Reach vs target marketing: how to reduce the waste

There are 2 somewhat opposing forces that advertisers are always trying to reconcile:

  1. broader reach
  2. higher precision

Search marketing solves the former. And niche publishing solves the latter. It seems to me that there are ways everyone could benefit from combining those systems in some way.

What B2B trade publishing discovered is that more valuable customers can actually be found and identified with the right kind of carrot. The methodology is very simple. If the value of the content on offer is higher than the cost of obtaining it, then people will give the publisher marketable data about themselves.

Globalization and Innovation by John Hagel and John Seely BrownIt hit me after giving my email and then downloading John Hagel’s and John Seely Brown’s PDF’s that I should be able to setup something like this through a simple self-serve tool if I wanted the same functionality on my site. There are a couple of longer papers I’ve been considering writing, and I’ve started playing with screencasts that might be particularly valuable to certain people.

If my paper or screencast had specific advertiser appeal, I should be able to triage the lead collection and bidding for temporary access to those people who agreed to be contacted in exchange for the content.

There are some smaller players who focus on certain kinds of lead generation activities. Some focus on webcasts such as Accela and On24, others on PDF’s such as ITBusinessEdge and IT.com.

Online tech publisher TechTarget purchased BitPipe in late 2004 for $40M, a successful whitepaper-based lead gen provider, so they could own the whole service chain from promotion to lead collection. This is very smart as they collect ad revenue all the way along the marketers path.

The next step after that, of course, is to connect directly into the sales channel at the advertiser’s side. That way you could watch the whole chain. You could see which promotions converted to leads and then translated into sales.

KnowledgeStorm shares this vision and has made some progress toward that end. They offer a lead generation system in tech B2B publishing which includes several methods for following up with the leads they pass to marketers. For example, they actually phone the lead and ask whether or not they purchased anything. (It turns out that in many cases the marketer doesn’t even contact the lead.)

There’s a lot of work going into algorhythmic improvements to ad targeting and behavioral approaches to identifying the right customer for a particular advertiser. These are certainly important, but there’s a much larger opportunity, in my opinion, in a distributed lead capture system. As always, the first to market in that kind of ecosystem will be difficult to unseat.

Regardless of who gets there first, that kind of efficiency would potentially create a win-win-win across the board. The marketer could spend less to get more, better customers. The publisher would improve yields on their already limited inventory. And people would get more relevant promotions for the things that interest them…well, we can dream, at least.

“Loosley Coupled” does not mean “Easy to build”

The concept of “Loose Coupling” is great on so many levels. I’ve used it to describe different types of things in ideal worlds, but I’m starting to see that there is a lot of gray area there that can be maddening in real worlds.

Here is Wikipedia’s current definition of it:

“Loose coupling describes a resilient relationship between two or more computer systems that are exchanging data. Each end of the transaction make their requirements explicit and make few assumptions about the other end. Loosely Coupled systems are considered useful when either the source or the destination computer systems are subject to frequent changes.”

I’m working with a small team on a really fun web-based product that weaves lots of stuff together. The core app we’re working on has a very powerful layer of intelligence built into it, but it depends on a stack of data sources and rendering environments that are all partially isolated and not necessarily production-ready.

This means that we can’t really test the product end-to-end. It means there are several layers of troubleshooting that get added to each bug no matter how small. It means we have to fake a service layer here and there to emulate behavior.

I’m realizing now that “loosely coupled” means you have to think a lot harder about each move instead of just cranking out everything from scratch the way you want it to work.

Ultimately, the power of our platform services including things like scalability and user data management will accelerate this product’s ability to reach a more profound state of being than it could without loose couplings. But the cost of glueing all the things together in parallel means that we spend hours in meetings and constantly reshuffle our attack plan.

It feels like running through mid-court of a dodgeball game.

IDG’s private-label CPC ad system

Most publishers are either looking to capitalize on the CPC text link advertisement bidding concept or they already have a plan for implementing something in this space.

