A very special thanks to Garr Reynolds for featuring this TED presentation today. I would love to have Benjamin Zander as an instructor, or a mentor. This morning, during coffee, when I usually catch up on the things that have already happened, I spent the 20 minutes or so learning about the things that MIGHT happen. I was so inspired by how he worked with his student to break apart music for Cello and actually begin to look at the parts, and place between the notes, and the connections between not only the pieces and the parts and the spaces, but connections those things have to each other AND to the audience. Benjamin also included the connection to the artist, a 15 year old talent named Nicholi, and inspired him to change his interaction with the music as well.

I am sure you will all take away a different nugget or two of wisdom, or inspiration or whatever… but I am so fully inspired to look at those parts of the whole, the spaces between the notes, and see if I can not add a different sense of beauty, of perspective, or of interpretation with the new work I am doing (more on that later).

I also hope to bring you a review of Benjamin’s book, The Art of Possibility. I am still reading Guy Kawasaki’s new tome Reality Check and will move on to Zander’s book after that. Special thanks to Guy and his people over at Penguin Group who sent me an extra copy of Reality Check for our readers. Tell me what inspired you about the Zander presentation from TED in the comments, and I’ll send Guy’s book to one of you.

With the economy going south, pink slips raising their ugly heads, and the weather turning cold on the Left Coast, sometimes its the small things that really warm you inside, like keeping cash in your pocket and listening to some of the brighter minds in the changing landscape of that pre-internets invention known as television.

On November 13th, in San Francisco, NewTeeVee Live will feature such luminaries as Reed Hasting, CEO of Netflix, whose recent announcement that NetFlix will offer video delivery to my TiVo has me ready to renew my NetFlix membership after a two year absence, as well as Jason Kilar of Hulu fame, and who to me represents all the things great about the internet delivery of television style programming.

NewTeeVee Live will sure to be a major stop on the “events for the in-crowd” tour for video entrepreneurs and influencers and may also be a great place for you to bring some resumes or reels in case the downturn of the economy has you on the hunt for a better gig. And the good folks over at GigaOm are offering a $200 discount to our readers to join me at the event. Follow this link to register for the event on November 13th. And then DM me on twitter so I can look forward to meeting you in the City By The Bay.

And a special shout out to the great folks at Marketing Alchemists who have arranged for us to blog from the event in case you are stuck in Philly, reminiscing about The WIn, but wishing you were at NewTeeVee Live. We will bring you updates and insights from the event so be sure to check in with us on the 13th.

The new digital landscape and modern consumers are dramatically different

The new “digital landscape” is dramatically different from the environment into which TV, print, and radio ads were launched no more than two decades ago. Even today’s Web 2.0 environment is different than the Web 1.0 environment of a decade ago. As the Internet led to the more facile accumulation and dissemination of information and as social networks brought even mainstream consumers online, the power of consumers has increased significantly relative to advertisers. For example, they will search for information when they want it and ignore all other forms of interruption media pushed at them. They will look for independent and objective reviews of products or services and distrust brand messages put out by advertisers touting their own virtues. And they will rely on the actions of the community to help them filter and prioritize the best “stuff” from the ocean of available content.

Audience fragmentation caused by the proliferation of niche cable channels (e.g. the fly fishing channel) and abundant online video channels means that “mass media” is not so “mass” any more — there are no longer massive audiences tuned into a single television program at the same time. “Media” is now two-way or many-to-many — i.e. consumers tend to talk amongst themselves. But many advertisers and their agencies still rely heavily on one-way tactics - pushing a carefully crafted message out at target customers.

Globalization, information proliferation, and socialization have irreversibly changed industries

Other macro forces are also re-shaping the industries, in particular the advertising, marketing, and communications industries.

Globalization means that, for example, coding can be outsourced to India, graphic design to Australia, or television production to Asia, all at a fraction of the cost of “in-house” resources. The wide availability of tools like online photo editing tools (picnic.com), video editing sites (motionbox.com), and even high-end 3D and special effects software (Blender.org) — all of which are open source and free — fuel the perception that such digital capabilities and services should be lower cost, if not free. These trends mean that agencies whose revenues were derived from these services are facing constant downward pricing pressure.

