By way of introduction, I would like to share with you this video of Redwood’s interpretation of Web 2.0. As the Creative Director of MediaTrust, I am always interested in the variety of ways that the industry has been redefining and visualizing Web 2.0. What I like most about this instance is that, aside from the Rolling Stones meets Rocky Horror Picture Show lips, Redwood decided to step into the customer’s shoes for a change.

 
So a little bit about me, as I plan on being a more active contributor to RelevantlySpeaking and it might help frame up my point of view, and why I post the things I do. My informal education really began at age 19 when i started tending bar in NYC in the early 80’s. Talk about jump starting a career in social media. My formal education came 10 years later when I went to University of California at Davis. I took my degree in environmental design and started my career as a designer with an exhibit design firm in California. Since then, I have worked for HP, frog, webassociates and with clients such as Apple, Quiksilver and RIM.

My interests are quite broad, but for the purpose of this blog, and our audience here, I will try to post things that are relevant to social media and the impact that design has on media and advertising. I would also encourage comments and crosslinks to items that you might also consider as important to this growing community here at RelevantlySpeaking.

My name is Christopher Smith. I can be reached at csmith at mediatrust dot com.

Comparative advantage is one of those basic economic concepts discussed in college.  Simply stated, it explains why the US is better off designing and building routers than growing bananas - even if it has an absolute advantage in producing both. The key to comparative advantage lies in figuring out the opportunity cost associated with doing one thing over another.

When I left Google to start Ooyala, my co-founders and I came face to face with this conundrum - neatly summed up by Jeff Huber from Google - “starting a company sounds sexy and exciting until you realize that only 30% of your time is spent building out your idea and the other 70% is spent on mundane tasks like plugging in cords at your data centers.”  Since our core-competence was not building out data-centers, it didn’t seem smart for us to focus our attention and time on this.

So in the same way that the US focuses on building routers, we decided to focus on developing our video technology and found a country/company that could provide us with bananas/infrastructure. We turned to Amazon Web Services (AWS) as they provide a bundle of infrastructure and application services that are charged on a per-use basis. The Elastic Computing Cloud, Simple Storage Service, Simple Database and a myriad of other development services are all part of this offering. Amazon provides the basic building blocks required to build a sophisticated and infinitely scalable application. On the fly, we can bring up and take down computing clusters and we can store terabytes of information for pennies on the dollar.

Building on AWS gives small upstarts the same type of building and processing power that the “big guys” such as Google are able to leverage for their own development. Brainscape, a small imaging company is using AWS for image processing and analysis of the brain.  Other companies are using the services to conduct computationally expensive calculations.  The availability of these types of services will increase the size and complexity of problems that startups will be able to tackle. It will put them on equal footing with companies with significantly larger R&D budgets. Even Google recently got into the outsourced cloud computing business.

Whatever happens in 2008, it is almost sure to bring a great amount of upheaval in technology, media, and marketing. In many ways it is likely to be a continuation of the trends that exist now. This is because technology continues to permeate our lives, how we connect, travel, and think. That likely won’t change, but the ways we interact with it might. Here are some predictions from RS for this coming year:

Peter Bordes:

“There will be a shift in the market with the next generation of dynamic media & advertising platforms as web 2.0 tries to find a meaningful business model other than AdSense, and the thinking web (web 3.0) begins to become a reality. New leaders will emerge who are able to integrate all forms of media (traditional, interactive & social) so that they are no longer silos and can all speak to each other. This marks the start of the era of open modular platforms. All must begin to adapt or adopt.”

“2008 is the beginning of the “age of relevance” and recommendations. As users, media and advertising move from searching to finding a more meaningful and intelligent way to dynamically & seamlessly connect. Relevance is the key as media becomes even more highly fragmented, and  users empowered to be in control of what & how they are consuming…”

David Taber:

“The writer’s strike and the ramp-up to full digital TV cause a permanent shift of viewership and ad dollars away from network TV and toward cable and web channels.  Audiences that are worth anything (e.g. urban, coastal) fragment dramatically, causing much more cohesive, easily targetable audiences.”

“FCC media ownership rules are enacted, causing a rapacious M&A cycle.  Every large media company has a complete portfolio of outdoor, print, radio, TV, and web properties.  They offer advertisers multi-property placement and comprehensive targeting and measurement services.”

“At least one major Social Media site falls victim to severe spamming and other attacks.  Users move rapidly from one Social Media site to another in fads that last only a few months, causing churn and user exhaustion.”