IDG found their private-label CPC bidding tool solution with Quigo, a competitor of smaller ad services companies such as IndustryBrains and Kaboodle. The system they created together is called “TechWords“. It’s a contextually-placed text link ad unit that runs across IDG’s portfolio of tech sites (or most of it, anyhow) in which advertisers can bid for placement.

This is exactly the right way to reinforce your brand as a publisher rather than water down your marketing potential through a larger mostly blind ad network. As Joe Wikert put it:

“Why should Google have all the fun? … Kudos to IDG for proving that disintermediation is alive and well! I’m surprised we’re not seeing more and more of this popping up, at least on the sites that are part of a larger network within one parent organization.”

If I sell complex IT equipment such as enterprise database systems, I’m going to have better luck reaching potential customers and converting them to sales by advertising through a brand that talks to people about databases than I will by blasting links out into the wild hoping they stick. And I should be willing to pay more for that opportunity.

…Or at least that’s what IDG is counting on.

Of course, IDG already uses IndustrBrains for basically the same thing which has proven to work pretty well. The problem is that IndustryBrains requires some manpower to build and retain the advertiser base. This has a cost which gets passed back to the publisher. Publishers usually have a sales force in place that would rather take those commissions than share that revenue with a service provider.

What IDG is about to learn, I think, is that you want your sales force spending time developing relationships and coming up with higher value opportunities with the heavy-hitting marketers rather than dialing for dollars with smaller CPC marketers. Though I wouldn’t be surprised if they plan to hire a classifieds sales team to operate this…and then you have the overhead costs of paying, training and managing people. There goes your margin.
Also, this is yet another ad unit on an already densely covered page. You’re not going to increase your revenue cap by meaningful numbers by squeezing a few more text links on the page.

There’s a lot of future potential when you have a closer relationship with your advertisers like this, regardless of the ad platform. I’m hoping they start working on ways to leverage TechWords into something that will support the next generation media models such as mashups and other syndication models. If nothing else, testing out the concept is really important at this stage in the game. I think we’ll see more and more media companies doing this kind of thing soon.

Related posts:

Advertising irrelevance

Lots of laughs this week over the advertisements for hemorrhoid remedies on my site. I don’t know what that says about my posts.

One person asked what that said about my audience. The poor click-throughs suggest people who actually visit this web site must have comfortable chairs.

hemorrhoids.gif

MySpace reinvented email

Somebody recently referred to MySpace as “Outlook for teenagers”. Wow, what an interesting way to visualize the paradigm shift.

I had trouble grasping why it was that kids were referring to their MySpace experience using phrases that imply addiction, but this expression broke down that mental block for me. We can all relate to moments when you’re pounding the “Check Mail” button in your email app.

Of course, you can’t reduce MySpace to such a simple generalization without missing some other key trends that serve it well.

There’s something fascinating about watching people react to what you post online. I do the same thing after I post something in my blog that I hope people read. I start checking technorati and watching my referrer logs more closely. People who add Wikipedia entries closely monitor the evolution of those pages as others contribute to it. People who post questions on Answers keep checking their question to see who has responded.

I would bet that people are often more interested in who responds than what the reponse is.

Feedback is validation, and there’s no age group that cares more about validation than teenagers. It can be a paralyzing experience for the less confident, but the Internet creates a nice layer of distance and control that provides a more comfortable home and even a canvas for anyone who can express himself or herself.

Mike Butcher drew an interesting picture of the portal landscape in his Netimperitive column, “Goodbye and good luck”. He asked how Google, Yahoo! and Microsoft were going to address the need for people to control their online identities:

“In this new world where there is no true ‘one-stop-shop’ for everything; where people subscribe to feeds from a myriad of places; where sites themselves are turning into mashups of other sites and none of us goes to one place any more (OK, so we never did, but this is now a fundamental and unbreakable trend); what do portals DO?…

The fight will now become one of identity as portals which used to control your ID because you were literally ‘walled in’ now try to win you over with identity tools locked into their ecosystem.”