The proliferation of information has also irreversibly changed the perceptions, behaviors, and habits of consumers. The abundance of information online conditions users to search for information and form their own opinions through research. They also expect more detailed information than can be typically delivered through TV, print, or radio ads — e.g. they want to see the product brochure online, do price comparison shopping across dozens of retailers, and read peer and expert reviews before buying. And they will do the above on their own time (e.g. planning a family cruise vacation at 1 am when the kids are asleep), which destroys the concept of targeting using day-part or show content.

The socialization of consumers online means that the conversations that used to happen among a few people around the watercooler are now happening online for all to see. The collective complaints or praises of products and services now become inputs to many other users doing research online before their next purchase. Furthermore not only is the spread of information much faster online, but the impact could also be dramatically larger —  for example, 1) by the end of opening weekend, hundreds of user reviews of a movie can immediately determine its fate — a mega hit or a “straight-to-DVD” movie, and 2) the action of a single person who found an unsavory clause in AT&T’s Wireless’ “fine print” and posted it online caused such a community uproar that AT&T made a public statement that it would be removed.

Traditional agencies rely on old business models (and other challenges for traditional agencies)

Despite the new landscape conditions of no more mass media and consumers doing their own research online, many advertisers are still doing traditional advertising. And many of their agencies are still relying on old business models (agency of record) and being paid for production. Creative ideas are still being given away for free during the pitch process; if the pitch is won the agency then gets to bill against production of assets. But freely available tools or production and abundant lower cost producers are causing clients to question costs.

Other challenges plague traditional agencies. All clients want to “go digital;” but digital is seen to be a “bolt on” capability among big agencies and smaller agencies are perceived to be more digitally savvy. Further, “clients find it hard to know how much digital stuff costs,” says Peter Cowie, Managing Partner of Oyster Catchers, a search consultancy based in London. “Many clients are using in house capability to save costs and retain control.” Cowie continues, “many clients are deeply insecure about digital marketing” partly because of its novelty, but also, practically because of the wide array of new disciplines, including for example, social networking, mobile, gaming, search, analytics, user interface, Flash, AJAX, e-commerce, online ad networks and media buying, etc.

The new digital agency plays the role of a strategic advisor and subject matter expert

So what is the role an agency can and should play in this new landscape? We believe, the role of a strategic advisor to calm clients’ insecurities and ensure a cogent and smooth incorporation of digital. Smaller agencies that grew up in digital may not have the expertise in traditional disciplines nor a global footprint and enough staff to handle large global clients. However, large traditional agencies, with a few key changes to business model, organizational structure, and internal processes will be able to guide clients through the shift towards digital, by changing the marketing mix and ensuring that all channels are integrated, working together, and reinforcing to each other.

These changes may include 1) managing a network of independent specialists (who serve on SWAT teams for client projects) instead of in-house FTEs, to account for the wide variety of new skills and disciplines 2) shifting away from the business model of being paid for production to being paid for managing a network of geographically disperse low-cost providers, and 3) providing thought leadership as subject matter expert in digital disciplines, strategies, and tactics.

On Saturday night, like millions of other people, I turned on TBS to watch the Red Sox/Rays game. I watched the pre-game coverage, then, all of a sudden they started playing Dick Clark’s Bloopers. Once that ended, they jumped in to an episode of the Steve Harvey Show. What the…? Could it be a rain delay? Tampa plays in a dome, so nope. Did something horrific happen at the stadium? Nope. I continued to watch TBS for the next 5 minutes waiting for some sort of update or screen crawl explaining what happened. Nothing. Finally, I pulled out my iPhone and went to search.twitter.com and entered “TBS” in the search field. Right away I saw the hundreds of messages of people trying to figure out what was going on. Within 3 minutes, I had links to boston.com and other websites that explained there was a router failure in Atlanta. Some Twitter users at the game started doing live play by play updates so that we would know what was happening on the field. Another user pointed me to a hidden gem on the MLB site called “four corners” where you can watch a live 4-camera mosaic of the game in a live video feed.

