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July 11 2011

09:52

"DDP" - Google's advertising revolution: liquid market for user segments only weeks away?

AdAge :: Google is quietly building an exchange platform for advertising data, internally known by the acronym "DDP". It is an attempt to create a liquid market for the data used to target display advertising. Here's how a data exchange works: publishers and third-party providers, such as BlueKai and Exelate, would be able to feed their data into the market and advertisers could dip in and buy audience segments, such as people shopping for certain products, or readers of certain sites like The New York Times. That data, attached to a cookie, is used to target advertising to the right people.

Continue to read Michael Learmonth, adage.com

June 14 2011

11:34

Google: we acquired Admeld to help publishers to get most out of display advertising

Google Blog :: Google often hears from major website publishers that ad management today is still mind-numbingly, complicated and inefficient. That's why the company has been investing in their publisher tools to try and improve this landscape. To help major publishers get the most out of the rapidly changing and growing display ad landscape, Google signed an agreement to acquire Admeld, a New York-based yield optimization firm.

Continue to read googleblog.blogspot.com

March 29 2011

14:00

The Geico Gecko meets The AOL Way: Are display advertisers too obsessed with click-through rates?

Late last year, AOL announced it would be revamping its ad platform, shrinking the number of ads it serves and expanding the sizes of those ads. In some cases the ad units would be four times larger than they were before. The move was seen by many as AOL’s attempt to address the abysmally-low click-through rates on display advertising, and senior executives admitted that they would see an immediate drop in revenue as a result of it; their hope was that in the long run advertisers would flock to the new platform and pay higher rates for these more successful ads.

According to several studies, click-through rates — the number of people who actually click on an ad — run well below 1 percent on most sites, and each year these rates get lower and lower. Some industry analysts have said this is a result of “banner blindness,” the idea that we inadvertently train our eyes to ignore certain parts of a web page, including sidebar and banner ads.

Depending on which side of the aisle you are on, these metrics are either a blessing or a curse. On the one hand, the Internet allows us to measure ad success like never before. In the past, advertising agencies would have to employ arcane formulas using Nielsen or circulation numbers to guess how many eyeballs saw a 30-second spot on television or a full-page ad in The New York Times. Now, we can open up Google Analytics or click-tracking software to determine exactly how many users engaged with an ad. We can even in some cases determine conversion rates, measuring not only how many people clicked on an ad, but also how many actually purchased a product after making the click. These metrics are a welcome relief to the client who famously said, “I know I am wasting half my advertising budget; I just don’t know which half.”

But many publishers and advertising agencies have expressed frustration that their industry is beholden to such confined measurement. By focusing so much on direct response, they argue, advertisers are missing out on the larger branding opportunities afforded by creative advertising. The Geico Gecko is not successful because he inspires people to jump up from their couches and purchase car insurance; he’s successful because when a person decides months later to shop around for car insurance, his image springs to mind.

Earlier this month, a company called MediaMind released a comprehensive study on the performance of financial services display ads. MediaMind specializes in hosting ads and collecting a variety of performance metrics for advertisers. If Goldman Sachs wanted to advertise on NYTimes.com, for example, MediaMind would host the ad on its own servers and give the NYT a link to pull the ad onto its site. The company would then measure how many times the ad is loaded, how many people click on it, and even how many hover their mouse over the ad without clicking — what MediaMind refers to as “dwell.”

For this particular study, MediaMind analyzed 28 billion ad impressions and terabytes of data to determine what kinds of financial service ads — whether for banks, credit cards, or insurance companies — performed best. The average click-through rate on such ads is .09 percent, with an even lower post-click conversion rate of .03 percent. Perhaps more encouragingly, though, the “dwell” rate for these ads was 4.26 percent, meaning that nearly one in every 20 users hovered his or her mouse over an ad — an indication, MediaMind said, that the ad carried influence even if it didn’t lead to a click. The study claimed financial service ads had an overall conversion rate higher than their click-through conversion rate — .16 percent vs .03 percent — because some of the users who didn’t actually click on the ad still visited the advertiser later. One of the biggest takeaways from the study was that a user’s engagement with an ad sharply falls after the first time he has seen it, meaning that if he sees an ad on NYTimes.com and then later on WashingtonPost.com, he’s much less likely to click on the Post’s ad than a reader who is seeing it there for the first time.

