be a godsend. Then they can just call their guy at Accenture instead of trying to remember which oddly named startup it is that handles that part of their marketing stack.

As digital marketing moves into the realm of the large corporate IT vendors, parts of it will become standardized and commoditized, and a significant amount of effort will be spent not on disruptively innovating the next big thing but on not rocking the boat. That will be a huge cultural transition for practioners who enjoy the current entrepreneurial climate, and it will be interesting to see how the industry communicates between its startup wing and its mega-IT wing.

Beauty May Be Skin-Deep, But It's Green and It Folds, Too

Just as we were talking about connecting marketing, social, and branding, BeautyCon launched a new site "to connect social media stars with fans and brands". This is a great idea, and it got me thinking about an interesting mix of industry types. As a marketplace or clearinghouse, BeautyCon's site is in excellent shape, because it has all the desirable properties of a sustainable two-sided market. Scale is important, and self-perpetuating. Once BeautyCon becomes the industry standard, it will be extremely difficult for anyone else to compete with it, and BeautyCon can enjoy a long and profitable run at the top. That's of course true of other business models, whether they relate to fashion or not: retailing, warehousing, publishing, etc. All of these businesses have had longtime dominant players at one point or another.

However, fashion itself - now that has been elusive. Western fashion essentially began in the mid 14-th century, and it has not stopped since. There has not been a singular driving force behind it since the death of Marie Antoinette in 1793. Sure, there is always some person or institution exerting influence over it, but that never lasts, and it is never pervasive.

I wonder if the application of web technologies to the field will enable a kind of grand consolidation for the first time in centuries. Web-enabled de factor monopolies like YouTube do seem to be fairly durable. Yet human taste is famously fickle, and I think that fashion will continue to be the glorious, constant flux that it is.




source: http://blogs.wsj.com/cmo/2015/03/12/beautycon-launches-its-own-media-site/

The 1x1 Pixel Strikes Back - by Ruslan Tepelyan

A few weeks ago, Ad Age reported on a massive ad fraud scheme, whereby fraudsters would sell lots video ads on a website, then compress the entire website into a 1x1 pixel, and insert that into a banner ad they bought on a normal website. The result was that they were able to sell "video ad traffic" to advertisers for millions of dollars. Amusingly (unless you are a victim), just weeks after the fraud was publicly revealed, it is back in action! There doesn't seem to be any robust means for detecting and stopping it on the fly. The fraudsters had even downloaded and modified the leading brands of fraud detection software, so that their websites would return "all clear" signals when queried by the fraud detectors' sensors.

Fraud is always a cat-and-mouse game, in any industry and at any time, but it seems to me that in this case, marketers are not just patsies falling for a clever trick, they are reaping what they've sown. Auto-playing videos, redirecting links, invisible 1x1 pixels full of content, traffic interception and tracking - these are all hacks, not in the malicious sense, but in the engineering sense. They are tricks, workarounds, and cludges, designed to graft a marketing infrastructure onto an Internet framework that was not built for one. When your whole industry is built on hacks, it is no wonder that it would be hard to detect just one more hack, even if it is clearly fraudulent while the rest were well-intentioned.

Customized TV Ads and Cultural Fragmentation

I've been reading about talks by Comcast to acquire Visible World, a company with technology that allows advertisers to quickly create different versions of the same TV ad for various markets. Clearly, this is an advance that has long been waiting to happen in the TV industry.

Online, the problem marketers face is that while it's really easy to send users targeted ads, and even to create targeted ads (in Google's case, simply by choosing the appropriate ad from the millions of candidates), it is not as easy to track users effectively. There are technical workarounds that function admirably, but fundamentally, the advertiser faces an uphill battle. IP addresses can change, cookies can be deleted, users can be on a proxy server - the list of pitfalls is enormous.

In TV land, the problem is the opposite. It's actually pretty easy for companies to know who is watching cable or satellite TV, because they know the precise address of each viewer. Some households may have older folks and young children, but there are far fewer degrees of freedom than in the web case. However, it is extremely hard to make and choose targeted ads, because TV ads are produced in an entirely different context. They are so much more expensive than web ads that spending the necessary time and money to shoot even 10 different versions of the same ad is incredibly expensive for any non-trivial ad.

In that sense, a technology that bridges that gap for TV is a clear win. Users get ads that are more compelling (no more denture ads for me during Jeopardy!), advertisers get to target appropriate segments instead of blasting out generic broadcasts, and media companies get to own networks that are more valuable, simply because the total value of the interactions on them is higher.