Lawrence Coburn:

“2008 will see the rise of powerful, cross-domain features. Just as widgets have infiltrated blogs and social networking sites in 2006-07, the trend towards open platforms will allow third party developers to build features that enable a single user experience that spans each of the major
social networks - for example, a movie reviewer might earn reputation points on Facebook that translate to their MySpace account. In some cases, these feature developers will become as powerful as the hosting social network. Cross domain feature providers will own a more robust view of the end user, as they will capture their activity in various social contexts (think LinkedIn vs. MySpace). They will also be hedged against the inevitable rise and fall of individual social networks.  Early favorites to seize important features that span domains include Flixster (movies), Bunchball (games), RockYou (communication), Slide (photo sharing), and iLike (music).”

“The social network battlefield will evolve from a competition to see who can own the biggest social network, to one to see who controls and influences the platform that connects each social network to the third party developer community.  Currently, there are two players: OpenSocial, spearheaded by Google, and the Facebook Platform.  I expect to see more.”

Edward Leaman:

“In 2008 we will see the idea of branding move from ‘relationship’ to ‘skinship.’ In skinship the requirement on brands is actually to touch the customer at the belief level, by creating the symbiosis of value alignment. You buy because you believe, rather than you need or want. This requires brands to become transparent to their customers and so customers will begin to really be able to talk to, and influence, brands, and brands will really be able to touch the hearts of customers, if they have the courage to be that authentic. The customer will name what and who is authentic and who is not.”

“The idea of a brand as a transparent container will appear on the horizon. In this construct, similar to an empty mandala, a brand becomes a vessel which the customer brings themselves to and fills with their own needs and wants requiring the brand to serve that purpose in order to win trust and loyalty. In this moment brands become sustainable and relevant to the market in truth for the first real time.”

Scott Parent:

“In 2008 MySpace will fall victim to it’s own poorly targeted ad-greed and could be face-down by the end of the year.  Spammers will turn their gaze to Facebook. The powers that be at Facebook however, will learn from MySpace’s demise and do a much better job policing their user base.”

“Because of the writer’s strike, fresh television programming will continue to be unavailable for the better part of 2008. As a result advertisers will take their dollars and turn to YouTube, via Google, to spend their cash. Smaller companies with great content and sizable audiences like PodShow, Revision3, Revver, and Rocketboom will get themselves a nice slice of the pie if they can continue to grow their audiences.”

“Finally, 2008 will be the year that television production companies start producing web-based episodic programming. Quarterlife was the first step, but was poorly executed. You’ll see networks trying out a few episodes online, then putting them on-air if they generate significant buzz.”

Chris Smith:

“Cute Cat videos will continue to dominate the UGC space.” (Don’t know about lolcatz? Read this.
watch this.)

“Online consumers of UGC (user generated content) will finally get tired of digging through horse dung looking for a pony. They will begin to consolidate their online short viewing content into channels run by individuals, continuing the “trusted advisor” or omakase meme that is prevalent in this “age of recommendation.”  The channels will be programmed by individuals to aggregate UGC and “traditional” broadcast content developed by non-traditional studios. (Example.)”

“At least one major social network will try for an IPO play this year. The twist will be that it will provide long tail incentives (pre-IPO positions) for “members” to maintain their active involvement with the social platform over time. The positions will have a vesting schedule to insure members stick.”

“2008 will the the year of the “connector”. The most impact-full software will be “plumbing applications” that work to tie together micro (cell and iPhone), mobile (laptop and PDA and vehicular) and teethered (set top, TiVo, AppeTV, VuDu, Bose, GenAir…) appliances to seamlessly move data in microformats that are relevant to each. Digital entertainment will drive this initiative. Enterprise data distribution will lag behind.”

“Social Networking fatigue will result in people actually getting out of their homes and going to clubs, bars, restaurants, libraries and museums. There will be a re-discovery of physical social intercourse, followed by a realization and backlash that these modern facilities do not have enough wall sockets to charge my iPhone so I can check to see if anyone looked at my facebook account and actually gave me a writing on the wall like they should do because I wrote on their Superwall and sent them a e-message video hello that cost me 21 tokens of “faceBucks” that i bought on eBay at a discount. Losers.”

“Interruption marketing will decline in 2008. A re-emergence of contextual marketing will gain traction this year. Advertisers will understand that consumers do not want to be bothered by pop ups and lay overs and other code driven gimmicks to force readers to acknowledge their advertising opportunities. Just like Ford’s new SuperDuty F-250 pickup truck with Rigid-Flex technology, advertisers will begin to create custom messaging that is interwoven into the content itself, so that the the consumer has a passive and more enjoyable interaction with the advertising of tomorrow and a smoother ride down the information Super Highway than other vehicles of its class.”

