Cable Tries to Save Itself

Many of you may already know that I believe cable television companies are heading to the slaughter house.  The number of entertainment and video distribution substitutes that are popping up on an almost monthly basis is hard to keep up with. There are many other reasons why I think their business is in trouble, but I wouldn't dive into those right now. While doing my nightly industry reading I came across an interesting article in the economist that talks about Time Warner's plans to save cable television. The action plan included Time Warner spinning off its cable operations business which already happened in March, trimming its film production business, and kicking AOL to the curb. Even more interesting, the plan also called for testing a scheme to put cable programming online via what they're calling TV Everywhere - an interesting choice of name since TV is practically everywhere already. 

This strategy shouldn't come as a surprise. Video content providers like Time Warner have paid close attention to what has happened to the music and newspaper industries and plan to avoid their mistakes. Specifically regarding the music industry, Time Warner plans to give their customers what they want instead of standing in their way. Something the music industry failed to do then had to watch as their customers turned into pirates and cannibalized their industry. The article seems to suggest that the mistake of the newspaper industry was in giving customers too much content for free initially and now they are unable to charge for it. Further, they suggest one major concern of the content providers is that the brands they have spent so much time and energy building offline, like CNN, will be devalued if distributed via current online distribution channels like Hulu. Unlike TV advertising "Hulu does not sell advertising on specific shows or networks; rather, it targets demographic groups". This is the fundamental problem of old media's transition to online.

In old media, magazines/newspapers/TV, advertisers will pay a premium to be placed on a particular page of a publication or injected into a particular TV show. The more "premium" the content the more advertisers are willing to pay. In the world of online media the concept of premium content is much different. In the highly measurable, finitely trackable world of online advertising premium content is really any content that drives conversions for an advertiser. What that means is the notion that advertisers will pay higher CPMs to run advertising on Time Warner's content just because it has a great brand doesn't necessarily hold water online. Any advertiser with half a brain is looking directly at the ROI. Whether the conversion comes from user generated content on YouTube or a home video on all that matters to the advertiser is that they got the conversion. Hulu understands this and is building out targeting options and sales packages that cater to this advertiser demand. Time Warner, as has many old media companies making the online transition, can't quite wrap their heads around this phenomenon just yet. It will take them a while, and hopefully they wouldn't make a complete mess of things by creating distribution silos or putting up too many digital fences. 

Search & Display, Married Forever

This month iProspect, a search marketing company, released a study about how display campaigns and search campaigns are integrated. The study highlighted, among other things, the need to include a solid search campaign with any online media effort. Not a very surprising conclusion considering that iProspect makes money from managing search campaigns, but the study did put numbers around what many of us in the industry have known all along. That is, running a display campaign without a fully integrated search campaign is like leaving money on the online ad revenue table. Further, a savy competitor who recognizes this error can lucratively capitalize on your mistake.

The study proclaims that 38% of internet users who respond to an online display advertising campaign eventually perform a search on the company, product, or service in question. The study also concludes that "almost as many Internet users respond to online display advertising by performing a search on a search engine (27%) as those who simply click on the ad itself (31%)". This means that your display campaigns not only generate traffic directly to your website via ad clicks, but a significant percentage of your potential customers find their way down the search funnel as well. As I have mentioned in previous posts, search does not generate demand it is merely a stream of demand which you can capture with the right funnel. The only way to capture that demand is to have a horse in the race, i.e. an active search marketing campaign. This becomes more important when you are the one generating the demand via your display campaigns. If you don't have a search campaign in place while you are running your display campaigns then you're just generating demand for your competitors to exploit, and they will.

The study also claims that 38% of online display advertising respondents learn about the brand for the first time during the initial display exposure. This is great news for those who believe that they can build their brand with onlie ads and an even greater reason to couple the display campaign with a search campaign. Why? Because those respondents wouldn't have any loyalty to your brand at the time of exposure, even though they are interested in your product or service. So if a significant percentage of them decide to search for your product or service instead of clicking on your ad your competitors will have an ideal opportunity to steal them away.

Whether or not you choose to believe the numbers, my gut tells me they are in range, the conclusions cannot be ignored. There can be no display without search and, for those who have unfamiliar brands, no search without display either. Read the full report and executive summary here.

The Problem With Big Media

If you've read enough of my posts you would know that I am not necessarily a fan of the big media establishments. Call me a nonconformist if you like, but I do have my reasons. My biggest beef with the media titans is the constant use of their position to push their own social and political agendas. Today I have a nice shinny example to show you. Earlier this week the Amazon Kindle DX was revealed to the world and hailed as a revolution in media distribution which could potentially save the dying newspaper and publishing industry. While some newspapers may be excited by the Kindle DX some are clearly not.