While I was getting all this useful information, I kept checking TBS.com, CNN.com and MSNBC.com to see if there were any updates. There weren’t. I kept watching TBS waiting for them to update their audience. Finally, at 5:19 PM PT - 25 minutes after they dumped out of the game coverage - there was a crawl apologizing for the the technical difficulties.

I looked to every major media outlet I could find to give me some answers to what was going on, and none did. Surely it was newsworthy that Game 6 of the ALCS was blacked out due to technical failure. Apparently not. In fact, it took nearly a half hour for TBS to give their audience any update. Through the use of Twitter, however, we had crowdsourced the problem and found multiple workarounds to get us the game information we all wanted. How many hundreds of millions of dollars do the major news outlets have tied up in broadcast equipment, staff and internet technology? Apparently, all the money in the world still can’t replace good ole’ fashioned human cooperation. THAT is the beauty, and true power, of social media.

If you’re a regular reader of this blog, you know I am no Twitter fanboy. I’ve been hard on them about their shortcomings and their infrastructure meltdowns. Over the last couple of months they’ve really gotten their act together. It’s a good thing too - otherwise how would all of us baseball fans have gotten the answers we needed during a time of TV crisis?

UPDATE: I received this from TBS Tuesday at 12:29 PM PT about the outage:

“On Saturday two circuit breakers in our Atlanta transmission operations tripped causing the master router and its backup - which are necessary to transmit any incoming feed outbound - to shut down.  This impacted our live feed for baseball from being distributed to any of the other networks in the Turner portfolio and caused the delay in our coverage.  Both our primary and backup routers were impacted by this problem.  We apologize to baseball fans for this mishap that caused a delay in our coverage.”

By: Christopher Smith & Scott Parent

SHOW ME THE MONEY! SHOW ME THE MONEY!

Ok.. now that we got that out of the way… yes, affiliate marketing is about making money. We all work to make money to provide for the things that are required in life, and to acquire the things that we desire, whether it is a flat screen TV, a trip to Portugal, or a nice dinner out with friends. Let’s also be clear about another thing: we are just like you. We have seen the same things you’ve seen in this industry. We are not satisfied. It’s time for a change.

Before we lay out our plan for change we need to establish a few things. Many hours have been spent crafting sentences, deleting whole paragraphs (similar to balling up a sheet of paper and tossing across the room) and sitting in a hotel room in Boston recounting the previous few days. You see, we have recently attended the Affiliate Summit East in Boston and everything we thought we knew about this industry was tossed into Boston Harbor like our forefathers did decades before as if the Queen of England wanted to tax the sales of Wu-Yi Tea.

We have been to many conferences in our combined careers. The string of 3-6 letter acronyms synonymously representing technology, entertainment, consumer products, music, big pharma, porn, and yes, an occasional educational event. Our frequent flyer miles pinpoint the destinations - Austin, SF, NYC, LA, Chicago, Vegas, St. Louis, Memphis, Cleveland and of course, Boston. How fitting is it that the place that hosted one of the most notable boat parties in history was also host to our company’s boat party that ignited this manifesto.

We should also point out that we work for a company that is firmly rooted in the industry that is struggling with it’s identity, it’s soul, and for reasons to wake up every day and go out and kick some ass. Who we work for doesn’t really matter, because you can swap out one company name for the next and we believe you won’t even notice a difference. What is important is that we work in marketing. As part of our job we speak with, and listen to, hundreds of people every year about what is wanted, what is missing, what would be nice, and what needs to change in the affiliate marketing industry. As part of our job we tick and tie numbers, we graph out trends and project long tail, groundswell, and shark jumps. We believe that we’ve identified quite possibly the most important thing that needs to be recognized, acknowledged and understood in our industry.

We want credibility for the work we do every day. We want to stop lying to each other and to ourselves. We want to hold our head up high when someone asks us what we do for a living. We want to be able to say “hello”.

In order to understand what is driving this “statement” or “manifesto,” you need to understand a bit more background. When we entered this industry we were told that “all affiliates care about is revenue.” Revenue and T-shirts. From what we’ve been told ad-nauseam, potential customers don’t care what we say as long as they hear something about higher revenue, faster payouts, and exclusive deals. These things should be looked upon not as differentiators, these things should be look upon as commodities, as common and expected as out-of-date magazines in the doctors office, the crying child on an oversold airplane, or a dail-tone when you pick up a phone. This takes us back to the point we want to make.