MySpace caught the big guys asleep at the wheel, though they run the same risk of controlling identity against people’s wills.

Another reason MySpace works is because no other service before it was enabling teenagers to build a fully customizable identity and to use that identity to interact with other teenagers. There are lots of platforms for socializing online, but none prior to MySpace gave kids the ability to build an evolving reflection of themselves. Avatars are neat, but there’s so much more to expressing teenage drama than altering your shirt.

As Jeremy Zawodny noted, the theoretical WebOS concept already exists. It’s on MySpace where you can install apps from other online services in the form of badges, buttons and visual doodads that spice up your site:

I recently came across something that completely changed the way I think about the idea of a Web OS. Over on the Flickr Ideas forum, I came across a posting titled Flickr is NOT MySpace compatible… please make a javascript free “Badge”.

Take a minute and think about the language that Daniel used there. It the exact same sort of complaint you might have heard 5 or 10 years ago about a desktop application. ‘Is CoolNewGame compatible with my Mac?'”

I thought the blogging craze would have enabled this world for teenagers, and from what I know about LiveJournal, this is exactly what was happening. But a handful of common user interface elements and an email platform pulled all the right pieces together to create the MySpace explosion in a way that blogging just wasn’t serving.

The opportunity to disintermediate MySpace certainly exists if someone can figure out how to couple the independence of a domain owned and controlled by a user along with the communication platform that unifies the way people can give feedback and validation to eachother that’s integrated into the experience.

Comments and trackbacks aren’t enough, obviously. And too much control will confuse the masses.

It’s a fine balance that MySpace nailed, but it’s also a precarious position. I imagine we’ll see MySpace cementing their market share by locking down their brand value before competitors figure out how to lure away their users with better offerings. They obviously need to initiate that effort with some better PR.

The problem with being popular

Several people have complained about the quality of the content that comes out of a site like Digg, a site that captures popular consensus to reflect back to its participants what matters at any given moment.

I actually agree with these people but for entirely different reasons than most of them. There are few things in this world more important than giving people platforms for speaking their mind and being heard, and there’s something valuable to take away from every individual. But ranking voices based on popularity ultimately creates the opposite of empowerment.

Competition is a fantastic incentive to evolve. I’d argue most of the critical commentary of citizen journalism is positioning by the people who have more to lose from the success of commons-based journalism than they care to admit. The argument is largely protectionist fear of a populist attack on mainstream media. They aren’t competitive, and they know it.

The real problem with popularity-driven models is not the existence of reporting that hasn’t been vetted or the increasingly fuzzy lines between perspective and truth. The real problem with popularity-driven models is that they reduce both the breadth and depth of the sources, topics and viewpoints being expressed across a community.

Popularity-driven models water down the value in those hard-to-find nuggets. They normalize coverage and create new power structures that interesting things have to fight through.

Slashdot requires that a participant build a level of karma high enough to breakthrough the controlling moderator hierarchy. Digg removes many of the layers that close Slashdot from wider participation, but it also creates its own power structure as the core voters develop an unwritten etiquette for reducing the noise.

Our current advertising models reinforce the popularity-driven systems and reward the sites that can win the most traffic over those that may actually provide more meaning. The more popular your articles are, the more ad inventory you create. The more inventory you create, the more revenue you can capture.

Rather than broadcast what a few people think matters, the Internet should be used to help people help other people discover and find what matters. Personalized recommendation engines and social networks have fantastic potential because they are learning how to surface relevance in ways that have real meaning without the filter of the popularity overlords or gameable search algorhythms.

And advertisers should begin rewarding sites that capture the right customers at the right time with higher rates. They should value media based on the how well the vehicle initiates movement of the right kind of customer at the right point down the marketing funnel rather than by the volume of touch points.