But I would caution us to think of some interesting and not immediately obvious long-term consequences. A few decades ago, most people who watched TV did so over-the-air, and there were only a few large national networks. Those people saw the same ads and the same shows and the same movies, and that, while being less rewarding as a short-term entertainment experience, provided a side benefit of cultural cohesion. If you saw something you liked on TV, chances are that many people all around you saw it too, or heard about it, because there were only 5 channels anyway! These days, it can be pretty hard to find someone who watches all the same shows as you do, and pretty easy to find one show that you like that no one else around you seems ever to have heard of. The only thing that TV watchers really have in common anymore is ads, especially the big campaigns from major retail brands like Coke and Bud. I think there is some non-zero value to the kind of cultural baseline provided by common TV experience, and I worry that the revenue-maximizing logical endpoint of the targeted advertising paradigm (individually targeted ads based on historical revealed preferences) will leave us feeling more isolated and fragmented as a society, not to mention a bit embarrassed when our friends come over to watch TV...

Cross-device privacy

One of the things I like about my smartphone is that I feel in control of the connection between it and my other digital manifestations. For instance, if I want to do a google search for some potentially sensitive topic, I would never do it on my work computer, and I may feel discouraged from doing it on my personal computer, but on my phone - well, who else ever sees my phone? In this way, my smartphone is a safer environment, almost like a confidant. But if cross-device tracking becomes a reality (and it appears that this is on the way), where will users go to retain some of that good old pseudo-anonymity that made the Internet so popular in the first place. They used to say that on the web, no one knows you're a dog, but now if Google sees your searches for Purina and chew toys, they just might figure it out.

Ultimately, for most smartphone users (and most consumers in general), ads are in general a nuisance to put up with, the price to pay for the benefits of being on-line, but they are not the purpose of being on-line. And so to have a situation in which one of the main benefits of being on-line (privacy and being able to separately manage multiple digital identities) becomes subservient to better ads would be to most consumers a rather clear reversal of priorities. Users feel a personal connection with their smartphones right now, and if nothing else that is a valuable marketing asset. So how to gain the benefits of cross-device information sharing without ruining that warm and fuzzy feeling?

Closing the Digital Marketing Loop

My wife is pregnant with our first child, and as we move into the third trimester, her purchases of a few baby-related items have percolated through the internet. She now receives marketing emails from Amazon that specifically target her with baby-related offers. She actually really likes these! It makes it easier for her to comparison-shop the 45 different baby monitors if they are all in the same email. And since this is our first baby, she is genuinely interested in learning more about all the available options. But what about non-baby stuff?

Search engine marketing is so useful because the potential customer has just told you what they are searching for. But in other cases, the marketer is left to guess at what people might want based on heuristics rather than explicit declarations of intent.

My wife loves getting baby emails from Amazon, but she hates getting emails about jeans and cooking utensils, because she already knows what kind of jeans she likes, and what kind of cooking utensils are out there. What she doesn't know is what the different baby monitors are like.

So wouldn't it be cool if there was a way to close that loop? If Amazon knew that my wife would rather get some kinds of offers rather than others, that would make their email marketing way more effective. That would be a huge step up for marketers, and a great business opportunity for the company that figures out how to do it.

The Coolness Treadmill In Digital Advertising

Bear with me on this, it will all be worth it.

There is an expression in linguistics, the euphemism treadmill, that refers to a process in which certain words come to be used as the polite, euphemistic term for something. Over time, the euphemism becomes too closely associated with what it describes, and so another word must take its place. This process has no end - we keep needing new words to become the polite way to say something.

A similar thing is occurring in digital media, and especially in social. Advertisers love to target young, affluent consumers, but those all aggregate to the coolest, most authentic sites. And which sites are the coolest and most authentic? The ones not connected with the establishment, and not colonized by marketing organizations. When Facebook first debuted, there were no ads at all, and the service had an aura of exclusivity and authenticity. Now, my mom is on Facebook, and ads are on Facebook. Then Twitter becomes the hot new social thing, and now companies are all on Twitter, presidents are on Twitter, and ads are on Twitter.

The next social thing to strike it big was chat apps (which is ironic because I remember how popular AIM was when I was growing up). Even those are now succumbing to ads: I just read an article about Swyft Media, an ad network for chat apps that adds product placement into the emoticons that people love to send to each other.

I feel like digital advertisers are constantly playing catch-up, trying to hook into the latest cool service, only to make it uncool as soon as they succeed. This is a very irritating treadmill to be stuck on, and it's the kind of situation that requires an out-of-the box approach that changes the strategic dynamics. Digital marketing needs a platform that it can exist on without being perceived as de-authenticating informational pollution.