“2008 will see a rise in “Enterprise re_Evolution”. 2006 and 2007 enjoyed dynamic changes in the click and mortar experiences of consumers and how they interacted with their brands of choice. Stuff (it’s a technical term) like AJAX, CSS, Ruby; micro and mini web-centric applications like basecamp, twitter, mint; and web platforms with solid API’s and Open Social integration will begin to make their way into the Corporate IT infrastructures. There has been relatively no progress in Enterprise Applications in the past couple of years. IT organizations will begin to be required to provide suppport for these apps as employees will continue to create “micranets” (micro-intranets) using things like BaseCamp for project management, Twitter for “paging and OPS (office positioning system)” and Wiki’s for KM solutions as well as blogs and RSS for knowledge transfer. The company that can tie this together in a way that will pass the “Big Blue” test of enterprise productivity applications will make a killing.”

“2008 will bring about a catastrophic disaster revolving around personal assets and data. I don’t know what it will be, but i have already had numerous phone calls with people that are looking to “integrate” and upgrade and connect the appliances, gadgets and devices they have, and in every case: directions were not read prior to install, formats or requirements were not reviewed prior to purchase, and NO BACKUPS were ever completed during the life of most products. I think that consumers will nuke their photos, contacts, movies in a way that will create a new short term micro-economy of data rescue services.”

“Apple will introduce something in 2008 that will make some people upset because its better than the something they just got for Christmas at a cheaper price that what they paid for something that doesn’t do as much or is heavier or bigger or shinier than the thing they have. Record, Film and Newspaper companies will blame Jobs for the the destruction of jobs (profit) in their respective industries. Fanboys everywhere will riot against the establishment, using MacBook Pros and media projection equipment to play first run movies (via PirateBay) on the side of multiplexes. Chuck Norris is called in to provide Law and Order. In other news - Chuck Norris is currently suing NBC, claiming Law and Order are trademarked names for his left and right legs.”

Gary Kreissman:

“The economy will flatten in ’08 and likely dip into recession.  Advertisers will be forced to accelerate the trend toward accountability, i.e. performance advertising. Many major brands will permanently make the shift from traditional media to Cost per Lead, Click and Action.”
 
“There will be a “flight to quality” in performance advertising as advertisers recognize that simply building a list of email names is insufficient to boost ROI.  Incentive-based lead generation will be further stigmatized, while programs that build relationships through relevant information and dialog will thrive.”

Jay Moore:

“Monetization – Users will find methods other than AdSense to fund their web and mobile presences. Small, widget like storefronts associated with the content of their interests will become commonplace, and allow users to not only talk about what they like (aka blogging), but also to get a little something for their effort (but not on a PayPerPost basis).”

“Mobile content/media will be fully integrated into the mass of users internet experience. Differentiation between short content forms (e.g., ringtones) and long content forms (full track music, videos, tv) will be significantly diminished. Users brand affinity for content will become their calling cards, and that which they communicate about the most.”

Trip Foster:

1. Design and user experience will continue their progression to the front of the classroom when the lecture turns to technology adoption and digital lifestyles. Apple will reap the rewards from this trend due to its product-centric design principles.
2. “Meta” Social networks such as Facebook and MySpace will lose popularity as other more focused niche social networks come to market that specifically address the needs of their users.
3. As the recession hits, more marketers will push more of their budget into measureable online media at the expense of radio, print and TV. The trend will be toward more rev-share and CPA marketing and less brand advertising.
4. Marketers will adjust their budgets to more accurately capture the 20% of user time spent on Online media (today ~7.5% of their budgets are allocated to online media). The gap will close even more rapidly in ‘09.
5. The volume of content uploaded to the web will create a Faustian Bargain…users will have a more difficult time finding relevant content and seek solutions to help them filter through the crap.
6. More of the mainstream web user-base will earn revenue from their activities on the web and realize the financial benefit of contributing to the conversation. 
7. Google will make more money. Steve Balmer will get angry again.
8. HBO’s Flight of the Conchords will redeem their poor season finale episode with an all star performance of the Rolling Stone’s smash hit Monkey Man.

As more marketers demand accountability from more media, both parties need to agree on the best way to pay for performance. The keyword and contextual players want revenue per click of course and the lead gen crew wants – no surprise – revenue for a qualified lead.

Then there are those hardy souls who want to be paid well for business closed – revenue for a specific action. Cost per Action or Cost per Acquisition (CPA) really could be the ultimate expression of performance – if the actions can really be measured. In our experience, attaining this ideal isn’t as easy as the concept. This raises a few considerations for marketers (as well as agencies and media) considering a foray into the world of CPA.

Can your system track source? : CPA can only work if the marketer’s CRM system can capably track the source of each lead. Months can pass from initial contact to eventual sale and there are liable to be other contact points after a performance ad firm initiates the relationship. All parties need to be sure that credit is given where it is due.

