On Monday the IAB held the annual Digital Video Leadership Forum educating marketers, agencies and publishers on one of the hottest topics in the marketplace. Visit our event recap to see what you missed. The IAB released the highly anticipated Digital Video In-Stream Ad Format Guidelines and Digital Video Ad Format Compliance Seal at the event.

Then on Thursday, the IAB announced the Revised Ad Unit and Rich Media Creative Guidelines for Public Comment. Please take a moment to review the proposed guidelines and leave your comments.

On the horizon are the highly anticipated IAB Leadership Forum: User-Generated Content & Social Media, IAB Professional Development training on interactive advertising sales and more!  Please visit the events section of the IAB website for more information.

Read More:

IAB Leadership Forum: Digital Video Live Blog

Digital Video Event Recap

Digital Video In-Stream Ad Format Guidelines and Digital Video Ad Format Compliance Seal

Revised Ad Unit and Rich Media Creative Guidelines for Public Comment 

IAB Leadership Forum: User-Generated Content & Social Media

IAB Professional Development Sales Training

The emergence of elaborated companion banners, animated overlays, repurposed text or product feeds and the ability to run non-video creative are just a few of the more recent innovations.

Video Advertising: A Performance Medium by Any Measure by Bill Todd.

Personalizing your creative video messages are also key in maximizing this technology. 

Not only can you optimize with video, but it is important to keep up to date with search as well. Max Kalehoff reminds us how to do so in this captivating blog post reminding us that we are nothing without a link.

Read More:

Video Advertising: A Performance Medium by Any Measure by Bill Todd

Making Video Personal by Phil Leggiere

You're Nothing Without a Link by Max Kalehoff

And the scary thing is: They are succeeding. I’ve detailed this “break-the-Web” effort in an article in yesterday’s Huffington Post. I urge you to print it out, circulate it, and oppose the forces that would force you under. (More on that later.)

Because virtually all of you reading this are scrambling to build your businesses in the face of a looming recession, you’ve probably been too busy to notice that a drive is underway to goad the Federal and State governments to regulate the core processes and technologies that underlie the operations of the Internet. The anti-Internet coalition’s proposals hide under the cover of very real, very legitimate concerns that citizens have over their personal privacy. But rather than focus on the real privacy dangers – loose data security policies, identity theft, Government intrusions into citizens’ phone and email records – these groups aim to shut down “advertising networks” and “third party entities,” including those central to the infrastructure of interactive media and advertising.

Hatred for Consumerism

If it were merely technological ignorance that’s driving them, it would be correctable. But even a casual read shows these groups are actually opposed to the consumer economy itself. And in their hatred for consumerism, they have drafted recommendations so breathtakingly broad that, if they stand, many sites will go under. Particularly vulnerable are the small, ad-supported sites that serve niche interests – the political blogs, ethnic dot-coms, and hobbyist Web sites that depend on ad networks to sell and place their ads. (I identified some of the potential victims in a Business Week article last week: Web communities like Disaboom.com, an ad-supported site for people with disabilities, run by Dr. Glen House, himself a quadriplegic.) Right behind them are the newspaper and magazine companies that are building vertical ad networks to extend their audience reach on the Web.

Here’s a sampling of some of the proposals gaining traction in Washington and State capitals:

• The Connecticut state assembly is likely to pass a bill that labels standard interactive advertising practices “unscrupulous,” and would, for the first time in the U.S., regulate the Web by creating inflexible controls on how any third party involved in Internet advertising collects and uses anonymized data.
• A New York State legislator has introduced a bill that would allow consumers to pull non-identifying information out of aggregated databases and regulate the companies that deliver 90 percent of the ads on the Web.
• Under the implicit threat of formal regulation, the Federal Trade Commission has issued guidelines that would prevent media, agencies, and marketers from using non-identifying data to make ads more relevant and products more effective for consumers. The FTC would require Web site operators to obtain permission from users for any changes in their privacy policies – paradoxically, even if the sites have no information identifying those users or means of getting in touch with them.
• In a signed editorial, The New York Times asked the Federal government to regulate the collection of the types of demographic information marketers have routinely gathered for decades, and recommended that all online data collection, including the measurement of Web traffic, be banned unless users explicitly provide permission.