We all want to belong. And it’s not just about money. It’s about community. It’s about validation. It’s about respect.

At no other conference have we ever had more people remember who we were. We’ve had people in the affilaite marketing industry cross the street to extend their hand and say “hello - I remember you from ad:tech SF last year” or “hey - you bought me a drink at eTail in Chicago and if you are free I would love to return the favor.” We know what you’re thinking right now; they are friendly because they are getting ready to sell us something, ply us for information or switch their draft beer order to a dirty Kettle when we insist on buying drinks. But you are wrong. We are looking for our group. We are acknowledging our own. We are reaching out and saying “hello” because we want to. Because we need to.

Now, please do not confuse this with thinking that we are saying we need friends. We all have plenty of friends. Most of our friends aren’t in this business. But we are connectors. We are deal makers. We are believers in each other or we wouldn’t be doing what we are doing.

HELP ME, HELP YOU.

Here is what we are proposing - If you want to differentiate yourself as a performance marketing network, you need to provide more personal attention to your customers. They can’t be looked at solely as a pipeline to revenue. Ask yourself, when was the last time you looked at the revenue numbers and picked up the phone and called that under-performing affiliate and offered some assistance? When is the last time you spoke to an advertiser and worked with them to make their offer unique and engaging? We spend such a large amount of time asking where the money is, but we spend very little time really trying to differentiate ourselves with relevant content and real innovation. This industry is extremely dependent on both the publisher and the advertiser, yet we rarely put the two together in the same room and the same conversation. Why? Advertisers understand their product or service better than anyone. Publishers know what their audiences want. Why not collaborate and give your campaign the best possible chance for success?

Affiliates have a wealth of knowledge about the industry, based on both their successes and failures. They are, in fact, the best teachers for success. Yet, when was the last time our industry invited them to participate in a conversation about the future of the space, where this industry should be going, and how to provide that change? When was the last time a group of publishers sat down together and discussed how they work without fear of “stealing” each others’ methods? There needs to be a better level of trust, collaboration, and cohesiveness if this industry is going to continue to grow and establish more credibility. We need a better sense of true community - one where we are willing to engage in dialogue that is helpful to each other.

So there you have it. In a nutshell, we believe that the affiliate marketing industry wants to belong, wants community and wants to be a functional group. Did anyone else see what we saw in Boston? Has anyone else felt the need or desire to change this sense of mistrust and dysfunction? Let’s make a pact to make a real effort. We can do it better. We can do it with more integrity, community, and transparency.

So in the words of Jerry Maguire - who’s coming with us?

Like many people, I’ve become frustrated with Twitter’s downtime. The fact that “Fail Whale” has become part of the social media vernacular is proof-positive and certainly not the type of brand awareness that Twitter wants. Despite it’s unreliability, Twitter has become part of our daily life. What else is there?

You can’t swing a dead cat in the blogosphere these days without hitting a post touting the benefits of Friendfeed. Scoble’s been using it for months. Now Calacanis is pushing it almost as much as Mahalo. I decided to see what the fuss was about.

First, the interface is much cleaner than Twitter. The more people you follow on Twitter, the harder it becomes to actually make sense of the information coming through. The noise to signal ratio goes way up. Unless you use a service like Summize, you easily miss content aimed at you. Friendfeed has threaded conversations. The ability to reply and comment in an orderly, easy-to-read way is huge.

Next, the process of following people on Twitter is tedious and time-consuming. Friendfeed integrates with your facebook account so the people you are friends with on facebook automatically become part of your Friendfeed network. Friendfeed also integrates your blog, YouTube, SumbleUpon, and yes, even your Twitter account.

The final feather in Friendfeed’s cap is it’s reliability. By many estimates they have half the users and traffic that Twitter has, and so far, haven’t had any of the scalability problems that have plagued Twitter since their inception. I’m not an IT guy and have no idea what it takes to keep a site like Twitter stable. BUT, I do know that they are sitting on a goldmine. The only thing killing them is their crappy infrastructure. Why on earth wouldn’t you make this your top priority and hire the right tech team to fix this issue once and for all? I know these things don’t happen overnight, but in 3 or 4 months it’s only gotten worse, not better. What’s the deal?

