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Time Warner no longer believes in “invisible network” February 14, 2013

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Back in the day, I used Time Warner as an example of an “invisible network.” That is, a reader of Time magazine or Sports Illustrated – or a user of their web sites – might not know that they were both owned by Time Inc., but big advertisers and sponsors did. The Wall Street Journal is reporting that TWX is considering spinning off most of its magazine titles, possibly into a joint venture with Meredith. It would keep Time, Fortune, and Sports Illustrated, whose brands complement its TV business better, but People would find a comfier home next to Better Homes and Gardens.

It’s fairly obvious, but branded visible networks that try to drive audiences across related properties work best when the audience is common. Disney can cross-promote entertainment to families, but its audience and ESPN’s rarely need to meet. Meredith could create a good visible network for People. Yahoo’s making noise lately about zeroing in on fewer content topics itself, a refinement of its classic broad-reach, very visible portal strategy.

Time Warner used to be the biggest media company in the world. It never really exploited the potential of its invisible network in the physical or digital media era. As predicted, the invisible media networks like Google and Facebook changed many of the rules, but Time Warner never learned them.

Get an early heads-up on how the media industry will change next at our paidContent Live event in the media capital of the world, NYC,  in April.

 

 

 

 

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Martha Stewart’s modern media model November 2, 2012

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Martha Stewart Living Omnimedia’s trials and tribulations don’t mean that fundamental omni-media principals are wrong. MSLO was, from the start, a multi-media media company. It may eventually be digital-first sooner rather than later, but the company was built to leverage print, TV, digital, and even physical store presence. It reached its audience on multiple channels, sold ads and products across all, and vigorously cross-promoted.

No, MSLO’s struggles are very traditional. Among media, it’s a truism that magazines are the most personality-based: They rise and fall based on the energy and buzz generated by the likes of Tina Brown (Vanity Fair, the New Yorker) and Rolling Stone’s Jann Wenner. Oprah and Martha are TV-centric examples. It seems like the popularity of the Martha persona may have run its course, and MSLO’s bench is thin. The company hasn’t tapped into social media currents as much as it should have, either.

Students of media will remember the odd synchronicity of MSLO’s IPO on the same day as that of another modern multi-media company, World Wrestling Entertainment. WWE may not be at its peak, but it’s going strong.

 

Social, mobile media increase news role for mainstream September 28, 2012

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Pew’s latest large-scale survey analysis on news consumption confirms the trend towards digital. Social media and mobile are the new kids on the block, and both are catching on among the mainstream. Well, sort of. I’d echo this interpretation: Twitter is not a source of news for mainstream consumers.

Pew does really good, solid consumer surveys. If you’re in the news business, the report is a must-read. I’m a believer in consumer survey-based research, but I’ll offer my usual caveats. Consumer surveys are better for detecting attitudes than closely monitoring actual behavior. Digital behavior is highly measurable by other means, and comparisons of meter-based metrics versus survey-based ones will show things like actual TV usage surpassing online time. Self-reported data is a good barometer of consumer interest — people report what they think they’re doing, and what is catching their attention. But comScore and Nielsen et al. will do better at the actual consumption figures.

One more caveat. Some behavior is age-based, and some is truly generational. By that, I mean that for every generation, teens and young adults age into many adult patterns. When you have a job and a family, you don’t have time for all-night sessions of World of Warcraft. On the other hand, Millennials growing up with ubiquitous access and social media probably will continue to use them at the expense of traditional media. Low news consumption by 18-24 year olds is age-based; social news is likely generational.

 

Handicapping Microsoft’s media business July 24, 2012

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Microsoft’s struggles to make a successful business out of advertising led to the company posting its first-ever quarterly loss. The main culprit was a $6.2 billion write-down of the goodwill associated the 2007 acquisition of aQuantive – a company that combined advertising technologies, networks and an agency business. But Microsoft’s continuing losses in its search and ad-driven Online Business division didn’t help. Some have been saying for years Microsoft should never have gotten into media. Is it about to get out?

Microsoft is sending signals that it might be about to dramatically restructure its ad-based businesses:

Why media?

In the past, I’ve tried to make the case for why Microsoft needs to have an advertising and search business. But I’m beginning to have my doubts, and my argument was always stronger for search. Search is technology- and scale-driven, is a core navigation/UI mechanism that threatens Microsoft’s Windows and browser franchises and is the unchallenged cash cow that powers Microsoft’s chief technology platform rival, Google.

A competitive search offering could fuel a display advertising business with user intention data valuable for re-targeting and advertising attribution analysis, two key factors in raising display ad CPMs. Years ago, Microsoft was an early leader in advertising yield management (acquiring Rapt Inc. in 2008) and attribution analysis. Advertising complements Microsoft’s digital living room and mobile efforts. And many consumer app and cloud businesses are paid for via a combination of advertising and fees, even if the idea of B2B marketplaces with advertising as one of the exchange currencies never caught on.

But Microsoft’s recent big acquisitions – Skype and Yammer – may employ freemium business models, but they don’t depend on advertising. They’re far closer to traditional Microsoft strengths in unified communications and enterprise software. Other social media acquisitions by enterprise software firms, like Salseforce.com and Oracle, display much more of a marketing focus than Microsoft’s.

Here are potential scenarios for Microsoft’s advertising and media business:

  • Stay the current course. Keep investing in MSN and Bing, build out ad networks and exchanges with other portal partners like Yahoo and AOL. Jump hard on local and mobile and buy a Yellow Pages company if that’s what it takes. Odds: 3:1.
  • Pick a spot.  Focus on one or two core advertising businesses, but de-emphasize the others and stop hoping for synergies. Pick only 2 of the following: Bing, MSN, targeting/hosting technology, ad neworks/exchanges, MSN, local/mobile. Odds 5:2.
  • Unload the media business. At the risk of being the boy who cried wolf, I could see Microsoft keeping search technology, but spinning off MSN and Bing to a joint venture with Yahoo, perhaps with AOL in the mix. Odds 2:1.

Some hybrid of the second and third scenarios is looking increasingly likely.

 

Question of the week

What will Microsoft do with its media businesses?

Facebook and Google: lessons to learn from Myspace July 5, 2011

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Last week, News Corp. unloaded Myspace for a pittance. Understanding why Myspace failed to maintain its early dominance in social networking is critical to determining whether Facebook is similarly vulnerable, and whether Google+ is on the right track.

BusinessWeek’s cover story on the fall of Myspace blames the usual reasons: Rupert Murdoch lost interest, Myspace got a rep for sleaziness, it went through a crippling technology transition and users lost interest and migrated en masse to Facebook. Other critics fall back on the tired idea that Myspace’s do-it-yourself design led to garish personal pages that scared away mainstream users.

The real story? Myspace was done in by technology and business model failures that Facebook is explicitly countering. Google’s social strategy is less clear. Although Myspace embraced third-party developers’ apps and widgets, it never built out a robust technology platform of APIs and services they could use, let alone syndicate across other sites. And Myspace signed an initially lucrative advertising deal with Google that distracted it from cultivating relationships with “classier” advertisers instead of cheesy direct marketers, and from building out innovative social marketing programs.

Not every online media business has to be a platform, but an ambitious social network does, and it can’t ease up on the innovation pace. Myspace was never a very connected network: it focused on self-expression at the expense of communication and everyone “was in your extended network.” More like Geocities than Friendster, Myspace only recently adopted a feed-based UI.

In contrast, Facebook launched APIs early, syndicated them offsite with Connect, Likes and Comments, copied and/or acquired its feed – and pushed it, despite initial user resistance – and is a leading contender as a unified communications hub. Google’s first social technologies were flawed as platforms: Orkut was a standalone effort, Wave was too complex, and Buzz had no central viewing place or reason to participate. Now, Google appears to want its innovative, communications-oriented Google+ to gain traction among digerati users before it shows any APIs, but its distributed +1 Like-button wannabe has a better pitch for publishers (use it and improve SEO) than for users.

On the business side, Facebook has surpassed Myspace’s early lead in ad targeting, though it’s still highly dependent on low-priced cost-per-click advertising. But Facebook is building relationships with brand advertisers and agencies through an advisory council and social marketing test bed. Moreover, Facebook collects ad revenues and virtual currency fees from its apps ecosystem members, something Myspace never mastered.

