Recently in The Digital Consumer Category

A Conversation with Nick Law, Global Chief Creative Officer, R/GA, and IAB MIXX Awards Judge

This past May at the What Works & Why in Digital Advertising: Insights from the IAB MIXX Awards event, Nick Law described his thinking on the alchemy needed in today’s digital world to achieve creative success. Although he took just five minutes to lay out his thesis, it crystallized for me the answer to a question I had been furiously pondering over the past four years: what is the right creative model to achieve the level of brilliance in the digital world that marketers have come to expect of the best agencies in the analog one?  I wasn’t the only one who found his thinking revelatoryNL2.jpg; I saw dozens of pens busily scribbling during his short talk. 

While Nick was at the IAB Ad Lab in New York to judge the 2014 IAB MIXX Awards, I asked him for a chat about this notion so we could share his thoughts with the industry. Our conversation is captured below and in the accompanying video.

Peter Minnium (PM), IAB: R/GA has a unique model of deploying talent in teams to get the best results; can you tell us the genesis of this thinking?

Nick Law (NL), R/GA: About a decade ago, I looked at the creative skill sets that we had at what was then a very different R/GA, and it occurred to me that if you were to be brutal in your division of skill sets, you would cleave the world into storytelling and systematic thinking. The important point about this realization, as much as understanding that these two ways of thinking exist, was to recognize that  are both creative ways of thinking. So if you’re from Madison Avenue, over the last 50 years, what has been considered creative is storytelling, because the mediums that we’ve used are narrative mediums. And since the advent of digital, this type of architectural and spatial way of thinking has become very important. In the advertising world, I think the problem is that this hasn’t been considered creative. It’s been relegated to a sort of an executional or technical path.

So when people talk about the “big idea” in advertising, they still really refer to the ability to tell a story and to distill a brand down to a little narrative. And when they think about this sort of interactive, they think about it from a technical point of view. So then, having come up with the big idea, they wonder how to push that down into this new set of formats and channels. But what I realized was that the sort of creativity associated with systematic thinking was very powerful and very different. 

Why is the distinction between the different skills sets important?

NL: This is an important thing to recognize, because if you don’t recognize the difference between storytelling and systematic thinking as sort of categorically different ways of thinking, then creators—because they’re all vain and because there’s this sort of hubris associated with creative people—will say that because they’re creative, they should be doing it all, right? So I would have an instance where someone who grew up designing interfaces and was a systematic thinker couldn’t wait to get over to the content studio and do a film, even though for 10 years, that wasn’t the way they thought. And vice-versa. I think that early on in this sort of emergent digital world, there were many creative executions that came from an art director/copywriter type of narrative team, which in a systematic world, failed dismally, right? I won’t mention any big platforms, but there’s quite a few. And a lot of money was wasted. 

PM: Are people born Systemic or Narrative Thinkers?

NL: So if you look at a human brain—and I sort of found out later that we don’t know a lot about neuroscience—we do know that the left-hand brain processes things sequentially and that the right-hand brain processes things simultaneously. So it’s this play between time and space, between the temporal way of thinking and the spatial way of thinking. Therefore, it stands to reason that if you’ve been doing something and you’ve gotten good at something from a creative point of view, the paths in your brain are in a very specific place. So for me, that explains why it’s very difficult for a narrative thinker to connect and design a systematic piece of work, and vice versa because they’re in a habit. 

PM: Bill Bernbach revolutionized creative teams in the 1960’s by pairing art directors and copywriters. Is the model different now?

NL: So at R/GA at least, we think that the atomic team is not an art director and a copywriter, but rather a storyteller and a systematic thinker. Another way of looking at this is as a tension. Storytelling is the act of simplifying, because it’s about the revealed moment and good storytelling, good brand storytelling, is really about that distilled moment and how it’s revealed. And there’s this tension between that simplicity and the possibility provided by systematic thinking. So systematic thinkers are good, very good at possibility because they understand how each node plays with each other and can look at all these relationships simultaneously and generate many ideas. 

So when you have a systematic thinker and a narrative thinker, you get this lovely tension between simplicity and possibility. When that is absent, when all you have is simplicity, you just have simple brand storytellers, really just a lucid brand but without innovation. And when you just have systematic thinkers’ input of possibility, then you get really interesting and multiple tactics that don’t ladder up to a simple brand idea. So that’s how I can tell whether or not we have the balance right—whether things are simple but not innovative, or innovative but not lucid. That balance becomes very important, that interplay. This doesn’t mean that underneath that organizing principle, we don’t have all sorts of different combinations: art directors, copywriters, data scientists, and strategists, and all sorts of other combinations, but that’s the sort of balance we’re trying to achieve, between storytelling and systematic thinking.

PM: Thanks, Nick; I now better understand the magic behind the award winning work at R/GA.

To learn more about creativity in digital advertising download the IAB MIXX Awards 2013 Insights Report: What Works & Why, which showcases examples of award winning digital advertising campaigns and the genius behind the creative work from thought leaders across the industry.

About the Author
peter-minnium-headshot.jpgPeter Minnium 

As the Head of Brand Initiatives at IAB, Peter Minnium leads a series of initiatives designed to address the under-representation of creative brand advertising online. He can be reached on Twitter @PeterMinnium.

blog-header-rr.gifAn Open letter from Randall Rothenberg to FTC Chairman Jon Leibowitz, calls on FTC to rescind Blogger rules.

Jon Leibowitz, Chairman

Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

Dear Mr. Chairman:

So there I was last Saturday, about to send out on my Twitter feed — which automatically updates my Facebook page and links to my personal blog — a photograph of this wonderful baked halibut dish I’d just made as a surprise for my wife. I was in the middle of typing a rave review of the recipe, which I’d pulled from my favorite cookbook, Delicioso! The Regional Cooking of Spain by Penelope Casas. But before I could press the “post” button, I stopped and canceled the whole thing.

I remembered that the book was a freebie, sent to me by an editor at the Alfred A. Knopf publishing house 13 years ago. And I didn’t want you guys to haul me into court and fine me for violating the rules you’ve just promulgated to muzzle social media.

I know what you’re thinking – I’m just confused. But so are the 22 million bloggers currently collecting audiences in the United States and the nearly 140 million Americans registering news and opinions through social media channels like Facebook, MySpace, Friendster, and Twitter. The source of the confusion: The new set of Guides Concerning the Use of Endorsements and Testimonials in Advertising, issued on October 5 by the Federal Trade Commission that you chair.

As you’re undoubtedly aware, the revised Guides, an update of principles the Commission originally established in 1980, have generated a firestorm of controversy within the ad-supported interactive media industry. Of particular concern are footnotes, asides, and elaborations in the Guides – as well as reported commentary by Commission staff – which indicate that opinions published by individuals have less protection than speech promulgated by large corporations; that “traditional” distribution channels deserve more protection than innovative online channels; and, finally, that the Internet, the cheapest, freest, most accessible communications medium ever invented, should have less freedom than other media.

Different Disclosure Requirements

It’s the Commission’s own words that have sewn this controversy and confusion. On pages 47 and 48 of the 81-page Guides, your staff

…acknowledges that bloggers may be subject to different disclosure requirements than reviewers in traditional media. In general, under usual circumstances, the Commission does not consider reviews published in traditional media (i.e., where a newspaper, magazine, or television or radio station with independent editorial responsibility assigns an employee to review various products or services as part of his or her official duties, and then publishes those reviews) to be sponsored advertising messages. Accordingly, such reviews are not “endorsements” within the meaning of the Guides…

In contrast, if a blogger’s statement on his personal blog or elsewhere (e.g., the site of an online retailer of electronic products) qualifies as an “endorsement” – i.e., as a sponsored message – due to the blogger’s relationship with the advertiser or the value of the merchandise he has received and has been asked to review by that advertiser, knowing these facts might affect the weight consumers give to his review.

With all due respect, Mr. Chairman: Huh? Does the FTC really intend to probe America’s opinion-mongering apparatus this closely? Do you have a team of Freuds and Jungs able to examine “the weight” consumers give such opinion – and the way they weigh that weight?

Naturally, this expedition from Oceania – that’s the place Big Brother ruled – should be worrisome to all Americans, and to all viewers, readers, listeners, users, and providers of any communications medium. But for the 400 members of the Interactive Advertising Bureau, most of which are small and medium-sized enterprises struggling to build their businesses in the face of the worst decline in marketing spending since the 1930’s, the implication that online social media represent a separate class of communications channels with less Constitutional protection than corporate-owned newspapers, radio stations, or cable television networks is of particularly grave concern.

They – and we — are not arguing that bloggers and social media be treated differently than incumbent media. After all, most newspapers, magazines, radio stations and television networks, in recognition that Americans are embracing new forms of social communications, have established their own blogs, boards, Facebook pages, Twitter feeds, and the like. Rather, we’re saying the new conversational media should be accorded the same rights and freedoms as other communications channels.

Stop Deceptive Advertising

All of us would agree that false and deceptive advertising should be stopped, and penalized when it slips through and is caught. We agree that paid testimonials and endorsements should be labeled. But in taking business ethics and attempting to give it the force of law, the Commission is stretching the definition of remuneration to ludicrous lengths. More frightening – certainly to the 22,000 womens-issue bloggers” on BlogHer, the 218 sports-fan facilitators on SB Nation, and the 302 people Tweeting to me daily – is that the FTC’s new Guides open the door to extremely selective pursuit and prosecution of those least able to defend themselves against government’s hammer: the solo entrepreneurs and opinionated individuals who are most vital to the functioning of our democracy and economy.