Let’s be very, very clear: The IAB is utterly committed to protecting citizens’ privacy. Peoples’ names, addresses, Social Security numbers, financial and health records, and anything that can be associated with their identity ought to be under lock and seal, if that’s what they desire. All the major interactive media companies are equally unswerving in their commitment; they know (and have expressed repeatedly) that violating consumer privacy expectations is virtually an invitation to users to flee their sites for friendlier environments. We favor (and are working with other major marketing, media, and consumer associations toward) meaningful self-regulation of consumer privacy online.

But let’s be equally clear that these anti-consumerist efforts are not about protecting peoples’ identities. They are about shutting down consumer marketing – and limiting consumer choice in communications and consumption. Jeff Chester, the frequently quoted proprietor of the Center for Digital Democracy and one of the FTC’s favorite anti-Internet witnesses, has increasingly come clean on his real motivation. He opposes practices “to get individual consumers to behave or act in ways that favor or reflect the marketer’s goals,” he wrote in his blog on April 11. He went at it again this week, writing to Business Week that the Internet is “a commercial surveillance system that rivals the NSA… all so we can be encouraged to behave favorably to some marketing message.”

Underlying this “break-the-Internet” activism is an aversion to democracy – a fear that, left to their own devices, Americans will make bad choices for themselves, and so must be protected from forces that might lead them toward such choices. Joseph Turow, a University of Pennsylvania communications professor and another frequent FTC witness, has gone so far as to decry the very diversity of information, entertainment, and commercial options on the Web – a repeated underpinning of his arguments in favor of Internet regulation. He has written of the “mutual cooperation and togetherness” Americans exhibited from the 1940’s through the late 1960’s, and of the "society-making media," including the "three-network universe,” that helped forge such social cohesion.

“Having the option to share the same marketplace of goods and ideas has become a central proposition of equality in the United States,” Prof. Turow argues. By contrast, he has excoriated "segment-making media" that "search out and exploit differences between consumers." "The emerging marketplace will be far more an inciter of angst over social difference than a celebration of the American ‘salad bowl,” he writes. Eyeing with suspicion what he calls “a database-driven culture of suspicion,” Prof. Turow asks, rhetorically and paternalistically: “How should public policies respond to social divisions that are bound to grow as people envy the data files that enable their peers to get seemingly better prices, seemingly better service, or both?”

Repress the urge to suggest to him that public policies may be unnecessary, given the terabytes of relevant information available online to help people locate better prices or better service. Americans, he says, aren’t up to the task of choice-making. “You may try to jump from site to site to hunt for the best buy, but that's time-consuming,” Prof. Turow argues. “And there are comparative shopping sites such as Bizrate or Nextag, but these can be tough to navigate, and companies are learning quickly how to game the system.” The only solution, he suggests, is regulation.

Prompted by this opposition to consumerism, the pro-regulation forces are attempting to redefine the concept of “identity” so it extends far beyond the boundaries with which it has typically been delimited. Mr. Chester, for example, talks about “our information” and “our data” as if online media and advertising have the inherent ability to vacuum up any and every individual’s name, rank, and serial number. If that were the case, it would be subject for worry. Indeed, interactive media companies DO need to understand that many consumers have legitimate concerns -- "creeped out" is the phrase you hear most frequently -- about what sorts of information is collected from plain-vanilla Web-surfing, whether it's merged into direct-marketing databases, and what's sold by whom to whom, and for what purposes. Concerns needs to be allayed with facts, and when issues arise that require action, we, as an industry, must address them with complete transparency.

Redefining Identity

But rather than zero in on the real issues, the anti-Internet activists are exploiting these concerns to seek regulatory approval for a new property right over any behaviors, including those that are not associated even indirectly with an individual – even behaviors which cannot be observed.

“…In today’s digital marketing era,” Mr. Chester wrote this week on his blog, “the very tiny bits of personal behavior they [interactive media companies] have identified are parts of individual human identity. Our ‘virtual’ identities may be composed of discrete and disassembled bits of information about ourselves: —what we like to read, watch, buy; our problems and concerns (such as health or our children’s education) or our political interests— but they are very much living aspects of ourselves.”

While the metaphysical nature of identity is a fascinating subject for philosophy and classics majors (myself included), such breathtaking redefinitions of established norms can make for very bad policy – and horrifying economics. If businesses are required to institute consumer opt-in’s for all measurements of consumption behavior (as Mr. Chester, The Times, and others propose), then bar-code scanners could not be used to tell retailers whether they need to restock shelves. TiVo would not be able to let the television networks know which programs viewers are avoiding. Research companies such as R.L. Polk (which for decades has used state auto-registration data to provide insights to auto manufacturers) would have to stop telling Detroit how to be competitive with Japan. Social scientists who pore through consumption data to tell us whether we’re going green or wasting energy, eating nutriciously or ingesting fat, buying domestic goods or favoring imports would have to go back to guesswork.

And, needless to say, interactive retailers would not be allowed to suggest products or services to you based on your preferences, search engines would not be allowed to serve ads to you based on your queries, and publishers would not be allowed to measure site traffic or customize their home pages to your interests. All of these activities require “behavioral targeting” and “third parties,” as they currently are defined (with astonishing breadth) in the regulatory proposals floating around Washington, Hartford, Albany, and Manhattan.

I’ve already been tarred by the anti-Internet forces as an “online ad industry lobbyist.” (I am not.) Prof. Turow has complained that I’ve made “fundamental misrepresentations” of his work. (Read his books – here’s the Amazon link again.) But let me make a few other suggestions to those in the interactive media and marketing worlds who care about the future of our industries – and the future of communications diversity:

• Read the proposed regulations, and write their sponsors to oppose their loose language, over-reaching breadth, and the harm they would impose on media companies, small businesses, consumers and citizens. In particular, send the State legislators my Business Week, Huffington Post, or Wall Street Journal articles and ask them why they are proposing far-reaching, rigid regulation rather than working with the IAB, a dozen other industry groups, and the FTC to create meaningful, effective, and less destructive self-regulation.
  
• Visit your Congressman and State legislative representatives and offer to provide a tutorial about how interactive marketing and media work – and don’t work. The best weapon against ignorance is education.
• Write your own Op-Ed Pieces! Your local newspaper and your favorite blogs are terrific places to educate the public – and dispel myths – about interactive media and advertising. They can also help all of us pick up legitimate concerns, around which we can coalesce the industry to become a force for positive change.
  
• Contribute to the IAB’s Political Action Committee. Write to our association’s one actual lobbyist, Mike Zaneis, for information. Even small contributions will help us get our message across in Washington.
• Love your consumers. Don’t do anything you’re not willing to talk proudly about in public. And make sure your privacy policies are crystal clear, written in English (or whatever the preferred language of your audience is) and posted prominently.

I’m committed to finding you the hottest topics and freshest commentary in the interactive world so please feel free to email me at Shira@iab.net with articles that you feel should be posted.  I can’t promise to get to all of them, but I’ll do the best I can to pick out the most relevant and timely links to highlight in this space. Also, if you like what you see, be sure to sign up for the IABlog RSS feed.

This week I have two pieces to share with you:

1) Initiative’s most recent White Paper by Janice Finkel-Greene which discusses the upcoming transition of television signals from analog to digital. Click here to read the 2009 Digital Transition: Y2K +9?. 

2) Cathy Taylor's piece on The Future of Advertising for the Project on Excellence in Journalism. It draws together a lot of research into a one-stop-shop for understanding what’s going on in media.

Those of you who were part of the sold-out crowd know that IAB’s just-concluded Annual Meeting in Phoenix was a soaring success: We made news repeatedly, we celebrated the difference-makers who are building the interactive industry, we facilitated deal-making among member companies, and – most importantly -- we brought into the open, for public debate, the sorest, most troublesome issue for our membership: Are advertising and the media that convey it just another commodity, or do they have transcendent value for marketers and consumers?

My answer: Both.

The debate was exquisitely captured over the three days in a thrust by IAB’s new chair, Wenda Harris Millard, and a parry by Doubleclick executive Michael Rubenstein. In a widely blogged comment in her speech opening the Annual, Ms. Millard, the president, media, of Martha Stewart Living Omnimedia, told the packed house, “We must not trade our advertising inventory like pork bellies.” Mr. Rubenstein, the head of Doubleclick’s new online advertising exchange, responded two days later, during his appearance on a panel debating the pros and cons of exchanges. Noting that the trading mechanism and the value of the traded product are distinct from each other, as they are in the gem exchanges of Antwerp, he said: “We like to think of our publisher impressions as diamonds, not pork bellies.”

Please note that at the end of this clog, I intend to give a major-league plug for our March 31 conference that is devoted solely to this subject, “IAB Marketplace: Networks & Xchanges,” an all-day deep dive in New York. But now (and over the next several weeks, if I can hold to a schedule), I’d like to offer some history and analysis about the progress of advertising, and why the IAB has made the evolution of our value chain a top strategic priority for 2008.

Midway through 2007, I became aware of tonal and contextual changes in the way many corporate leaders in the interactive industry were speaking. Chief Executives of several “portals” were rebranding their companies as “platforms.” A portal, according to Wikipedia, is “a site that functions as a point of access to information on the World Wide Web… [and] offer[s] other services such as e-mail, news, stock prices, infotainment and various other features.” Central to their user-friendliness in the early days of the Web, “portals provide a way for enterprises to provide a consistent look and feel with access control and procedures for multiple applications, which otherwise would have been different entities altogether.”

In other words, portals portrayed themselves to consumers as the only interactive resource they would ever need – hence their attractiveness to financiers and advertisers in the late 1990’s, and the fear they struck in the hearts of branded media incumbents. The widespread belief was that one or two portals would establish themselves as the Web’s operating systems – closed structures with enormous influence over consumer and business behaviors.

Platforms appeared to be something different altogether, and in conversations over the course of last year with Yahoo! co-founder Jerry Yang and AOL CEO Randy Falco, I heard the language of control being replaced by the language of participation. At the Right Media Open last October, Mr. Yang defined a platform as “a business that has a set of standards that allows a set of companies to participate and find benefit from it.” He added: “Yahoo will have to embrace openness.”

At roughly the same time, Mr. Falco, less than a year into his tenure as Chairman and Chief Executive, unveiled what seemed a similar strategy for AOL. “With the increasing fragmentation of online audiences, the best way to serve advertisers is to enable them to harness massive advertising networks that reach across the entire Internet, not just our AOL websites," he said. The new aggregation of third-party sites and tools and services for advertisers and publishers would become its own business inside AOL, called Platform A. “With the launch of Platform A, we are unleashing this powerful network to deliver unrivaled transparency and return on investment for our marketing partners,” Mr. Falco said.

Netscape founder Marc Andreessen, now running a social-network facilitation service called Ning, confirmed that the shift from control to openness was more than linguistic. “A ‘platform,’” he wrote in a widely-circulated blog posting, “is a system that can be programmed and therefore customized by outside developers -- users -- and in that way, adapted to countless needs and niches that the platform's original developers could not have possibly contemplated, much less had time to accommodate.”

“The key term in the definition of platform is "programmed,” he added. “If you can program it, then it's a platform. If you can't, then it's not.”

Network of Fear

But there is a problem, Houston: A lot of the intended beneficiaries simply do not believe the behemoths. In most of my conversations with branded-media providers in our membership, the old fears of portal control are still extant and, if anything, more jagged in the dawning era of platforms. Everywhere they turn, media incumbents are seeing threats to their ability to hold their audiences, or price their ads appropriately to the value they deliver: Online ad exchanges are driving their advertising prices down… Widgets on social networks are decontextualizing their expensively-built content… Online networks are delivering ads to tiny sites, many of which are built on links to the major media sites whose lunch they’re eating… Behavioral targeting technologies are divorcing ads from context entirely…

That open platforms seem as much of a danger as closed portals became clear when I started doing formal interviews with members of IAB’s Board of Directors to prepare our 2008 strategy and operating budget. To the question, “What new technologies, platforms, or application categories do you see as potentially disruptive threats or opportunities to your business?,” the answers – from both our network-based members and our branded-media members – were startlingly consistent: Behavioral targeting vs. contextual targeting… Pricing challenges… The value of the differentiated user experience… Supply chain efficiencies in an increasingly fragmented media environment… Interoperability standards that could synchronize millions of sites and hundreds of agencies… Agreement on core metrics… Teaching marketers, agencies, and media alike about the new opportunities and challenges…

Thus was born the theme for our Annual Meeting, Ecosystem 2.0. The interactive industry needed a place to air its concerns and showcase its opportunities – to ourselves. And that means all of us – platforms, publishers, marketers, and agencies – for, as became abundantly clear through the multiple presentations last week, the boundaries that once cleanly separated buyers and sellers, clients and agencies, service providers and customers, are shifting, even eroding.

Benjamin Franklin argued a variation of this challenge when he urged the 13 fractious colonies to come together and declare independence from Great Britain. “We must, indeed, all hang together,” the Colonial pop philosopher said, “or most assuredly we shall all hang separately.”

At our conference, though, Federated Media founder (and IAB Board member) John Battelle argued it more succinctly. “We’re all in each others’ shorts,” he said.

Heat and Light

Mr. Battelle’s contention wasn’t a complaint; it was a simple affirmation of truth. It echoed the refrain Ms. Millard repeated throughout her keynote: “My space is your space.”

But if you listened closely to what Ms. Millard was saying, you realized that she was doing more than describing our evolution: She was issuing an invitation.

Let’s not minimize the tensions in the marketing-media ecosystem. Forbes.com CEO and IAB Board member Jim Spanfeller opened the onstage debate we structured on the role of online exchanges by charging that “the fully-executed concept of networks and exchanges is to disassociate content from the advertising.

“That’s not good for the end user or for the advertiser,” he said.

Bill Wise, the General Manager of Yahoo’s advertising exchange, responded that exchanges like his provide media like Mr. Spanfeller’s an opportunity to sell advertising more efficiently. “There’s a lot of inventory that doesn’t need a sales force,” he offered. But Patrick Keane, Executive Vice President and Chief Marketing Officer of CBS Digital – and a former senior Google executive before leaving that “portal” for the branded-media world last year – captured the essential concern on the “contextual” side of the industry.

“I remember trying to get Jim and his team to ‘surrender’ premium inventory to Adsense,” Mr. Keane, an IAB Board member, told panel moderator Michael J. Wolf, the former Chief Operating Officer of MTV Networks. Adsense is Google’s advertising network. “Now that I’m on the other side of the fence, I know we have a sales force with great client relationships, and it’s hard to surrender those relationships to the four-letter-word called ‘auction process.’”

Nor could the jockeying for position among the various platforms that occurred during the Ecosystem 2.0 conference have been comforting for branded-content leaders like Mr. Spanfeller and Mr. Keane. While Yahoo! CEO Jerry Yang and President Sue Decker took pains to reassure publishers that their intentions toward them are honorable --- their forthcoming platform, the Advertiser-Publisher Exchange, or Apex, will optimize advertising for agencies and publishers alike, they said – a vision of oligopoly could not have been far from the minds of many. Microsoft Advertiser and Publisher Solutions Group Senior Vice President Brian McAndrews calmly predicted that if his company’s bid for Yahoo! is successful, there will be only two platforms in the industry, his and Google’s. That prompted AOL CEO Falco to retort the next day: “"Microsoft and Google can ignore us and leave us off of charts if they want, but they do that at their own peril."

I did find some of the argument a-historical. Television advertising, almost from the dawn of network broadcasting in 1949, always disassociated advertising from content. Once the "Quiz Show Scandals" killed sponsored programming, TV advertising was dominated by spots created to air promiscuously across all forms of programming on all the networks, with only the barest demographic differences entering into agencies' calculations of where to place the ads. That's why the television industry has been able to use an exchange -- albeit an opaque and non-mechanical one -- to sell so much of its inventory. It's called the annual Upfront Marketplace.

Still, for all the drama, it was clear to all during the conference that relationships are changing, as technology allows competition to take new forms and all of us face rivals we couldn’t have dreamed of 10 years ago. Microsoft, the world’s wealthiest technology company, now owns one of the most prominent interactive ad agencies, Avenue A/Razorfish, and in bidding for Yahoo, hopes to take in the largest interactive advertising distribution network and content provider in the world. The WPP Group, the world’s second largest marketing-communications company, is now a media company; its acquisition of the 24/7 Real Media ad network makes it both a buyer and a seller of inventory.

Put another way, both WPP and Microsoft now have units in the IAB and the AAAA. They won’t be the last ones, either: We're all in each others' shorts.

Marketing-Media Hermaphrodites

Many less-recognized examples of these new competitive dynamics surfaced during Ecosystem 2.0. On the Battelle-moderated panel on coopetition, Lauren Wiener, Senior Vice President of Meredith Interactive Media, reported that the venerable women’s magazine company has expanded dramatically into other forms and functions, and is now both a distributor of Kraft advertising and the food company’s CRM agency-of-record. Group M Interaction CEO Rob Norman, in a spellbinding presentation that shifted tone from the comic to the complex, revealed that agencies like his are likely to start buying and trading media for their own accounts.