Do you want to share information? : Many marketers we speak with prefer not to give specific results of campaigns to 3^rd parties. In CPA programs, the marketer promises to reveal important financial information, i.e. how many accounts are opened or sales are made based on the performance ads. Are you willing to do this? Is your CFO? How will you build an audit track?

How do you manage the continuity? : CPA programs are rarely one-shot deals. There will probably be an ongoing campaign to convert as many of the initial prospects as possible. Media might vary. How will the follow up strategy work? Who will oversee all the creative for continuity programs? Who will manage the responses and coordinate with your database?

How do you set the price for a customer acquisition? : Some marketers base the CPA on current account acquisition norms. If they’re now paying $1000 all-inclusive to get a new customer through other marketing means, they might offer $500 per acquisition for a CPA program.

Often, the price can be set through testing Cost per Action to Cost per Lead and Click. If 0.2% of $2 clicks convert, that’s a $1000 acquisition, as is 1% of $10 leads. There’s a good horse race to see which provides the lowest cost of acquiring new business.

Should you vary the payout? : Good performance marketing enables segmentation. Most likely, you’ll offer your better potential customers a better set of benefits. If some customers are worth more than others, are you willing to pay more to get them? Incentives are powerful: consider paying your performance ad group more when they bring in a prime target customer.

These just scratch the surface of decisions you’ll make when embarking on CPA. But, if you can comfortably answer these questions, you’ve gone a long way toward a potential ROI boost.

By David Taber.

In media, there are periods sometimes of a decade or more when a formula works very well, producing quality entertainment and profits for all. 1930’s radio dramas, 1950s MGM musicals, 1965-75 situation comedies, 1980-2000 TV advertisements. But after one of these golden ages is over, the models can never be revived.

In some cases, the intervals end with a clear event, such as WW II or the end of the ASCAP strike. But it’s not always an earthquake — more often, the tide shifts imperceptibly: you notice after awhile that “there haven’t been many of those lately….” For example, in the 80s and 90s, the best advertising creatives, writers, and directors worked on TV ads that were visually beautiful and emotionally compelling. But the economic malaise of the early 2000s, TiVo, and the rise of viral video has moved the best creative campaigns away from TV. BMW, Coke, BlendTec (“Will it Blend?”), and others have produced campaigns that would kill in the Clio TV category, let alone the Innovative Media one. Meanwhile, over the last five years all US TV ads have gotten less and less compelling.

It’s unlikely that the great ads will ever return to TV again. Web video and multimedia are too measurable, too easily targeted, and too relevant to lose out to TV. The audience will get just the ads that are interesting to them, and the advertisers will enjoy higher conversion ratios. Advertisers will continue to put their A-team on Internet media because that’s where the yield is. TV ads will be around forever, but they’ll mainly be vaguely targeted branding campaigns, and they’ll be no more strategic than radio ads are.

But that secular change is only half of the story. The TV content that’s sandwiched between the commercials is also changing forever, even if you haven’t seen it yet.

The Screen Writer’s Guild strike is a watershed event. It will likely go on for months, and many leading TV series will never recover. As in the 1988 strike, once new episodes stop flowing, the viewing public will forget how much they liked “that show.” By the time the shows return after the strike, there will be unrecoverable declines in audience, to the point that some (like the 80’s hit, “Moonlighting”) won’t even try to restart. In the meantime, the networks will produce a panic supply of reality, game, award, sports, and election-politics shows — anything that doesn’t need script writers. While these shows will fill the airwaves, they will drive the quality audience away…and online.

The demographics of TV audience versus online are telling. The more highly educated and wealthy the audience, the less they watch TV and the more time they spend online. The crossover point today is a household income of $75K, and it drops about $10K a year. Soon, the crossover point for TV vs online hours will be at the median US household. Even worse, looking at audience demographics by age, the key 14-27 demographic has been more likely to spend time online than on TV — and that was before the “vast wasteland” of TV content got hit by the writers’ strike.

The Big Deal here is that the entire ecosystem of hot advertisers and quality content is moving online as fast as it can. Smart web video producers will start offshoring content to English-speaking countries so they can get writers immediately productive. Both advertising and content will be changed forever because of the ability to microtarget the content and the relevant ads, as well as the real-time measurement down to the individual level. Done correctly, online media makes everyone a “Nielsen family.” Further, narrowcasting down to the individual becomes economically reachable for advertisers.

In the long run, technology such as IPTV could enable these online advantages for “standard” TV. If that happens (subsequent to the ASTV digital transition in 2009), TV can become truly competitive with the web again. But that’s years away. For now, we should be enjoying the Golden Age of online content as it develops in the coming months.