That fear, I fear, is supported by the Commission’s own words. For example, in an interview with the blog, FTC Assistant Director of Advertising Practices Richard Cleland took decades of common practice in offline media — specifically the acceptance by reviewers of free books from publishers — and said that bloggers engaging in the same activities could be subject to prosecution. “The primary situation is where there’s a link to the sponsoring seller and the blogger,” said Mr. Cleland. The repeated supply of free books could constitute “compensation,” thus triggering an FTC review and, possibly, sanctions.

“You can return it,” Mr. Cleland said, when asked how a social mediator could avoid this fate. “You review it and return it. I’m not sure that type of situation would be compensation.” Otherwise, “if a blogger received enough books, he could open up a used bookstore.”

The ignorance of established offline media practices is more than mildly surprising. Take a walk through New York’s mecca of used books, The Strand, or the Portland emporium Powell’s, and you’ll find bin upon bin of “reviewers’ copies,” direct contravention of Mr. Cleland’s declaration that “most of the newspapers have very strict rules about that and on what happens to those products.” (My own shelf of review copies from my days as a journalist attest to how wrong he is.)

Shackle Online Media

But of greater concern is that the Commission is translating this ignorance into rules that would specifically shackle online media while exempting our offline cousins and competitors from equivalent constraint. Publish? You might perish: “Consumers who join word of mouth marketing programs that periodically provide them products to review publicly (as opposed to simply giving feedback to the advertiser) will also likely be viewed as giving sponsored messages.” Have a lot of Facebook friends? Better watch it, you dot-commie: “If that blogger frequently receives products from manufacturers because he or she is known to have wide readership within a particular demographic group that is the manufacturers’ target market, the blogger’s statements are likely to be deemed to be ‘endorsements.’”

Indeed, to copious industry protests that provision of free samples, tickets, and services to independent reviewers has been a staple of media since media began and shouldn’t be regulated more strictly online than off, the Commission simply disagreed and said it will “consider each use of these new media on a case-by-case basis for purposes of law enforcement.” So if Niero Gonzales fails to flash “freebie” across each review of a first-person shooter posted on his gamer site, will he be dragged down to Pennsylvania Avenue for a civil investigation? If I blog on about the dozens of free management books I receive each year from publishers, will I, John Wiley & Sons, or Harper Business be subject to a penalty? Again with all due respect, Mr. Chairman, the Commission’s Guides really provides no guidance at all.

You must know that, because in the days following the release of the revised Guides, the FTC has been furiously backtracking about their implications, in an apparent attempt to soothe the blogosphere. “We are not planning on investigating individual bloggers,” Mary Engle, the Commission’s Associate Director for Advertising Practices, told reporters this week. “We will be focusing any enforcements on advertisers, not on individual endorsers.”

But the Commission is being disingenuous. “The recent creation of consumer-generated media means that in many instances, endorsements are now disseminated by the endorser, rather than by the sponsoring advertiser,” the Guides state. “In these contexts, the Commission believes that the endorser is the party primarily responsible for disclosing material connections with the advertiser.

Individuals More Liable

In other words, the Guides DO allow you to pursue bloggers. They DO hold individuals more liable than larger corporations. They DO explicitly say online social media have less protection than offline corporate media. They DO obstruct online companies’ opportunities to drive cultural conversation more than offline companies’. They DO threaten with prosecution book publishers, movie producers, and other companies that supply products to individual social media conversationalists.

This confusion easily could have been avoided. The IAB and other industry organizations clearly identified the risks to free expression and provided the FTC significant, formal First Amendment guidance when you first mooted the new guidelines earlier this year. We offered to bring in bloggers, social media executives and others from among our membership and work with you to develop practical guidelines and self-regulatory mechanisms that would protect consumers from real harm, while assuring that independent opinion in digital media isn’t stifled.

But Commission staff did not follow up with us on our offer, held no public hearings on the proposed Guides, and ultimately dismissed our concerns. Instead, they took the perverse - and Constitutionally dubious - step of saying that individuals writing in social media bear greater liability than do those writing for offline, one-way media.

Mr. Chairman, these are the types of vital regulatory issues that, if decided without due care and reasoned judgment, will impair the continued growth of news and content in the online space. I urge the Commission to retract the current set of Guides and to commence a fair and open process in order to develop a roadmap by which responsible online actors can engage with consumers and continue to provide their invaluable content and services.


Randall Rothenberg

President and Chief Executive Officer

Interactive Advertising Bureau


8 tips for Social Media

| | Comments

blog-header-around-web.gifWith our Social Media Marketplace coming up, we’ve been combing the web for examples of what’s happening here and now with social media.

4 simple rules for generating traffic from forums

Don’t mention your Web site. Yes, you read that right. Do not mention your Web site in posts or refer to your signature, unless it is abundantly, extremely clear that it is acceptable. This isn’t your Twitter account or your Facebook page - this is the community space. The way you generate traffic from forums is generally through your signature. You do great things, you help people, and you make good posts. That makes people look at your signature and your profile, which is how you receive traffic.


4 Lessons for Social Media Marketers

4. Creativity wins A marketer with an understanding of social media and the need for engagement online tends to think outside the box. They don’t see Facebook or blogging, instead they see vessels for a conversation. Because of that mindset they’re poised to be creative with their social strategy.


plus, here’s a video describing Social Marketing in Plain English

Don’t forget to follow us on Twitter


blog-header-rr.gif Thanks to Advertising Age, I’ve had a chance recently to reflect on my favorite advertising and marketing books of all time. Alas, the book I believe is the best did not make the Top 10 list. It is Strategy in Advertising: Matching Media and Messages to Markets and Motivations by Leo Bogart.

First published in 1967, “Strategy in Advertising“: remains the best single-volume work on the science of media mix modeling and allocation. That’s not surprising, because its author was a brilliant and widely respected social scientist, who for years served as the executive vice president of the Newspaper Advertising Bureau and the de facto dean of media researchers in the United States. Bogart (who died in 2005) was of that generation of sociologists who saw both the bad and the good that managed communications can do. Born in Poland, his observations as an American soldier in Europe at the end of World War II — his confrontation with the horrifying results of Nazi propaganda — prompted him to become a sociologist. Among his post-war projects was the research that underlay the desegregation of the U.S. armed forces.

I mention Bogart’s background and his grounding in science because the second page of his classic book on advertising strategy contains one of the most contrarian lines ever written by a scientist. “Advertisements,” he writes, “may be evaluated scientifically; they cannot be created scientifically.”

Leo Bogart no doubt would be amused that, some four decades after he penned his great book, we’re still fighting the old art vs. science war in advertising. But we are — and it’s a war worth ending, because it misses the point entirely.

Two weeks ago, I published a clog titled, “A Bigger Idea: A Manifesto on Interactive Advertising Creativity.” The observations and hypotheses — that our direct response heritage has hindered this medium’s hospitality to brand advertisers, that we must incentivize creative excellence, that we need to integrate technologists as full partners into creative teams — apparently have resonated.

Ah, hell — they became the talk of the clogosphere, and for that we’re extremely grateful. The French Revolution began in salons and coffee shops, so no reason the interactive creative revolution can’t begin here!

We furthered the cause subsequently at the IAB Annual Leadership Meeting in Orlando, FL — the Ecosystem 2.0 conference, as we call it — earlier this week. There, I disclosed that, for the first time, IAB will invite creative agencies into the interactive advertising format standardization process. We also announced the formation of IAB’s first Agency Advisory Board, with senior executive representatives from a dozen top creative, digital and media agencies, including:

  • Brad Brinegar, Chairman and CEO of McKinney, and Chair of the Agency Advisory Board
  • Tom Bedecarré, CEO, AKQA
  • Jeff Benjamin, Interactive Creative Director, Crispin Porter + Bogusky Advertising
  • Alan Cohen, CEO of OMD USA, OMD Los Angeles.
  • Colleen DeCourcy, Chief Digital Officer, TBWA Worldwide
  • Brian DiLorenzo, Director of Integrated Production and Executive Director of Content, BBDO
  • David Droga, Founder and Chairman, Droga5
  • Sarah Fay, CEO, Carat North America
  • Maria Luisa Francoli, Global CEO, MPG
  • Jean-Philippe Maheu, Chief Digital Officer, Ogilvy & Mather Worldwide
  • Benjamin Palmer, Co-Founder, CEO, Barbarian Group
  • Steve Wax, Partner and Chief Narratologist and Co-Founder, Campfire

But this is not a revolution against science, as some have characterized it. It’s a war against the mismanagement of marketing communications by people who don’t have the background or experience to help marketers use all the tools and services available to them to grow profitably. In that war, as IAB Chair Wenda Harris Millard put it so eloquently at our conference, both art and science have a place.

It’s important for all of us who would offer our services to marketers and consumers to know how to arrange the seats at this table.