To understand the click-through rate dilemma many advertisers face, one merely has to dive into MediaMind’s findings about which kinds of ads perform best: The highest click-through rates were for credit cards, while the lowest were for car and home-owners’ insurance. Ariel Geifman, MediaMind’s principal research analyst, explained to me in a phone interview that the credit card ads perform better because many people are almost always willing to try a new credit card with a better rate. But why did the insurance ads perform so poorly? “We think it’s because users only need a policy once a year, so you only need to get people at the point when they’re thinking about it — which is really hard,” Geifman said. “Unlike credit cards, users are not actively shopping for better insurance offers all the time, only once a year. You have to tempt them with an offer exactly at that point in order to get them to consider it.”

Display advertising, in other words, is lacking a Geico Gecko strategy.

Geifman told me that despite pushes for advertisers to take a much more “holistic” view, they’re still measuring their success on click-through and conversion metrics. “People try to focus more on the tangible rather than the intangible metrics,” he said. “In the furture, display advertising is going to be a lot more focused on branding.”

But will it? John Battelle, founder of Federated Media and a board member of the Interactive Advertising Bureau, has spent a lot of time contemplating this question. Federated Media is an ad network that provides advertising for hundreds of publishers, seeing more than a billion ad impressions a month. (I’ve written for some outlets that use FM advertising.) “No matter what, we have to live in a world where the question, ‘Does the consumer click on my ad?’ is the fundamental and only consistent signal in display advertising that is universally understood,” Battelle said in a phone conversation. “That impulse has a lot of implications. When people optimize click-through rates, it changes all sorts of decisions that can inevitablly lead down a path towards, in essence, the direct-response approach to advertising. Which is to say, if you optimize your creative — your media buy, your placement, everything — to this one signal, and you tell your agencies and your publishing partners that’s what’s most important, you’re going to get behaviors that drive clicks. And that sort of ignores a very large percentage of the value of advertising, which has to do with changing the perception, awareness, and potentially other important signals of value in the ecosystem. Unfortunately, it’s something we’ve had to live with because it’s the only standard that’s easily measured.”

To show the short-sightedness of such metrics, Battelle cited a comScore study that found in 2009 that 4 percent of Internet users drive a whopping 67 percent of all advertising clicks. Do we really want to target our ads, he asked rhetorically, to such a small user base — the online equivalent to those who respond to late-night infomercials?

Though the display advertising industry has been slow to battle this trend, it has taken steps to ameliorate it. Part of the problem, as the recent AOL ad revamp indicated, is that display ads are small. It’s very difficult to replicate the full-page ad of a print newspaper or magazine, and there’s only so much you can convey in a tiny box on a website’s sidebar. In 2009, Federated Media launched a product called an Ad STAMP that allows an advertiser to purchase multiple ad slots and effectively take over an entire page. The same year, Daily Kos hosted a “skin” advertising platform for a then-upcoming Frontline program called “Obama’s War.” The skin wrapped around all the Kos content, effectively bombarding the reader with the brand (while not intruding on the actual blog posts). BlogAds, a North Carolina-based ad network that serves ads to Daily Kos and hundreds of other blogs, has also experimented with including social content from sites like Twitter directly into the ads themselves.

In an interview last year, I asked BlogAds founder Henry Copeland which industries should rely less on click-through rates and more on long-term brand influence. He pointed to the entertainment industry as one example. “For instance, with TV shows or with a movie, very few people buy the ticket online,” he said. “So the real measure is you spent X amount in advertising and then you put this many seats in movie theaters.”

In the AOL Way, leaked to the Business Insider last year, the company indicated that an individual blog post needs about 7,000 pageviews to generate a profitable amount of advertising revenue. With the average cost per piece of content pegged at $84 and a target of an average gross margin of 50 percent, that puts AOL’s CPM at $18. In other words, it hopes to generate $18 for every thousand pageviews it generates. At a .09 percent click-through rate, we’re looking at about $18 per click. Given that you can get much better rates on advertising platforms like Google Adwords and Facebook’s targeted display advertising, it isn’t hard to see why a publisher would want to steer an advertiser’s focus away from raw clicks alone.

“You don’t build brands by optimizing for clicks,” Battelle told me. “There needs to be other measurments as to whether your audience is aware of and gaining value from the messaging you’re doing on these sites through display advertising.”

Of course, some would accuse these publishers of trying to put the new clothes back on the emperor. But as AOL shifts further away from its declining subscription revenue and more toward an ad-based model, it’s not surprising that it wants to convince advertisers that there is, in fact, value in a banner and sidebar ad. How much value is there will determine whether Tim Armstrong’s quest to build a content-based company will result in success or dismal failure.