Cutting-edge news delivery on a cutting-edge OS. Mac users will feel right at home with the Mac Dashboard version of widgetQube’s friendly interface and unique features.

What’s new?

widgetQube v1.5 includes Leopard compatibility, updated interface components and improved feed handling. Version checking has also been added to make updating widgetQube in the future even easier.

During ad:tech NYC, MediaTrust’s CMO Trip Foster recently spoke with Jay Moore, the VP of Marketing for PlayPhone about how Advaliant, MediaTrust’s pay-for-performance affiliate network extended the value of Playphone for their customers and about the value of partnerships.

By David Taber.

THIS POST ORIGNALLY APPEARED ON MR TABER”S SITE:  Unfortunately, most marketing is ineffective. As I wrote a while ago, marketing effectiveness depends more on timing and sequence than on just effort and money. Like all persuasion, it’s not enough to throw a bunch of features and benefits at your target audience: only subtle and flawless orchestration will make you overwhelmingly effective.

My earlier article was intended for sales and marketing professionals. But VCs, CEOs, and non-marketing executives need to keep things simple, and it helps if they have a simple rule or standard that they can “always” apply.

Sort of like, “What would Jesus do?” except in this case we’ll have no problem with the money-changers.

The Only Question that Matters

Vendors spend time and energy making their products and services better. The marketing materials tend to focus on the features, functions, benefits, and advantages of their offering. Typically, marketing “works for sales” because they’re the immediate customer.

That’s supply-side marketing. It’s focused on competitive differentiation — how you are better — which will only be effective when a prospect is already aware of you and interested. In other words, supply-side marketing assumes demand.

Usually, highly innovative products can’t assume demand—far from it. So demand-side marketing must start from a completely different point. To develop demand, you follow a learning or awareness model such as “AIDA.” Your marketing materials tend to focus on increasing a prospect’s knowledge and interest in your product category before trying to focus demand on your specific product.

In the course of developing demand, the ultimate marketing question is…

How are you relevant?

It’s a deeper question than you think, because relevance depends on the audience and their objectives, not yours.

Prospects go through a range of objectives that may evolve in fairly chaotic ways. Almost all vendors understand that the prospect’s need for information changes during the sales cycle, but — again — that only occurs once the prospect has figured out that your product category is relevant to them.

The trickier part is the demand development cycle that precedes the prospect’s willingness to take a sales call. How do you make your product relevant?

Well, the answer is, you don’t — not until you’ve made your product / service category relevant. And that doesn’t happen until you’ve made a problem (or a missing upside) visible and relevant to the prospect. Creating visibility for the problem (or potential benefit) is the only real reason to do advertising (or better yet, blogs and contributed press articles). This takes at least time and effort, plus usually money. Unfortunately, the results may not be directly measurable for several months.

CEOs hate marketing that doesn’t lead to sales. Sloppy- thinking marketers will blather they need to “do branding” or “raise awareness.” But both branding and awareness exercises are just irritating noise to your audience unless you are also becoming relevant to them.

The fastest way to become relevant is to have an audience defined around a community of interest, which usually clusters around a demographic, vertical, or business-process focus. (e.g., iPod owners, telecom carriers, or finance departments of F1000 companies). The tighter your community definition, the easier it is to find them (in web forums, blogs, industry associations, etc.) and to effectively communicate with them. Your goal early on is to earn enough credibility to be listened to, and to provide information about the “problem area” so you can draw them towards your world view. You want the targets to start seeing that they have a problem that can now be solved. (Note, it’s way too early to start saying “solved uniquely by me” — at this early stage of awareness, that would blow your credibility.)

The evolution of relevance, to the prospect, looks like this:

• This is a business or personal issue I care about
• This is a problem / improvement I’m interested in
• This is a product / service category I want to know more about
• This is a group of vendors I want to understand and compare
• This is a company I’m willing to take a sales call from.

Emotional drivers dramatically increase relevance, particularly after the early stages of awareness. What’s in it for the individual you’re trying to get to? How can it make them feel more important, more attractive, more healthy/wealthy/wise? Nobody thinks the iPhone is cheap, but everyone thinks it’s cool (which is another word for personally relevant).

As you can never know where an individual prospect is in this pre-sales evolution, you need to make sure that any information they’d need at each stage is available to them at all times. But to reduce the chance of confusion, you want to present the information in a partitioned way so that the user sees only the level of information that is relevant at their current state of inquiry. If you’re clever in your use of Web 2.0 interactions, online ads, landing pages, content management system, IVR and other tools, you can create the illusion of a personalized response to the customer’s current level of interest. With some attention to detail, you can move the customer from general awareness to determined interest at very low cost.