A Great Debate

I’ve loved the debate generated by our rants, diatribes and importunings. My special favorites include the passionate back-and-forth instigated by Adweek’s Brian Morrissey on his @BMorrissey: thoughts on branding and advertising blog. Videoegg’s Troy Young did a funny, heartfelt, and wonderful analysis of the online creative crisis on his company’s blog. Silicon Alley Insider joined the fray with some terrific commentary and links.

But my favorite response was from Paul Seward, a senior interactive application engineer at the Martin Agency in Richmond, Virginia, and an inventor of the creative technology program at the VCU Brandcenter, one of the institutions that will save advertising — and make interactive media hospitable to it. The Martin Agency is part of that core class of ad agencies that are and will be at the forefront of the interactive creative revolution: Its people understand not only what builds businesses, but what motivates clients, creatives and consumers — and how those motivations must be aligned for advertising to succeed. The subject of my first “clog,” Martin and its longtime president and creative director, Mike Hughes, were among the first to break down the walls between their direct response division and their “brand advertising” division, setting the stage for the agency’s reinvention as a leader for the interactive era.

The Martin Agency and VCU Brandcenter are intertwined; Mr. Hughes is a founder and the chairman of school. So when one of his team wrote about the need to bring technology and creativity closer together, I listened. And what I heard from Paul Seward was a passion to lead a revolution that is grounded — as he is, personally — in both art and science. Here’s what he wrote me:

Mr. Rothenberg,

I am one of the original contributors that helped Rick Boyko, Bob Greenberg, and Nick Law create the Creative Technology curriculum for the VCU Brandcenter. Mark Avnet and I have been working together to craft the new track to make it become something very special. I am teaching my second semester of classes and I am completely blown away by what the students are coming up with. Their thinking is amazing. Thinking beyond the tactical execution with their ideas and developing platforms that are seated in the idea of the experience. It really is extraordinary!

I also work at The Martin Agency. Currently I am one of those guys that are “working in a different room” as George Lois once said. I am within the interactive department and currently act as a Information Architect, Producer, Programmer, System Administrator, Software Architect and sometimes even graphic designer. See, I am one of those graphic designers that saw the power of the Internet as a medium and left the practice to pursue programming in 1994. Prior to that I was a lead graphic designer of a national magazine and before that a graduate of VCU’s acclaimed Communications Arts and Design, Graphic Design school. But, as a programmer, I excelled very quickly. Going on to become a enterprise developer with the J2EE language. I then moved on to become a Software Project Manager/Architect. It was the advent of advertising starting to take the deep dive into technology that lured me back to my creative roots. At the Martin Agency, I get to experience the best of all of my worlds. I can intermingle my extensive technical experience with my creative side. It really is a unique marriage. But, it is this unique type of individuals that we are looking for at VCU’s Brandcenter. And I am happy to say, we have found students that fill this bill.

Like you, I believe that the Creative Technologist should have a seat at the creative table Throughout the complete ideation stage. But, I think there needs to be some level-setting done before that happens. First, I am not talking about these creative technologists as traditional strategist, programmers, information architects, or even digital designers. Mark Avnet and I believe that they are more closely defined as “experience managers”. They have a understanding of traditional branding and advertising. But, they also have a deep understanding of personal interaction. How the tribe interacts with each other and how a brand can quickly adapt its messaging in response to user actions and responses.

These new principles are easily defined by saying words like adaptive design, information design, data visualization, etc. But, look deeper at the core of what this new creative team member brings to the table. A deeps sense of how people interact with each other. Thinking of the brand as “within the community” (please do not confuse this with having a brand play within Facebook), talking, listening and reacting to the needs of its community. But, this thinking is what separates this type of individual from someone who may recommend the latest technological animation tactic. This kind of tactical ideation is not what a CT does. They understand what may be possible, but they think and concept in a much more generalized fashion.

Take Nike+, R/GA was able to take the idea of recording pedometer results and create a platform that allows many different forms of communication to flourish. A platform based on uniting “like minded” individuals within a experience brought to them by the brand. Allowing them to become apart of the brand and living within its experience. But, it is the value of this type of engagement that is so powerful. TV, online, events, OOH, all tactical executions that evolved easily from the initial platform idea. To me, that is what is so revolutionary about the Nike+ campaign. Not the piece of tech that goes in your shoe.

The industry is at a crossroad today. What we do in the next couple years is going to redefine our work and culture for the next 60 years. It really is an exciting time for us all.

Thanks, Paul Seward

I can’t be any more eloquent than Mr. Seward, but I can try to summarize his thinking: Whether their medium is the written word, the designed image, the produced event, or the software application — whether their grounding is in science or in art — great advertising people share a common trait: They know what moves people.

Or as the late, great advertising scientist Leo Bogart wrote 42 years ago: “The Great Idea in advertising is far more than the sum of the recognition scores, the ratings, and all other superficial indicators of its success; it is in the realm of myth, to which measurements cannot apply.”

Viva la Revolucion!


blog-header-rr.gif Quick — name four fantastic, emotionally resonant, culturally significant and successful interactive advertising campaigns from the past year.

Came up empty? That’s what I thought. Palo Alto, we’ve got a problem.

Actually, Palo Alto may be the problem. Fifteen years old, a vital component of the marketing landscape by any calculation, interactive advertising is still characterized in the public eye and practitioners’ minds by its technical sleight-of-hand instead of its narrative and emotive power. This has led our industry to a creative crisis that, if not resolved, will almost certainly impede our — and our customers’ — growth.

It’s time to engage marketers, agencies, and publishers in a public debate about creativity in interactive advertising. The IAB has set aside much of our February 22-24 Annual Leadership Conference in Orlando, Florida, for this discussion. But if you’ll indulge me, I’d like to launch the debate right here by naming names — the four enemies of online branding:

  • A direct-marketing culture and tradition that devalues creativity and its long-term effect on brands
  • An interactive agency business model that disincentivizes greatness and fails to penalize mediocrity
  • An unwillingness by mainstream agencies to integrate technologists as full partners in the advertising creative team
  • Media industry values and habits that malign and depreciate our own products, and by extension our customers’

The Banner Shibboleth

The issue of brand advertising and its future in interactive media is particularly prominent now, as the U.S. struggles through its worsening economic crisis. With much of marketing spend frozen, mainstream media suffering from significant advertising dropoffs, and interactive ad growth slowing, the blame game has become a desperate pastime in our industry, especially from premium publishers trying to maintain pricing on their display inventory.

The latest shibboleth is the online banner ad, whose formats IAB members first began standardizing more than a decade ago and subsequently realized in the “Universal Ad Package” in 2003. Industry chatter recently has begun to attribute pricing pressure to the mere existence of these standard ad units. New York Times “Bits Blog” columnist Saul Hansell this week related an encounter with President Charlie Tillinghast, who told him that “that the standard sizes have allowed the advertising networks to turn display ads into commodities.”

“We made it possible for any Web site to run ads through the ad networks,” Mr. Tillinghast told Mr. Hansell. “That’s created an oversupply of space.”

On the one hand, the charge is literally true: Standardization of anything — the ASCII character-encoding scheme, the North American 15A/125V ungrounded electrical plug and socket, the IEEE/ANSI Performance Criteria for Alarming Personal Radiation Detectors for Homeland Security — turns it into a commodity, “an article of commerce or a product that can be used for commerce.” There are many types of commodities characterized by natural or artificial standards — coal, oil, currencies and, of course, pork bellies, to name a few.

On the other hand, the charge, in relation to advertising, is historically jejune. Blaming Internet banner standards for commoditization is no different than attributing television advertising pricing fluctuations to standardization of the 30-second spot, or faulting the magazine page for the pressures on magazine advertising.

Indeed, the accusation ignores the very reason IAB members — including such historic beneficiaries of advertising standards as The New York Times and CBS — developed the ad standards in the first place: to reduce the complexity and transaction costs associated with interactive advertising, and allow the medium to scale. “The Internet is taking an important step in its evolution as an ad medium by moving in this direction of standard ad sizes,” Richy Glassberg, then the Vice President and General Manager of Interactive Sales for Turner Broadcasting, said when the first IAB banner standards were introduced in 1996. “This will make it easier for agencies and advertisers to develop advertising and will further establish the Web as a viable mass medium.”

Endorsing those standards, Mike Donahue of the American Association of Advertising Agencies, said, “The proliferation of banners has created a massive problem for advertisers and their agencies, which sometimes have to create their ads in 50 or more sizes. These voluntary guidelines will greatly streamline the advertising production and placement process and contribute to the overall growth of Internet advertising.”
Supply vs. Demand

Mr. Tillinghast (who has built into a national and global news powerhouse) is also wrong in attributing the “oversupply of space” to standardization. The disequilibrium in the supply and demand for advertising inventory has a more fundamental cause: technology itself. As I noted in my first presentation to the IAB Board of Directors, using research we conducted at the consulting firm Booz & Co. in the early 2000’s on behalf of the Association of National Advertisers and some media clients, it is now possible for a 14-year-old to create a global television network with the applications that come built into her laptop computer. That means that, for perhaps the first time in any industry, new product — in our case, content and advertising inventory — can be created and distributed seamlessly, without friction, and largely without marginal cost.