I haven’t quite rang the death knell for Twitter yet. They were the pioneer in the micro-blogging movement and they have a great brand. That will keep their head above water for a short time, but if they don’t resolve their tech issues soon Friendfeed is going to continue to poach their user base. Then, it will be too late and whale will have permanently failed.

What’s one thing that advertisers and customers can agree on? Advertising Spend?

Some control shifts that are happening in this age of customer empowerment are being classified as Vendor Relationship Management (VRM), which is basically a movement to enable customers to have more control in managing their relationships with companies who are attempting to sell them products or services. The idea is very much tied to the data portability/ownership movement and is increasingly being tied to pay-for-performance marketing.  Harvard Law School is organizing initiatives to move VRM forward for a host of reasons including privacy, control and economics.  These are obvious benefits for customers.  Conversely, advertisers are reluctant to give up their control.  But there is one thing that both Customers and Advertisers can agree on – a better way to spend $1 billion of wasted money.  Here are some interesting views of the costs associated with ineffective advertising and the increasing role that pay-for-performance online marketing will play in the new world.

At least $1B of what’s spent on online advertising is completely wasted and is unsustainable. Advertisers are going to eventually wake up and recognize that unless it’s a highly visible placement, banners get you largely nowhere.

Some claim this number is actually as high as $100 billion throughout all channels.
 
The Cost-Per-Action/Pay-for-Performance business model of Affiliate Marketing is likely to continue to transform the ad industry, significantly reducing billions in unnecessary expenses, including the $1B wasted on unseen display ads in Rubel’s analysis.

Perhaps this money could be spent on adding value to a customer’s lives and on truly building win-win relationships. Well, customers and advertisers have long accepted advertiser money for funding enhancements to customer’s lives – so this isn’t a stretch.  The question is, how do we track it to a specific customer reward level in this fragmented media environment?  Just to think a bit out of the box — would there ever be a complete flip, where systems track what advertisers are doing for customers – all from a customer-centric POV?  What would that performance model look like – advertising and loyalty per enhancement?  How could customer-owned data models enable more effective advertising/loyalty programs and an exchange of what customers and companies both want in a relationship? Tracking is a unique feature of online media – but customers hold control over advertisers by limiting how and where they are tracked.  Customers owning their own tracking/data and embracing performance exchanges is potentially much more efficient for both companies and customers.

Just food for thought.  

Check out more on VRM on Harvard’s website.

Google announced today that they are launching the “Google Affiliate Network”. This further integrates and consolidates Performics after Google acquired DoubleClick Performics. Most importantly this is a significant validation of the effectiveness and viability of the affiliate marketing channel.

The integration marks the beginning of the next evolution in affiliate marketing through consolidation and innovation. The industry needs to evolve as performance marketing becomes a very important channel for advertisers and publishers. Additionally, current economic conditions have mandated the need for more effective spending. I think this will create a new round of industry consolidation as it moves from ad networks and exchanges into the affiliate marketing community. Accountability is king right now, and performance marketing offers the best ROI across multiple distribution channels such as email, search, display, mobile and social media.

The most important aspect of this announcement is that it moves the industry away from the “network” and closer to being platform-centric. We firmly believe the next evolution of performance marketing is about open, modular and multi dimensional platforms as we move away from one dimensional networks.

Here is the announcement from Chris Henger, group product manager for the Google Affiliate Network.

We are pleased to introduce Google Affiliate Network . Effective Monday, June 30, 2008, DoubleClick Performics Affiliate will operate as Google Affiliate Network. The integration with Google’s brand is a reflection of efforts to quickly assimilate our business and teams, as well as reinforce Google’s commitment to the Affiliate channel. Together with our new colleagues at Google we are creating new opportunities for monetization, expansion and innovation in Affiliate Marketing.

Within the next couple of weeks you will see some exciting changes to the user interface reflecting the new brand. The platform will continue to be hosted at www.ConnectCommerce.com, but will eventually migrate to a google.com product url.