That said, just putting out a viral campaign is no more effective than just putting out a website: why will your offer be relevant to your social network, and why will it be in their interests to forward it to their social network. In designing a viral campaign, think through the specific situations or triggers that would make using your widget (or whatever) an immediate advantage for the network participants.

Making your initial call to action free dramatically lowers the bar for relevance. But even free takes time — a costly commodity. So design positive incentives to make the trials really happen.

Customers ought to be a slam dunk when it comes to relevance, right? Don’t count on it. But do count on the fact that selling to existing customers is far more profitable and reliable than trying to grab new ones. So relevance after the sale is the best marketing bet you can possibly make.

Once the sale has been made, your professional services and support organization are in the best position to keep your product relevant to the customer. After all, they deliver the value and have the most frequent customer contact. To build relevance in the customer’s mind, you’d want to:

• Show the business impact that has resulted from use of your product.
• Provide a steady diet of tips and techniques to help them get the most from your product or service on an ongoing basis.
• Give the customer best practices and lessons learned from their competitors (avoiding, of course, revealing any customer secrets).
• Run a quick ROI study before “renewal” time.

Ideally, the account manager would do all this on a regular basis — but most vendors can’t afford to have dedicated account managers. However, I have seen SaaS / subscription vendors doing some of these things, which shows real promise for that business model.

Contents copyright 2007 by DOTnet Consulting, Inc., all rights reserved. All trademarks and graphics are the property of their respective owners.

As ad:tech wraps up its final conference of 2007, Advaliant President, Jivan Manhas and MediaTrust Chief Marketing Officer, Trip Foster, share observations from the show floors at ad:tech London and ad:tech New York.

Jivan Manhas’ Observations from London:

1. ad:tech London 2007 took place at the Olympia center. The exhibit hall was large, with two floors (apparently there was a small third floor but like many others I completely missed it….ouch!). It was interesting to see a mix of companies that was quite different than those typically present at the ad:tech San Francisco and New York events.

2. The first thing that struck me was the strong presence of search marketing firms, which could likely be a reason why Google had such a large presence at the show. I saw as many as search firms as you would see affiliate networks at the U.S. shows. The search industry in Europe seems very strong, and from what many of the companies stated, it’s a rapidly growing market.

3. There was a smaller presence of affiliate networks at ad:tech London. The affiliate marketing opportunity seems quite substantial in Europe, as many of the affiliate networks that attended were European-based. Many of the European networks indicated that they were looking to get into the U.S. market. This was surprising to me since the European space is less crowded and is growing substantially while almost all the larger North America-based networks are looking to make inroads into Europe. If I was a European affiliate network, I would first solidify my company as a market leader in Europe. From there, I would partner with U.S. networks to help them get traction in my market, and vice-versa. The U.S. market is very crowded but also very attractive due to its sheer size so I guess I can’t blame them for wanting a part of it.

4. What else was hot? Co-registration, shopping comparison sites and networks of content sites looking to sell media placements. The European market is big for online gambling and casino companies, many of which also had a strong presence at the show.

Trip Foster’s Observations from New York City:

1. ad:tech New York 2007 was a significant event both in terms of content and the large number of attendees. The conference featured almost 300 exhibitors, and had an excellent turnout from investors, agencies, media companies and more. There is clearly a lot of money being thrown around in the online advertising space. While that is exciting, it certainly makes you wonder if there isn’t a bit of a bubble in the online advertising market, and how many of the companies will be around in five years… reminiscent of years 1998-1999.

2. With so many new companies entering the online advertising space, there was a consistent buzz from prospects on the issue of viability. Which of these companies will be around for the long haul and are they looking at long term interest in my company? Will these companies deliver what they promise? Are they committed? It will be interesting to do a side-by-side comparison of existing companies a year from today, to see which companies deliver on their promise.

3. As marketing budgets grow and marketers allocate more of their budgets to online advertising, accountability in the industry will skyrocket. Advertisers and agencies alike are looking to acquire customers, create brand awareness, generate sales and drive traffic. Discussions on the expo floor articulated the importance of clear metrics and being able to prove that money spent in online advertising delivers returns.

4. The buzz at the show demonstrated that this industry is actively maturing. There is a lot of clutter in the space, and it is incumbent on brands to help separate the wheat from the chaff. With all this hype, it becomes increasingly important for vendors to build a long term relationship with prospects. You build trust by performing on your word, and delivering on your promises. If you cant do that, we won’t see you at ad:tech in a few years.

