Show Me The Metrics! (What, is it 1996 already?)

IAB: Better metrics would increase online ad revenue

A survey co-sponsored by the Audit Bureau of Circulation and NSON Opinion Research confirms that advertisers would spend more money online if only the metrics came from an independent third party auditor. My self-interest detector is going off, but as an advertiser, I can vouch for the validity of this.

I think this is a good news/bad news situation for online publishers. Better metrics by third parties will lead to more spend, so the investment will for the most part be well worth it. The bad news part is two-fold: (1) Third party metrics and auditing cost a boatload of money, and (2) not a few publishers would go belly up as their sham self-reported visitor numbers are exposed for all to see.

Walled Garden Down, Ad Revenue Up

AOL has profited handsomely by moving from a subscription-based revenue model to an ad-based revenue model, and the proof is in this Mediapost article (free subscription required).

I don't think anyone is too surprised that this might occur, but the article might lead one to believe that all the growth comes from AOL.com, specifically. I was questioning that, and the article is silent on it, leading me to wonder: how much of this revenue growth comes from network cash cow Advertising.com?

One amusing part of the article is toward the top where they say:

"The Time Warner unit's decision last year to replace its ailing subscription model with a free service supported by advertising resulted in a 454% surge in billings from 2005 to 2006, compared to a 142% increase in portals overall."

Gee, this makes 142% sound so paltry. But seriously, it is good to be a portal, as Jeff Lanctot at Avenue A confirms in this ClickZ article.

And On The Flip Side of the Online Video Spectrum:

NBC Poised To Sell Digital Downloads. (Free registration required.)

Here's the latest attempt by Big Network TV to generate revenue directly from consumers for their standard TV offering. They'll be selling flotsam like five-minute video clips of SNL for a buck ninety-nine, although you'll also be able to buy sketchy-quality videos of shows like "The Office" as well.

I predict this will not work in the long-term -- meaning sustain a profitable SKU for anything longer than a year -- for the opposite of many of the reasons I elucidated in my preceding post.

"How Radio Is Becoming RadiADo"

The brilliant Al Ries, author of the marketing classic "22 Immutable Laws of Marketing", validates in this Ad Age article my main beef with terrestrial radio that I mentioned in my post here.

The End of Web Radio As We Know It?

This story is so big that even the mainstream media sources are talking about it, but I will link to the first source in which I saw this story online, this Business week article.

The technical issue here is payment on a per listener/per song basis versus the traditional percent of revenue basis. Since web radio generates hardly any revenue to start with, there's no way they can withstand hefty fee increase the Copyright Royalty Board is demanding through their mandating the former, to take effect within the next two months.

The real issue, as I see it, is the music industry regaining some measure of control over their product, even if it's only symbolic. They're mightily pissed at the MP3/piracy phenomenon, which has reduced their sales at the local Tower Records (that is, if it's still open) and through Amazon.com. Heck, the unchecked growth of the MP3 single-handed even killed off a burgeoning online sales channel characterized by once-known entities CDNow and CDUniverse, which can now be only found strewn among ancient Mayan ruins somewhere in Mexico, I think. (Actually, I see a site called CDUniverse is actually still selling CDs online. Do you buy your CDs there? No? See what I mean?)

So, killing off several thousands basement web radio stations that weren't generating any money for them anyway is a cheap way to make a point to music distributors everywhere: don't eff-you-see-kay with the RIAA.

I doubt anyone is quaking in their boots as a result.

Goodbye News, Hello "USASpace"

OK, so it's not as facile as all that, but it's interesting how USAToday online has relaunched itself as more or less a social networking site, where you're invited to interact with the news stories, rather than be the passive audience for the news. You can leave comments and recommendations on individual stories, and it also is replete with video and blogs.

I'm not sure whether this is a bad thing. I'm used to my news sources being authoritative, and this has the feel of a blog, which I do not deem as being authoritative. After all, if just anyone can go in and add content, how can you vouch for the quality of it?

One thing I don't like, for sure -- it's laid out very poorly. The various areas don't appear properly sectioned off, and it's hard for the eye to track through it very efficiently.

Banner Advertising 2.0

This is ultimately a CNN Money story about how display advertising is evolving into a algorithmically-oriented exercise in exactitude in general, but the most compelling part to me is the first part that discusses how agencies are using such algorithms to make creative adjustments to banners on the fly, meaning elements like colors and copy. The article doesn't talk about the format of the banners that can be changed in this manner -- I assume it's a rich Flash-based format -- but it sure is a lot different from the days of begging and negotiating for creative and IT resources to set aside a few hours here and there and make simple changes to your banners for testing purposes.

Many senior management types believe that online marketing success boils down to negotiating ever lower rates for the media purchased as the path to lower CPAs and higher revenue margins. But until you get to a certain spend level -- at least two commas of spend per month -- online media is generally a transparent marketplace where you know whether you negotiated a rate that's too low -- in such case, your ads simply won't run. Yahoo might write Class 2 IOs for 10¢ CPMs -- the inventory simply won't clear unless no other advertiser is purchasing the allotted salable inventory for higher rates.

