Social Networking Goes Niche

As titled in this Business Week article.

The gist is that more people are getting turned off at the overt openness of MySpace, where basically anyone can reach out to you (except if you're a teen, in which case you can put up a wall), so social networks that allow you to control exposure of your profiles to others are gaining traction. The article names Vox as an example of just such a niche network.

I see MySpace as filling a fundamentally different need than Vox. MySpace is all about widening your circle. It's a place where kids can connect with other kids from far-flung places, to help mitigate the isolation they feel as their parents place ever more restrictions on their mobility in response to our increasing media and news culture built on fear of strangers and of The Other. Young people, therefore, would like as many contacts as possible. It also makes them feel popular if they have 100,000 "friends" in their network.

People like the protagonist in this story, who fled MySpace for Vox, want to use social networks in a different way: to strengthen ties with the contacts they already have, and to broker, and have brokered, contacts with only those new people with whom they share common interests or purpose.

But there's another thing not being addressed by this article: is another reason people are fleeing MySpace that there's just too much advertising and storefonts being put up there? I can easily envision such backlash against this marketing tactic causing the sun to set on it in the next year or two. And if that happens, what would justify continued investment in broad network platforms like MySpace?

Online Leads To Offline -- And Vice Versa

I've seen numerous articles suggesting that online research leads to offline purchases, but this is the first article I've seen suggesting that exposure to offline advertising leads to online searches.

This makes perfect sense -- I can easily recall instances where I've done the same thing -- but this is the first I have seen this idea articulated in trade press.

This is based on research by the Retail Advertising and Marketing Association, representing a category that currently does most of their advertising offline.

Another Ad Network Gets Busted

This time it's TMP (TrafficMarketPlace), as a user alleges that Travelocity and Cingular are still serving ads through malware. As I mentioned in this post, that's how it happens to major advertisers, and surely they know by now that it happens this way.

I pulled my company's advertising out of TMP because we suspected some funny business from one of their affiliates. We experienced a sudden spike in impressions, no increase in clicks, CPAs going from about $5 to hundreds of dollars in a single day. We suspected impressions fraud. We went round and round with TMP to try to get a resolution in place, then all of a sudden, my rep left, her spot was not backfilled, and the VP of Sales became suddenly unavailable. We ended up simply not paying for it, and ultimately not working with them anymore.

And now this.

Viacom Sues Google -- Now What?

Everyone knows the what, and few people are surprised, although the amount does make one giggle in shock -- but what does this mean?

The core legal issue here is the "Safe Harbor" provision of the Digital Rights Management Act, which indemnifies online service providers when their users infringe copyright law by storing protected materials on their servers. The idea is that there's not much a provider can do to stop the individual, so only the individual is liable, not the provider.

What Viacom maintains is that, in this case, YouTube is profiting from the infringing materials, so Safe Harbor doesn't apply to them. Viacom has demanded that YouTube remove some 100,000 pieces of copyrighted materials from their servers, but YouTube is just not moving fast enough in bringing them down, nor are they proactively preventing users from uploading new material.

YouTube responds that they do not allow advertising on user video pages, in order to comply with the spirit of Safe Harbor (that is, not profit directly), although one could easily maintain that existentially, YouTube profits when the system is widely known to allow protected material. In practical terms, that means that if I remember a great "Family Guy" bit and want to see it replayed, I know I can get it on YouTube -- and as of today, that's still true. (Careful when clicking on this link -- this clip could be construed as very disturbing for some people.)

OK, so now what the technical issue is and what it means, but what does this lawsuit really mean? On the one hand it's hard for Google to control their users. If their users infringe, they're gonna infringe, so what can they do? That's not a good argument, says Viacom -- it's your service, you're making money off these videos, so we want our cut, and if you can't pay us, then take them off -- and it's up to you to figure out how.

Google is reported to be working on a search function to identify protected content on both Google Video and YouTube, but they're not there yet. So what can they do in the meantime? Go to signup-only model so they can control users better? That could cut down their reach significantly. Review every video that users upload? That would create a backlog months long, on the optimistic side.

When you get right down to it -- meaning using your "follow the money" instincts -- this must have something to do with the failed negotiations between the two parties to allow YouTube to carry Viacom clips. Google apparently wasn't going to pay Viacom to their satisfaction, so Viacom might very be using this lawsuit as a negotiating tool. Pay us now, Google -- or you'll pay us later. But either way, you're going to pay us. (Wow, maybe the "Family Guy" clip is a propos, after all!)

I predict the lawsuit does not proceed to fruition. It can't -- YouTube risks sinking an entire online marketing channel if they fight and lose. Google will settle, and it'll cost them.

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.

The Most Successful Online Video Event So Far ...

... has got to be CBS March Madness product, located here. When they first came out in 2004 in conjunction with CSTV, it was as a $19.95 subscription. Starting last year, CBS started offering it free to viewers, with the cost underwritten by advertisers.

Now that's really starting to bear solid fruit: this Mediapost story (free registration required) reports that revenue has gone to $9 million this year, over double that of last year's $4 million, with advertisers such as AT&T's wireless unit, Kraft Foods and DiGiorno buying into the fun.

I can think of four key reasons why this specific online video offering has become so successful:

1. It's an event. March Madness has become the #1 sports event in America, and it generates a significant amount of low-level non-professional (and professional) gambling. So there's a lot of intense interest inherent in it. (I love serendipitous assonance.)
   
2. It's sports, a top avocation for the heaviest users of video, young men.
3. It's free. Appealing for obvious reasons.
   
4. It's a viable alternative to nothing. This is not an insignificant point. I would be willing to bet that the vast, vast majority of online video viewership of March Madness comes in the early rounds during weekday day games, when most people are at work and have no alternative method of or access to viewing games. Once you get later into the tourney -- specifically, Sweet Sixteen -- every game is on TV anyway, and plays at night or on weekends. The chances you'll be watching a relatively grainy online video versus watching the same game on better-resolution TV, especially hi-def, has got to be nearly nil.

If proven correct, then the implication here is that people respond to scheduled video events that are special in nature and not otherwise available to them. This is not the same viewing psychology as watching UGC on YouTube, or catching up on the latest 30 Rock on NBC.com.

Technorati Profile

"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.

Are Ad Networks Safe for Brands?

Of course they are, according to this iMediaConnection article in which the author interviews Joseph Apprendi. And who is Joseph Apprendi? He's the CEO of Collective Media, a "leading online advertising network specializing in audience targeting and optimization". And if you can't trust the CEO of an ad network, who can you trust?

To be fair, Apprendi does recognize the need of brand marketers for transparency, which is the number one point of contention between ad networks and advertisers. But he does suggest that the desires for 100% campaign (not just list) transparency and complete control over carve-outs are unreasonable, and does slightly mischaracterize the issue as one only of quality assurance. That's part of the issue, to be sure, but the one issue he would never bring up is that of bait-and-switch. We've seen this before -- ad network touts ESPN and CNN and iVillage as part of their networks, and you run with them, and within a week you're getting emails from your CEO with links to www.popcap.com, wondering what the hell the media buyer is doing advertising a product clearly intended for adults on a site for little children. (Of course, you could reply asking your CEO what he's doing on such a site himself, but you wouldn't have to love your job too much to do that.)

Ad networks want nothing to do with the bait-and-switch discussion because for some of them, it's a core business strategy, and the others who might be sympathetic to a client's wishes don't want to pigeonhole themselves into a guarantee that's too hard to keep. Until the networks can figure out a way to give brand advertisers what they need (not just want), they're never going to become a must-have part of the plan.

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.