Posts from the ‘advertising’ Category
Last week I hosted a dinner in NYC with a great group of folks to discuss the future of online advertising. I had meant to get some video interviews but forgot my trusty little flip camera. So you’ll have to settle for this blog post a week later.
We had the dinner at the Red Eye Grill (which was fitting as I was coming in off the redeye from SF!), which has a terrific room for private parties upstairs — complete with its own bar, a little sitting area with a fireplace, etc.
Thanks in part to the fact that lots of folks were in town for AdTech, we had a fantastic group assembled: David Rosenblatt (Doubleclick), David Payne (CNN.com), Larry Kramer (Polaris; CBS), Peter Horan (IAC Media), Pam Horan (Online Publishers Assn), Simon Assaad, David Carson, Eric Hadley (Heavy), Dean Denhart (BlackArrow), Ranaan Bar-Cohen (Automattic), Jeremy Shane (HealthCentral), Matt Cutler and Scott Velechko (Visible Measures), James Bilefield and Scott Switzer from OpenAds. And from Polaris, myself, Peter Flint, Alan Spoon, and Jason Trevisan.
Somewhat spontaneously, I made both Visible Measures and OpenAds pitch their company to the group. So, we ended up having a fascinating conversation about video advertising and how to measure its efficacy, and the future of ad networks, the implications of the Goog-click deal, and advertising in the long tail generally.
All in all a terrific evening. Hoping to do another similar dinner soon in SF — I think we’ll make the theme “Madison Avenue meets Silicon Valley.”
I had coffee today with an unusually smart guy who (at least for now) works for one of the large Ad Agency conglomerates.
He had a really interesting comment that has had me thinking.
His point is for startups not to waste time trying to get the large advertisers (and their agencies) to adopt new behaviors, because by and large they won’t. The more fruitful opportunity is to make it easier for mid-market advertisers to do things that the big guys do.
I think there is something to this…
Mark Cuban has a pretty interesting post (2 actually) on how to measure web video advertising.
Dianne Mermigas of the Hollywood Reporter has a terrific article discussing the impact Google and metric driven web advertising will have on the still much larger TV advertising business. (Hat tip: Heavy founder Dave Carson).
Boiled down to its essence, the article makes a few elementary — but big — points.
Mermigas’s broad thesis is that “Internet-related practices and values are fast becoming common place, and altering old media’s business models and expectations. The rapid adoption of digital broadband media applications is bringing us to the tipping point. You don’t hear much, if anything, about advertising resisting the change, especially when the giant likes of Google and Yahoo! are tripping over each other to quantify and qualify every legal and ethical detail about the individual users they are delivering. ”
As traditional media practices and business models morph, expect changes to many tried and true media conventions.
First, the age old ritual of TV’s “up front” ad buy, in which media buyers and sellers converge on Madison Ave. to negotiate the following TV season’s ad buy en masse, is short for this world. In its stead will be something along the lines of Google’s auction system, which attributes value not to a piece of content and its ratings but to the actual connection of relevant viewers to marketers.
Second, unlocking the value of this more direct and accountable connection will allow ad-based programming to replace the notion of paid access to content.
Finally, Mermigas predicts that advertisers and programmers alike ultimately will dissolve the dichotomy between the different platforms and evolve a set of formats across platforms.
“The nagging dichotomy between advertising form, function and price on traditional TV and on the Internet is in the process of rendering a new hybrid standard to extend across all media platforms. But this year, it is much more than an “either-or” ad spending proposition. It is about reinventing the effective and innovative ways advertisers and target customers interface in a global marketplace on fire with interactivity. Even if traditional media’s structural and psychological transformation don’t occur fast enough, advertisers now appear willing to break from convention to follow targeted consumers into customized, niche spaces. That’s the difference a year has made.”
This hulaballo over the transformation of the media business is becoming such a common refrain I suppose it is becoming trite.
But, even if the notion of the media business being transformed is trite, watching as the rubber meets the road, and trying to figure out where all this is heading and its real world implications, remains fascinating, and pretty damn important for anyone (like me) with a vested interest.
So, with no further apology, here is a link to a MediaPost article on the topic that I enjoyed.
Particularly interesting was the observation that while marketers are increasingly finding online campaigns to deliver better results than traditional campaigns, online players still generally capture only a fraction of the prices traditional media have captured. And, that part of the answer to narrowing this void is likely to be a more cost-effective market for media buys. Probably correct, but still lots of gold in them there hills, I think…
I was chatting the other day with Mark Jung, former CEO of IGN, and former COO at Fox Interactive Media, who had a great line.
“The dirty little secret of ad sales is that it is really hard.”