Meanwhile, some of Google’s social impetus is defensive, geared to protect its paid search business by ensuring access to social “signals” for ranking search results. While it’s currently unconnected to Google+, YouTube counts as social media and is signing big deals with premiere advertisers and experimenting aggressively with video ad formats. Unlike Facebook’s social platform, Google’s search, maps and mobile platforms offer its ecosystem a ready-made revenue stream from Google’s ad networks, a boon for developer relationships and lock-in. Presumably, Google will offer that for its social platform. I’d give Facebook an A for its social tech platform and a B- for its social media business model. Google gets an incomplete on both fronts.

As for Myspace, it’s been acquired by Specific Media, a top-ten online ad network that already reaches 79 percent of the U.S., according to comScore. Myspace’s user information will be useful for Specific’s ad targeting, although Specific says it’s more interested in becoming a media company like Yahoo than in Myspace’s data. Myspace had some interesting ideas on curating entertainment content via professional and semi-pro editors – if Specific is smart, that effort won’t succumb to layoffs.

Myspace doesn’t seem poised to regain much past glory. Under Specific, it could survive as a low-cost, medium-sized entertainment portal. It still gets about 30 to 35 million monthly users in the U.S. and has fairly strong relationships with the music industry and Hollywood. If it works hard on sponsorships and can secure access to some entertainment exclusives, it may be able to overcome the baggage of its tarnished brand.

Question of the week

Why did Myspace fail, and what does that imply for Facebook and Google+?

Privacy Legislation’s Potential Impact on Online Media April 18, 2011

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Last week, the bipartisan Kerry-McCain bill proposed legislation on a Commercial Privacy Bill of Rights that would put the Federal Trade Commission in charge of policing the online collection, sharing and use of personal information. Because the legislation is watered down relative to prior proposals, the Kerry-McCain bill will face the least industry resistance and is more likely to be passed this year. Passage would shift some power in online media, and force changes in the way online ad networks and other targeters work with content sites.

The proposed bill is relatively business-friendly, so much so that it’s drawing criticism from privacy rights activists. The bill:

  • Focuses explicitly on the use of personal information for behavioral ad targeting — and particularly on data sharing between companies — rather than information collection in general.
  • Mandates opt-out policies for personal information use, but only requires tighter opt-in permission for sharing “sensitive” personally identifiable information related to religion, health and finances.
  • Enables what some are calling a Facebook loophole that imposes lighter restrictions on web-wide information collection and use by companies where the user has an account. This would favor Facebook Connect over ad networks.
  • Is strict about data-sharing for behavioral targeting via third parties (data collectors and ad networks), but much looser on ad targeting done by a publisher that collects the data on its own site.
  • Does not address “Do Not Track,” the concept of a universal opt-out mechanism that users broadcast to sites popularized by the FTC last December. In February, Congresswoman Jackie Speier, D-Calif., proposed that the FTC create and manage a Do Not Track framework.

Although advertising industry groups are predictably resistant to any kind of regulation, their initial reactions to Kerry-McCain seem more muted than concerns they had prior to the bill’s introduction. Big tech companies like Facebook, Microsoft, eBay, Hewlett-Packard and Intel expressed support for the bill. The trade groups are probably relieved about the absence of Do Not Track, which they fear encourages users to block all cookies and customization indiscriminately, and requires potentially costly support from ad servers, ad networks and sites. Apple is the latest browser maker to experiment with Do Not Track support, after Mozilla and Microsoft; Google favors an alternative approach that maintains user opt-outs.

Privacy Legislation Impact Scenarios

The promise of online advertising has been the potential combination of television-like reach with precision targeting. Passage of the Kerry-McCain bill or something similar will have the following effects on the online media landscape:

  • Online content sites: Don’t call me a conspiracy theorist, but some traditional publishers like the Wall Street Journal might be perfectly happy without web-wide behavioral targeting. They could tout the value of their online/offline audience and promote contextual targeting and sponsorships. As noted, publishers would able to follow and target a user within their own site, which would benefit portals like Yahoo and AOL, which have huge audiences and broad variety of content.
  • Online advertising ecosystem: The bill’s restrictive approach to behavioral targeting favors search advertising over display ad formats. It also weakens industry efforts to deliver attribution, i.e., understanding and valuing the longer-term effects of seeing brand advertising. The data sharing guidelines could force data miners (Experian, Audience Science, BlueKai) and ad networks (DoubleClick, ValueClick, 24/7 Real Media) to secure more formal contractual relationships with content sites that have registered users. And the legislation seems to leave room for third parties to take user info and create anonymized groups of targetable customer “types” based on demographics and behavior.
  • Social targeting: Today, most third-party social targeters (Lotame, 33Across, Media6Degrees, Rapleaf) base their analysis on tracking user behavior with their own cookies, rather than getting access to API data from Facebook or Twitter. Legislation may make them pay for access, and even then, Facebook to-date has been stingy about data sharing. Likely it’s saving that targeting opportunity for itself.

Question of the week

How could potential privacy legislation affect online advertising?

Facebook Patent Hints at Social Search Plans March 21, 2011

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Last week Facebook was awarded a patent that covered essential elements of social search. Patents don’t always predict products, but this one was acquired by Facebook when it purchased intellectual property from Friendster, which perhaps indicates new and active intent. Is Facebook is building an alternative to Google? Possibly. Let’s examine the state of social search and its potential implications for online media.

There is a “social will replace search” theory that runs something like this: Overwhelming amounts of data, along with SEO gaming, make Google’s traditional approach to ranking results less effective than it once was. And driven by social networks, a passive, feed-based user interface is usurping the old “seek and search” style of online navigation.

The big search engines like Google and Bing are already incorporating social signals into their ranking schemes, and into how their results are presented to users. It’s likely, in fact, that both social and search will co-exist as navigation modes. Some observers may have over-interpreted back-and-forth traffic among top sites (Google, Yahoo, MSN, Facebook) as an indication that Facebook drives more viewers than Google. A lot of cross-site traffic for them is the natural flow of an online session — check mail, headlines, social network — rather than a search- or feed-directed path. And sometimes a user’s friends aren’t the best source of relevance. Seeking medical information rather than a preferred dentist, or a convenient airline ticket rather than a fun vacation destination, will remain directed queries based on authority and the breadth of information coverage.

Social Search Competitors

If Facebook’s creating a social search alternative, Google is the big target; it has, after all, over $25 billion in search advertising revenue. It both integrates and segregates social technologies. Personalized social search that displays content shared or posted by a user’s friends is buried under More Search Tools on Google’s results page. It puts real-time search — licensed Twitter results and what public Facebook content it can crawl — a little higher on the page, and sprinkles in a few real-time results on its main results pane. With its existing strength in ad networks, Google is in the best position to build out real-time advertising.

Microsoft’s Bing, which isn’t really gaining ground on Google yet, has partnered with Facebook to gain more access to Facebook data like friends, status updates and Likes. Bing’s results feature Facebook and other social content a little more prominently than Google’s do, but Bing also offers a separate social content-only search function.

Other social search players include Topsy, which searches real-time content and keeps a deeper archive of tweets than Twitter does, and blekko, which uses human editors to create authoritative indices of results, partly by blocking what they determine low-quality sites. WOWD was building a social search engine, now concentrates on personalized feed filters. OneRiot ceded its real-time search to Topsy while it attempts to build an ad network.

What Facebook Might Do

The Facebook patent covers ranking and displaying search results by their popularity among a searcher’s contacts and those removed by a few degrees of separation. In fact, Facebook nearly does this already. When users start typing in the search field, Facebook auto-suggests content that’s been Liked by the user’s friends. Carefully adding friends of friends would expand the results index.

Facebook could be thinking of using its patent offensively to gain licensing royalties. But although Google’s patent portfolio isn’t as big as Microsoft’s, it’s pretty diverse, and even contains a lot of social technologies. So maybe the patent’s just defensive.

Building a full-blown search engine requires attempting to index the entire Web. Even if Facebook relied on its users to do the indexing, the results would be spotty. Facebook search would no doubt do well on entertainment, baby photos and sports trash talking. But that medical content and those travel arrangements would likely remain thin. Chances are, Bing remains Facebook’s search engine strategy.

Question of the week

What is Facebook’s social search strategy?