AOL's Dumbell Strategy

AOL just recently fired 150 ad salespeople as part of its re-organization, and it's a strategically interesting question for digital marketing. AOL is structuring itself as a two-product player in digital advertising: on one end there is a commodity programmatic ad sales division. On the other end is a high-margin, customized products division. Part of AOL's restructuring is getting rid of the middle ground that used to exist between those two ends of the market.

Now, what is interesting about this is how obviously similar it is to the story in other industries. It seems that everything from PCs to mobile phones to apparel to food to housing to, apparently, ad sales, is being affected the same way: the low-end is flourishing due to a technology-driven expansion, but that expansion is fueled at the expense of margins, because such a large, open market tends to be come standardized and commoditized.

The high end of the market also does well, because when the underlying technologies are harnessed for a specific, custom purpose, the custom products that can be produced are perceived as higher-quality than the mass-market commodity goods in the low end. But in this situation, there really isn't room for a "middle": if you are buying on price, you buy the low end, and if you are buying on quality, you buy the high end.

This process has been so widespread that we can look at some other industries in which it has already had more time to reach its later stages, and see if we can make some predictions about the future of digital marketing.

In fast food, the companies with the best performance are the ones that have managed to keep margins high through a willingness-to-pay strategy and a high organizational focus: Five Guys, Chipotle, and Panera all keep their menus small and expensive, attracting customers who want a perceived better experience with higher-quality food for slightly higher prices. On the other hand, the formerly dominant commodity players like McDonald's are struggling. McDonald's in particular has expanded its menu in a quest for higher margins, but still can't move its core customers off the dollar menu, and now has to deal with increasingly complex operations thanks to the new breadth of its offerings.

In electronics, the good news is even harder to find: the big players have only a few years of high margins on any given product before it gets commoditized into unprofitability, so they have to relentlessly try to develop improved products, or at the very least new products (customers can disagree about the value of some of the innovations, e.g. the flub that was 3D TV).

In retailing, the similarity to the current state of digital advertising is even starker. Amazon and related web-commerce sites are taking over the low-margin low end of the market, and boutiques are embracing digital technology to develop their brands and reach more customers with their high-margin low-volume products.

So, which of these three situations will digital marketing find itself in in the next 5 to 10 years? This wouldn't be much of a blog post if I didn't make a prediction (although I frankly admit to no special expertise in this matter), and my prediction is that it will look like the electronics market. The low-end business will be huge but not very profitable, and the high-end business will be split into small, profitable niches threatened by the improving quality of the low-end products (e.g. the audiophile market).

Now of course, this is assuming that no major changes occur in the structure of the industry, which is itself unlikely. It will be interesting to see how the different players respond to the changes taking place, and whether for instance Google will embrace the "dumbellization" of the digital advertising market and seek to empower one or both ends of it, or whether there will be some attempt to rescue the old middle of the market.

My ad got 1 million views - or did it?

I recently read an article in the Wall Street Journal about ComScore, a new company that wants to "clean up" online advertising, but in a way that I hadn't ever considered. Apparently, quite often marketers buy ads, but humans never see them. Either the websites are "viewed" by bots instead of by real people, or the ads are displayed somewhere that real users never actually see. ComScore's business is ranking ad merchants by trust-ability, so that if you buy from one of them, you have some idea of how trustworthy they are. Presumably, if they are trustworthy, you can buy confidently and not worry that bots and hidden deep pages will be the only things that see your ads.

Now, for one thing I really admire ComScore's business model and their mission. But this has really made me think about just how vulnerable digital marketers are. Like Stevenson's cow, they are "Blown by all the winds that pass/And wet with all the showers." Whether it's Google changing their algorithms, or your ads only being seen by bots, or negative SEO from a competitor. Digital marketing seems like a constant struggle against unpredictable external forces. This must be extremely frustrating - you spend time developing an ad campaign and deploying over the web, only to doubt whether anyone is actually watching. All of those useful metrics that come from Digital Marketing are now suspect, and then how are you supposed to use the data if you can't trust it? What is worse, you will never even know how much of your "viewers" were (and are) real, and what is even worse than that is that you cannot know, no matter what happens. That knowledge is simply inaccessible. It's vitally important to keep the bots and fake pages at bay, because they have the potential in Market for Lemons style to drive out all of the good ad traffic; they therefore pose a huge threat to the legitimate Digital Marketing industry as a whole. It's not just a nuisance, and it's good that ComScore is opening up a counterattack.