Great compilation (which will keep going) by AdExchanger today of the views toward RMX and the importance of ad exchanges for liquidity.  Our own Eran comments:

The impact of the Right Media exchange on the media industry has been tremendous, and we are just in its beginning. It had impact that ran across the entire food chain of the media business. Most of the benefits are enjoyed by various players on the buy side. First and foremost, it is a great equalizer, allowing start-ups and small companies to get as fair a chance in bidding for media as the biggest advertisers. As such, it provides the type of liquidity in display that keyword bidding provided in search marketing.

Second, it facilitated the introduction of new technologies and tools that utilize an automated media buying platform. It justifies investment in new targeting capabilities and data leveraging. It’s already spun a set of new companies that are implementing automated media buying and optimization a la Wall Street, forcing media agencies and ad networks to adapt to this new world. It wont be long before we’ll be seeing a lot of openings for ‘quants’ in agencies.

[Regarding the importance of having at least two, large ad exchanges] – it’s very important, especially in the current scenario where both the two largest ad exchanges are also big time buyers and sellers on their own and thus have skin in the game. We would like to see much more than just two exchanges in place. This is also important for ensuring rapid innovation. In particular, I think it will be very problematic for Google to monopolize this market.

I’ll get around to posting the official Phocuswright video in due time, but I’ve had a number of requests to post the presentation I used today so here it is:

Greetings from sunny Orlando!  Today I’ll be speaking at the Phocuswright Travel Innovation Summit, presenting Dapper’s set of dynamic advertising and media optimization tools for the travel industry.  Why Travel, you ask?  Because all the ever changing offers and inventory are just begging to be matched up with the right consumer at the right time.  Okay, end of pitch.

But seriously, it’s a vertical for which ads like ours add a tremendous amount of value (or, conversely, reduce a tremendous amount of cost-per-booking).  Showing me a generic “Book with us!” ad vs. “Here’s a room for $100 that makes sense for what your preferences are” is a no-brainer.  For those who want a preview of the talk I’m going to give, here’s some food for thought:

Dapper will be speaking at approximately 12:15pm EST.  If anyone is going to be there and wants to meet up, contact me here.

1. The media industry is still an industry in denial.
2. After 15 years at the top, the CTR as the metric of record is finally starting to die, like it should.
3. The distinction of media vs. creative shops is not the right one to do in online advertising. The right distinction is between a shop that is focused on analytical drive towards measurable performance and one that is focused on deriving unique, out of this world and memorable experience. In both cases, media and creative should be intertwined.

An Industry in Denial

Bigwig media execs are still feverishly looking for a way to revitalize the ‘pay for content’ model. There have been several vivid examples I’ve witnessed, the first of which was when the president of Fox movies was interviewed on stage and completely downplayed the role of media ‘piracy’. He actually stated he believes it’s possible to put that genie back in the bottle. In the meantime, he succeeded, it seems, in persuading his teenage daughter to not download media, in exchange of which he agreed to stop preaching her and her girlfriends. I’m not sure how scalable this model is though.
Another great example was the heated debate ran with Mathias Döpfner, Chairman and CEO of Axel Springer, and Ariana Huffington from HuffPost fame (see here: http://www.youtube.com/MonacoMediaForum#p/u/31/ar6pCxwtUBk). The point Mathias makes on stage is actually one I have a lot of empathy to. Namely, that advertising alone cannot support the current mechanisms of quality content production. Thus, we need to work on changing people’s habit back to paying for content. As some of you may noticed, this argument suffers from the common mistake philosophers like to call “the would’a/should’a/could’a fallacy”. Yes, to create quality content requires investments. Yes, advertising alone is probably not enough. However, the logical conclusion is, sadly, not that we’ll see more people paying for content but rather we’ll see less of what is currently considered quality content produced through the mainstream publishers. In fact, it’s actually even worse for the Axel Springers of the world. The way they describe their business (see minute 39:50 in the video) is “Getting talent to create great content”. Alas, if there’s one thing we’ve seen happening in the last 15 years is how the effective the Internet and the web have been in going sector after sector and breaking middleman business models who are focused on distributing and arbitraging other people’s work and assets. In most cases, this is due to the fact that the traditional distribution channels are really in the business of lumping together A quality and B and C quality products together. In it’s basic form, a newspaper does just that. A product that lumps together Thomas Friedman and Rosalie Radomsky (The NYTimes wedding reporter) for the sake of distribution. For hundreds of years, the economics of content distribution required it. But not anymore.

And that is precisely the headstone. The question is not really whether people are willing to pay for content. It is whether they’ll be willing to pay for the current content products being sold. The answer to that is probably negative. To illustrate, a couple of months ago, one of Israel’s premier writers, Ron Mayberg, was let go of his newspaper. He was promptly encouraged by many(including myself) to open up a blog. Out of necessity, he decided to open a site that is based on a $100/year subscription. Within a few weeks he got probably a couple of thousands of subscribers. What he has done for lack of choice, the next generation of journalists will do as the natural choice. At that point the model of the Axel Springers will become really shaky.

The bright point was that it was evident these guys finally have started to understand that people are not criminals by nature, but rather that the ‘pirate’ distribution channel was much more convenient than the channels they provided. Success stories like spotify and the iTunes/App store have finally drove that point home. There is another lesson, though that the App store has been teaching us that I’m not sure they appreciate. That is, in a world where movies and tv don’t have a monopole on entertainment, the price of entertainment hour goes down rapidly. If the price of an entertainment hour seeing a movie is about $5, for a typical iPhone game it is probably around 5-10c. That is a major shift in the economics of content and is not going anywhere.