To prove the point, just look at another industry standard that’s helped a commodity proliferate in recent years: ICANN’s Web site naming conventions. Thanks to it (and that other contributing standard, Internet Protocol), there are now approximately 160 million Web sites in the world — some 1.2 million of which sell advertising.

This isn’t to deny that oversupply is a problem. It is. But short of a shutdown of the Internet itself — a ban against new domain names, an ICANN moratorium, or mass public revulsion against a medium that is now the world’s most popular — new supply will always be entering this marketplace.

Yet in the very notion of commoditization lies the salvation for interactive advertising. For as in all other commodity markets, the products can be shaped and modified in ways that add enormous value to them. Raw diamonds can be polished to perfection. Cotton balls can be woven into couture dresses. Pork bellies can be sauteed into haute cuisine.

And advertising inventory can be written, designed, and produced by immensely talented creative people into communications that drive the fortunes of great companies.

Direct Response Culture

Can be… But for the most part isn’t. Given the remarkable creative potential in interactivity, online media should present a cornucopia of fabulous, affecting and effective advertising. Take the great concepting and design that went into Doyle Dane’s “Think Small” ad for Volkswagen, spoon in the equivalently brilliant production simplicity of Chiat/Day’s “Human Cartoons” campaign for the Nynex Yellow Pages, throw in the remarkable production values that for two generations characterized BBDO’s work for Pepsi, sprinkle over it the captivating long copy Ogilvy wrote for Rolls-Royce — and then add the potential for mass viral video distribution, one-to-one validation, social media engagement, blog conversation, customization on premium news and entertainment sites, and segmented reach through online networks. The marketing mind boggles.

So with all that potential, why is that so few people can name even two great, recent interactive advertising campaigns — so few people in our own industry? (For those tempted to respond, “Hey, wait a minute, what about ‘Subservient Chicken?’”, I feel compelled to point out that this breakthrough effort by Crispin Porter Bogusky for Burger King is five years old.)

Culprit no. 1, I believe, is the direct-marketing culture that is part of interactive advertising’s DNA. Lord knows, we should and do revere direct response advertising and most of what it’s bequeathed to the interactive industry. From the DR industry we’ve derived our attention to accountability — an obligation honored only in the breach through the history of mainstream media and agencies. From direct marketing we have learned that data and its management are central to everything we do. Many of the growth areas for interactive publishers, including lead generation and customer relationship management, are based on direct marketing innovations.

But direct marketers are almost defiantly disinterested in the aesthetics of communications — and the long-term impact aesthetics has on brand value and company activities. Notwithstanding such legendary direct marketing efforts as American Express’s — where every element of the brand is supported through all channels, from main media to direct — even direct mailers will say that creativity, designed to build and reinforce such well-established, long-term brand-uplifting effects as “likeability,” is not native to the direct response business. Attention to beauty is more the exception than the rule in a marketing-services segment that prizes today’s response to today’s offer over long-term brand lift.

This isn’t a criticism, but a reflection of the way the marketing mix is supposed to work, and has worked for decades. When I first visited the fabled Publisher’s Clearing House in Port Washington, Long Island 20 years ago, I was shocked at the contrast between their clinical understanding of the “what” and their utter detachment from the “why.” PCH’s 12 writers and four art directors were involved continuously in developing new mailing “involvement devices” — pre-Internet instigators of what we today call “consumer engagement” — and, through rigorous testing, could tell down to fractions of a percentage point the lift to gross revenues each would provide.

But how such devices as the “television tag” and the “Jaguar stamp” worked to influence consumers, and what the implications were for the magazines that used PCH to boost subscriptions — that the direct marketers could not say.

“Don’t Know Why”

”If you use a manila envelope, people respond more than they do to a white envelope, but we don’t know why,” Lee Epstein, president of Mailmen Inc., a Long Island company that inserts materials in direct-mail envelopes, told me at the time. ”The postage-paid stamp in the upper-right-hand corner - someone once made a mistake and tilted it. It increased response, but we don’t know why.”

Almost everyone in magazine publishing can relate a horror story about how direct marketing’s ingrained disdain for beauty and branding sundered a property — how a circulation department for an elegant fashion or furnishings periodical, intent on meeting a mailing response target, flooded low-income neighborhoods with cheap come-ons, driving the publication’s demographics downward and turning off the very advertisers the magazine was supposed to attract. “Most direct-mail letters, they said, don’t use good writing; don’t worry if you split an infinitive,” Frank H. Johnson, a direct mail pioneer who began his career at Time Inc. in the 1930’s, once told me. “And you’re never supposed to be funny.”

Bill Jayme, one of the greatest direct mail writers of the past century, agreed. ”The general attitude in direct mail is to talk down, assume people are stupid and repeat everything,” he told me nearly 20 years ago. The late Mr. Jayme was a rare exception. “I haven’t had any qualms about using a word like ‘peregrinations.’ If the context is right, the reader’ll understand and will feel flattered.”

But this notion that your consumer was part of a community of interest with the brand marketer, not a “target” to turn into a “conquest” at any cost, was and is rare in direct marketing. The late, great magazine journalist Clay Felker once related to me the struggles he, Harold Hayes, and others charged with reinventing Esquire magazine in the early 1960’s had persuading the publication’s proprietors to abandon the “damn it letter” — the long-time direct mail control missive that opened with those words and chortled over pinup girls. However damaging this legacy of Esquire’s earlier girlie magazine days was to the rebranding effort the newcomers were charged with spearheading, the publisher was reluctant to change it, because it brought in subscribers. Mr. Felker succeeded in his effort only when he retained Mr. Jayme, who wrote an intelligent letter that finally outperformed the debilitating “damn it letter.”

Why Creativity Matters

Agency founder David Ogilvy revered direct marketing, yet also was the ad industry’s leading apostle of brand imagery. In his marvelous new biography of Ogilvy, The King of Madison Avenue, former Ogilvy & Mather Chairman and Chief Executive Kenneth Roman relates how, for years, Ogilvy (shown at left) struggled to reconcile these “two schools of advertising” that “were diametrically opposed to each other.”

By the time Ogilvy founded his agency in 1948, he had succeeded. As committed as he was to the principle that advertising must sell, Ogilvy also understood the risks posed by a fixation on immediacy and accountability — primarily the brand marketer’s loss of public esteem and the ability it bestowed to maintain pricing power. In remarks made 50 years ago that seem eerily prescient today, Ogilvy told the author Martin Mayer:

“Most brands that need help today were given sleazy, bargain-basement brand images in the thirties, when money was scarce and it was a great help to seem cheap. They’ve suffered from it. When I first came into this country Packard was one of the great quality cars. Then they began getting tough, going after the middle-priced market. What do you think they would give today to get back their old image?’

To marketers and others who complained that brand-image advertising “is unmeasurable, it’s all a lot of airy-fairy nonsense,” Ogilvy had a simple response: “Well, is it?”

Ogilvy was one of the last century’s great salesmen. In his book, Mr. Roman spins wonderful yarns about the hours “DO” spent as an apprentice chef in the kitchen of the Majestic Hotel, one of Paris’s best restaurants, and the years he spent peddling Aga cookers, a premium stove, door to door across Scotland, in the 1930’s. What Ogilvy learned from these experiences is that successful selling is at root about one thing: faith — your ability to provide to others a dream with infinite horizens. The exquisitely designed plate of cuisine classique — ah yes, you are living the good life! This remarkable stove — why, your home will be akin to the finest restaurant!

Creating Faith

In taking this lesson to his agency, Ogilvy also understood that creating faith in customers was not a distant exercise; he would not succeed solely by delivering creatively constructed messages across pages or airwaves to a faceless mass of consumers. There was always a more immediate, more present customer: the clients themselves.

This is perhaps the most important reason advertising creativity matters. It inspires the marketer. It encourages the sales force. It provides them, and all the other constituencies in and around the company and the brand, the faith that they will be able to sell the product in to the retailer, close the sales on the dealer’s lot, win new commissions, and better their own lives. Great advertising is their rallying cry, the flag they march under. The mouseclick must be matched by their heartbeat.

This is the reason no major new advertising campaign ever debuts de novo on broadcast network television, but rather is premiered at the franchisees’ convention, the national dealers’ conference, and the annual sales meeting. The campaign, the ads, are the gospels — the stories that excite and unite the tribes, that spur them to go out and do battle for a higher cause. Done right, an advertising campaign transforms the advertiser itself into an army of true believers. For how can you expect to win new converts, if you, yourself, are not a true believer?

The notion that a narrative could be used to drive people toward higher goals is as old as philosophy itself. As Socrates says in concluding the myth of the cave in Plato’s Republic: “Without having seen the Form of Good and having fixed his eye upon it, one will not be able to act wisely, either in public affairs or in private life.”

Jerry Della Femina described this cultural power — this corporate cultural power — of great advertising more profanely but no less profoundly in his famous book, From Those Wonderful Folks Who Brought You Pearl Harbor. “The client is standing up there waiting at the train station for the New Haven to take him into New York and he’s dying to be stopped by his buddies,” Mr. Della Femina wrote in his classic memoir. “He is dying for them to compliment him on his new campaign.”

“‘Boy, you’ve got a hell of an ad there.’ That’s what the client wants to hear.”