Portrait of the Geico Gecko by Thomas23 used under a Creative Commons license.

December 06 2010

15:00

“An art brand”: Gawker Artists looks at the image beyond the display ad

Five years ago, Chris Batty, until this week Gawker’s vice president of sales and marketing, was looking to fill un-purchased ad space on the site. He wanted to forgo the “horrendous creative” of ad networks that litter sites with penny stocks and would keep his sales teams pushing buttons instead of building relationships. Batty sought something prettier, more intimate, more unique for the company’s growing real estate. At the time, he was living with a woman who worked for Christie’s art house, and he prodded her to find artists to fill the empty space. She didn’t act on Batty’s inspiration, but he did — bringing images of artists’ work to stand alongside Gawker’s blog posts.

The result was a workaround that gave Gawker full control over its pages’ aesthetics. Born as a stopgap to complement blog posts, Gawker Artists is now taking on an unexpected life of its own — it became a standalone site in 2006 — in large part by thinking of art not merely as a pretty placeholder for text but as something that could survive on its own. Something that could be modeled and monetized. “Gawker Artists is an art brand rather than an editorial brand,” Gawker Media’s director of marketing, Erin Pettigrew, points out. That’s a major distinction in an industry that uses the word “art” as shorthand for photos, infographics, cartoons, and any other visual.

G.A. curators — working with more than 1,400 artists with 35,000 images — tailor and export work to media partners like Elle, Curbed, and The Atlantic. They hang pieces at Gawker’s notoriously bit-focused office, and are in talks to curate work for the headquarters of another high-profile startup. G.A. organizes sponsored exhibitions and events and collaborates with brands on creative projects. Soon, it will launch an art shop that sells limited-edition prints.

It’s an experiment that suggests the power of looking beyond text in journalism’s business models. As Ivan Askwith, director of strategy at Big Spaceship and a founding member of MIT’s Convergence Culture Consortium, puts it: “Let go of the idea that content needs to be created in a certain medium.”

“A good karma project” is a good business proposition

In hindsight, Batty says he would have found a simpler solution for the ad space. Networks are more versatile now, and Gawker can collapse un-purchased space, folding the pixels away and making them disappear. That would have been a shame, though, for Jonathan Fasulo, a photographer who shows on artists.gawker.com. A company that builds websites for photogs found Fasulo there, liked his work, and is giving him a free site for two years. Berlin-based Winston Torr started exhibiting on G.A. earlier in 2010 — and within a week of signing on, his Facebook fan page jumped from 175 to 275 followers. That was followed up with a phone call from the curator of a new Berlin gallery, who wants Torr for a show.

Gawker doesn’t represent artists, but it provides free profiles and exposure. “We both want to communicate with as big an audience as possible,” says Liz Dimmitt, drawing a comparison between artists and journalism companies. Liz and her 24-year-old sister, Genevieve, curate Gawker Artists, visiting studios and taking submissions.

Right now, G.A. is a corporate art program: It’s not charged with generating revenue, producing traffic, or breaking news. The site is an endearingly calm space among Gawker’s tumultuous, often cheeky media properties. “We are sort of a good karma project,” says Liz, who interned with JP Morgan Chase’s corporate art program seven years ago and joined G.A. in 2006. Genevieve, fresh out of Savannah College of Art and Design, says, “I didn’t really know what Gawker was,” but adds that it’s “kind of genius for them to be placing art in their ad space.”

That genius is not just about G.A.’s use of ad space; it’s also about their construction of an entirely new community (in this case, artists) that builds an entirely new resource (in this case, art) that is entirely monetizable: exhibits, art-based events, prints, etc. Some of the most promising media organizations are bringing their business models offline: Mashable inaugurated Social Media Day; Vice invited its merry band of hipsters to watch Eastbound and Down; the Economist holds business summits; Vogue brings out the fashionistas; GQ opened a restaurant division; Wired pops up its SoHo store; Tyler Brule’s traveling journalism operation, Monocle, has an office that publishes in the back and sells products in the front. What makes G.A.’s model work is that they move offline by harnessing community-generated content online.

Gawker Media (and Art House)

Since Gawker differentiates between a Torr painting and, say, a picture of Putin, the company can use each resources in different ways. One way they do that is to spread their new resources to visually-based websites. Each month, the Dimmitt sisters cycle new content through Gawker Media properties, and G.A. offers to share the code with anyone who wants it (simply fill out a form with preferred display sizes). More than 200 sites — many of them those of Gawker Artists — feature Gawker’s art on their blogs and Flickr and Etsy profiles. Digital Americana, a literary and culture mag made strictly for the iPad, exhibits Gawker Artists as a footer banner on its site.

For bigger journalism outfits (like Curbed, Elle, and The Atlantic), the Dimmitts hand-curate. Curbed, a real estate-focused network, features art from thematically-related artists in the top-right corner of its site and as banner ads to break up blog posts. General Manager Josh Albertson trusts the Dimmitts to pick images that fit, and if you check out Curbed, there’s a pleasant mix of architectural work co-branded as the “Gawker Artists Curbed collection.” Even though Albertson looks forward to the day when Gawker Artists content is replaced by paying clients, “we’d rather be running this than 25-cent weight-loss CPM ads,” he says. Gawker curates these collections for free, but along the way, they’re building their second brand — and curators are getting to know their community for the time when bigger projects come along.

Gawker Artists also brings a three-dimensional sensibility to Gawker Media sites. Not Avatar 3D, but events, exhibitions, community. “I think Gawker has been somewhat of a pioneer in that respect,” says Erin Smolinski, media planning manager for Diesel USA. As part of Diesel’s Be Stupid campaign earlier this year, she spent $30,000 with Gawker Media, a buy that included run-of-site banners, custom roadblocks, co-branded posts, and a contest moderated by James Frey. Click-throughs were through the roof — 3.8 percent on custom builds, almost five times the industry average — and Diesel’s first-ever online campaign garnered Gawker up to $7 CPMs.

Simultaneously, Gawker Artists was curating its NSFW (“Not Safe For Work”) show featuring artist Justine Lai’s “presidents” series (somewhat SFW). Account exec Meredith Katz told Smolinski about the event, and Diesel put $5,000 of the buy to sponsor NSFW. “I liked the way it made our plan robust,” she says. Smolinski, who partnered with Gawker for its Silent Rave — a dance party with headphones (really) — says NSFW was “a little more intimate and brave” than the rave. It made the campaign resonate more, and Diesel got to wrap party guests in a room full of branded information.

This summer, the Dimmitts helped build an event with $10,000 from smartwater, a Glaceau (Coca-Cola) brand. Artist Ryan Brennan created a multimedia installation that synchronized with music and played well against the setting sun. Infinitely more engaging than a display ad, “the event creates a lot of value, no doubt about that,” says Clotaire Rapaille, author of Culture Code. He likes the fluid nature of Gawker’s creation. “Water is only good when it is in movement. Smartwater is ‘being’ movement, being alive and being in the moment. That reinforces your brand in people’s mind.” Not bad for community-generated content. “I’m actually shocked that more people haven’t done what we’re doing,” Liz says.

Image courtesy Gawker Artists.

September 01 2010

09:57

Google attempting to woo publishers with advertising plans

In a charm offensive, Google has been posting a series of reports on the future of display advertising. Yesterday’s entry focused on the search company’s efforts to help publishers make money online.

We believe that the new technology we’re developing to make display advertising work better will help to grow the display advertising pie for all publishers, by orders of magnitude. We shouldn’t be asking how publishers can eke another 5 or 10 per cent out of display advertising in the next few years. We should be looking at how the industry can double or triple in size.

Part of the challenge is reducing the administrative costs of display advertising for publishers, says Google, as these currently account for 28 cents of every dollar spent on these ads.

Full post on the Official Google Blog at this link…Similar Posts:



August 06 2010

14:30

This Week in Review: Newsweek’s new owner, WikiLeaks and context, and Tumblr’s media trendiness

[Every Friday, Mark Coddington sums up the week’s top stories about the future of news and the debates that grew up around them. —Josh]

A newbie owner for Newsweek: This week was a big one for Newsweek: After being on the block since May, it was sold to Sidney Harman, a 92-year-old audio equipment mogul who’s married to a Democratic congresswoman and owns no other media properties. The price: $1, plus the responsibility for Newsweek’s liabilities, estimated at about $70 million. The magazine’s editor, Jon Meacham, is leaving with the sale, though he told Yahoo’s Michael Calderone that he had decided in June to leave when Newsweek was sold, no matter who the new owners were. Harman’s age and background and the low sale price made for quite a few biting jokes about the sale on Twitter, dutifully chronicled for us by Slate’s Jack Shafer.

Harman didn’t help himself out much by telling The New York Times he doesn’t have a plan for Newsweek. In a pair of sharp articles, The Daily Beast painted a grim picture of what exactly Harman’s getting himself into: The magazine’s revenue dropped 38 percent from 2007 to 2009, and it’s losing money in all of its core areas. The Beast noted that with no other media properties, Harman doesn’t have the synergy potential that the magazine’s previous owners, The Washington Post Co., said Newsweek would need. So why was he chosen? Apparently, he genuinely cares about the publication, and he’s planning the least number of layoffs. (That, and the other bidders weren’t too attractive, either.) PaidContent reported that his primary goal is to bring the magazine back to stability while he sets up a succession plan.

Everybody has ideas of what Harman should do with his newest plaything: Jack Shafer tells him to treat Newsweek as a magazine to be saved rather than a fun vanity project, and MarketWatch’s Jon Friedman wants to see Newsweek drop the opinion-and-analysis approach that it’s been aping from The Economist, as do several of the observers Politico talked to. (DailyFinance’s Jeff Bercovici just wants Harman to make it a little less excruciatingly dull to read.) Two other Politico sources — new media guru Jeff Jarvis and former Newsweek Tumblr wizard Mark Coatney — want to see Newsweek shift away from a print focus and figure out how to be vital on the web. Media consultant Ken Doctor proposes pushing forward on tablet editions, multimedia and interacting with readers online as the future of the magazine. Jarvis also has some pieces of advice for magazines in general, urging to them to resist the iPad’s siren song and get local, among other things.

Poynter’s Rick Edmonds has the most intriguing idea for a new Newsweek — going nonprofit. That would likely require refining its editorial mission to a narrower focus on national and international affairs, with the pop culture analysis getting cut out, Edmonds says, but he believes Harman might actually be considering a nonprofit approach. Ken Doctor suggests that with Harman’s statements about the relative unimportance of turning a profit from the magazine, he’s already blurring the lines between a for-profit and nonprofit organization.

Meanwhile, others were busy speculating about who might be the editor to lead Newsweek into its next incarnation. Names thrown out included Newsweek International editor Fareed Zakaria, Newsweek.com editor Mark Miller, Slate Group editor Jacob Weisberg, and former Time editor and CNN CEO Walter Isaacson, though Isaacson has taken himself out of consideration.

WikiLeaks and the need for context: WikiLeaks continued to see fallout from its unprecedented leak of 92,000 documents about the war in Afghanistan two weekends ago, with more cries for it to be shut down and its founder, Julian Assange, arrested, largely because its leak revealed the names of numerous Afghan informants to the U.S. Assange expressed regret for those disclosures, and WikiLeaks said it’s even asking for the Pentagon’s help in identifying and redacting names of informants in its next document dump, though the Pentagon said they haven’t heard from WikiLeaks yet. Not that the U.S. government hasn’t been trying to make contact — it demanded the documents be returned(!), and agents detained a WikiLeaks researcher at customs and then tried to talk with him again at a hacking conference this week. An Australian TV station gave a fascinating inside look at Assange’s life on the run, and Slate’s Jack Shafer contrasted Assange’s approach to leaking sensitive documents with the more government-friendly tack of traditional media outlets. WikiLeaks also had some news to report on the business-model side: It will begin collecting online micropayment donations through Flattr.

The ongoing discussion around WikiLeaks this week centered on what to do with the data it released. The Tyndall Report provided a thorough roundup of how TV news organizations responded to the leak, and several others pinned the rather ho-hum public reaction to the documents’ contents on a lack of context provided by news organizations. Former Salon editor Scott Rosenberg said the leak provides a new opportunity to shed an antiquated scoop-based definition of news and bring the reality of the war home to people. In a smart post musing on the structure of the modern news story, the Lab’s Megan Garber proposed an outlet dedicated solely to follow-up journalism, arguing that one of the biggest challenges in modern journalism is giving a sense of continuity to long-running stories. “What results is a flattening: the stories of our day, big and small, silly and significant, are leveled to the same plane, occupying the same space, essentially, in the wobbly little IKEA bookshelf that is the modular news bundle,” she wrote in a follow-up post.

Mashable also examined (in nifty infographic form!) how WikiLeaks changes the whistleblower-journalist relationship, while NPR wondered whether WikiLeaks is on the source or journalist side of equation. And PBS’ Idea Lab had something handy for news orgs: A guide to helping them think about how to handle large-scale document releases.

Tumblr trends upward: The social blogging service Tumblr got the New York Times profile treatment this week, as the paper focused on its growing popularity among news organizations who are trying to jump on it as the next big social media trend — a form of communication somewhere between Twitter and blogging. The article noted that several prominent media brands have Tumblr accounts, though many of them aren’t doing much with theirs. Over at Mediaite, Anthony De Rosa, who runs the Tumblr account for the sports blog network SB Nation, said we can expect to see still more media outlets jump on the Tumblr bandwagon, especially because it rewards smart media companies who have a distinctive voice.

New York’s Nitasha Tiku tried to douse the hype, arguing that Mark Coatney’s often-mentioned Tumblr success for Newsweek “wasn’t thanks to the distribution channel on Tumblr, it was his irreverent, conversational style — and that will be difficult for the fresh-faced interns that old-media publications don’t pay to run their Tumblrs.” And Gawker gave us a graded rundown of traditional news orgs’ Tumblr accounts.

Two Internet freedom scares: From The Wall Street Journal and The New York Times this week came two stories that have had many people concerned about issues of freedom and the web. First, the Journal ran a series on the alarming amount of your online data and behavior that companies track on behalf of advertisers. Cluetrain Manifesto co-author Doc Searls argued that while the long-held ideal of intensely personal advertising is getting closer to reality, “the advertising business is going to crash up against a harsh fact: ‘consumers’ are real people, and most real people are creeped out by this stuff.” Jeff Jarvis was much less moved by the Journal’s reporting, mocking it as scaremongering that tells us nothing new. Salon’s Dan Gillmor fell closer to Searls’ outrage than to Jarvis’ nonchalance, and media consultant Judy Sims said this series is a window into a complex future for display advertising, one that media executives need to become familiar with in a hurry.

Second, the Times unleashed an avalanche of commentary in the tech world with a report that Google and Verizon are moving toward an agreement that would allow companies to pay to get their content to web users more quickly, which would effectively end the passionately held open-Internet principle known as net neutrality. The FCC quickly suspended its closed-door net neutrality meetings, and despite denials from Google and Verizon (which Wired picked apart), a whole lot of whither-the-Internet concern ensued. I’m not going to dig too deeply into this story here (I’d rather wait until we have something concrete to opine about), but here are the best quick guides to what this might mean: J-prof Dan Kennedy, Salon’s Dan Gillmor and ProPublica’s Marian Wang.

Reading roundup: Just a couple of quick items this week:

— Thanks to Poynter, we got glimpses of a couple of softer paid-content options being tried out by GlobalPost and The Spokesman-Review of Spokane, Washington, that might be sprouting up soon elsewhere, too. The Lab’s Megan Garber profiled one of the new companies offering that type of porous paywall, MediaPass, and All Things Digital’s Peter Kafka sifted through survey results to try to divine what The New York Times’ paywall might look like.

— Google’s social media platform Google Wave officially died this week, a little more than a year after it was born. Tech pioneer Dave Winer looked at why it never took off and drew a few lessons, too.

— Finally, the Lab’s Jonathan Stray took a look at some very cool things that The Guardian is doing with data journalism using free web-based tools. It’s a great case study in a blossoming area of journalism.

April 12 2010

12:28

The future is mobile, and other thoughts from Google CEO Eric Schmidt’s speech at ASNE

Yes, he got the inevitable “shouldn’t you pay content providers?” question from an audience member. And, yes, he gave the inevitable “most news organizations actually want the traffic we provide” answer. But for the most part, though it tread familiar territory, Google CEO Eric Schmidt’s speech last night — delivered to a packed half-ballroom at the American Society of News Editors conference in DC — was an impressive feat of rhetorical tight-rope-walking. (Text: You, news editors, are guardians of democracy. Subtext: You, news editors, should probably rethink your patrol systems.)

So was the speech well-received? My read: the crowd reception to the uber-exec and his thoughts was cordial, but — despite the many, many compliments Schmidt paid to journalism and journalists during the course of the talk — not overly friendly. (Usually, at a speech like this, there’d be a vibrant back-channel conversation, via Twitter, that would allow a more nuanced assessment. Last night’s speech didn’t have that back-talk; relatively few people were tweeting it, though many were taking notes on reporters’ pads.)

Below, I’ve excerpted the sections of the talk that I found most interesting; they’re listed in chronological order to give you an idea of the arc of the speech.

On newspapers and discovery:
I love newspapers. I love of reading them — that when you’re finished, you’re done, and you know what’s going on. I love the notion of discovery that newspapers represent…. Newspapers are fundamental, not just in America, but around the world.

On information and democracy:
We have goals in common. Google believes in the power of information. We believe that it’s better to have more information than less. We also understand that information can annoy governments and annoy people…but that ultimately the world is a better place with more information available to more and more people. And the flow of accurate information, of the diverse views and debate that we’re so used to, is really, really fundamental to a functioning democracy.

On criticism (and sympathy):
You all get criticized all the time. On the left, you get criticized for being too liberal. On the right, you get criticized for being too conservative. In our case, we just get kicked out of China. Same thought.

On journalism as an art form:
We’re not in the news business, and I’m not here to tell you how to run a newspaper. We are computer scientists. And trust me, if we were in charge of the news, it would be incredibly accurate, incredibly organized, and incredibly boring. There is an art to what you do. And if you’re ever confused as to the value of newspaper editors, look at the blog world. That’s all you need to see. So we understand how fundamental tradition and the things you care about are.

On the best of times, the worst of times:
You have more readers than ever; you have more sources than ever, for sure; you have more ways to report. And new forms of making money will develop. And they’re underway now…. So we have a business model problem. We don’t have a news problem. That’s ultimately my view.

On our new emphasis on now-ness:
What do our children know now that our parents did not know when they were the age of our children? They know about now. They know about precisely now, in a way that our parents’ generation did not. That this now-ness drives everything…and what happens is, you experience the reality of the moment in a way that’s much, much more intense.

On the implications of now-ness:
It’s creating a problem which I’m going to call “the ersatz experience problem.” On the one hand, you have a sense of connectedness to everything — literally, every event globally…but you also have a false sense of actual experience, since you’re not really there. So the trade-off is that you know everything, but you’re not physically in any one place. And that shift is actually a pretty profound one in the way society’s going to consume media and news and so forth. And all of us are part of it. And Google is obviously moving it forward.

On Google’s “mobile-first” focus:
It’s important to understand that three things are coming together: the powerful mobile devices that …are paired with the tremendous performance that we can now get on computers…it is the sum of that, and the capabilities and the technologies that will exploit the sum of that, that will define the next ten or twenty years for all of us. So when I say “Internet first,” I mean “mobile first.”

Now, some of the most clever engineers are working on mobile applications ahead of personal computer applications. People are literally moving to that because that’s where the action is, that’s where the growth is, there’s a completely unwashed landscape, you have no idea where folks are going to go.

On news’ mobile/personal/multi-platform future:
Google is making the Android phone, we have the Kindle, of course, and we have the iPad. Each of these form factors with the tablet represent in many ways your future….: they’re personal. They’re personal in a really fundamental way. They know who you are. So imagine that the next version of a news reader will not only know who you are, but it’ll know what you’ve read…and it’ll be more interactive. And it’ll have more video. And it’ll be more real-time. Because of this principle of “now.”

When I go to a news site, I want that site to know me, to know about me: what I care about, and so forth. I don’t want to be treated as a stranger, which is what happens today. So, remember me. Show me what I like. But I also want you to challenge me. I want you to say, “Here’s something new. Here’s something you didn’t know.”

On the sheer volume of information out there today:
The Internet is about scale. I was studying this, because I was trying to figure out how big this thing is. Between the dawn of humanity and 2003, roughly 5 Exabytes of information were created. (An Exabyte is roughly a million gigabytes.) We generate that amount in every two days now…. So there is a data explosion. And the data explosion is overwhelming all of us. Of course, this is good business for Google and others who try to sort all this out.

On the future of display ads:
If you think about it in this context — you have this explosion of mobile devices, you have this connection, and so forth — what does this mean for the business world? Well, it’s obvious that advertising, which is the business Google is in, is going to do very well in this space. Because advertising works well when it’s very targeted. Well, these devices are very targeted. So we can give a personalized ad.

Furthermore, Google — and others — are busy building vertical display ads that look an awful lot like the ads that look an awful lot like the ads that are in traditional newspapers…. In the next few years, you should be able to do very, very successful display advertising against this kind of content. You may not be able to do it against murders, because it’s very difficult to get the right targeted ad in that case — what, are you going to advertise a knife? It’s obviously terrible. I’m not trying to make a joke about it; it’s a real business problem.

On the future of subscriptions:
We and others are working on ubiquitous ways in which subscriptions can be bundled, packaged, and delivered. We’re seeing this today with both the Kindle and the iPad. Both of which have this subscription model which you can test. You can actually find out, “What will people pay for this?” And eventually that model should have higher profitability. Because it has a low cost of goods, right, because you don’t have the newspaper and the printing and distribution costs. So there’s every reason to believe that eventually we’ll solve this and ultimately bring some significant money into this thing.

On the need for experimentation:
A Ralph Waldo Emerson quote is, “Don’t be too timid and squeamish about your actions; life is an experiment.” On the Internet, there is never a single solution…. The fact of the matter is there are no simple solutions to these complex problems. And in order to really find them, we’re going to have to run lots of experiments.

March 09 2010

15:00

How Ars Technica’s “experiment” with ad-blocking readers built on its community’s affection for the site

Even on the web, sometimes actions really do speak louder than words.

The technology site Ars Technica has a tech-savvy group of readers, of which about 40 percent have installed ad-blocking software in their web browsers. That’s a plugin that allows you to avoid seeing most ads on a site. The financial consequence for Ars is “devastating”, editor-in-chief Ken Fisher explained in a post. Ars sells ads based on impressions, not clickthroughs — which means it takes a big financial hit because of browsing habits of its users.

On Friday evening, Ars tried an experiment: Readers running ad blockers got a blank page instead of the story they intended to read. The move was a technical success, but caused an uproar (and confusion) among users. In hindsight, Fisher told me, the site’s experiment in retribution was the “wrong approach,” causing confusion among many readers.

“What we weren’t expecting is so many people were blocking ads and didn’t even know it,” he said. “It left a lot of people very confused. They started digging around, wasting an hour trying to fix their broken computer.” There was nothing on the site to explain to readers why content had been blocked.

But the experiment still generated positive returns for the site’s bottom line. Fisher wrote a lengthy post on Ars (similar to many the site has run before) about its goals and why ad blocking was a big problem for the site:

My argument is simple: blocking ads can be devastating to the sites you love. I am not making an argument that blocking ads is a form of stealing, or is immoral, or unethical, or makes someone the son of the devil. It can result in people losing their jobs, it can result in less content on any given site, and it definitely can affect the quality of content. It can also put sites into a real advertising death spin.

And since Saturday, Fisher has received about 1,200 emails from users saying they had whitelisted the site — meaning they had told their ad-blocking software it was okay to show Ars’ ads. Based on Ars data from IP addresses, 25,000 users whitelisted the site in a 24-hour period — evidence that the goodwill the site has built up with its audience could be converted into user acts of generosity.

Another 200 users signed up for Ars’ premium accounts, which run $50 a year or $30 for six months. A subscription gets users access to an ad-free version of the site, full-text RSS feeds, printable PDFs of posts, and closed community sections of the site. (But Fisher notes that many subscribers just feel a sense of obligation, not a desire for premium features. “We get many people who subscribe just because they love us. They just want us to survive.”)

I asked if the $50-per-year subscription makes up, financially, for the loss of ad revenue on the ad-free version of the site. It depends on the user, Fisher said. For anyone who visits the site more than its user-average 89 visits per month, probably not. But he doesn’t think of the equation in those terms. Fisher views the subscription fees as covering the cost of specialized content that only the most dedicated user would want, like the online community sections. Ads alone wouldn’t generate the revenue to cover that. An advertising strategy that assumes a broad audience can cover the more general-interest content that audience wants. Having a multi-pronged revenue approach allows the site to provide different kinds of content for different audiences.

Fisher said he’s also had good experiences using a sponsorship model to support specialized content, including in-depth coverage that attracts a highly engaged, technical audience, but not huge pageviews. For instance, IBM sponsored a recent series on the future of collaboration. The writers didn’t know IBM was the backer, and IBM was told only the broad topic for the stories. Topic-specific sponsorship “delivers more value than display advertising, in my opinion,” he said. “It’s much more targeted. It takes the best of contextual advertising.”

But Ars’ bottom line still relies heavily on traditional display advertising. Its particular audience likely has a worse ad-block problem than other sites. But the benefits Fisher found from communicating directly with readers — making the ask along with a gentle but clear nudge — can apply to any site.

“It affects so many sites,” he told me. “And just getting the message out there makes a difference.”

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