One repetitive theme from both conferences is that agencies, advertisers and publishers alike are growing weary of looking at one vendor for a single solution for each need they have in their portfolio. Our conclusion is that the vendors that can deliver integrated campaigns across several different online marketing disciplines will be able to gain long term customers in the current environment.

By David Taber.

Since the dawn of the information age, TV and films have portrayed computers as being capable of evil, mayhem, murder, and even world domination. War Games, 2001, Demon Seed, The Matrix, I Robot, Star Trek, and dozens of other science fiction books and movies painted really scary portraits of what our digital creations would do to us if given the chance. Terminator’s story line had it that the Final Conflict began just 15 minutes after Skynet’s link-up allowed it to gain consciousness.

The realities of the information age have been a lot less dramatic, and probably will be for a long time to come. In this issue, we’ll explore the real-world impact of the technologies that we’ve been building and marketing. Why? Because the best marketing is based on truth, not fabulous stories. The magic of marketing happens with believable hype.

Future Schlock

Computers and high technology have had a huge impact on our lives. But the impact is rarely as envisioned — or marketed — by the technology’s purveyors. For example, Alexander Graham Bell did not expect that the telephone would be used for point-to-point conversations. He thought that people would come to auditoriums to listen to the news, lectures, and music brought by telephone wires. This is what radio eventually did, only decades later and in the home. One hundred years later, developers of the Short Message Service in cell phones expected their system to be used for occasional paging among professionals. What happened instead: millions of teenagers tapping out SMS messages as a replacement for passing notes around the classroom.

Looking at the core of the IT industry:

• There are more microprocessors in the world than there are people. Most computers are used in remote controls, door locks, and other low-level automation. There is no danger of their conspiring against us.
• A $1000 laptop may have as many as 16 billion transistors in it and a clock speed 30 times faster than a Cray-1. But most of the processing power is used to run GUI widgets and eye-candy. On a laptop fully loaded with software toys, going from power-on to usable desktop applications consumes enough time for a trillion computational operations. Long before the system could take over the world, it would BSOD.
• The largest computing resources are grids that tackle really tough problems like modeling weather systems, simulating nuclear explosion, and exploring genomes. Google uses a grid of ~500,000 Linux boxes. But the biggest grids on the planet — harnessing millions of nodes — are used to compute fractals for Electric Sheep screen savers or sift through random noise for the SETI project. Doesn’t make for a good movie script.
• There are hundreds of useful software applications for sale. But most users typically run less than 7 applications on their computers, most of which are used as a very smart replacement for paper.
• Artificial Intelligence — once an overhyped defense-department technology and still an overhyped plot device for science fiction — is used most commonly to correct spelling, detect (and generate!) spam messages, and move videogame characters. HAL ain’t here.
• The real impact of IT on users has been surprising. Everyone forecasted that office automation software would reduce the amount of paper, but ink and toner are the only consistently profitable parts of the whole industry. Vendors paid big money to prove that computer literacy would lead to higher incomes, but a recent study (funded, ironically, by HP) showed that the info-glut in modern PCs actually decreased officeworker IQ by more than 10 points.

Looking further afield, at electronic media and entertainment:

• For 3 years now, every computer made can be a TV, radio, DVD player, recording studio, and videoconferencing system. This goes double for a Mac. Yet even today, nobody but the uber-geek puts a PC in their living room.
• Despite the potential for the democratization of entertainment content — something that many artists viewed as nirvana — the quality content is not coming from “anywhere in cyberspace.” Sure, there’s an overabundance of stuff on YouTube, MySpace, and GarageBand.com, but the stuff you actually want to watch and listen to is produced and controlled by increasingly concentrated media conglomerates.

How has this changed the economy?

Clearly, IT has had a dramatic impact on business and consumer purchasing patterns. Slide rules, drafting tables, typewriters, and pocket protectors disappeared within 10 years or their digital replacements.

But the dramatic changes from the PC are complete, and future innovation at the base level will have only incremental effects. (In fact, we’re probably near the end of the PC era as we know it. The only things preventing the PDA/phone from supplanting most PCs: the size of the keyboard, and the limited battery life. Find a way to eliminate a laptop’s screen through an audio or eye-movement interface, and the PC is toast.)

After all the hype about the Next Big Thing, what really changed the economy was not routine automation or individual productivity software, but digitized content and the internet. Ironically, the really important impacts — the effect on documents, research, and media — were not hyped that much. The gravitational pull of the Network Effect was, truth be told, missed even by Bill Gates and Scott McNealy for quite a while.

Universal email (and its cousins, IM, newsgroups, and blogs) has all but wiped out postal mail, faxes, and office memos. VOIP and audio chats will wipe out conventional telephony.