Missing Reputational Currency

The gap between the mouseclick and the heartbeat is nowhere more evident than in many of our digital advertising agencies. To illustrate, allow me to pose an admittedly trick question: What’s the biggest difference between a traditional creative agency and a new-age digital agency?

Answer: Traditional creative agencies are named after human beings. Digital agencies are named after inanimate objects or nonsense words.

Check out the winners of the 2008 IAB MIXX Awards — the industry’s premier showcase for creativity and effectiveness. Winner, Best in Show: Tequila. Winner, Brand Positioning: Digitas. Winner, In-Game Advertising: Jogo. Silver Award, Brand Positioning: Blockdot. Silver Award, Digital Video: Tribal DDB.

Look, we love these agencie. And to be fair to them, the depersonalization of advertising predated the digital revolution. But it’s a particular tragedy in the digital arena, because it has robbed the industry of its most potent fuel: reputation capital.

From their inception in the 19th Century, advertising agencies, like law and accounting firms, represented their origins and duties as client service businesses in their names. “N. W. Ayer & Son,” “Batten, Barton, Durstine & Osborne,” “Young & Rubicam” — all implied a sense of personal responsibility on the part of founders to their customers.

Not incidentally, they also conveyed a sense of opportunity to their ambitious employees. Advertising was always a low-barrier-to-entry business. If success depended solely on the ability “to render service and make money,” as Lord & Thomas leader Albert Lasker once put it, why, anyone could try it!

And they did — at no time more prolifically than during the Creative Revolution of the 1960’s. The concurrent post-war Baby Boom, suburbanization of America, and spread of network television put a special premium on quality advertising content; more products and more communications channels meant more ads, and more need to cut through the growing clutter to engage audiences. Writers and graphic designers determined that they, too, might have value — perhaps more value than account handlers. So writers like David Ogilvy and Bill Bernbach (shown right) and graphic designers like George Lois took the plunge and founded agencies.

Cultural recognition and financial growth rapidly came their way, emboldening other creatives to believe they could trade the personal reputations they had won using little more than their pens and palettes into successful agencies. The “swinging agencies,” Jerry Della Femina called them: Wells, Rich, Greene; Delehanty, Kurnit & Geller; Smith/Greenland; Daniel & Charles. Many were spawned directly from the creative department of Doyle Dane Bernbach. Between January and July 1969 alone, more than 100 ad shops were launched, most in New York, all of them gassed up with reputational capital.

Agency Road Map

The calculation was clear and direct: Get known as the creator of great, successful campaigns, and you, too, could start your own business, bring some clients along, and make an awful lot of money on little capital investment. And to this day, that remains the road map for success in the agency business. If you want to understand why the Cannes Lions International Advertising Festival has become the largest destination gathering of advertising professionals in the world — “more than 10,000 delegates from 85 countries… inspired by the 28,000 pieces of work on display,” as its Web site says — that’s all you need to know.

And that’s the reason to mourn, and perhaps war against, the depersonalization of the agency business. Sure, there are several valid explanations for it: to scale, advertising had to globalize and industrialize; and increasingly, one could maintain that successful client service is about the team, not the individual.

But if, as I have argued, great advertising not only stimulates consumers but galvanizes that team to build and sustain strong companies and brands, then we must recognize that its creation requires both collaboration and individual achievement. Advertising, in this regard, is no different from any other form of communication that seeks after broad, material, cultural impact — no different than film, or theatre, or journalism: If stardom is not rewarded, there is little incentive toward superiority. Worse, perhaps, if mediocrity is not penalized, there is little deterrence to decline.

There’s good news lurking beneath the surface. The rising category of digital advertising award winners — agencies making the hearts beat and the mice click — are the great creative agencies of the past two decades: Hill Holliday, Goodby Silverstein, McKinney, BBDO, TBWA Chiat/Day — companies whose names (or, well, acronyms) have meaning.

But we must unleash and laud by name the next generation of stars. Interactive advertising, I suspect, will only take its place in the cathedrals of cultural significance when we start to recognize and reward the creative individuals who make greatness happen.

Creative Technologists Arise

Those individuals carry at least one non-traditional title. To the advertising creative partnership that traditionally has teamed a copywriter and an art director, a third member must be added: the creative technologist.

The creative technologist is only now beginning to gain public recognition. Google the term and you’ll find hundreds of help wanted ads at agencies and publishers. But I’d never seen the phrase in the mainstream media until two weeks ago, when New York Magazine writer Emily Nussbaum published an exciting piece about the transformation of uptown rival The New York Times. “There is something exhilarating about watching web innovation finally explode at The Times,” she wrote. “… Everyone seems to have a job title like ‘creative technologist,’ giving the entire floor a mad-scientist air.”

Yet these are not mad scientists; they are essential partners in modern media, central to the craft of communication today. Creative technologists, says Mark Avnet, professor and head of a training program for them at Virginia Commonwealth University’s VCU Brandcenter, are “fluent and confident in using media technologies appropriately in the service of branding, advertising, marketing and persuasion.” VCU’s program — the world’s first at an accredited university, launched only six months ago — aims to train “leaders and members in ‘new’ creative teams, as interactive designers, creative directors, producers, directors of interactive media, members of account teams, as entrepreneurs and in emerging creative technology positions in forward-thinking agencies.”

Among contemporary agency leaders, the only one who speaks publicly about the indispensability of creative technologists is RG/A Chairman, CEO and Global Chief Creative Officer Bob Greenberg.

“There are critical creative needs that didn’t exist in the old advertising,” says Mr. Greenberg, who counts 130 technologists in his New York office. “Advertising is no longer just about the display ad or the TV commercial or the banner; it’s about creating meaningful tools and architecting user experiences. Our technology group, they can keep up to speed technically with the top people at HP or IBM. But they also understand how to work with others to create an application that will lead to community.”

Mr. Greenberg stresses that calling the creative technologist the “third member” of the creative team is, at best, metaphorical. There are several new skill sets creative agencies today must possess to attract, engage, and influence consumers — Flash video development, software design, information architecture, animation, CRM, iPhone app design, and ActionScript development among them — and no one individual will have expertise in all. The point is that the men and women with these skills must be treated as full partners in the campaign development process, contributors to “the Big Idea,” not as executional afterthoughts buried in the basement.

The Bigger Idea

This evolution of the creative partnership is as transformational a moment as was the invention of the copywriter-art director partnership exactly 60 years ago, at fledgling shop Doyle Dane Bernbach. Influenced by his former colleague, the legendary graphic designer Paul Rand, agency founder Bill Bernbach realized that effective persuasion required the full integration of words and images — and of their expert creators.

“Up until that time in agencies, the art director was a layout man,” George Lois, a Bernbach acolyte, once told me. “He may have been a very, very good layout man. He may have been a gifted layout man. But he was not a thinker. He was a layout man.” So secondary were they that they worked in different rooms, often on different floors, than the copywriters, who referred to these layout men as “wrists.”

“Before Bernbach, there were slogans, great lines, and they got laid out,” Mr. Lois said. “Well, Bernbach didn’t believe in catchy lines as much as he believed in attacking the heart and soul. So Bernbach gave the art director power.”

Significantly, this occurred at the dawn of the last information revolution — the introduction of broadcast network television, which also occurred exactly 60 years ago. The advent of the interactive revolution now heralds the empowerment of the creative technologist. Clearly, their ascent adds complexity to advertising agency and media management: Communications leaders will have to learn how to foster collaboration among larger and more diverse teams — in addition to motivating their individual stars, as I’ve suggested is necessary. But agencies and media have no choice but to add them to their capability mix.

“You can’t have an art director and a writer who go off for two weeks in a room and try to come up with a Big Idea that is rendered into a print ad or billboard, and the interactive accompaniment to that is just matched luggage,” Mr. Greenberg says. “You have to get to a bigger idea. You now may need eight people around the table.”

All That Remains

If you’ve had the good fortune to spend time in RG/A’s Bauhaus-style headquarters on Manhattan’s West Side, or a block away in the offices of New York Times Digital, or across the country at Google’s campus in Mountainview, or a little bit north of that, in the AKQA agency’s HQ across from AT&T Park in San Francisco, or across the country again, in the converted tobacco factory that houses the transforming McKinney agency in Durham, NC, you’ll be struck immediately by all this creative ferment — this reinvention of the way we communicate the world and persuade consumers.

Yet that is not the conversation that dominates our ecosystem today.

Instead, we’re engaged in a war over “pork bellies.” We’re publicly complaining, on stages and in pages, about commoditization. We talk incessantly about “remnant inventory.”

I’ve got to tell you, every time I hear an interactive publishing executive use the term “remnant,” I want to take a scissors, shred the dress, and stab the salesman. How dare you, I think, deprecate your property in that way? You’re trying to sell couture at Bergdorf’s, yet you’re using the language of Seventh Avenue garmentos to describe it?

With all due respect to the IAB’s members — who are, after all, my bosses — and to the media agencies (who are among our most important customers), I’d like to suggest that our seller-buyer-driven culture is devaluing not just the pricing but the potency of our medium. We must stop acting as if we’re selling schmattes, and start acting like the makers of magic that the best of us are — and always have been.