The CTR is DEAD

That took a while, and probably will take a decade more, but finally the CTR is dying as the metric of record. Part of it is new tools and the weaving of different media sources through exchanges, and part of is probably the rise of social media and the increased measurability of ’softer’ metrics like engagement and buzz. Finally marketers understand that most people don’t click on ads, and those that do are of very specific demographics, and as such, optimizing for CTR will actually take you away from your target market, in most cases. A marketer today should ask herself: “What is my goal?” – Is it traffic growth on my site? Convesions and revenues? Brand engagement? Buzz? and optimize her campaigns towards those goals, requiring from her partners and tools transparency and correct attribution of all activity, not just post click. An example of what seems to be a great tool in the buzz department is Microsoft’s new LookingGlass tool. LookingGlass shapes up to be one of the top social media dashboards in the wild. Yes this is a Microsoft product aimed at social media, and it’s great.

The Identity Crisis

Are you a media agency? A creative agency? Focused on direct response? big brands? I would claim these are the wrong dimensions to identify yourself by. Ask yourself, are you a Bill Gross (the head of PIMCO) or a Picasso? These are the two models for the new media world. Are you all about performance and analytics? Wil you feel great working with a bunch of ‘quants’ trading media and optimizing creatives? Or would you only feel great taking customers through an emotional experience, custom built to push specific buttons? Because that is where the world is going, and it’s really hard to do both. Media and online advertising are quickly becoming a WallSt. inspired profession, sitting on the bridge between the science of options pricing and psychological engineering. However, as companies like Apple constantly show repeatedly building unique campaigns on sites like the NYTimes, there will always be a place for a ‘greater than life’ advertising concepts. They will just be done by other people.

The media industry is still an industry in flux, and will probably continue being for years to come. However, if you identify who you are, what you want to accomplish, and be realistic about what you can expect from users and consumers, this is one hell of an industry to play at.

Just posted Episode 6 of Advertising Sucks (and the People Who Fix It) with guest Sara Holubek, president of SEMPO and of her own marketing consultancy.  You can reach her at www.saraholoubek.com.

Before forging out on her own, she was the Chief Strategy Officer at iCrossing and held roles at Organic and Blue Dingo.  She is a master of search marketing, and we discussed a lot of how Search and Display are beginning to cross over.  Another great guest and another great episode!

Listen to it here

(no iTunes or don’t want to listen to it there? Here.)

Great guest post in TechCrunch by Steve Poland today on how Amazon is opening up affiliate channels for us to tweet and Facebook-status-update product recommendations for a cut of the revenue. Brilliant!

Guess what though – this had a name, and it was Beacon. And I’ve claimed in the past that Beacon was a game changing idea, executed poorly, because it didn’t cut the users in. Now Amazon is making the opposite a reality, cutting the users in but as of now excluding the platform. This is problematic for a couple reasons.

First, as Steve rightly claims, the affiliate rev share will go down due to the onslaught of millions of would-be affiliate marketers saturating supply. This is counterproductive to everybody: think about the value of a genuine “dude, you should buy this too” of your product from one friend to another.  This is immensely valuable, and it’s something that no organized marketing channel can address as of now.  The problem is, if you put tiny revenue incentives behind it, one needs to either blast his friends like crazy with SPAM all day or just not play the game.  I suspect most individuals that marketers care about in any given campaign will just not play the game, and the SPAM industry will automate it as much as they can (as they’re already doing).

Second, and closely tied with my first point, without some mediation from the platform, this value is all but lost.  Beacon did something interesting: it used your actual behavior (Paul just ordered Season 2 Disc 1 of Mad Men from Netflix) to influence your friends to do the same.  Your friends see this once, and only once, from you, and its part of a one-time behavior that is actually an update relevant to what you’re doing at any given time (e.g. maybe one of your cute female friends wants to come over and watch it with you?)  Essentially Netflix sponsored a direct conversation between you and your friends, and it was an informational one.  This is not SPAM.

Compare this with “Hey I just ordered Mad Men you should get it to http:bit.ly/blahblahblah!” and suddenly you look like SPAM.  See the difference?  When the platform is able to be a part of the experience, it can mediate the relevancy of these messages to make the relationship actually valuable to marketers.  And I bet Netflix is willing to pay a lot more to that kind of recommendation than the irrelevant blasts of affiliate marketing Amazon is sponsoring by allowing individuals to be affiliates.

Solution: Facebook & Twitter – bring Beacon back.  But don’t be selfish and keep all the revenues for yourself.  Share with the users that are actually creating the value.  The alternative is here, and it’s going to ruin user experience, and you make no money from it.  You decide.

Good writeup today from our good friend Brian Massey (hear his podcast interview here).  Regarding Jonathan Mendez’s “Adplications” – a full retail application in a banner.

We partnered with RAMP to crank out the “Father’s Day Slacks” example he cites in the article, check it out (DISCLAIMER: this ad ran ages ago so the data doesn’t refresh):

We’re off to Monaco to present at the Monaco Media Forum.  It’s sure to be filled with innovation, revelation, and…yachts, probably.

I’m on a panel “Extreme Measures” on Thursday, and Jon will be doing a demo of Dapper in action on Friday.  If you’re there, give me a shout and we can meet up.

See today’s SearchEngineWatch / ClickZ write up about your marketing push for the holidays. It mentions the importance and efficiency of retargeting (or our flavor of it, remessaging) and how it can boost your holiday sales.

A few sites can be helpful for a relatively low investment. Retargeting works via cookies and is relatively painless to the user. Check out FetchBack.com, Dapper.net, or Retargeting.com to get started.

This bone-crushing ad shows you how you can get the next big matchup of the home team from Dish Network. How do we know what the home team is? Like this, if you’re in Bloomington, IN:

Or like this, if you’re in Denver: