A
day before the always-stimulating Google Zeitgeist conference at the
search-engine giant’s Mountain View campus a few weeks ago, I had the
privilege of participating in a day devoted to advertising agencies and
marketing inventiveness. My role was simple: I was to moderate to panel
on innovation, featuring five pioneering interactive companies, all of
them, in their own ways, direct or indirect competitors. The panelists
were Tim Armstrong of Google, Randy Falco of AOL, Brian McAndrews of
Microsoft, Mike Murphy of Facebook, and Michael Barrett of MySpace.
But
as we prepared for our two-hour session, I was worried. As much as our
hosts wanted to talk about innovation, there was, I knew, an elephant
in the room: industry consolidation. Microsoft’s acquisition of
aQuantive (of which Mr. McAndrews had been the CEO), Google’s pending
purchase of DoubleClick, the rise of social networking, the
mainstreaming of digital video, to name just a few trends, were
generating apprehension across the marketing-media value chain. The
concern was captured in the now-famous term the WPP Group’s Chief Executive, Sir Martin Sorrell, applied to Google at the Zeitgeist conference just one year before: “frenemy.”
“We
must show a willingness to address consolidation, disintermediation,
reintermediation, ‘frenemization,’ and all manner of these Latinate
concerns,” I suggested to my fellow panelists, “else we’ll be accused
of ducking.” All readily agreed.
Came
the panel. Finished with introductions, I turned to the table of 10
advertising-agency executives — an assembly of the most accomplished
men and women in the business, gathered from creative agencies, media
agencies, diversified services agencies, regional agencies, and global
agencies — and put the matter to them. We will address everything that
interests and concerns you, I said, but what would you rather take up
first: innovation or consolidation?
The immediate reply: “Innovation.”
And
no matter how many times I tried to bait the agency executives, no
matter how many times I tried to get them to start a “frenemy”
discussion, they just would not rise to it.
“You
must understand,” said one, “that we understand what’s happening to the
landscape, and while there are obvious concerns, we really need to know
more about the opportunities. What we want to know most is how you can
help us build value for our clients.”
“Teach Me” Moment
We are in what I call a “teach-me moment.”Everywhere
I turn, the apprehensions of a year ago are, if not banished,
significantly diminished. In their place, across the value chain, is a
desire to learn, to improve, to acquire new capabilities, and to
collaborate in unfamiliar ways to build customer relationships and new
business opportunities.
I
call this revised view of marketing-media coopetition “Ecosystem 2.0.”
I suspect it will dominate our waking hours for the foreseeable future.
And I know that we at the IAB will be paying close attention to it -
for we intend to make it a centerpiece of our association’s 2008
strategy.
I’ve
talked in previous posts about how and why the new complexities and
opportunities of marketing require unfamiliar forms of collaboration
across the value chain. It was clear the message resonated: IAB’s MIXX Conference & Expo, which was themed around the new collaborative landscape, sold out for the first time in its history.
But
there’s increasing evidence that this evangelical message is winning
converts, even in more orthodox precincts - including marketing
departments. In “Marketing-Media Ecosystem 2010,” the study done by the global management consulting firm Booz Allen Hamilton for the IAB,
the Association of National Advertisers, and the American Association
of Advertising Agencies, one of the key findings was the degree to
which marketing executives are seeking new types of relationships to
buttress their own capabilities.
Publishers
must learn how to respond. “We need you [interactive companies] to come
to us in a different way,” one agency president said at the Google
roundtable I moderated. “Instead of just sending your salespeople to
talk to our media planners, we need you to send your savviest
technology people to talk to our creatives. We need to get your
analytics experts to talk to our account planners.” His fellow agency
executives agreed.
The
agencies, though, need to match wishes with actions. As much as their
leaders profess deep interest in learning more about applying
interactive platforms, applications, brands and opportunities to their
client work, their troops aren’t necessarily following. Many IAB
members say that when they try to set up broader meetings at agencies,
the right people too often do not come to the table. At the media
agencies, in particular, discussions still center predominately on
price, not value.
Agencies
need to bring senior team leaders into the room. They must strive to
break down the walls that not only have kept publishers, too
frequently, in their traditional place — as “dumb” conduits for the
agencies’ ads - but have kept agency functions siloed from each other.
Cross-functional collaboration must begin at home, else it will never
take root between and among companies.
Media
companies are similarly challenged. For years, “branded publishers”
have maintained a wary distance from “the portals.” They have worried
that these eyeball-aggregators are using their “front door” status as
well as search engines, free email and other services to legally tap
into the publishers’ content to amass audiences and sell advertising
that otherwise would go to the content sites. Now that the portals are
evolving into platforms, the apprehension, in some quarters, is growing.
I
believe it’s wiser - certainly, it’s more realistic - for publishers
and agencies alike to determine how and where they can play with the
platforms to enhance their own capabilities, and thus their value to
clients.
The Platform Environment
Platform, admittedly, is a vague word -“a swirling vortex of confusion,” Netscape founder and Ning chief Marc Andreessen says.
But Mr. Andreessen offers a simple explanation. “A ‘platform,’” he
writes, “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 the time to accommodate.”
To
one degree or another, the major Internet giants appear to be following
Mr. Andreessen’s definition. Several of them are evolving into platform
companies that are building advertising exchanges — stock-market-like mechanisms that connect advertising buyers and sellers, price available inventory, and clear it in real time —and
integrating them with their growing multi-site advertising networks.
These platforms, in effect, marry a liquidity mechanism to a pool of
inventory, a continuing flow of behavioral data, and analytics and
optimization tools that can automate many of the expensive
people-centric processes that have typified advertising for generations.
Could
platforms represent another threat to content sites - an effort to
aggregate and monetize their audience without them? Sure. But it’s very
telling that the intended transformation of the social networking site Facebook into a platform
has been accompanied by enormous interest by major content developers.
Every day, it seems, heralds a new Facebook application from The New York Times, the Washington Post, Conde Nast,
or another premium publisher. They believe that open platforms can
represent opportunity as much as threat. In a dramatic turnabout, they
a chance to take the aggregator’s audience and enhance the publisher’s
brand, reach, and stickiness.
Indeed,
rather than positioning themselves to “own the world,” as branded
publishers feared during the era of the “portals,” the new platforms
seem to be wanting to develop scalable businesses that can add value to
others’ businesses in the marketing-media value chain.
“Live by Openness”
At the Right Media Open
last month, I had the privilege of conducting an on-stage interview
with Yahoo’s co-founder and new CEO, Jerry Yang. He was explicit about
his platform’s value proposition to others. He
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.”
The key to success, he indicated, would be the platform’s availability
to players across the value chain. “Yahoo will have to embrace
openness,” Mr. Yang told me. “We must live by openness, leverage the
data to be smarter and improve upon our partnerships with important
companies like Comcast.”
I
like Mr. Yang’s definition of platform more than Mr. Andreessen’s, if
only because the latter, focused as it is on systems, seems more of an
engineering construct than a social construct - and because,
ultimately, the value-additive collaboration that Mr. Yang foresees
will require tapping into real human needs, emotions, and
satisfactions. I’d even go Mr. Yang one further: A
platform is a collection of scaled or scalable services that help
players up and down the value chain grow their customers’ businesses,
and their own businesses in turn.
While
there is reason for publishers and agencies to feel threatened by the
evolution of the platforms, more and more of them seem to be perceiving
them as opportunities, as Mr. Yang would have them do. Mike Walrath,
the founder and CEO of Right Media,
the exchange that was acquired earlier this year by Yahoo, spoke
directly (albeit with background noise on the Flip camera) to the issue
when I queried him specifically on the subject of advertising exchanges
and commoditization at his conference.
Joe Fiveash, Senior Vice President and General Manager of Weather.com
and a member of IAB’s Board of Directors, agreed that the opportunities
presented by the platforms must be explored. While aware of the
pitfalls of commoditization, he, too, saw more to embrace than to fear
in the ad exchanges and the platforms.
Small
players are arising to realize the advantages Mr. Fiveash foresees to
grow the overall marketplace. As Yahoo’s Developer Network Director Matt McAllister blogged
at the Right Media Open, there is “an interesting market of middlemen
that I didn’t know existed. For example, I spoke with a guy from a
company called exeLate that serves as a user behavior data provider between a publisher and an exchange. There were also ad services providers like Text Link Ads and publishers like Jim Mansfield’s PhoneZoo
all discussing the tricky aspects of managing the mixture of inventory,
rates and yield, relationships with ad networks, and the advantages of
using exchanges.”
My
point is a simple one: As Ecosystem 2.0 evolves, we’re likely to
benefit from thinking more about symbiosis than about victory. If
you’re looking for an image to carry you through a 2008 that will be at
least as tumultuous as 2007, I’d recommend one from my scuba days: Not
dolphins and sharks, but clownfish and anemones. It looks scary, but
it’s mutually beneficial.
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