As I’ve written and any economist would affirm, supply-demand disequilibrium, exacerbated by a recession-driven flight of marketing budgets from above-the-line functions to promotional availabilities, is the root cause of today’s pricing pressures in media. Yes, it’s bad, and yes, it will get worse before it gets better. But it’s no reason for discussions of commoditization to dominate our business — now, or at any time. Remnants may clothe you when you are needy, but they will not make you feel grand.

Interactive Advertising Grows

And that, fundamentally, is the business we are in — of providing men and women the information they need and they entertainment they want to think and feel and act in different and better ways. And therein lies the power of our medium, its unprecedented power, for it allows people to find the information, to talk back to the news, to create and share the entertainment, to shape the event. And that is the force of advertising in this medium — not the fact that in some places, at some times, it can be purchased in the bargain basement.

That is the reason why, while other media platforms contract, interactive advertising is still growing: especially during a recession, not all time and space are created equal.

That’s especially true within our industry. Some interactive publishing companies are growing bigger and better than others. There are many reasons for their relative success: the addition of sophisticated yield management capabilities, the creation of customer-facing services businesses, the development of consumer insights capabilities, the training of a more consultative sales force, the highlighting and fulfilling of creative opportunities for clients, the implementation of sophisticated market- and product-segmentation strategies, the undeniable attractiveness of quality content to men and women hungering for information and entertainment.

But these publishers’ achievements and their bright prospects all derive from their willingness to ask — and answer with actions — one fundamental question: How do I add value to my consumers’ experiences and my customers’ businesses?

In our obsession with immediacy and accountability, we have overlooked the more subtle yet more powerful ways that companies, brands, and fortunes are built through time. Our IAB Annual Leadership Meeting, Ecosystem 2.0, themed “Brands Battle Back,” will launch this needed conversation.

For digital publishers and agencies, here’s what I hope this conversation leads you to do:

  1. Motivate greatness among your best creative people, for their work inspires consumers and customers alike.
  2. Collaborate — creative agencies and publishers — with each other and within yourselves to develop outstanding advertising and communications products.
  3. Assemble writers, designers, and technologists into teams that can engage the intellect and emotions of audiences and individuals across all channels, toward the goal of creating enduring brands.
  4. Prove to your customers that causing the heart to beat quick is at least as important as making the mouse click.

Finally, and politely, let’s ask the sellers and the planners, the publishers and the senior buyers, to continue their price negotiations — but quietly, in the back room, away from the customers crowding our front counters and our home pages.

Let’s return to a time when advertising and media conversation was owned by the creatives, the editors, and the impresarios — when it was dominated by debates about the craft of persuasion, about what moves people. After all, isn’t that the reason we’re in this business?

blog-header-rr.gifIf you are a Web publisher earning less than $1 million annually in advertising revenue and with five or fewer employees, you can help save the ad-supported Internet. I urge you to join the Interactive Advertising Bureau and become part of the small business army we are mobilizing to stop politicians from unfairly and inappropriately regulating digital advertising.

The threat is very real. As I have outlined in previous postings,
forces arrayed in Washington and multiple state capitals are specifically targeting the business infrastructure that enables small Web sites to support themselves through advertising sales. Although these advocacy groups have provided no evidence of public harm, their efforts have resulted in a flurry of regulatory proposals which, if enacted, would severely hinder the ability of small publishers to support themselves with advertising sales, and impair the ability of small businesses to use interactive advertising to market themselves.

I believe these proposals have received little attention from marketers, media and publishers because they have been hidden on legislative calendars in Albany, Hartford, and Springfield, or been negotiated behind closed doors in Washington, away from our ecosystem’s business leaders. Moreover, because the proposals state that they seek to control “behavioral marketing” or “third party networks” or “online preference marketing,” publishers that do not engage in such practices or with such practitioners believe they are safe.

But in fact, these proposals are so broad, they will put virtually all interactive advertising practices — and even many mainstream marketing practices — under a strict regulatory regime. Business leaders need to start paying attention now, or the underpinnings of the “free” — which is to say ad-supported — Internet will come undone.

Undermining Advertising Research

Consider a bill that has been before the New York State Assembly, which aims to curtail “online preference marketing.” It defines “online preference marketing” as “a process used by entities whereby data is typically collected over time and across web pages to determine or predict consumer characteristics or preference for use in ad delivery, including the use of non-personally
identifiable information.” But employing non-identifiable data to predict consumer preferences for use in ad delivery is, in fact, the very definition of advertising research. Were the New York bill to pass, a mainstay of business development for 120 years would, for the first time, fall under a strict regulatory regime - forcing small Web publishers and their advertisers to incur legal and lobbying expenses they cannot afford, and just for New York State.

Or look carefully at Connecticut
General Assembly Bill 5765. It offers the same, sweeping definition of “online preference marketing,” and goes on to say that any publisher offering it through a “third-party advertising network” must additionally give consumers the opportunity to “opt out” from receiving it. This means consumers, for the first time, would be able to force advertisers to stop providing them ads - but only if those ads are relevant to their interests! Presumably, mass-distributed “spam” advertising would still be protected.

The Connecticut bill also would allow consumers to pull non-identifying data they generate out of the aggregated databases that are commonly used in market research to improve products, services, and marketing. To put this in perspective, this is the equivalent of allowing you, me, or anyone to demand that a grocer not use our anonymous checkout-counter scanner data to determine when to restock a product.

These state bills have been tabled — for now. But consider the Federal Trade Commission’s recommendations for self-regulatory principles for “online behavioral advertising.” The FTC has been a good partner with the interactive media and marketing industries, and has encouraged us, for the most part beneficially, to develop an effective self-regulatory mechanism to guard consumers’ legitimate interests in identity protection and data security. Yet even the FTC has succumbed to the fear-mongering of anti-business advocacy groups, and HAS offered breathtakingly broad definitions that could severely hamper the activities of small publishers and marketers.

The FTC defines “behavioral advertising” as “the tracking of a consumer’s activities online,” and would give consumers the right “to choose whether or not to have their information collected for such a purpose,” apparently even if it is anonymous and non-identifying. Yet one such “tracking activity” is the measurement of Web site audience traffic - the central measure by which advertising prices are established. Another such “tracking activity” is the measurement of advertising delivery - the core determinant of whether the publisher gets paid by the marketer for running its ads! Thus, in its recommendations for the self-regulation of what it calls “behavioral advertising,” the commission has made suggestions that would break longstanding processes essential for the management of media companies in the U.S.

The most unfortunate aspect of these proposals is that they are utterly unnecessary. The IAB and its members vigorously support the principle of consumer control over their media consumption. Indeed, consumer control is one of the fundamental reasons interactive media have grown so quickly in popularity. And consumers have all the tools they need to control all forms of data collection in online media and advertising, built into their browsers and into security packages, many of them available free online.

Small Business Boon

As I told the House of Representatives Small Business Committee in Washington earlier today, such regulations would have a disproportionately negative effect on the small publishers and small marketers that are the backbone of the interactive media and marketing ecosystem.

Because so much attention in our industry recently has focused on multi-billion-dollar consolidation battles, it’s easy to assume that we lives in a land of giants. But nothing could be further from the truth. Interactive media is a dynamic field suffused with small entrepreneurs with big dreams. When you think of IAB’s 375+ members, you may conjure up the great names of the online and offline media world - Google, Yahoo, AOL, MSN, The New York Times, Time Inc., CBS, and Walt Disney among them. But the majority of our members - 61 percent - are small businesses, earning from $0 to $8 million annually in advertising revenue.

Evidence that the Internet is a small-business engine abounds. For example, research done by the consulting firm Booz & Co. for the IAB, the Association of National Advertisers, and the American Association of Advertising Agencies shows that 40 percent of IAB members’ revenues comes from local businesses.

Interactive advertising revenues totaled more than $21 billion in 2007 and were estimated at nearly $5.8 billion in the first quarter of 2008, up 18 percent over the first three months of 2007. Of that total, search is about 40 percent. And small companies’ share of online ad spending in search engines is more than double the share of medium or large companies, according to the research firm Outsell, Inc.

According to the Pew Internet & American Life Project, more than 32 million American adults have used online classified ads for selling or buying. eBay — which is both an advertising vehicle and a retail mechanism for its sellers — says 768,000 small businesses across the U.S. use this online marketplace as their primary or secondary marketing channel. Blog networks, supported by advertising, helped would-be media moguls generate 112 million blogs worldwide; in the U.S., as of July 2006, some 12 million American adults, about 8 percent of the American population, were publishing their own blogs, which were being read by 57 million others, according to Pew.

Publishing’s Long Tail

Those blogs are part of the most remarkable communications phenomenon since the invention of the printing press: the explosion of small interactive publishing businesses, untold thousands of which support themselves through advertising sales.

While many of these businesses employ direct sales forces, I pointed out at Congress yesterday that an essential aid to them has been online advertising networks
consisting of hundreds, thousands, even tens of thousands of sites. These online networks are the moral equivalent of the broadcast radio and television networks with which we grew up; they have technological infrastructures that can get contextual or behavioral advertising and ad revenue to these small sites, wherever they are located.

But there’s one crucial difference: Instead of delivering the same programming - and for the most part the same ads from the same giant marketers — at the same time across groups of local affiliates, online networks allow myriad voices to flourish, serving myriad interests and needs, in the tiniest nooks and crannies of our culture.

