Venture Beat has an interesting rundown on the “state of the ad industry” from Silicon Alley technologists and Madison Avenue advertising executives meeting at the AlwaysOn OnMedia NYC conference. There’s plenty to discuss, but one thing of note stood out:
Content vs community is emerging as a major debate:
In the TV world, advertisers attach ads (like beer) to pieces of content (TV shows) that are associated with specific audiences (men, ages 18 to 25). The problem is, online advertisers, including many tech start-ups, are trying to attach ads to content in the same way. But the advertisers don’t want to get close to user-generated content, like party pictures of people drinking beer on Facebook.
But, online ads should follow users and communities, since users are the ones to decide what content they want to put where, says David Carlick, Managing Director at Vantage Point Venture Partners.
“[I] say no, now you [the advertiser] are sponsoring the consumer—not the content online, but what they want to do online. If they want to go on MySpace and look at half-naked drunk photos, who are you to say that’s not good for my brand? You need to go where the people are and sponsor what they do, and not attach yourself to the 5% of content that looks like TV.”
It’s a minority opinion in the ad industry, but as Jeff Jarvis notes here, a potent one. Digital content is less about free-standing web sites these days, as users share videos, blog posts, and widgets with each other across sites, and as big media (like CBS) starts to push their content out to multiple distribution partners. At the same time, digital content is starting to flow off the PC and onto mobile and ipTV platforms.
This dual flow is changing how we interact with digital content and ads. It’s starting to push a proliferation of ad formats (beyond pre-roll, overlay, interstitial, banner, etc) and ad targeting paradigms (beyond contextual, demographic, social, behavioral).
This is the fundamental question facing the ad industry and publishers.
Yes, I’m biased: I’m now a publisher/producer of video content.
But, I’ve also worked with Fortune 500 advertisers and global ad agencies.
I think the notion that advertisers will chase communities (alone) is sound in theory but fails in practice. The reason is simple: only the early adopter keener crowd goes out there and creates or appropriates media. Most of the world’s consumers don’t. They consume content in a fairly laid-back manner. Yes, younger generations might tend to be more proactive in UGC and content-sharing, but guess why that is? They have nothing better to do! As they enter the workforce and begin to understand the concept and value of time, they won’t be as willing to do all of these wonderful things that prognosticators like David Carlick and Jeff Jarvis pontificate. Both men are brilliant, don’t get me wrong, but sometimes when we try to be thought leaders, our thoughts can tend to get too ahead of the curve. Carlick, of note, isn’t some technologist who is dipping his toes in content and media, he’s helped launch media ventures such as iVillage and Netscape… but as a Venture Capitalist, he falls in the category of stakeholders who has probably invested in a good number of solutions that marketers don’t want or won’t need.
Media, publishing, marketers and advertising has remained significantly consistent for centuries. The details change, for sure, but the big idea remains the same:
Step 1: Content draws Audience
Step 2: Audience creates Demographics, as a virtue of the content
Step 3: Marketers spend money to advertise their brands.
Why is that? Because most normal people are not passionate about about brands. They are passionate about subjects, it is such topics that create content. Readers, listeners, viewers, or browsers - some but not all of whom are consumers - put up with advertising message or PR pitches. We don’t actually go out there and seek these out.
Brands come to life when they’re juxtaposed to content.
This is why the “community” camp falls flat.
Now, some would argue that user-generated content will prevail and be sufficient to please marketers, to that I say “I’ll believe it when I see it.” Thus far, since the advent and explosion of user-generated content, marketers have distanced themselves from UGC. UGC, by the way, is in itself is a misnomer, if anything, it’s user-appropriated content because 80% of what passes as UGC is pirated content; the remaining 20% might indeed be user-generated but it is of poor quality.
YouTube sold a whopping $15M in 2006 revenues despite online US video advertising having been roughly $450M. $15M for the whole year for the market leader is pretty puny.
As I said, I am biased, but my bias comes after my belief: I maintain that yes, marketers are looking for ways to reach audiences on those massive video social networks and portals, but currently, the money is being spent on the latter (video portals) and not the former. The way for social networks to win some of the pie is by partnering with content producers. This is in fact what WatchMojo.com has done, does and will continue to do. Obviously, we’re not alone. But unlike many TV and Theatrical Content Owners who are worried that they are trading “offline dollars for online pennies” to us it’s all incremental. Credit that penny/dollar quote to NBC CEO Jeff Zucker.
To quote a VC, we are all for shrinking markets and make no doubt about it, there is a risk that over time - adjusting for population growth and what not - marketing as a whole will shrink because web advertising brings a degree of transparency and efficiency not hitherto found in any form of advertising.
That is something that should worry ad agencies and publishers but please advertisers… The bottom line is that media producers need to find more and better ways to become efficient because only the fittest will survive.
Why this is even more folly is because even Google - the world’s most profitable and successful ad machine - could care less about community. They focus 100% on content. Mind you, they don’t own the content, but the conduit is a keyword, which is the simplest form of content. Think of it as atomic content (and traditional content as molecular).
But to answer the question will favor content or community, I think the answer is both, either one alone won’t prevail, but if I had to pick one, I’d say it’s content. Sumner Redstone is right: content is king. There will be an ever-increasing number of distribution points, and that in turn makes ownership of high-quality content worth exponentially more.
So for the technorati who think they can bypass content and go straight to the communities, they’re dreaming.
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January 31st, 2008 at 11:43 pm
So, the content is all the good inventory, and the community is all the good targeting info. hmm. I wonder how that gets worked out.
February 2nd, 2008 at 1:54 pm
hey Scott, notice I said both are important… while targeting in such a granular & detailed way is a welcome variable in the marketing mix, content has always been the glue that keeps advertising together.
I don’t see how that will change, but as I said, my view is biased.
February 3rd, 2008 at 1:44 pm
I was being a little tongue-in-cheek. Somebody, hopefully Lookery, will deliver privacy-friendly social-net targeting data to the great content, including you. That way, we can have the best of both and go make a lot of money together.
Here’s a tidbit that I put up just a minute ago and n nobody’s noticed.
http://www.techcrunch.com/2008/01/31/how-much-is-a-facebook-ad-worth-lookery-guarantees-drum-roll-125-cent-cpms/#comment-1966346