One thing that leaped out at me in this story: Yahoo digests about 12 terabytes of data from user interaction every day. That adds up to almost 4.4 petabytes a year.

Did you even know what a petabyte was before today? Neither did I.

XM = More AM and FM? Siriusly?

This Adweek article provides for terrestrial broadcasts -- those with antennas here on earth -- hope for the future as satellite radio gains more of a foothold in listening share: those who listen to satellite radio actually spend more time listening to AM/FM and Internet radio than non-satellite customers. In fact, the claim is that these people listen to more AM/FM (14 hours) than satellite (10 hours and 45 minutes), with Internet not far behind (8 hours and 15 minutes).

Huh? Really? I happen to have both Sirius and XM in the car (both units were free to me, and I don't mind paying the $25/month), and i gotta tell ya: I rarely switch the unit over to AM or FM. If I had to put a frequency on it, I'd say I listen to satellite radio 100% of my car rides, AM maybe 5% of car rides, and FM less than that. As a listener, I have no interest in terrestrial because it seems that every time I flip it to either band, there's a commercial on. Plus, the sound of music on Sirius is so good, and the connection so stable, that there's no quality advantage to FM at all. (My XM XT Roady unit sucks for music -- I only listen to comedy, baseball games and old-time radio on it.)

Honestly, I would like to meet one of those people with satellite radio who listen more to AM/FM instead. I won't to know what the thought process is there. Seriously -- I can't imagine.

Like Viacom, CBS Rebuffs Google/You Tube

According to this Mediapost story (free registration required), the negotiations between Google and CBS to extend the agreement to show CBS content on YouTube have ended. This happens not long after Viacom had broken off talks regarding a similar agreement.

Boy, wouldn't I like to be a fly on the wall of the corner offices at the media companies as they talk about YouTube. How much of the problem in reaching an agreement stems from CBS's and Viacom's being threatened by a new media upstart? After all, these companies have been around for decades (Viacom: 1971; CBS: 1927), and YouTube launched -- launched, mind you -- in February of 2005, a scant two years ago. If I were an old media company regarding such upstarts, both in terms of the threat they pose and in terms of the audacity of their very existence -- my nose might be a little out of joint, too.

Interesting comment by Larry Gerbrandt, general manager of Nielsen Analytics: "The problem with You Tube is there is no revenue yet ... How is Google going to see a return on the $1.65 billion they paid? They have yet to create a model. On the other hand, once they start to generate significant amounts of revenue, those copyright issues become more significant."

This all prompts a recall of Mark Cuban's famous email regarding the Google acquisition of YouTube in the first place, in which he wrote that anyone who would buy YouTube is a "moron". The delicious irony here, of course, is that Cuban himself cashed out on Broadcast.com to the tune of $5 billion. To see just how much Yahoo is benefiting from that deal, just type the URL www.broadcast.com into your browser and see where it takes you.

Young People Believe

Here's something that media salesfolk should be mighty interested in. The Audit Bureau of Circulations have just released a news item, the main point of which is that as spending in digital media increases, advertisers will demand more accountability, in which they don't currently have much confidence (fewer than less than half of ad-agency respondents and only one-third of advertiser respondents being so).

But here's a data point that jumped out and grabbed me:

"Younger ad professionals appear to be less skeptical: 75 percent of respondents under age 25 said they trust the metrics provided by online publishers, compared to 22 percent of those in the 55-64 age category."

That's a huge disparity, and it tells me less about how confident different age groups are in Internet advertising metrics than it does about the general level of skepticism among age groups.

So you salespeople can probably use this kind of insight to tailor your presentations based on the age of your audience.

Yahoo's Rich Media SNAFU

According to this story (registration required to view), PointRoll has written to its clients stating that Yahoo is going to make an effort to enforce their policy of charging fees for third-party rich media placements.

Yahoo have apparently pulled the PointRoll rich media ads of some clients and replaced them with standard ads. It appears the real reason behind the move is to try to migrate advertisers to use of rich media solutions from AdInterax, a company Yahoo acquired in the fall, and for use of which Yahoo would waive the fees (since AdInterax is not a third-party to Yahoo). PointRoll, who claim to have 70% of the rich media market, is a direct competitor of AdInterax.

If I'm a Yahoo media rep, I can't be too happy with having to field numerous phone calls and emails this morning from media-buying clients asking for makegoods on what's been switched out, and a bonus to salve hurt feelings. Yahoo might be an 800-pound gorilla, but it's a huge jungle out there, and Yahoo is already seen as a stumbling giant anyway. There are too many other online media vehicles out there for significant advertisers to cave to Yahoo on this.

On the other hand, there's no word in the story on whom the affected clients were, and that is a very large question. I have trouble envisioning Yahoo putting their foot down with their biggest advertisers (such as automotives, financials and the biggest direct advertisers) or their most coveted advertisers (such as CPGs) very hard. Would Yahoo risk ticking off an eight-figure spender just to try to strong-arm them into migrating their rich media technology to AdInterax? I doubt that.

I don't see Yahoo's strategy here succeeding for very long. Online media is a fluid commodity that is highly subject to the vagaries of supply and demand. If Yahoo loses business over this, the strategy will go bye-bye.