On Thursday, May 7th the NY Times Media and Advertising section had as its front page article a story of how the new Kindle DX couldn't clearly pronounce the president's name. "if the Kindle, which not only displays the news but also speaks it with a computerized voice, is ever to be the savior of print media, it needs to bone up on its pronunciation", wrote Time Arango the article's author. The NY Times is certainly not on the level of the NY Post when it comes to bias reporting, but this article could leave readers thinking otherwise. For the NY Times to put a story about the phonetic inabilities of a digital device on their front page seems laughable. However, when you consider the device in question it becomes clear that the NY Times must have a bone to pick with Amazon.

It's not Amazon's fault that the media industry has failed to innovate for so many decades. Neither can you blame them for seeing and acting on a profitable need that must be met. Like most big media companies the NY Times initial reaction to technological innovation in their industry is wary jest. I recommend instead embracing the change and riding it for all it's worth. After all, what do you have to loose that you're not loosing already?

Cry Me a Big Media River

While doing my daily online advertising reading this morning I came across an interesting article that both distressed me and made me laugh at the same time. It was written by one Jim Spanfeller who among other things is the president and CEO of In his article, published on, Spanfeller went on the Google assault. In it he waxed absurdly about how "the parasitical nature of its business" is causing Google to be rewarded disproportionately for other people's work. Spanfeller argues that because of the "ill-conceived" last click attribution model Google is winning big as most web users utilize their search box as a navigation tool online. You see, a user searching for Honda's website might type "honda" in their search box then click on the paid link among the search results returned. By selling these branded search terms to the very brands that own them, Spanfeller argues, Google is muddying the value chain and maximizing on the flaws of the last click methodology. Spanfeller even goes as far as to suggest, however poorly, that Google's business model threatens to destroy "the core building blocks of our democracy". I'll spare you the rest of his poorly contrived argument.

First, let me say that nothing spells clear desperation like when the CEO of one company writes an article blaming the problems of his company, and entire industry, on another company. Further, to try and link the destruction of the established web publishing industry to the destruction of our democracy is both ridiculous and pathetic. While many of the points that Mr. Spanfeller makes are with merit, his conclusion is nothing short of absurd. The problem with the branded professional journalism institutions is not a search engine, it's their revenue model. A model which they adapted from print and is both outdated and completely inappropriate for online. This revenue model assumes that content created by branded professional journalism institutions should be held above all other content for the mere fact that it was created by said institutions. It also assumes that advertisers should be willing to advertise on this "premium" content for a premium price. Both are completely wrong assumptions.

Yes, I agree "the advertising lifeblood for branded professional journalism seems to be shrinking ". But, the world doesn't need big brand journalism institutions, all we need is good journalism. One does not necessarily produce the other. Further, the days when the big players like Forbes held a monopoly on reach, circulation, and research resources are over. Now anyone with enough time can research and produce compelling content and put it in mass circulation all from the comfort of their homes. This is a reality that you must come to grips with Mr. Spanfeller. Your "premium" content isn't so premium anymore. So stop complaining that Google does not consider "paid" journalism over user-generated blogs. For years the established media outlets have abused their power with undeclared agendas. They've pushed products, politicians, and causes all disguised as news. They've vilified their opponents with little accountability for years on end. Well, now the audience is revolting. Readers vote with their clicks and if they would rather visit over, then the vote is in and you loose.

Further, what is premium content anyway? In the measurable, finitely trackable world of online advertising premium content is really any content that drives conversions for an advertiser. What that means Mr. Spanfeller is the notion that advertisers will pay higher CPMs to run advertising on your content just because it's produced by Forbes doesn't hold water online. Any advertiser with half a brain is looking directly at the ROI. The bottom line is your content isn't driving enough ROI to warrant paying you disproportionately for it. If it did, rest assured you would be getting your due.

So, your content cost too much to produce and is not compelling enough to draw huge numbers of web users. It also isn't generating the advertising ROI to warrant a profitable price. Who is to blame for this Mr. Spanfeller, Google? Is this your answer to your industry's woes? You clearly lack any idea for a solution, needless to say a thorough understanding of the dynamics of online media. Here is an idea, rethink your approach, change your model, use technology don't attack it.

If you don't like the fact that Google is profiting from directing users to your content then block the Google spider. While you're at it block all the search engine spiders because they're just as bad, right? With that logic you must also hate yellow pages and directory assistance services too so stop all business activities with them, they must also be part of the problem.

Oh, and about the last click attribution model, yes it's severely flawed. However, and other such publishers had absolutely no problem with the last click attribution model when they were successfully demanding $50+ CPMs for their inventory. Now that their premium content isn't exactly premium anymore they're all pointing fingers and looking for a scapegoat. The stream of each industry is constantly changing. Those companies who are leaves in the stream adapt and flow with the stream, e.g. Apple, IBM, Amazon. Those who are rocks in the stream wither and die. Don't be a Rock Mr. Spanfeller, nobody likes rocks.