Face it, we’re living in an industry composed increasingly of marketing-media hermaphrodites. “The media company is rather redefined in digital,” Christopher Vollmer, head of the U.S. Media and Entertainment Practice at Booz Allen Hamilton, said in presenting the latest findings from “Marketing-Media Ecosystem 2010,” the groundbreaking collaboration between the global strategy and technology consulting firm and the IAB, the Association of National Advertisers, and the American Association of Advertising Agencies.

The Booz Allen research provides startling evidence of the degree to which we’re all in each others’ shorts. Ninety-one percent of the media companies surveyed said they are currently providing agency-like services. Eighty-eight percent say they are providing campaign development and strategic services directly to marketers.

Yet for all that, media still are under-leveraging their opportunities: While two-thirds of media companies are providing consumer insights to marketers, it was only no. 7 on the list of agency-like services they offer. Perceiving an unexploited opportunity, Mr. Vollmer told media companies they should feel anything but threatened. “The antidote to commoditization is to have much more granular data on your consumer,” the Booz Allen consultant told the audience, “almost to the point of managing relationship marketing.”

No wonder Ad Age titled its post-mortem on the conference, “Why You Should Be in the Media Sales Business.”

Marketers Want Relationships

Marketers appear to like the situation: Almost half say they anticipate their relationships with media companies increasingly to resemble the relationships large retailers currently have with major consumer-products manufacturers. That is, they expect major cross-platform publishers to have teams living at General Motors and Unilever, the way Procter & Gamble currently has a team living in Bentonville, Arkansas, to keep the relationship with Wal-Mart successful, profitable, and fully optimized.

Kim Kadlec, Chief Media Officer of Johnson & Johnson, agreed. "Media companies are the most underleveraged resource for insights that exist," she said. She then introduced Tina Sharkey, the chair of Babycenter LLC – the largest destination site on the Internet for new and expectant mothers.

Babycenter is yet another of the hermaphrodites populating our industry: Supported by revenues from multiple advertisers, as befits a leading media company, it also happens to be wholly-owned by J&J, which has managed to keep the relationship between the two companies sufficiently bounded to protect Babycenter’s business and integrity, while mining it for useful consumer insights. As Ms. Sharkey (an IAB Board member) showed in her fascinating (and highly buzzed) presentation, the insights derive from analysis of blogs, observed consumer behaviors, and the myriad other interactions that take place between users and the company, and among users themselves, as they traverse pregnancy and early motherhood.

“BabyCenter has taught us that media companies don’t just sell pork bellies, they sell much more,” Ms. Kadlec said.

Blogger and Edelman Worldwide public relations executive Steve Rubel caught the drift. Publishers, he wrote, are “disintermediating agencies -- even as they all downplay it.”

Interactive Boot Camp

Add up Ms. Kadlec’s, Ms. Sharkey’s, and Mr. Vollmer’s analyses, and you get a strikingly different view of the evolving ecosystem than the commoditization fears convey. Marketers are not looking for cheap inventory; they are looking for relationships. They understand – quite correctly, as my earlier blog post on the history of social marketing, showed – that strong relationships with consumers breed more consumers, and more sales. Individuals talking to other individuals about their preferences and purchases spur more and more enduring sales opportunities than all the “spots and dots” shotgunned across the media. “Advocacy trumps awareness” is how Booz Allen summarized the new view of marketers toward media.

Marketers have been crystal clear that relationships are what they are seeking. When H.J. Heinz invited the IAB to facilitate our Interactive Boot Camp for Senior Marketers for its entire senior marketing team in Pittsburgh recently, the revered food marketer owned up to one primary interest: Using social marketing and social media to build closer alliances with its consumers and customers. We brought a senior executive from Myspace, as well as DDB CEO Chuck Brymer, to help teach them the ropes.

“Companies will need to train themselves with a new ‘dialogue’ skill set and build expertise to leverage a whole new set of available tools,” Heinz CMO Brian Hansberry told us afterward. “IAB's marketing boot camp enabled us at Heinz to begin that work.”