No one knows how many of these “long tail” publishers are in the U.S., but here’s a sample gathered by the ThinkPanmure equity research firm. The 24/7 Real Media network sells and places ads for 1,000 Web sites. The Blue Lithium Network, owned by Yahoo, reaches 119 million unique U.S. users through 1,000 publisher sites. Burst Media has 4,200 ad-supported sites in its network. Tacoda, a network acquired last year by AOL, delivers behavioral ads to half the U.S. population, across 4,500 sites. The Adbrite auction-based ad marketplace represents 19,000 Web publishers.

How diverse are these publishers? We don’t have a census of the whole, so to prepare my Congressional testimony, I asked my IAB team and some of the networks among our membership for examples of their favorite small, ad-supported publishers. Interestingly, many of them are mothers who are using interactive tools and services to develop home-based businesses around their passions. Here are a few examples:

  • is a community site started by three local women for the area of northern New Jersey where I grew up. Its advertisers include a local hospital, Montclair Family Dentistry, and Dial Pest Control of Roseland.
  • is a blog started by a stay-at-home mother in Salt Lake City, who was the valedictorian of the Class of 1993 at Bartlett High School in Memphis, Tennessee. She carries ads from the Disney Vacation Club and Verizon.
  • is run by a woman in northeast Mississippi, who subtitles her Web publication “Adventures of an Amateur Baker.” It’s filled with recipes, sells cookbooks, and carries ads for M&M’s, Perdue chicken, and Bertolli olive oil. Some of those ads are sold by Martha Stewart Living Omnimedia, an example of the growing symbiosis between small and large publishers on the Web.
  • Here are three political sites that cover the spectrum of opinion. Many of you know, the famous liberal political blog; look closely, and you’ll see that it’s supported by ads, many of them placed by the Google Adsense network, from PBS, the online t-shirt maker Café Press, and others. Latino Issues, by contrast, is a conservative Latino blog, with some ads also sold by Google. Its advertisers include the dating service And Confederate Yankee is an ad-supported site, via the Pajama Network, that’s a hybrid of conservative and liberal, Northeast and Southeast sentiments and values: Advertisers include Omaha Steaks and FTD, the floral company.
  • is the central meeting place for women who participate in the oldest American sport. It’s a family business run by Founder and CEO Cathy Samaras of Annapolis, Maryland, and its advertisers include the Kaplan test preparation company, and the Bowie Baysox Class AA minor league baseball team.
  • is a collection of 90 ad-supported science sites covering fields from neurophilosophy to quantum mechanics to tetrapod zoology. Its offices are in LA, Washington, New York, London, Munich, and Shanghai, but its bloggers come from all over: Iowa, Colorado, Massachusetts, New Jersey, and Virginia, among other places. Its advertisers include PerkinElmer and Dow Chemical.
  • was formed in 1999 in Garland, Texas by a group of black women to help women of color build businesses, increase employment and build revenue. Its advertisers include the “tea-of-the-month club,” Crockpot cookery, and Kmart.

IAB Thinks Small

As the IAB team surveyed the regulatory landscape this past year, it occurred to us that few regulators or legislators are aware of this small business landscape, and how interactive media and advertising have served, in essence, is its railroad: the network that enables these tiny markets to exchange value within and among themselves. So we asked our Board of Directors and then our entire membership to approve a change in our bylaws, and allow small publishers to join the IAB at an advantaged price — $500 in annual dues, or 1/20th the minimum dues tariff we charge General Members.

I’m pleased to say our membership approved this Small Publisher Membership category by an overwhelming majority last week. So if you think small (or work with publishers who do) please let them know about our offer. (I’m equally pleased to note that when we canvassed about a dozen of our network-oriented members and asked if they would help us market this new membership to their publisher affiliates, each and every one enthusiastically answered in the affirmative.)

IAB Small Publisher Members will have business insurance and services discounts; preferential pricing for IAB events; special webinars and seminars designed to teach small publishers the contours of the advertising and marketing industries; and membership in the IAB’s new Small Publishers Committee. And, of course, there is representation by the IAB in Washington and across the U.S. Like our Associate Memberships, these will not carry voting rights — but any Small Publisher Member that grows large enough (or otherwise wants advanced participation) is free to join IAB as a General Member at the normal dues rates.

Our first signup was Tim Carter, the founder and proprietor of in Cincinatti, Ohio. I wrote about Tim — and his remarkable development from a self-syndicated, hand-to-mouth newspaper columnist to an online media mogul earnings hundreds of thousands of dollars in ad income a year, thanks to network-based sales — in an earlier “clog” posting. When I asked Tim (who also testified at the House hearings yesterday) why he was joining the IAB, here’s what he said:

“I decided to join the IAB for any number of reasons. Primarily, I want to be connected with an organization that’s ahead of the curve, and gives me an enormous competitive edge in the marketplace. I also enjoy being surrounded by other successful people who help me to achieve goals I set for myself. I also love the fact that the IAB represents small digital publishers like myself in Washington. I don’t have the time nor resources to be heard, but politicians need to know the facts about what is happening in the Internet world I work in. The IAB delivers a fair and balanced perspective to these lawmakers.”

I’m incredibly proud to have Tim Carter as a member of the Interactive Advertising Bureau. But we should aspire to make sure that hundreds of thousands, even millions, of Tim Carters can flourish in this country, building businesses through the communications, advertising, and services available online. We can do that by assembling together, to learn each others’ best audience-building and marketing practices, and to ward off the ugly and unnecessary hand of anti-Internet regulation.

Put simply, IAB WANTS YOU!.
Click here and join today.

With barely an acknowledgement of the myriad ways in which the Internet has revolutionized economic development, information access, and communications diversity, an increasingly organized coalition of anti-business groups is mobilizing to get the Government to shut it down.

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, 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.”

Aversion to Democracy

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.
blog-header-rr.gifAn Ecosystem 2.0 Post-Mortem

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.

Portals Become Platforms

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. 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… The nesting tips on… The insider gossip on… The felinophilia of… 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!


A Geek in Aspic

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Once upon a time (August, 1999, to be exact) aficionados of popular culture conjured a dream. They envisioned a “Jukebox in the Sky” — a colorful, shiny, neon-bedecked contraption that would allow them instantaneous, universal access to all the music that had ever been recorded during the entire history of the world since Thomas A. Edison started scratching nursery rhymes into wax cylinders. And lo, it came to pass. From Napster and the Creative Jukebox to eMusic and the iPod, if your life needs a soundtrack, you can find it, program it, and wallow in it.

Of course, for some of us, that only whetted our appetites. What we really wanted was the Film Forum-in-the-Sky. And creating it is how I spent my holiday break… and my holiday heartbreak.

Look, let me admit it right off the bat: My cultural predilections are… aberrant. I loved the Napster phenomenon from the get-go not because it allowed me to steal popular contemporary tracks, but because it enabled me to reach across the globe to pull in my obscure, idiosyncratic objects of adoration, the love that dare not speak its name. The Les Baxter Orchestra. Julie London. Vic Damone. Spike Jones. Crooners. Lounge. Elevator music. I was hooked from my first search (the Cab Calloway-Al Jolson novelty number I Want to Sing-a, if you must ask).

And so, too, in film. Sure, sure, my list of favorites includes the standards — Citizen Kane, The Third Man, Hitchcock’s Notorious. We spent New Year’s Eve watching the Fred & Ginger Marathon on TCM. But what I really crave are psychotronic movies.

Psychotronic Mania

The word psychotronic was coined — in the way I use it, at least — by Michael J. Weldon, who, back in the day, owned a small video store in the East Village of New York City that specialized in renting… well, psychotronic movies. It was the only place in Manhattan (to cite a special, personal example) where you could lease a copy of The Manster (businessman is injected with serum by evil Japanese doctor, grows a second head on his shoulder), unseen in these parts since Chiller Theater went off the air. As that example should indicate, “psychotronic” translates — uneasily and incompletely — into: Cult. Compelling. Odd. “B” movie. As notes, in an entry about Mr. Weldon’s remarkable 1981 book The Psychotronic Encyclopedia of Film, the word “stretches to encompass horror flicks, spaghetti westerns, low-budget quickies, exploitation films of all stripes—in short, anything disdained by the critical establishment.”

Those are the films I love. And while they’re increasingly available by mail order, what a true fan really wants is instant gratification. Hence the Film Forum-in-the-Sky — the infinite repertory cinema. Every movie you’ve ever wanted, the moment you want it. Time-travel Tivo. Netflix Now. The Manster, On-Demand.

In the years since Napster teased us with the prospect of such immediate pop-culture satisfaction, various technologies and devices have taken us closer to the ideal. The Bittorrent protocol and the file-sharing ecosystem that’s developed around it have made an Alexandrian Library of cultural detritus available to diligent searchers (although I’d never recommend breaking copyright laws to get it). XBox Live, Apple TV, and TiVo Series II are among the devices that can retrieve, store, and stream They Saved Hitler’s Brain (Nazis in South America scheme to use the preserved head of Der Fuhrer to guide them as they launch World War III) to the living room screen. One-terabyte hard drives can hold 700 or 800 Roger Corman exploitation films (although I don’t think he made that many) for under $300. Together with the exploding number of online guides to genre films — just today, I learned from the new io9 sci-fi blog of a new site,, which streams dozens of the best and worst psychotronic films — they make the Film Forum-in-the-Sky a tantalizingly real prospect.