Good Night and Good Luck,” the recent film about Edward R. Murrow’s battle with Senator McCarthy challenged the television industry to rethink the value of the medium to society. Murrow’s speech in the beginning of the film is a harsh criticism of broadcast-style media:

“We have a built in allergy to unpleasant or disturbing information. Our mass media reflect this. But unless we get up off our fat surplusses and recognize that television in the main is being used to distract, delude, amuse and insulate us, then television and those who finance it, those who look at it, and those who work at it may see a totally different picture too late.”

He then goes on to fault popular opinion for allowing McCarthy to frighten everyone with his tactics:

“[Senator McCarthy] didn’t create this situation of fear. He merely exploited it and rather successfully. Casius was right. ‘The fault, dear Brutus, is not in our stars but in ourselves.'”

Finally, Murrow has to confront the station management and their desire to maintain strong sponsor relationships. His boss apologetically demotes Murrow:

“‘$64,000 Quesion’ brings in over $80,000 in sponsors and it costs one third of what you do. I’ve got Tuesday night programming that’s number one. People want to enjoiy themselves. They don’t want a civics lesson….I never censored a single program. I never said ‘no’ to you. Never.”

Murrow replies:

“I would argue that never saying ‘no’ is not the same as not censoring.”

I’m not saying popularity isn’t important. What other people think matters profoundly. It’s the root of being a social creature. And anyone who creates would be lying to you if they claimed they weren’t hopeful that what they create becomes popular.

The method for finding and consuming what’s popular, however, shouldn’t be controlled by dynamics that value what’s entertaining at the expense of what matters.

The SF Chronicle uses blogs and ancient history to improve their print product

The San Francisco Chronicle has been doing some really innovative things recently. They’ve begun printing blog entries from their web site in the daily print edition. It’s good reading that rounds out the wire stories nicely. Every print publisher should be doing this.

They’ve also been printing the front page of the paper as it was 100 years ago in memory of the damage done by the Great Quake. Though many references are meaningless, you can imagine life in 1906, which, in some cases, doesn’t sound all that different to the world today. Here’s a particularly gruesome tidbit from 100 years ago:

COLORADO SPRINGS, April 24. – Passing through this city to-day on a Denver and Rio Grande train, bound for Chicago, where her parents reside, was a San Francisco fugitive who said her name was Miss Logan. She wore a bandage on her left hand and said that while she lay unconcious upon the floor of the lobby of the St. Francisco Hotel in San Frncisco after the earthquake last Wednesday morning the third finger of her left hand was cut off and she was robbed of rings that she wore there.

Copyright challenges when users are creating your content

The ongoing joke about the Internet is that the new successful business models, technology advances and creative breakthroughs always come from two market sectors: games and porn.  The most important breakthrough I’ve seen in a long time cuts across all axes.  Second Life is an online environment where everything is created by the participants in what seems to be a world with never ending scope. (BusinessWeek’s cover story this week is all about this new market.) 

BusinessWeek covers virtual worldsThe joke always has the same conflicts, copyright infringement and under-age usage among the biggest problems.  Second Life has a really interesting way of handling the ongoing copyright problem which seems completely unmanageable given how much freedom participants have to contribute whatever they want to the world.

As people are creating things like clothing and posters and songs in this virtual world, they occasionally use copyrighted material.  Linden promises to remove what they can, but the control of the environment is clearly in the hands of the users who therefore are responsible for adhering to the law.  Copyright owners must chase down infringing uses and request that Linden remove them, which they are ready and willing to do.  But the participants are at risk for legal action, not the game operator.

YouTube has the same policy.  It makes a lot of sense.  And, perhaps most importantly, it’s scaleable.  Systems that are dependent on approval throughput can only scale to the size of the approval pipe.  That pipe gets really expensive really quickly even on a small scale.

The key to Second Life’s success in managing copyrighted material is distributing responsibility according to the rules of ownership, including the ownership of a person’s actions.  Very smart.

Switching to a new host and blog platform

I’m moving from Blogharbor to WordPress to publish this blog.  I’ve been procrastinating this job for months, but it’s time for a little Spring cleaning.  Apologies if the feed gets messed up or if things look weird.