But note something vital here: We brought a great agency executive in that room along with some great interactive media companies. Even as the competitive boundaries change, the importance of classic, discrete skill sets remains undiminished. It is unlikely that media companies will be able to hire enough strategic marketing expertise to fill clients’ needs. And even as the best agencies help their clients develop sites that look, sound, and feel like infotainment (as Digitas has done for Kraft, to cite one ready example), it’s unlikely that agencies will be able to insource all the independent, audience-gathering skills that the best media companies manage.

The media agree; they don’t want to take on the burden of providing most agency services. While they intend to compete in generating insights – “It’s a competition for good ideas, and good ideas get funded,” IAC Media and Advertising CEO Peter Horan explained at our conference -- by a 3-1 ratio, media execs told Booz Allen that creative production should remain the province of agencies. They are equally sure that communications planning and media planning are the agency’s responsibility.

Clients see it the same way. “We don’t need media companies to be our agencies,” J&J’s Ms. Kadlec told the IAB crowd. “We need media companies to do what they do best: Create great content, and draw audiences to it.”

Networks & Exchanges

It is not a simple charge. Drawing audiences now fragmented across tens of millions of sites is hard, hard work. That challenge will only grow more daunting once addressable television enters our dens. And creating great content? If that were easy, every blogger would be a best-selling author, and every Youtube uploader a James Cameron.

Which is why I believe the dichotomy between environment and commodity – as represented in the debate between branded-content sites and platforms, or the contest between behavioral targeting and contextual targeting – is a false one. Both have their place, each serves different marketer needs, and neither is likely to be able to exist without the other. To create advocates, marketers require the relationships that engaging content creates. They need the trust forged by The New York Times, the comfort purveyed by Martha Stewart, the style identified with Conde Nast, the technological savvy conveyed by CNET, the wonder associated with Disney.

Marketers also will need to go deeper into those attachments, which is why they and their agencies will use networks to find the smaller sites, many of them without direct sales forces, that inflame the passions of consumers everywhere: The laughter generated by FunnyorDie.com… The nesting tips on Askthebuilder.com… The insider gossip on Gawker.com… The felinophilia of Icanhascheezburger.com… and on and on, ad infinitum (or so it seems). For these reasons, marketers and agencies will use networks – vertical networks for depth, and broad networks for reach. Yes, reach: As important as relationships are, marketing cannot live on advocacy alone.

Already, we are seeing the merger between the seemingly opposing forces of context and commodity. Many branded-media sites are launching their own vertical networks – catching portions of the Web’s long tail and sheltering them within their brand environments. Indeed, the clean segmentation that used to characterize the media is breaking down. The Booz Allen research shows 84 percent of media companies offering contextual targeting services, 70 percent offering behavioral targeting, and about half providing clients with performance marketing services, email marketing, or both.

For such reasons, I expect many branded media will start using exchanges to help lower their average cost of sales, freeing capital to invest in the enhanced services, insights generation, consultative services, and audience gathering that marketers and agencies need.

Marketplace of Ideas

Which is why IAB is inaugurating a new type of conference on March 31. We call it “IAB Marketplace.” It aims explicitly to take a developing segment of the interactive media marketplace and to provide marketers, agencies and media companies close-in views of that segment as it evolves in real time – as well as introductions to providers they may want to partner with. We chose “Networks & Xchanges” as our first marketplace to showcase for one reason and one reason only: It’s the most controversial.

And as Ecosystem 2.0 showed, IAB loves controversy – because out of heat comes light. “It’s one of the most exciting conferences I’ve ever attended,” Doubleclick research and industry relations director Rick Bruner wrote in his blog. Thanks, Rick! But it’s nothing next to the excitement of our ecosystem as it evolves before our eyes.

Imagine the shorts we'll be wearing!

Moderator: John Battelle, Founder and Chairman, Federated Media Publishing
Matt Freeman, CEO, Tribal DDB
Don Friedman, EVP and CMO, Computer Associates
Lauren Wiener, Senior Vice President, Meredith Interactive Media
Peter Horan, CEO, IAC Media and Advertising

Check out some photos below -

The panel speaks of the new platforms that are based on conversation and how they are monetized.

Matt Freeman believes that in today's ecosystem, whoever gets to the senior decision maker with good ideas essentially takes money from everyone else.

Don Friedman has a simply principle – anything published must be of value to the customer

Lauren Wiener uses her insights on the CRM side to bring great ideas to Digitas and then go back to the brands.

Peter Horan talks about how were are transitioning away from the high buy-in broadcast model into a conversational model.

That's it for the morning session.  I'm off to lunch (unfortunately the events staff did not take my advice and cater from In-N-Out Burger) and then we'll have more live from Ecosystem 2.0 this afternoon!

Monday 11:15am
Chris Vollmer, Media Practices Leader from Booz Allen Hamilton, just finished his presentation on the second half of the Marketing & Media Ecosystem 2010 study. This may have been the most informative hour of the conference so far.  There really is no way for me to address the depth and grasp of this groundbreaking study in this tiny bit of cyberspace I have here for the Ecosystem 2.0 Live Blog.  In a nutshell, online activity is on a tear.  However, there are still tremendous growth opportunities and this study outlined many of those.  We'll have the full presentation on IAB.net in the coming days if not sooner.  Please remember to come back and download it.

Chris Vollmer tells us how marketers want advertising that provides a service – that consumers find valuable.

Monday 10:15am
Jerry Yang and Susan Decker just left the stage and it was quite an eventful hour.  Yang opened up with some reflection, remembering the days before the dot.com bust – when all knew that a more sustainable model had to be built.  And over the last five years, we’ve seen that. He spoke of Yahoo!’s strength in being part of our ecosystem as well as Yahoo! being an ecosystem in itself. Most importantly, he spoke of personalization and openness.  How do we drive a better experience for users and advertisers? Yang expressed that it’s about creating an advertiser and user experience that is flawless and creative.

Susan Decker then spoke about Yahoo!’s focus on making the process simpler for everyone engaging with each other in the advertising process.  She spoke of Yahoo!’s ad network, Panama, and their hope of revolutionizing the advertising industry by removing the headaches. Yahoo! hopes to leverage the power of all the users in the industry – and wants to do for the advertising industry what the DVR did for VCR users – revolutionize with simplicity in ways not thought possible.  Ultimately the goal is to allow publishers and advertisers to focus on creating and getting to the right audience at the right time.

Last but not least was a spirited Q&A with Randall Rothenberg.  Rothenberg put on his reporter's cap and wasted no time in raising the elephant in the room of Microsoft’s attempted purchase.  This issue is so public that there was not much Yang could say that we have not already read.  However, he did speak of the galvanizing affect it has had within Yahoo!.  Susan added that this combined with the fact that more R&D dollars than ever are going towards new products, both on the consumer and advertiser side, makes this one of the most exciting first quarters ever at Yahoo!.

Randall spoke of branded publishers being fearful of platform consolidation and potential commoditization. Yang feels that rather than commoditizing, platforms are building the tools to enable more creativity. The tools that are shown to publishers are garnering the reactions of “wow, I can do so much more.”

Another interesting response came when Susan Decker was asked what today’s sales force needs to do differently than 10 years ago. She stated that what is happening now allows them to focus less on ad operations and more on sales channels. They can think of how to optimize the marketing funnel – how to increase awareness and branding. They can now use any product online to achieve a goal – search, video, mobile – it’s not just about display.

Overall, a very special session to watch, especially given how busy the folks at Yahoo! must be these days.  Chris Vollmer from Booz Allen is up next to talk about the second half of Marketing & Media Ecosystem 2010.  Stay tuned for more!

Jerry Yang asks "how do we drive a better experience for our users and our advertisers?"

Susan Decker is all smiles as she speaks about Yahoo!'s new ad network.

In response to the ownership of data,Yang expresses, "The consumer is still the king and they ultimately decide how they want to respond in this medium. We know there is an ecosystem developing.  Now we have to figure out the rules.”

Monday 8:55am
Good morning and welcome back to the Ecosystem 2.0 Live Blog from the IAB Annual Meeting in Phoenix, AZ.  We will once again be covering all the action as it happens.  Last night ended on a very fun note with a wonderful outdoor networking reception.  All in attendance looked to have a great time and we'll have a gallery of photos up soon on IAB.net. Right now, the general session room is filling up as everyone in attendance is waiting to hear what Jerry Yang and Susan Decker of Yahoo! will have to say.  Stay tuned for more!

Rick Brunner does some entertaining for Rich LeFurgy and the rest of the welcome reception last night.