This is something that I think lots of early stage ventures, as well as “consumer Internet” VCs, don’t give its full due. Assuming that about 99% of the Internet ventures getting backed these days aspire to an advertising-based business model, it seems to me there are way, way more companies getting built than there are talented, experienced ad sales executives. Even if all these companies succeeded in building an audience large enough to support a real advertising business, there just isn’t enough talent to go around. And, because ad sales really is hard, companies who lack experienced senior ad sales execs are going to have a heck of a time building revenue.
Which leads me to believe that a trend we are already seeing will only increase — a growing gulf between the revenue haves and have nots in the consumer Internet. Lots of sites are going to emerge over the next couple years that tap into great audience appeal and engagement. But the vast majority of these won’t succeed in building substantial advertising businesses.
Which leads me also to conclude that this gulf will present great opportunity for the companies who DO have real ad sales teams and success — either by acquiring sites with large but unmonetized audiences, or by developing partnerships to sell otherwise unmonetized inventory.
There’s been lots of discussion over how bloggers can monetize their sites.
Traditional ad models have not been so successful; sponsorships have done better, to date at least.
But Techmeme has just announced a clever new offering for advertisers: become a techmeme sponsor, and, instead of just sticking up a boring old banner on techmeme, the advertiser’s own blog feed is inserted into Techmeme.
It will be really interesting to watch how this pans out. My hunch is that for those advertisers who can grok the notion of blogging, this will become a much more effective way to reach blog readers.
My morning reading today surfaced two interesting announcements regarding ad measurement.
First, MediaPost's OnLine Minute announces that NetRatings finally is extending its web measurement to online video, and will develop a way to measure combined viewership for video consumed both on TV and on the Internet.
"NetRatings says it will beef up existing Nielsen/NetRatings products and patented technologies in order to properly measure digital media usage and work with Nielsen Media Research to develop integrated measurement services for Internet and television convergence."
Second, the next volley has been fired in the battle between programmers and advertisers over how to handle the increasingly substantial problem of time-shifted TV viewing. MediaDaily News claims it has gotten its hands on a Nielsen report which documents that–surprise, surprise–"the impact of time-shifted viewing will be profound on the broadcast networks." You may recall that a few weeks ago the major broadcast networks conceded that they would not charge advertisers for ads that are viewed on a time-shifted basis. Now, though, the broadcasters are working with Nielsen on a plan to measure commercials viewed both live and time-shifted. We'll see where this goes, but you can bet that we have only seen the tip of the iceberg of the time-shifted advertising problem.
In my view, the mass adoption of time-shifted TV viewing will ultimately be viewed as one of the more important developments in the media industry, up there with the emergence of broadband as a key platform for TV and video content.
"Next generation" advertising has been an area of keen interest for me over the last few years, and one way or another has had something to do with pretty much every investment I've made in the Digital Media sector.
Most of the activity in this sector has focused on large national advertisers.
Recently, however, it seems like a bunch of startups are starting to go after the more elusive, but gigantic, market for local advertising. Most would agree that there is lots of opportunity for whoever figures out how to crack the local advertising nut, and take a chunk of the billions of dollars spent every year on Yellow Pages, local broadcast and local cable advertising.
A bunch of early efforts in this vein were failures, but my hunch is that this time around there are going to be some pretty big winners. Spotrunner (quick and cheap ads for local cable), Jingle Networks (ad supported Directory Assistance) and MerchantCircle all are early stage companies doing some pretty interesting stuff with local advertisers.
I think I am willing to take a bet or two here. Stay tuned to see what happens…
And, more importantly, let me know if you are doing something interesting with local advertising on the digital platform, and/or if you know of interesting projects/people/research I should know about. Feel free to comment or send me an email at mhirshland@polarisventures.com.
Thanks!
This year's "upfronts" for TV advertising have been a watershed not just because of the networks' emphatic embrace of the digital platforms.
Equally important, I believe, is the industry's acceptance that TiVo usage, and more specifically the fact viewers watching TV recorded on a DVR invariably skip most ads, is an important turning point.
In short, this is the year when the DVR ad skipping phenomenon has actually been recognized by programmers and advertisers alike.
The major news on this front is that Disney/ABC has agreed to negotiate advertising packages for "live only," in other words, only charging advertisers for viewers who watch the programming live, not charging for DVR viewers who, presumably skip all ads and therefore are worthless from an advertiser's perspective.
Here is an excerpt from an AdAge article breaking the news:
"Disney Cos.' ABC issued a statement today confirming the network was prepared to negotiate with agencies using the existing ratings metric of "live only," meaning it will only charge marketers for viewers who watch programs when they are aired (and not for viewers who watch later using a digital video recorder). ABC formally steps down from its stance to negotiate using 'live-plus' ratings.The issue of what metric to base this year's upfront negotiations on has held up deals. Media agencies were united in their stand that they would only pay for live viewers, while the broadcast networks wanted to charge for those viewers who watched programs either later that same day (live plus same day) or later that week (live plus seven days). But late last week, ABC began to soften its stance, offering to negotiate with buyers on 'live plus same day.'"
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