As noted in earlier communications, DoubleClick Performics’ Search operations are being spun off and sold to a third party. While many advertisers have relationships with both DoubleClick Performics’ Affiliate and Search, there have always been separate account teams and product-specific specialists servicing clients’ search and affiliate programs. These teams remain intact. While the formal separation will occur when the Search business is sold, the businesses are functionally separate today.

We are proud of what we achieved as Performics and this name change signals a new milestone. Google provides world-class resources and enables us to continue to attract the best talent to support our advertisers and publishers. Now as part of Google we have an exciting and unprecedented opportunity to advance our industry. We remain committed to ensuring you receive the quality service you have come to expect from us.

We appreciate your business and look forward to doing great things together.

Sincerely,

Chris Henger

Group Product Manager
Google Affiliate Network

Robert Scoble is talking about how YouTube is going long-form and why it will be more profitable for them and more attractive to advertisers. His argument is that if someone is willing to sit through a 30-minute video online, then they are more engaged and will more likely be customers for advertisers:

Someone who’ll watch a 30-minute video is HIGHLY ENGAGED. They are far more likely to become a customer than someone who just watches a two-minute entertaining video.

Here’s why: long videos are a filter. Only the most passionate and most interested people online will watch such a video. Those who aren’t interested wouldn’t even consider watching a long video.

It’s a nice theory, but I don’t buy it. First, I believe that a large chunk of people that consume online video do so at work. That environment allows you to watch a 2-5 minute video and then get back to what you are doing. It also allows for more interruptions, while still being able to finish the video. How many times are you going to tolerate being interrupted at work by co-workers, phone calls, or email before you throw in the towel on a 30-minute video?

People just don’t watch long-form video on their computer. My own video work has fallen victim to this as well. I’ve done many videos that were 15 minutes long and after watching them with colleagues or with an objective eye, it was clear that people get antsy after 7 or 8 minutes. It made me cut deeper during the editing process and really get to the meat of the content. My productions are better for it.

Don’t get me wrong, I’m not saying that it is impossible for a long-form video to find an audience online. After all, Scoble does just fine with viewership of his pieces - although it doesn’t hurt to have his brand name and the weight of Fast Company behind him. Additionally, sites like Hulu that archive complete TV shows and movies will find an audience because they are serving up content that already has a traditional media audience of millions. It’s hard enough for unknown prosumer / UGC / pro content to find an audience with short, well-paced pieces. I believe that becomes an even bigger challenge when the content starts getting into the 30-minute range.

The other side effect I see of YouTube allowing video longer than 10 minutes is increased piracy. They can barely police their network efficiently now with a 10-minute limit. This opens up their network to people adding complete TV shows or movies. That means their copyright department is going to be working lots of overtime.

Advertisers want engagement. We know that. To me, that is better measured by how many people comment on a video or link to it, rather than making the assumption that committing to watching a longer video makes them a better potential customer.

Who has business partners that they can’t contact and build relationships with? How many people get financial statements with the understanding that they are only 90% accurate? How many marketers want to build campaigns in one channel and not be able to leverage them in another? How many companies want to be forced into paying fees for services that ineffectively bridge gaps that are actually created by the service provider? How many companies want to be forced into silos and high switching costs as the result of a vendor’s strategy? Who wants redundancy and inefficiency due to a lack of standards?

Well, at this point – thousands of advertisers and publishers in the current affiliate marketing models. Or, at least, they are made to accept these compromises.

Why? – I think there are basically two reasons:

1. Affiliate marketing is relatively narrow and under served. It has not gotten the attention that other online channels have had in terms of standardization, technology advancement and channel integration.

2. Vendors and networks that control the market have not needed to evolve because of their clout. They’ve used this clout to create closed networks, proprietary standards and high switching costs. Some changes toward what clients are asking for now, could result in loss of control and revenue.

Are there better ways? – of course! Many networks, vendors and clients are talking about the changes that need to be made, but the industry has still not truly moved toward more accurate tracking, open communication, universal standards, more sophisticated ‘action’ metrics or integrated channel/partner models.

I think that in any industry, customer compromises flag areas from which the next generation of innovators emerge. And that’s where we need to focus as an industry ready for that next evolutionary stage.