Book and record stores die on a weekly basis because of the triple onslaught of Amazon, recordable CD / DVD media, and MP3 compression. Tower Records — once the world’s largest record store chain — was sold out of bankruptcy. iTunes and their cousins essentially remove the need for media stores and CD production altogether, and in 2007 iTunes alone represented 10% of the retail US music market. The fabled internet disintermediation has actually happened here.

Newspapers and news magazines are commercial zombies, ravaged by declining readership thanks to the internet. They are in a death spiral as they cut their reporting and editorial staff to meet budgetary realities. Although there is a great example of open source information content in the WikiPedia, blogs and talk radio are not likely to serve as credible substitutes for professional reporters. As modern societies need a flow of quality news in order to function properly, something big is going to change here: watch for a tipping point.

Radio has been able to adapt much more readily to the internet than print media, and overall listenership is still healthy. But podcasting is making a serious dent by changing consumer listening patterns. In my family, listenership to real-time radio has fallen to zero in just 2 years. Podcasting might have seemed like just hype, but its user impact is probably even more significant than Tivo. And users of these new media always skip over any ads.

However, TV is still much more economically potent than radio, because people spend more hours watching TV than listening to radio. There are more channels to watch every year… and Tivo, satellites, broadband internet, IpTV, YouTube, and Video iPods ensure that this trajectory will continue for a long time to come. However, because viewership is constrained by the number of free hours in a day, audiences will be increasingly fragmented.

Advertising has been turned upside down by all these trends. Print advertising in newsmagazines, professional journals, and newspapers is in deep trouble, although print ads in gaming, fashion, and lifestyle magazines are still OK. Advertising’s impact in broadcast media has been dramatically reduced by Tivo and podcasting, and rates there will decline as audiences splinter.

On the other hand, there’s a ton of positive innovation in online advertising, both in Google and the major media properties. Watch for a tipping point here as well, as innovators create closed-loop advertising and marketing systems that really engage their audiences as a community of interest.

What does this mean for marketing?

You don’t have to have read The Innovator’s Dilemma to know that high tech products evolve a whole lot faster than the user’s ability to take advantage of them. Countless product innovations just won’t matter, and a lot of hype won’t either.

Wonder why you can’t get any attention from reporters and editors about your new product? They’re completely jaded, after having been bludgeoned by countless over-zealous product managers. If you want them to give you some ink, give them an interesting customer story.

Don’t get me wrong: hype is a necessary and even desirable thing. You won’t get headlines without it. To get funding and press attention, company founders must make grandiose claims about the impact their technology is going to have.

This awareness-building hype is necessary, but it must not permeate the value propositions or sales materials for products. Overblown claims cannot be effective because they aren’t really relevant or credible to the customer.

Applying the right amount of hype — and for the right reasons — is the trick.

• If you make components or subsystems: some new products deserve hype because they change the economics for users. It is significant that now you can now hold a terabyte of disk storage in your hand for $500. When there’s cheap 64 GB flash RAM, it will make a difference to a lot of products. If you could increase the power density of batteries by 2x, you’d enable big changes in the way users work. If you’re lucky enough to have a product like this, your hype will be most credible if you had your customers (OEMs) do the talking for you.
• If you make entire systems (end-user products): incremental improvements shouldn’t be hyped. What’s the level of change that should be hyped? If the end result of your new system can be a big shift in consumer behavior, and if it passes the in-law litmus test (i.e., at least two of your in-laws says that they would actually do something different thanks to your new product), then hype away. But it will be more credible if you use an industry expert or pundit to say it.
• For software (and particularly for platforms): ubiquity is more important than technological finesse, so don’t hype features. Oracle isn’t the 800-LB gorilla because of 7000 APIs or world-beating quality: it’s because Oracle is the de facto standard. This is where Open Source can be truly important: when properly targeted, it can achieve ubiquity faster than any previous business model. So, JBoss and MySQL can hype achieving real market power despite big vendors like BEA and Oracle.
• For luxury items: don’t use hype at all, use celebrity endorsement. What is said is nowhere near as important as who said it and how cool the situation surrounding the endorsement was. The best endorsements are natural and subtle, often involving few words about your brand.

Looking at the impact of the IT and internet revolutions, big changes have happened to the craft of marketing: advertising, merchandising, selling, and continuous customer interaction. The internet enables companies to rapidly and economically create communities of interest that form the basis for very low cost commercial interaction and loyalty. Take a look at what Woot has done with almost zero capital. Clever marketers figure out how to engage their communities throughout the product life-cycle, and create closed-loop systems for measuring and optimizing every phase of doing business. Unfortunately, most companies have not invested properly in their marketing departments. They need to evolve their skills to effectively leverage new tools and available information.

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