New Media Literacy

So near, but so far. For here’s what I learned during my attempt to jerry-rig a home media server filled with cult movies:

  • Too many codecs spoil the fun. There simply are too many ways to encode movies and sounds, and no one serving solution currently can take them all. Xbox 360 does a great job streaming MP4’s and some XVID’s. Other XVID’s will freeze the system and require continual reboots. Apple TV will only handle MP4’s — forget about DIVX.
  • You need to be 12 to figure this stuff out. Working through the encoding/streaming incompatibilities took the better part of a week and visits to several score Web sites — most of which speak only Windows or Mac, few of which speak both. It’s easy enough to learn that the VLC Player will play most codecs on your PC, and that the Videohub app can transcode most formats into most other formats. But after that, you’re on your own. I spent four hours over the weekend trying to figure out why iTunes can change the metadata on some MP4’s, while others it corrupts and renders unplayable in Quicktime. The answer? I DON’T KNOW! That’s the point.
  • Stuff clogs. While Apple’s done a great job making media accessible to the masses, Mac’s move into movies has been more than a little confusing, especially when it comes to organizing libraries. Front Row — Mac’s media center application — sources from one set of folders, iTunes sources from a different set of folders, Apple TV appears to source from yet a third set. Before you know it, you can have five or six different versions of the same film floating around various hard drives (and taking up the limited space on the stingy Apple TV hard drive).
  • Beware the bit rate. A 256kb bit rate may be perfectly adequate for streaming The Indestructible Man (a faulty electric chair turns Lon Chaney Jr. into a monster who cannot be killed), but it looks awful blown up for a 55-inch screen.
  • Creatures crave features. Fed by iTunes, music set a high standard for cultural gluttony. Music collections would almost miraculously self-organize, pulling metadata and album-cover photos from the CDDB, building playlists almost at will. No such luck with film. There’s an open-source media center program for the Mac called Centerstage, currently available in alpha, which pulls film descriptions directly from the Internet Movie Database. Alas, it was among the several things (including my permissions, damn it!) that didn’t survive the upgrade to Leopard.
My dream? One box, one simple box, that will search, retrieve, label, organize, store, and stream. From the Web (not from a closed system). Which will handle DRM (for everything out there). And — very important — that will eliminate the terms “codec,” “bit rate,” “transcode,” and others akin from the lexicon of entertainment.

I’ll wait. In the meantime, I’m going home to watch Glen or Glenda.
blog-header-rr.gifThese were the opening remarks I gave a few moments ago at the Interactive Advertising Bureau’s first-ever Audience Measurement Leadership Forum. That even is taking place right now at the Marriott New York Hotel in midtown Manhattan.

I have spoken and written about growing up as the son of a market and media researcher. What I have never said publicly is that my life has been framed by market and media research. Today, for the first time, I will tell that story.

My father entered Temple University in Philadelphia in 1948, to pursue a degree in marketing - a brand new major at the school, and one that combined his interests in business, radio and that new invention, television.

It was a good choice for a Jewish boy from Northeast Philly, for media research was one of the few areas in white collar business that had been open to Jews. That was true even in the advertising agency business, which today we recall for its friendliness to minorities. Other than in research departments, that had not been the case: One historian who reviewed the 1931 edition of Who’s Who in Advertising found only 92 identifiably Jewish names among the 5,000 people listed.

My father’s first post-college job was at the Benson & Benson research company in Princeton, N.J., which had been founded by Larry Benson, previously the managing director of the Gallup Poll. At that time, Princeton was the Silicon Valley of research. Startup companies dotted Witherspoon and Nassau Streets, most of them, like Benson & Benson, founded by refugees from Gallup.Later, when I was fortunate enough to attend the university located in that town, my Dad, referring to his walk from the train station to his office, liked to say he had “passed through Princeton.” It was a not-so-subtle acknowledgement that in the 1950’s, there were precious few real opportunities for kids of his background to have passed through Princeton.

Of course, by that time, he’d moved from Philadelphia with his family to the New York area. He’d been hired by NBC in 1957 to do research on the public’s potential reaction to another forthcoming invention, color television. His wife - my mother - had started up a small company that trained interviewers to go out into the field and conduct survey research. Their eldest child - that would be me - had made pocket money during high school by conducting hundreds of these interviews. Among my more pungent memories is lugging a 20-pound contraption called a “tachistocope” around the richest and hilliest sections of Ridgewood, N.J., trying to find scotch drinkers over 50 willing to let me into their mansions to show split-second flash images of different actors trying out for the title role in the Ambassador Scotch print advertising campaign.

Asking Questions

I learned that I liked asking questions for a living. I also learned that there is nothing more difficult than trying to find in a six block radius in Denville, N.J. a woman over 50 who is willing to test a vaginal deodorant. So I became a newspaper reporter, instead. Grilling Presidential candidates, I can attest, is much easier than filling the last gaps in a quota sample.

I mention this background because for much of the past 100 years, media and market researchers have been the business world’s most rugged, unflagging, and unfailing pioneers. Whether refugees from Germany, kids from the inner city, or emigrants from Asia, through the decades they have been driven by one goal: the quest for truth. What happened? What made it happen? What did they see? When? How did they react? Can we prove it? Can we repeat it? How are opinions shaped? Where do our preferences come from? Did it make a difference?

It is no exaggeration to say that these have been some of the most important questions asked - and provisionally answered - in public life during the past seven decades. Phrases that now are part of the fabric of everyday conversation originated in the classrooms and offices of researchers: “Personal influence…” “Public opinion…” “Opinion leader…” “Pollster…” “Survey said…”

It is also no exaggeration to say that the men and women behind such concepts were among the giants of American business and public life. Paul Lazarsfeld, Frank Stanton, Herta Herzog, Leo Bogart, Hadley Cantril, Art Nielsen, George Gallup, Elihu Katz - these were the people who pioneered audience research, invented media metering, forged modern politics, and shaped news and entertainment broadcasting. They even helped integrate the U.S. Armed Forces. Remarkable as it may seem, they walked the earth in our lifetimes.

Some of these pioneers still do walk this earth. And some of them are in this room. The technologies may change, but one thing remains constant: the researcher’s quest for truth.

Today, the opportunity to find truth in business and public life is greater than it ever has been. Interactive technologies are allowing us deeper and deeper access to peoples’ ideas, behaviors, and consumption patterns. We are able to combine sample-based research and census-based research to create a richer portrait of peoples’ lives than research scientists ever thought possible.

Research Startups

Entrepreneurs are taking advantage of these new opportunities. The research startups dotting the marketing and media landscape make the Witherspoon and Nassau Streets of Princeton in the 50’s look fallow indeed. comScore, Quantcast, Hitwise, Compete, M:Metrics, Omniture and scores of others have joined venerable firms like Nielsen to alter our understanding of social life.

Thanks to interactive technologies, media companies, too, have access to troves of information about the preferences, desires, and needs of their viewers, readers, and subscribers. They can deploy this information to make their news, entertainment, and advertising offerings more engaging and relevant to segments and sub-segments of their audience than ever before. Time Warner, Disney, Viacom, Conde Nast, Meredith are joining “newcomers” to the media business like Microsoft, and contributing to this deeper, richer, and more valuable picture of the why’s and what’s of consumer behavior.

These media and research companies, together with advertising agency and marketer research departments, are transforming the way the marketing and media ecosystem operates. Thanks to them, our portrait of society - a rendering that used to be painted with broad brushes - is now a pointillist painting.

Of course, with new technologies and the opportunities they unleash come new complexities. Last March, the Interactive Advertising Bureau hosted a Summit Meeting on Audience Measurement. Executives from comScore and Nielsen joined representatives from major advertising agencies, marketers, media companies, and media-marketing-and-advertising trade associations to chart the journey forward.

It was a significant gathering, because we all realized that we seek the same thing: to use the new emerging interactive technologies to bring us closer and closer to the truth about consumer behaviors.

IAB’s Role

This conference is a direct result of that gathering. The IAB agreed then to take on a vital role: To demystify the metrics of interactive marketing. To help educate the marketplace about what works, why, when, and under what circumstances. To showcase the advances in audience research made by research firms, media companies, ad agencies, and marketing departments. To make this pointillist painting of human behavior even more refined.

This is a new role for the IAB. We join venerable groups in the marketing world, like the Advertising Research Foundation, the American Association of Advertising Agencies, the Magazine Publishers of America, and the Newspaper Association of America, in this activity - and happily so. Few matters in business today can be more important than shedding light on - and reaching agreement on - how we measure consumer behavior.

The people you will hear from today would make Frank Stanton and Paul Lazarsfeld proud. These contemporary research pioneers will describe for you the new ways they are looking at peoples’ media journeys. They will explain how they are bringing together methodologies to measure activities in different media. They will give you a sense of what’s coming next.

On behalf of the 450 members of the IAB, I thank all these pioneers for joining with us in advancing the science of audience research. I want to thank the IAB’s Research Council for helping to plan such a rich and provocative day. I want to thank all of you for taking time during a busy holiday season to pursue this quest for truth.